Citigroup Inc. today reported net loss for the fourth quarter 2023 of $(1.8) billion, or $(1.16) per diluted share, on revenues of $17.4 billion.
This compares to net income of $2.5 billion, or $1.16 per diluted share, on revenues of $18.0 billion for the fourth quarter 2022.
As previously disclosed5, fourth quarter results included several notable items consisting of: expenses associated with the Federal Deposit Insurance Corporation (FDIC) special assessment of approximately $1.7 billion pre-tax; a reserve build of $1.3 billion associated with transfer risk in Russia and Argentina; the pre-tax revenue impact from the fourth quarter of 2023 devaluation of the Argentine peso of approximately $880 million6 and a restructuring charge of approximately $780 million related to actions taken as part of Citi's organizational simplification. The combination of these items negatively impacted diluted earnings per share by approximately $2.00. Excluding these items5, diluted earnings per share would have been $0.84 for the quarter.
Revenues decreased 3% from the prior-year period on a reported basis. Excluding divestiture-related impacts7 and the pre-tax impact of the Argentina devaluation, revenues increased 2%, driven by strength across Services, US Personal Banking (USPB) and Investment Banking, partially offset by lower revenues in Markets and Wealth and the revenue reduction from the closed exits and wind-downs.
Net loss of $(1.8) billion decreased from $2.5 billion of net income in the prior-year period, primarily driven by higher expenses, higher cost of credit and the lower revenues.
Earnings per share of $(1.16) decreased from $1.16 per diluted share in the prior-year period, reflecting the net loss.
For the full year 2023, Citigroup reported net income of $9.2 billion, on revenues of $78.5 billion, compared to net income of $14.8 billion on revenues of $75.3 billion for the full year 2022.
Percentage comparisons throughout this press release are calculated for the fourth quarter 2023 versus the fourth quarter 2022, unless otherwise specified.
Citi CEO Jane Fraser said, 'While the fourth quarter was very disappointing due to the impact of notable items, we made substantial progress simplifying Citi and executing our strategy in 2023. We restructured around five core, interconnected businesses to align our organization with our strategy and to provide greater transparency into their performance. Revenues ex-divestitures grew by 4%7 and we met our full-year expense guidance. We increased our CET1 ratio to 13.3%, grew our Tangible Book Value per share by 6% to $86.19, and returned $6 billion in capital to our shareholders in the form of common dividends and share buybacks.
'Services revenues were up 16% for the year driven by share gains and client wins. In Markets, our fourth quarter Fixed Income results were disappointing as we saw a significant slowdown in December. We had a decent quarter in Equities, particularly in Derivatives, and saw growth in Prime balances. Investment Banking revenue continued to be impacted by a weak wallet globally while activity picked up in the fourth quarter with revenues up 27%. While investment activity in Asia rebounded during the quarter, up 21%, Wealth revenues were down in 2023 and we fully recognize that this business isn't where it needs to be. USPB was a bright spot with every product up double-digits in the quarter and up 14% overall for the year.
'Given how far we are down the path of our simplification and divestures, 2024 will be a turning point as we'll be able to completely focus on the performance of our five businesses and our Transformation. We remain confident in our ability to adapt to evolving capital and macro environments to reach our medium-term targets and return capital to our shareholders, whilst continuing the investments needed for our Transformation,' Ms. Fraser concluded.
Citigroup
Citigroup revenues of $17.4 billion in the fourth quarter 2023 decreased 3% on a reported basis. Excluding divestiture-related impacts and the pre-tax impact of the Argentina devaluation, revenues increased 2%, driven by strength across Services, USPB and Investment Banking, partially offset by lower revenues in Markets and Wealth and the revenue reduction from the closed exits and wind-downs.
Citigroup operating expenses of $16.0 billion on a reported basis increased 23% in the fourth quarter 2023, which included the FDIC special assessment of $1.7 billion pre-tax and modest divestiture-related costs. Excluding the impact of the FDIC special assessment and the modest divestiture-related costs, expenses increased 10% to $14.2 billion, largely driven by the restructuring charge.
Citigroup cost of credit was approximately $3.5 billion in the fourth quarter 2023, compared to $1.8 billion in the prior-year period. In addition to the reserve build for transfer risk, quarterly cost of credit was driven by cards net credit losses, which are now at pre-Covid levels, as well as allowance for credit losses (ACL) builds for new card volumes.
Citigroup net loss of $(1.8) billion in the fourth quarter 2023, compared to net income of $2.5 billion in the prior-year period, driven by the higher expenses, the higher cost of credit and the lower revenues. Citigroup's effective tax rate was 14% in the current quarter versus 20% in the fourth quarter 2022, primarily driven by a different geographic mix of pre-tax earnings in the current quarter.
