Citigroup profit hit by more than $2bn in charges

Citigroup posted $2.32bn of charges for layoffs and lawsuits in the first financial report under its new chief executive, Michael Corbat, who cautioned that the bank needs more time to deal with the problems it faces.
Even with the charges, Citi yesterday reported a higher fourth-quarter profit as trading revenue rebounded. But the result was well below Wall Street expectations, and the company’s shares fell 3.4% in early trading. Corbat, who took the reins in mid-October after predecessor Vikram Pandit was ousted, said in a statement that Citi’s various businesses were combating competitive and regulatory problems, as well as issues dating to the financial crisis that continue to plague the bank and its peers.
Fourth-quarter net income was $1.2bn, or 38¢ a share, compared with $956mn, or 31¢ a share, in same quarter of 2011.
Revenue from fixed income markets increased 58%, driving Citi’s Securities and Banking segment back to profitability. Companywide revenue, adjusted for certain items, increased 8%, while operating expenses were unchanged.
Results were reduced by new legal costs of $1.29bn, or 27¢ a share, and a previously announced corporate restructuring charge of $1.03bn, or 21¢ a share.
On a conference call, Citigroup chief financial officer John Gerspach said $500mn of the new legal costs came from what he called a variety of issues in the ongoing US consumer banking business.
Excluding the many one-time items, Citi said it earned 69¢ per share. On that basis, analysts polled by Thomson Reuters I/B/E/S on average expected 96¢ per share.

Bank of America
Bank of America Corp’s fourth-quarter profit dropped after it took some $5bn of mortgage-related charges, but the second-largest US bank showed signs that it was moving past its problems as it shrank the group that deals with its troubled home loans.
The Charlotte, North Carolina-based bank also made more home loans during the quarter, with its mortgage volume rising 42% from the fourth quarter of 2011. That lending helped the second-largest US bank earn $732mn, or 3¢ a share in the quarter, compared with a profit of $2bn, or 15¢ per share, in the same period in 2011.
Bank of America said it began slashing employees in its mortgage servicing unit, which helps borrowers behind on their payments, and said it would cut more jobs as delinquencies decreased. The mortgage servicing unit’s total employees fell by 3,000, or 7%, from the third quarter, and the bank also shed 6,000 - or 35% - of its contractors.
Bank of America said on January 7 its fourth-quarter results would include a litany of one-time items, including more than $5bn in mortgage-related charges, a $1.3bn tax benefit and a $700mn charge related to the value of its debt.
Even with those charges, results beat analysts’ average expectations of 2¢ a share, according to Thomson Reuters I/B/E/S.

BlackRock
BlackRock Inc, the world’s largest money manager, said yesterday its fourth-quarter profit rose 24%, bolstered by increased investor confidence in global stock markets.
New York-based BlackRock benefited doubly from strong global equity markets. The MSCI All-Country World Index gained 2.5% in the fourth quarter and 13.4% over the past year, increasing the value of BlackRock’s asset base to a record $3.8tn, and encouraging investors to put more money to work in higher-fee stock funds.
Investors poured a total of $47bn into BlackRock’s long-term funds, including $31bn into stocks, and $14bn into money market funds and short-term products. Net income totalled $690mn, or $3.93 per share, in the fourth quarter, compared with $555mn, or $3.05 per share, a year earlier.

UnitedHealth
UnitedHealth Group Inc, the largest US health insurer, said yesterday it kept fourth-quarter costs under control and increased revenue by more than 11%, helping earnings per share to rise.
The company, which provides health care benefits through both employer and government-paid insurance plans and serves individuals and military members, also backed its forecast for 2013 revenue growth of at least 11% and said earnings would be in a range of slightly down to up 4%.
Fourth-quarter profit rose to $1.20 from $1.17 per share a year earlier, as outstanding shares fell. Net earnings were down 1% to $1.24bn from $1.25bn a year earlier.
Revenue rose to $28.8bn from $25.9bn.
Analysts expected fourth-quarter earnings of $1.19 per share and sales of $28.2bn. For 2013, UnitedHealth forecast revenue of $123bn to $124bn, up from $110.6bn in 2012. It sees earnings per share rising to a range of $5.25 to $5.50, from $5.28 in 2012.

ASML
Dutch company ASML which supplies computer chip-making systems and is a global high-tech bellwether, posted yesterday a drop in sales and net profit for 2012, saying it expected a similar outlook for this year.
But despite profit dipping to €1.1bn ($1.52bn), down 16.25%, and sales down 21.88% to 4.7bn year-on-year, ASML said 2012 was “our second-best ever” after 2011.
“The 2012 fourth quarter and full year profit came in as expected,” ASML chief executive Eric Meurice added in a statement, issued from the group’s headquarters in Veldhoven in southern Netherlands.
Fourth quarter net profit totalled €298mn, some 4.5% higher than predicted by analysts polled by Dow Jones Newswires, boosted by lower than expected provisions in tax benefit audits.

Gazprom
Top Russian gas producer Gazprom reported negative free cash flow in the third quarter, increasing analysts’ concerns about its heavy spending and long-term prospects, even while it increased revenue and doubled net income.
Gazprom, which supplies a quarter of Europe’s gas, said yesterday it had raised capital spending by around 10% from the previous quarter to 376.4bn roubles ($12.4bn) in the July-September quarter.
Its January-September operating cash flow fell almost 8% to 983bn roubles.
Gazprom plans to pump as much as 115bn cubic metres (bcm) of gas from the field by 2017 and 140 bcm in 2018, up from 46 bcm expected this year. It would send most of that gas via pipelines to Europe.
“Gazprom even may borrow money to pay dividends,” Vakhrameyev said, adding that the company aims to pay at least 25% of its income as dividends, or as much as $7bn for the year. Its July-September 2012 net profit attributable to shareholders rose to 305.1bn roubles from 152bn in the year-earlier period, above the 287bn forecast in a Reuters poll of analysts.