Citi’s results continued to bear the impression of Jane Fraser’s restructuring plans, as profit fell sharply compared to the year before, but exceeded analyst expectations.
Profit slumped in the first quarter, falling to $3.4bn from $4.6bn in the same period last year. However, this was still comfortably ahead of the $2.3bn expected by analysts.
The fall in profit was driven by higher expenses tied to the overhaul and lower revenue, which was down two per cent year-on-year. Citi’s trading division was the weakest performer in the quarter.
Expenses were up around seven per cent to $14bn, a large part of which was a result of the short term costs of Fraser’s restructuring plan. Citi’s results noted severance costs from the bank’s exit from Mexico and Asia.
Fraser announced the restructuring last September, confirming that a layer of leadership would be removed to give her more direct control over the business. In its investor presentation, the bank said it expects a headcount reduction of 7,000 helping to generate annualised savings of $1.5bn.
In her statement today, Fraser said: “Last year marked the end to the organizational simplification we announced in September. The result is a cleaner, simpler management structure that fully aligns to and facilitates our strategy.
“It will also help us execute our Transformation, progress as we retire multiple legacy platforms, streamline end-to-end processes, and strengthen our risk and control environment. This is necessary to both meet the expectations of our regulators and also to serve our clients more effectively,” she continued.
Citi’s cost of credit was also up significantly compared to last year, rising to $2.4bn from $2bn previously. This was primarily driven by credit losses on its cards business.
Last year’s regional banking crisis continued to impact Citi, with the lender having to set aside $253m to restore a government insurance scheme which was depleted in the wake of the crisis.