Citi 4Q profit misses forecasts
New York » Citigroup's fourth-quarter profit fell short of analysts' expectations as its bond and mortgage businesses weakened.
The bank said Thursday it earned $2.60 billion, after stripping out the effects of an accounting charge. Per share, that amounted to 82 cents, falling short of the 95 cents that analysts expected.
Citi's stock fell nearly 4 percent in late morning trading.
Revenue, excluding adjustments, slipped 2 percent to $17.9 billion, short of the $18.2 billion Wall Street predicted.
"Although we didn't finish the year as strongly as we would have liked, we made substantial progress toward our key priorities in 2013," said Michael Corbat, Citigroup's CEO said in a statement.
The bank logged its most profitable year since 2006, before the financial crisis.
SLOWER MORTGAGE BUSINESS: Like JPMorgan Chase and Wells Fargo and Bank of America, Citi saw its mortgage business decline as refinancing slowed. Revenue at the bank's consumer division fell 5 percent to $9.47 billion. Over the summer, mortgage rates started to rise, stopping many consumers from refinancing their home loans.
"What we want to do is to focus the mortgage business on serving our retail business clients," said John Gerspach, Citi's Chief Financial Officer. "We're going to be smaller than some of the other competitors."
BOND DRAG: Revenue at Citi's bond business also slumped, dropping 15 percent to $2.33 billion. Much of the decline was due to a drop in demand for the bank's structured credit products, Gerspach said.
BRIGHT SPOTS: Citi's operating costs fell 6 percent to $11.9 billion in the period. Revenues at Citi's investment banking unit also improved, driven by more mergers and acquisition business. Its equity business also improved.
STOCK REACTION: Citi's stock price fell $2.09, or 3.8 percent, to $52.90 in late morning trading, paring the stock's gains for the year to 1.5 percent.