Citigroup has put in place a cost cutting program that, when reporting its fourth-quarter results, missed revenue estimates by 500 million dollars on the back of trading short-falls, according to CNBC. However, the bank made $1.61 per share in profit – this is excluding a one-time US tax overhaul. Still, it beat analysts expectations of $1.55 on better-than-expected cuts in expenses and loan losses. Overall, the general view is that the firm has been cutting costs and saving on a wide range of expenses.
Operating expenses fell 4 percent to $9.89 billion in the quarter, driven by lower compensation costs. Earnings of $4.2 billion rose to 14 percent in the quarter, thanks to lower expenses, credit costs and a lower corporate tax rate. The bank said fixed-income revenue dropped 21 percent to $1.94 billion from a year earlier. The volatile fourth quarter impacted some of the main businesses according to the bank. However, looking at the cost cutting, Citi seems to be, in our view, managed well.
Citi is the third-biggest US lender by assets, and will be giving guidance in the coming months. Note that some companies like Starbucks and Apple are lowering guidance on expectations that there will be slower global growth in 2019 and 2020.
The shares of Citi are reacting well to the news, again as the cost-cutting seems to be a solid support of share price for this firm.