Citi CEO Jane Fraser speaks at the 2023 Milken Institute Global Conference in Beverly Hills, California, on May 1, 2023.
Mike Blake | Reuters
citi group warned investors Wednesday night that charges linked to the fall of the Argentine peso, as well as the bank's reorganization, were much higher than those disclosed by the company's chief financial officer just a few weeks ago.
The bank said its fourth-quarter results, to be released Friday morning, were hit by $880 million in peso currency translation losses and $780 million in restructuring charges tied to the corporate simplification project. from CEO Jane Fraser.
Those charges are significantly higher than the “a couple hundred million dollars” each that Chief Financial Officer Mark Mason told investors to expect at a Dec. 6 conference hosted by Goldman Sachs.
“They gave guidance just a month ago, and now it's several hundred million dollars higher for two categories,” veteran banking analyst Mike Mayo of Wells Fargo said in a phone interview. “If your problem is credibility with investors, then you shouldn't do this kind of thing.”
Fraser faces a key moment this week as Citigroup reports its fourth-quarter and full-year 2023 earnings amid restructuring efforts aimed at making the bank a more efficient and profitable company. Over the past two decades, Citigroup has been plagued by high expenses and eroded credibility after Fraser's predecessors failed to meet their goals. That left Citigroup as the lowest value among the six largest U.S. banks.
Beyond the two charges, Citigroup revealed Wednesday that it needed to build up $1.3 billion in reserves because of its exposure to Argentina and Russia, and that it would post a $1.7 billion expense for a special FDIC assessment tied to the bankruptcies. regional banking regulations of 2023.
In total, the charges are likely to result in a loss of $1 per share in the fourth quarter, according to Mayo. Despite his own skepticism that the bank can meet its goals, Mayo recommends Citigroup shares, saying they are so weakened that they can double in three years.
The bank's shares fell about 1% in after-hours trading Wednesday.
A Citigroup spokeswoman declined to comment on the bank's change in guidance, instead pointing to Mason's comments posted Wednesday night.
“While these items are significant to our 2023 results, we remain on track to meet 2023 spending guidance (excluding FDIC and divestitures) and all of our medium-term objectives,” Mason said. “The elements we revealed today do not change our strategy.”
