Citigroup (C) posted an increase in net income for the fourth quarter at $1.2 billion, compared to net income of $956 million from a year earlier.

Although Citi profits climbed more than 25%, there were fourth-quarter charges including $1.3 billion in legal fees as well as the previous announcement of multi-million in charges for a foreclosure-related settlement between regulators and banks, which paved uneven ground for the company.

"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," chief executive officer Michael Corbat at Citigroup.

The company’s allowance for loan losses was $25.5 billion at year end, or 3.9% of total loans, compared to 430.1 billion, or 4.7% of total loans from the previous year.

Corporate non-accrual loans decreased 20% to $2.3 billion from the previous year, while consumer non-accrual loans grew 17% to $9.2 billion from last year.

This predominately reflects the third quarter Office of the Comptroller of Currency and Federal Reserve guidance, regarding the treatment of mortgages when the borrower goes through Chapter 7 bankruptcy, adding $1.5 billion to consumer non-accrual loans.

Consumer loans that were 90-plus days delinquent, decreasing 17% compared to the prior year period to $7.7 billion, or 1.9% of consumer loans.

Global Consumer Banking revenues of $10.2 billion grew 4% from last year, as a result of volume growth across most businesses, partially benefiting from higher U.S. mortgage revenues.

North America GCB retail banking revenues grew 20% to $1.7 billion from last year, primarily reflecting higher mortgage revenues as a result of increased retail originations and wider margins.

Click on the chart to view retail banking key indicators from 2011 to 2012.


In December, Citi announced it would cut 11,000 jobs, reducing its work force to about 4% in an effort to cut costs. However, on the mortgage lending side, the bank is looking to expand its retail group partnership channel, which includes alliances with other companies and real estate agencies.

About 1,900 jobs will be cut in the institutional clients division, 6,200 positions will be removed from the bank’s consumer banking business and 2,600 jobs in the operations and technology group will be removed.

"These actions are logical next steps in Citi’s transformation," CEO Michael Corbat of Citi said in a statement. "While we are committed to – and our strategy continues to leverage – our unparalleled global network and footprint, we have identified areas and products where our scale does not provide for meaningful returns."