Citigroup anticipates $3.8 billion impact on Q4 earnings due to charges, reserves

Citigroup Q3 expectations: Citigroup is expected to report a fourth-quarter earnings setback of approximately $3.8 billion, as disclosed in a recent filing. 

The bank allocated $1.3 billion in reserves to mitigate risks beyond the US, specifically addressing currency exposure in Argentina and Russia. 

Image Credits: Shutterstock

Additionally, restructuring charges of $780 million, covering expenses such as employee severance pay, were incurred due to the bank's extensive organisational changes.

A charge of around $1.7 billion was recorded to replenish a Federal Deposit Insurance Corp fund that had been depleted following the collapses of Silicon Valley Bank and Signature Bank. 

Mark Mason, Citi's finance chief, stressed upon the transparency and credibility of the disclosure, stating that these items do not alter the bank's overarching strategy.

The reserve of $720 million for Argentina aims to safeguard against risks associated with economic trends, currency devaluation, and geopolitical uncertainties affecting Argentina's external debt service. 

Furthermore, Citi recorded approximately $880 million in lost revenues for Argentina in the fourth quarter following the peso's devaluation.

Citi increased reserves by $580 million, citing the extended political and economic instability in Russia. 

The bank also filed revised historical financial reports spanning March 2021 to September 2023, reflecting its reorganisation into five main businesses. 

These reports are intended to facilitate comparisons with the upcoming fourth-quarter results on Friday.

(With Reuters Inputs)