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Citigroup

Citigroup posts $18.3B fourth-quarter loss, its earnings erased by federal tax overhaul

Kevin McCoy
USA TODAY

Citigroup reported an $18.3 billion loss Tuesday, becoming the second major U.S. bank to have its earnings hit by the federal tax overhaul.

A customer leaves a CitiBank branch office on April 18, 2011, in San Francisco, Calif.

The net loss, equivalent to $7.15 per share, stemmed from a one-time non-cash charge of $22 billion, or $8.43 per share, related to the Tax Cuts and Jobs Act finalized by Congress and the Trump administration in December.

The charge was expected, though its record size was unknown until the New York City-based bank released its fourth-quarter earnings results before U.S. financial markets opened. JPMorgan similarly reported a 37% drop in fourth-quarter earnings on Friday because of a $2.4 billion one-time charge tied to the tax overhaul.

The tax law is expected to benefit U.S. banks in the long run because it cuts the top federal tax rate for corporations from 35% to 21%.

However, accounting procedures require Citigroup and other banks to write down previous tax credits and deductions that they have used to lessen future federal tax payments.

More:Citi to boost pay for women and minorities, closing gaps in the U.S., UK, and Germany

In all, $19 billion of the massive charge was related to Citigroup's deferred tax assets, the largest amassed by any U.S. bank. The additional $3 billion related to the deemed repatriation of unremitted earnings of Citigroup's foreign subsidiaries, the bank said.

Excluding the tax law write-down, Citibank would have earned $1.28 per share on net income of $3.7 billion

Citigroup reported nearly $17.26 billion in revenue for the fourth quarter, topping the $17.23 billion consensus forecast of Wall Street analysts surveyed by S&P Global Market Intelligence.

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Citigroup shares closed nearly 0.4% higher at $77.11 Tuesday.

CEO Michael Corbat said the financial impact of the tax overhaul on Citigroup's regulatory capital was "much less significant." Subject to regulatory approval, Corbat said in a written statement that Citigroup remained committed to returning at least $60 billion in capital to investors during the current and succeeding two cycles of the Federal Reserve's bank stress tests.

"Tax reform not only leads to higher net income and increased returns, but also serves to strengthen our capital generation capabilities going forward," said Corbat.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc

 

 

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