Citigroup Profits Pass Analysts’ Estimates
Citigroup Inc said it was shuttering consumer banking in 11 locations that includes Egypt and Japan, as the U.S. bank with the most international business focuses on businesses that are more profitable.
Citigroup, which reported a 13% increase in its adjusted net profit for the third quarter, is returning to a structure of before that concentrates its global reach on its business clients by eliminating different consumer businesses across the globe.
Shares at Citigroup on Tuesday were up in early trading by 3.3%. The latest shuttering of business by Citi will bring the number of countries to 24 where Citigroup maintains consumer banking.
CEO Michael Corbat said he was committed to simplifying the business and allocating finite resources to places it can generate the best results for the bank’s shareholders.
While having a presence in a large number of countries gives huge name recognition to Citigroup, it means operations are subjected to an array of local customs and laws that usually affect the operations of consumer banking.
The criminal investigation by the federal agencies in the U.S. of Banamex, its Mexican unit, underscores the difficulty that can take place to operate in over 100 countries and divide the responsibilities between its New York headquarters and all its banking centers domestically and internationally.
On Tuesday, Citigroup said a legacy unit of Banamex, which provided service in personal security, was to be disbanded, after it was uncovered by the bank that illegal activities including fraud of $15 million took place.
Citigroup is the third largest bank in the U.S. and said it would exit its consumer operations in six countries in Latin America, Egypt, Japan, Hungary, Guam and the Czech Republic. Citigroup said it was continuing to serve commercial clients in all those markets.
The cumulative revenue amongst those markets for the past 12 months was just over $1.6 billion and its net income was just $34 million with a return on assets of only 0.11%.
The announcement on Tuesday included a statement that an initial cost exists to close the businesses down. Citigroup announced its third quarter unusual expenses included an amount of $59 million related to its sale of its Spain and Greece consumer businesses.
In June, Citi agreed to sell its credit card and retail banking business to Banco Popular in Spain.
Adjusted profit for the recently ended third quarter increased to just over $3.67 billion equal to $1.15 per share, compared to $32.6 billion equal to $1.02 a share for the same period one year ago.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.