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Citigroup Earnings Miss Analysts' Estimates on Litigation
January 18, 2013
Citigroup reported a profit increase that was less than analysts estimated as litigation costs rose and benefits from releasing loan-loss reserves declined.
Citigroup reported a profit increase that was less than analysts estimated as litigation costs rose and benefits from releasing loan-loss reserves declined. Net income climbed 25 percent to $1.2 billion in the fourth quarter from $956 million a year earlier. CEO Michael Corbat took over in October and last month announced plans to eliminate about 11,000 employees and pull back from some emerging markets, undoing part of the expansion strategy of his predecessor, Vikram Pandit. Litigation costs included $305 million from a settlement between U.S. banks and federal regulators, who were probing claims that lenders improperly seized homes. The bank's fourth-quarter report also included an unexpected $500 million reserve for legal and regulatory issues "related to U.S. consumer businesses," in the words of CFO John Gerspach. It appears to be related to the marketing of payment protection add-on products and related practices scrutinized by the Consumer Financial Protection Bureau.
Author: Bloomberg (01/17/13)
Source: "Citigroup Earnings Miss Analysts' Estimates on Litigation"