Citigroup (C) Issues Guidance Ahead of Q4 Results

The fourth quarter of 2023 pretax results for Citigroup (NYSE: C) were impacted by the following new discrete item:

● Citi recorded a $1.3 billion reserve build in the quarter related to increases in transfer risk associated with exposures outside the U.S., driven by safety and soundness considerations under U.S. banking law; more specifically, cross-border and cross-currency exposures in Argentina ($720 million), based on prevailing economic trends, currency devaluation and geopolitical risk that may impact Argentina’s ability to sustain external debt service, and in Russia ($580 million) for the prolonged political and economic instability. For additional information on transfer and other country risks, see “Country Risk–Argentina,” “Country Risk– Russia” and “Forward-Looking Statements” in Citi’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 (3Q23 Form 10-Q) and “Risk Factors—Other Risks” in Citi’s 2022 Annual Report on Form 10-K (2022 Form 10-K).

In addition, Citi’s fourth quarter of 2023 pretax results were impacted by the following items previously discussed by Citi, but which have now been finalized, and are being disclosed for transparency purposes:

● Citi recorded an approximate $1.7 billion charge to operating expenses in the quarter (previously estimated to be up to $1.5 billion in Citi’s 3Q23 Form 10-Q, and subsequently estimated to be approximately $1.65 billion during a recent Citi investor presentation) related to the Federal Deposit Insurance Corporation special assessment. For additional information, see page 6 of Citi’s 3Q23 Form 10-Q.

● Citi recorded an approximate $880 million translation loss in revenues in Argentina in the quarter, as a result of the recent devaluation of the Argentine peso. This decrease in revenues impacted Services, Markets and Banking (see discussion of these new operating segments in Item 7.01 below). Citi also generated net interest income of approximately $250 million on its net investments in Argentina in the fourth quarter of 2023, which is not included above. For additional information on Argentine-related devaluation risk, see “Country Risk–Argentina, and “Forward-Looking Statements” in Citi’s 3Q23 Form 10-Q and “Risk Factors—Other Risks” in Citi’s 2022 Form 10-K.

● Citi recorded approximately $780 million in restructuring charges in the quarter, largely driven by severance, non-cash asset impairments and other related charges, as part of Citi’s implementation of its organizational and management simplification initiatives as of year-end 2023. For additional information, see pages 3 and 5 of Citi’s 3Q23 Form 10-Q.

These items will be reflected in Citi’s fourth quarter and full-year 2023 earnings materials to be released on January 12, 2024.

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