Citi falls behind rivals as profits dip on legal and layoff costs

 
Tim Wallace
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CITI’S profits dropped sharply on the year as legal bills and layoff costs took a major chunk out of its rising revenues, the bank said yesterday.

In contrast with JP Morgan and Goldman Sachs’ healthy figures, Citi’s income dropped 32 per cent to $7.54bn for 2012 as a whole.

Profits increased in the fourth quarter, rising 25 per cent on the same period of 2011 to $1.2bn.

But that improvement was hit hard by a $2.32bn bill from legal actions and layoff payments.

Headcount fell three per cent on the year to 259,000, which should help keep a lid on costs in the longer term.

“Our bottom line earnings reflect an environment that remains challenging – with businesses working through issues like spread compression and regulatory changes – as well as the costs of putting legacy issues behind us,” said new chief executive Michael Corbat. He added that progress had been made in some areas, with Citi’s Basel III tier one common ratio rising to 8.7 per cent, its target for the year.