Citigroup announced today, Friday, that its fourth-quarter earnings fell as reserves increased in anticipation of deteriorating economic conditions, as well as lower investment banking revenue due to a significant decline in deal activity.
Shares of Citi fell about 3% in pre-market trading after fears of a possible recession prompted the bank to increase its reserves by $640 million in the fourth quarter, according to Reuters.
This compares to the bank releasing $1.37 billion from its reserves in 2021 when pandemic-related credit losses failed to materialize.
Citi’s investment banking revenue fell 58% amid a significant slowdown in M&A activity last year as companies avoided deals, high interest rates, the war in Ukraine and heightened economic uncertainty.
However, in the face of rising volatility, dealers have resorted to a reorganization of their portfolios, which helped boost Citi’s activity in the markets. The bank’s revenue jumped 6% to $18 billion.
Net income for the three months ended December 31 was $2.5 billion, or $1.16 per share, compared to $3.2 billion, or $1.46 per share, in the same period a year earlier.
