Investing.com – Citigroup (NYSE:) followed JPMorgan (NYSE:) and Wells Fargo (NYSE:) Friday in reporting a better-than-expected profit for the fourth quarter, but relied on the release of loan loss provisions to achieve it, against a backdrop of depressed lending income.
Citi released $1.5 billion from previously-booked loan loss reserves, after bolstering them by over $10 billion earlier in the pandemic. The relative resilience of the U.S. economy and the various safety nets provided by the Federal Government and Federal Reserve have all helped to avert Wall Street’s worst case scenario for Main Street.
Citi, which last year appointed Jane Fraser to succeed Michael Corbat as CEO, reported profit of $4.63 billion, or $2.08 a share, down from $5 billion, or $2.15 a share, a year earlier. Analysts had expected profit of $1.34 per share.
The bank’s core tier 1 capital ratio, a key measure of financial strength, inched up to 11.8% from 11.7% at the end of the previous quarter. It ended 2020 almost exactly where it had started it. Corbat has signaled that the bank aims to start buying back stock again in the first quarter of this year, after the Fed gave the green light for the resumption of payouts last month..
Citigroup shares are up 11% from the beginning of the year, still down 16% from their 52-week high of $82.13 set on January 16, 2020. They are outperforming the S&P 500 which is up 1.1% from the start of the year.
Citigroup shares lost 1.4% in pre-market trade following the report.
Reserves releases also dominate JPM, Wells reports
Citigroup’s report follows an earnings beat by JPMorgan on Friday, who reported EPS of $3.79 on revenue of $29.22B, compared to forecasts EPS of $2.56 on revenue of $28.41B.
Wells Fargo & Co had beat expectations on Friday with fourth quarter EPS of $0.7 on revenue of $17.93B, compared to forecast for EPS of $0.5816 on revenue of $18.12B.
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