New tax law hits Citigroup’s revenue
(15 January 2018 – USA) Citigroup recorded an US$18-billion (A$23 billion) quarterly loss as a result of charges related to a new US tax law, however, the US bank’s adjusted earnings surpassed analyst expectations.
The law, signed by President Trump last month, forces banks to take one-time hits on earnings held abroad and changes the treatment of deferred tax assets, both of which affect Citigroup in particular.
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.
Citigroup, the fourth-largest US lender, stands to gain less than peers because it already earns about half of its profits in lower-tax countries abroad. Even so, it expects its tax rate to fall to about 25 per cent this year from 30 per cent in 2017. That could save the bank billions of dollars over the next few years.
Citigroup’s fourth-quarter earnings were boosted by growth in consumer banking, especially in Asia and Mexico.
Its adjusted net income rose four percent to US$3.7 billion compared with estimates of US$1.19 per share.
Total revenue rose 1.4 percent to US$17.26 billion.
Citigroup's institutional business dropped one percent due to weakness in trading, a market-wide trend.
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