Citigroup's total allowance for credit losses was approximately $21.8 billion at quarter end, compared to $19.4 billion at the end of the prior-year period. Total allowance for credit losses on loans was approximately $18.1 billion at quarter end, compared to $17.0 billion at the end of the prior-year period, with a reserve-to-funded loans ratio of 2.66%, compared to 2.60% at the end of the prior-year period. Total non-accrual loans increased 31% from the prior-year period to $3.2 billion. Corporate non-accrual loans increased 68% to $1.9 billion. Consumer non-accrual loans were largely unchanged at $1.3 billion.
Citigroup's end-of-period loans were $689 billion at quarter end, up 5% versus the prior-year period, largely reflecting growth in cards in USPB.
Citigroup's end-of-period deposits were approximately $1.3 trillion at quarter end, down (4)% versus the prior-year period. The decline in deposits was largely due to a reduction in Services reflecting quantitative tightening, and a reduction in USPB and Wealth reflecting a shift of deposits to higher-yielding products.
Citigroup's book value per share of $98.71 and tangible book value per share of $86.19 at quarter end increased 5% and 6%, respectively, versus the prior-year period. The increases were largely driven by net income, common share repurchases, and beneficial movements in the accumulated other comprehensive income (AOCI) component of equity, partially offset by payment of common and preferred dividends. At quarter end, Citigroup's CET1 Capital ratio was 13.3% versus 13.6% in the prior quarter, driven by the net loss for the period, higher deferred tax assets, payment of common and preferred dividends, share repurchases, and higher risk-weighted assets, partially offset by a benefit from the accumulated other comprehensive income (AOCI). Citigroup's Supplementary Leverage ratio for the fourth quarter 2023 was 5.8% versus 6.0% in the prior quarter. During the quarter, Citigroup returned a total of $1.5 billion to common shareholders in the form of dividends and repurchases.
Services
Services revenues of $4.5 billion were up 6%, largely driven by higher net interest income across Treasury and Trade Solutions (TTS) and Securities Services, partially offset by lower non-interest revenues driven by the Argentina devaluation. Services non-interest revenues were up 20%, excluding the impact of the Argentina devaluation.
Treasury and Trade Solutions revenues of $3.4 billion increased 6%, driven by 13% growth in net interest income, partially offset by a 20% decrease in non-interest revenues, driven by the impact of the Argentina devaluation. The increase in net interest income was primarily driven by higher interest rates. The decline in non-interest revenues was partially offset by an increase in cross-border flows of 23%, outpacing global GDP growth, and an increase in U.S. Dollar clearing volumes of 5%.
Securities Services revenues increased 3%, driven by net interest income growth of 11%, partially offset by a 4% decline in non-interest revenue, largely reflecting the Argentina devaluation. Citi also continued to onboard assets under custody and administration, which increased 13%, or approximately $2.9 trillion.
Services operating expenses of $2.6 billion increased 9%, primarily driven by continued investments in technology, product innovation and client experience.
Services cost of credit was $646 million, compared to $(10) million in the prior-year period, driven by a reserve build of approximately $652 million, primarily associated with the transfer risk in Russia and Argentina.
Services net income of approximately $776 million decreased 43%, driven by the higher expenses and the higher cost of credit, partially offset by the higher revenues.
Certain statements in this release are 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. These statements are not guarantees of future results or occurrences. Actual results and capital and other financial condition may differ materially from those included in these statements due to a variety of factors. These factors include, among others: Citi's ability to achieve its objectives, including expense savings, from its transformation and strategic and other initiatives, which include the divestiture of Citi's consumer, small business and middle-market operations in Mexico and other exits and wind-downs, all of which involve significant execution uncertainty and complexity and will result in continued higher expenses and may result in certain losses or other negative financial or strategic impacts; a potential U.S. federal government shutdown and the resulting impacts; continued elevated interest rates and the impacts on macroeconomic conditions, customer and client behavior, as well as Citi's funding costs; potential recessions in the U.S., Europe and other countries; revisions to the Basel III rules, including the recently issued notice of proposed rulemaking, known as the Basel III Endgame, related to regulatory capital requirements; continued elevated levels of inflation and its impacts; potential increased regulatory requirements and costs, such as the FDIC's recently issued notice of proposed rulemaking for a special assessment to recover the uninsured deposit losses from recent bank failures; the various uncertainties and impacts related to or resulting from Russia's war in Ukraine and the precautionary statements included in this release. These factors also consist of those contained in Citigroup's filings with the U.S. Securities Exchange and Commission, including without limitation the 'Risk Factors' section of Citigroup's 2022 Form 10-K. Any forward-looking statements made by or on behalf of Citigroup speak only as to the date they are made, and Citi does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made.
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