Published: Tue, January 16, 2018
Money | By Armando Alvarado

Citi profit tops estimates; books $22 billion tax charge

Citi profit tops estimates; books $22 billion tax charge

However, adjusted earnings per share for the quarter beat analysts' estimates, while revenues were in line with expectations.

The law, signed by President Donald Trump last month, has made fourth-quarter earnings a messy ordeal for big banks. Citigroup's statement announcing quarterly results only called out the cash coming investors' way.

However, banks and other large US corporations expect to benefit greatly from lower taxes and other provisions in the new law over the long term.

Without the charge, the bank earned $1.28 a share for the quarter, above the $1.19 expected by analysts as polled by Thomson Reuters. The company said the tax law would lead to higher profit and increased returns in the future.

Citigroup said Tuesday its effective tax rate will probably fall to about 25 percent this year and potentially lower afterward. Analysts expected revenue of $17.22 billion.

In premarket trading, Citigroup shares were up 2.8 per cent at $79 - their highest point since December 18, 2008.

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The New York-based bank said it had a loss of $7.15 a share, compared with a profit of $3.57 billion, or $1.14 a share, in the same period a year ago.

The company said the tax charges will erase about $6 billion from a key measure of regulatory capital, CET1, but that it still expects to return at least $60 billion of capital to shareholders over three years.

Lagging competitors in growth and not earning its cost of capital, Citigroup's valuation has not kept up with rivals like JPMorgan Chase and Bank of America Corp. Adjusted earnings per share, which excluded the impact of the tax-related charge and an 8-cent benefit from other one-time items, were $1.20. (JPM) on Friday disclosed a loss of $143 million on a "margin loan to a single client" in its results, which was linked to troubles at Steinhoff International Holdings NV (SNH.JO), a South African company facing an accounting scandal. Citigroup wrote off $19 billion of these assets last quarter, and still has roughly $45 billion of these credits still sitting on its balance sheet.

U.S. President Donald Trump signed a $1.5 trillion tax overhaul bill into law December 22, 2017, cutting the corporate tax rate from 35 to 21 percent effective January 1, 2018.

Bank of America Corp, the second-biggest US lender, and investment banking house Goldman Sachs Group Inc are expected to report fourth-quarter results on Wednesday.

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