Citi’s profits plummet due to slowdowns and layoffs

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Citigroup’s profit fell by more than a third in the fourth quarter, hit by slowing corporate spending, a dearth of deals and a costly round of layoffs.

The New York-based bank reported net income of $2.9 billion, down from $4.5 billion in the same period last year. Revenue fell 1 percent to $19.4 billion in a quarter marked by growing fears of a recession in the United States.

Revenue at Citi’s large cash management and payment processing unit, which serves businesses, rose just 15 percent, less than half the 32 percent growth in the same period last year.

Like its competitors, Citi hasn’t been able to escape a sharp slowdown in deal-making. Corporate and investment banking revenue plunged 44 percent in the quarter, while fees from its markets business — trading stocks and bonds on behalf of clients — fell 13 percent.

Weaknesses in many of its businesses led the bank to announce plans last month to cut up to 5,000 employees. During the quarter, Citi’s expenses increased by more than $1 billion, mostly related to layoffs.

“Amid a challenging macroeconomic backdrop, we have continued to see the benefits of our diversified business model and strong balance sheet,” Citi CEO Jane Fraser said on Friday. In the banking sector, the long-awaited recovery in investment banking has yet to materialize, making for a disappointing quarter.

However, the still resilient US consumer has proven to be a bright spot for Citi. Revenue from Citi’s retail credit card business rose 27 percent in the period, helping the bank’s overall profit beat Wall Street expectations.

As the Federal Reserve signals its intent to continue raising interest rates to lower inflation, Citi expects that more of its loans will go bad. Its provisions for loan losses in the quarter rose nearly 40 percent to $1.8 billion. Total lending was little changed this quarter compared to last year.

Deposits came in almost unchanged from the previous quarter. Analysts have warned that banks, even large ones, could see deposit outflows this quarter as consumers seek higher-yielding investments.

Citi is still struggling to regain its footing a decade and a half after the financial crisis. Fraser, who took over in 2021, has led the bank through a restructuring, pulling Citi out of the underperforming business and closing retail branch networks around the world in an effort to cut costs.