Citigroup Announces Job Cuts, Worst Q4 Loss in Years

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Facts

  • Citigroup detailed in its latest quarterly earning report on Friday that thousands of job positions will be slashed over the medium term as part of an ongoing corporate reorganization, ultimately trimming its expenses by up to $2.5B.1
  • The third-biggest US lender plans to reduce its workforce by about 8% over the next two years, laying off 20K employees globally in addition to 40K jobs that will be shed from its Mexican retail unit through an initial public offering.2
  • Meanwhile, CEO Jane Fraser, who announced a comprehensive overhaul last November to reduce bureaucracy and increase profits, called fourth-quarter results 'very disappointing' as the company reported a $1.8B loss — its worst Q4 loss in a decade and a half.3
  • Earlier this week, Citigroup reported in a regulatory filing that several one-time charges and expenses were recorded in the fourth quarter, including an $880M loss in Argentina due to the recent devaluation of its peso currency as well as a $1.7B special fee to the Federal Deposit Insurance Corporation.4
  • For the full year, Citi's revenue went up 4% to $78.5B, but net income plunged 38% to $9.2B. In comparison, JP Morgan and Wells Fargo reported that their revenue grew 23% and 11%, respectively, with corresponding profit increases of about 30% and 40%.5
  • Yet, shares of Citigroup rose by 1.04% to $52.62 on Friday, breaking a four-day downtrend and closing $2.13 short of its 52-week high reached on Jan. 4. The stock outperformed some of its competitors, including JP Morgan and Wells Fargo.6

Sources: 1FOX News, 2CNN, 3New York Post, 4Wall Street Journal, 5BBC News and 6MarketWatch.

Narratives

  • Narrative A, as provided by American Banker. Given these results, 2024 will be a decisive year for Citigroup investors. While the company claims that its ongoing restructuring will improve profitability and returns, it has yet to be seen whether that will actually happen in the short run. Additionally, there's a long way to go on efficiency metrics, such as return on tangible common equity.
  • Narrative B, as provided by Benzinga. Though apparently disappointing, fourth-quarter earning reports from the largest banks in America reveal their resilience in the face of one-off charges that melted their income. Even Citigroup, which reported its worst quarter in more than a decade and announced plans for job cuts, performed well during the last quarter of 2023.

Predictions