Citigroup reported lower earnings from its wealth unit in the first quarter compared to a year earlier, but revenue is on the mend after the megabank took significant losses in the fourth quarter due to its massive restructuring.
Wealth net income of $150 million in the first quarter was down 6% year over year, largely due to lower revenues and higher expenses, Citi said in its earnings release on April 12. Though revenues were down, net income in Citi's wealth group was up from $5 million reported in the fourth quarter as the company was going through a "simplification" across its global operation, spearheaded by CEO Jane Fraser.
"Markets bounced back from a good client activity in Equities and Spread Products. The rebound in Banking gained speed where near-record levels of investment-grade debt issuance helped increase revenues by 49%," Fraser said in the earnings release. "In Wealth, we grew fees and gathered more than an estimated $22 billion of net new assets over the past 12 months."
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Overall, Citigroup reported first quarter net income of $3.4 billion, or $1.58 per diluted share, a significant uptick from a loss of $1.8 billion in the fourth quarter 2023 while the company was going through a restructuring that included laying off roughly 7,000 employees and exiting its consumer business in 14 foreign countries.
"Last month marked the end to the organizational simplification we announced in September. The result is a cleaner, simpler management structure that fully aligns to and facilitates our strategy," Fraser said in the release. "It will also help us execute our transformation, progress as we retire multiple legacy platforms, streamline end-to-end processes and strengthen our risk and control environment. This is necessary to both meet the expectations of our regulators and also to serve our clients more effectively."
Citigroup is still going through a much larger restructuring through 2026. The company's Chief Financial Officer Mark Mason said on an earnings call with reporters that they are on track to reduce an overall headcount of 20,000 by 2026, and they've exited nine of those 14 countries.
As for wealth, Mason said they are laser-focused on building growth through their existing client base and fee-based investments.
"We're going to get after that as rapidly as we can, and we're starting to see good signs of that," he said, noting Citi will also look to acquire new clients. The "primary focus is how do we do more with the clients we already have on the platform and with our bankers."
