Citi reports profit jump thanks to lower legal bills

Citigroup

Citigroup has reported a big leap in quarterly profit as a sharp drop in legal costs and gains from the disposal of unwanted assets more than made up for weak revenue in its core business.

The bank’s legal and repositioning costs fell to $724 million in the fourth quarter, down from $3.55 billion a year earlier.

CEO Michael Corbat has promised to shrink Citi to a more profitable core by focusing on more promising markets and return capital to shareholders.

Adjusted revenue from its main Citicorp business declined 2%, but profit rose as expenses fell 24% in the unit.

“We have undoubtedly become a simpler, smaller, safer and stronger institution,” Corbat said in a statement. “We have sharpened our focus on target clients, shedding over 20 consumer and institutional businesses in the process.”

Citi shares fell 3.6% to $43.75 in premarket trading, far below the stock’s tangible book value of $60.61 as of December end.

Citi’s net profit rose to $3.34 billion, or $1.02 per share, in the quarter ended December 31 from $344 million, or 6 cents per share, the year prior.

Excluding items, the bank earned $1.06 per share, beating the average analyst estimate of $1.05.

Citi’s adjusted revenue was up 4.2% to $18.64 billion and total expenses fell 22.8% to $11.13 billion.

Shares at Citi are down 12% of the year.