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Legal expenses drag down Citigroup 4Q earnings

Published on NewsOK Modified: January 17, 2013 at 5:15 pm •  Published: January 17, 2013
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Revenue rose to $18.7 billion, up 8 percent from the same period a year earlier and slightly below forecasts.

Citi's net interest revenue, which includes interest collected on loans and interest paid out to depositors, edged up to $12.15 billion from $12.08 billion a year earlier. Banks' interest income has been squeezed by ultra-low interest rates and competition for depositors. They are increasingly reliant on fee-based services like investment management and advisory offerings.

The bank's non-interest revenue, which includes fees and other categories, rose 18 percent, to $6.02 billion from $5.09 billion.

Citigroup reported $1.3 billion in legal and related expenses in the quarter.

A big part of the legal expense was a settlement with federal regulators announced last week related to Citigroup's foreclosure practices. The bank allegedly took part in industry-wide practices that caused people to be foreclosed on illegally. It took a charge of $305 million in the quarter to cover its agreement with the Office of the Comptroller of the Currency and the Federal Reserve.

The higher legal expenses also included various expected costs related to its U.S. consumer business, which bank officials would not specify.

Citigroup also released less money from its rainy-day fund to cover souring loans — $86 million, compared with $1.47 billion a year earlier.

In a departure from an industry-wide trend, Citi said it originated fewer mortgages than in the year-ago quarter: $16.8 billion, down from $21.1 billion. Mortgage originations increased at the nation's other top banks, including JPMorgan Chase, Wells Fargo and Bank of America.

Citi's stock fell $1.24, or 2.9 percent, to close at $41.24 Thursday.

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Daniel Wagner can be reached at www.twitter.com/wagnerreports .