Citigroup (C, Financial) had net income of $3.6 billion, diluted earnings per share of $1.14 and net revenues of $17 billion in fourth-quarter 2016, the company reported on Jan. 18.
While the company’s revenues slightly declined from fourth-quarter 2015, Citigroup’s net income and earnings outperformed prior-year quarter values. As the company produced strong earnings performance for the final three months of 2016, Citigroup increased its shareholder returns during the quarter.
Brief summary of earnings report
New York-based Citigroup produced solid results for the final quarter of 2016 including higher net income and earnings from the prior-year quarter. The company’s net income of $3.6 billion represents a 4% increase from fourth-quarter 2015 income while earnings per share and book value per share increased 8% and 7%.
CEO Michael Corbat praised the company’s “core business,” which began producing the expected and desired returns for the company’s investors. Citigroup returned $11 billion in shareholder capital and repurchased 79 million common shares during fourth-quarter 2016 and 196 million shares during full-year 2016. For 2016, the company’s end-of-year “Common Equity Tier 1 Capital” ratio of 12.5% outperformed the 2015 ratio by 4%, driven primarily by higher earnings and lower risk-weighted assets.
Segment performance overview
Citigroup operates in two segments: Citicorp and Citi Holdings. The former contains three subdivisions: Global Consumer Banking (GCB), Institutional Clients Group (ICG) and Corporate/Other.
Citicorp’s net income increased $700,000 during fourth-quarter 2016, a 25% increase from the prior-year quarter. Overall segment revenues increased 6%, with ICG revenues increasing 11%. The Corporate/Other subdivision underperformed during the quarter, losing $18 million due to the divestiture of Citi’s stake in China Guangfa Bank during third-quarter 2016.
Company has strong financial outlook
Citigroup currently has a financial strength rank of 6 and a profitability rank of 6, both suggesting a solid financial outlook for 2017. While the company’s return on equity underperforms 69% of global banks, Citigroup’s profit margins and return on assets are close to 10-year highs.
The company’s three-year EBITDA growth, three-year EPS growth and three-year dividend growth rates outperform more than 85% of competing global banks, suggesting that Citigroup has good short-term growth potential.
Disclosure: No position in Citigroup.
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