Citi Losses Mount; Smith Barney Still Truckin’

Citigroup announced another whopper of a write-down in the fourth quarter; full-year results were dismal. That said, Global Wealth Management, which includes Smith Barney, was a bright spot.

Citigroup announced another whopper of a write-down in the fourth quarter; full-year results were dismal. That said, Global Wealth Management, which includes Smith Barney, was a bright spot.

“Our financial results this quarter are clearly unacceptable,” said new Citi Chief, Vikram Pandit, in the earnings call. Significant write-downs, losses in the firm’s sub-prime portfolios, and a large increase in credit costs in the U.S. consumer-loan portfolio were primarily to blame, he said. Citigroup stock is down 44 percent from January 16 of last year.

Citigroup reported fourth-quarter revenue of $7.2 billion, a 70-percent decline from the fourth quarter of 2006, and a net loss of $9.83 billion ($1.99 per share) in the quarter. The loss includes an $18.1-billion write-down on sub-prime related exposures, and a $4.1-billion increase in credit costs in the U.S. consumer-loan unit, “primarily related to higher current and estimated losses on consumer loans,” according to the earnings release. Full-year revenue was $81.7 billion, down 9 percent from 2006; full year-net income was $3.6 billion, down 83 percent from the $21.5 billion it netted in 2006.

Amid the ugliness, record revenues and net income were achieved in Citi’s International Consumer, Transaction Services and Global Wealth Management divisions. Smith Barney, which accounts for the majority of the revenue in Global Wealth Management, had net revenue in the fourth quarter of $2.8 billion, up 27 percent from the same time last year, and net income of $327 million, a 7-percent increase from the same time last year. For the year, Smith Barney’s net revenue was $10.5 billion, up 29 percent from $8.2 billion in 2006; net income for the year was $1.4 billion, up 34 percent from last year. The number of financial advisors at year end was 14,858, an increase of 13 percent from the same time last year. Net new client assets were $12 billion in 2007, up from $9 billion in 2006, while total client assets increased to $1.5 trillion in 2007, up 26 percent from 2006. In addition, 28 percent of client assets are now in fee-based products, up 30 percent from the end of last year.

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