NEW YORK: Citigroup Inc’s earnings took a hit in the fourth quarter of 2002 because of a costly settlement with federal and state regulators, but the financial services giant has still managed to post record profits for the year.
For the three months ended Dec 31, 2002, Citigroup reported a net income US$2.43bil, down 37% from US$3.88bil a year earlier.
Excluding special items – a restructuring charge and insurance gain – fourth-quarter earnings were US$2.44bil, compared with adjusted earnings of US$3.6bil in the final quarter of 2001.
The earnings for the quarter were reduced by a previously announced US$1.3bil after-tax charge to cover the cost of a settlement that Citigroup and other banks and brokerages reached with regulators over allegations of biased stock analysis.
Some of the funds will also go towards covering related shareholder lawsuits and fallout from the Enron Corp scandal.
Citigroup chairman and chief executive Sanford Weill said in a statement that he was pleased with the company’s results.
“During 2002, our company faced several significant challenges, continued weakness in global markets, record bankruptcies in the developed world, political and economic upheaval in a number of countries in which we operate, and intense scrutiny of its business practices,” he said.
“That we delivered record results to our shareholders during this period ... is a testament to the strength of Citigroup, the power of our business model and the value of recurring and predictable earnings.”
He said reforms adopted by Citigroup “only serve to strengthen our company” and predicted the company would “deliver double-digit income growth and industry-leading returns for our shareholders in 2003.”
Earnings were boosted by strong performance in the company’s retail operations, which reported operating income of US$2.37bil for the fourth quarter, up 26% from a year earlier.
However, earnings were down in the global corporate and investment banking division, in part because of the settlement with regulators. Operating income fell 19% to US$153mil in the private client services unit but was up 5% to US$439mil in global investment management.
Citigroup said its reserves for loan losses were US$11.67bil, including US$452mil related to its acquisition of Golden State Bancorp. The purchase added 352 branches and US$25bil in deposits to Citigroup’s retail operations, mainly in California and Nevada.
Net income for the year was US$15.28bil, up from US$14.13bil in 2001. – AP
Did you find this article insightful?