Citigroup Inc (NYSE:C) saw its shares rise in premarket trade after its fourth quarter profit tops Wall Street estimates and despite seeing earnings wiped out by a US$22bn charge related to the new US tax law.
The fourth-largest US bank by assets, said that it booked in a loss of US$18.3bn in the fourth quarter, mainly due to writing down deferred-tax assets.
READ: Citigroup's finance chief sees profits hit of about US$20bn from US tax reform plans
Without the tax charge, the bank would have made US$1.28 per share, beating the US$1.19 consensus penciled in by analysts, versus the US$3.57bn or US$1.14 per share recorded a year ago.
Revenue rose to US$17.26bn from US$17.01bn a year ago.
The bank had already warned the market last month, saying it expected to take a hit of about US$20bn to profits in the fourth quarter.
Tax changes to create a windfall ... longer term
Citigroup however said return on equity came in at 6.5% and that it still expects to return US$60bn to shareholders through 2020.
Trading revenue, a profit engine for many of the biggest U.S. banks, fell 19% to US$2.9bn from US$3.6bn a year ago, in line with estimates given by last month by the bank’s chief financial officer John Gerspach.
Longer term, the tax changes are expected to create a windfall for Citigroup and other banks by slashing the overall corporate tax rate to 21% from 35%.
In premarket trade, its shares were up 2.13% at US$78.48.