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(AOF) – Citigroup has unveiled results in decline in the fourth quarter. Net income fell 21% to $2.51 billion, or $1.16 per share. Excluding the impact of disposals, earnings per share amounted to $1.10. Citigroup recorded a cost of credit of $1.845 billion after increasing its provisions for bad debts by $640 million. The American bank had taken back 1.37 billion dollars of provisions in the fourth quarter of 2021, allowing its cost of risk to be negative up to 465 million dollars.
Group revenue rose 6% to $18 billion, benefiting from the 23% jump in interest income.
In detail, investment banking revenues fell 58% to $645 million due to the sharp slowdown in mergers & acquisitions activity. On the other hand, its market trades increased by 18% to 3.944 billion dollars.
The ever-watched Rates, Credit, Foreign Exchange and Commodities (FICC) brokerage saw its revenue jump 31% to $3.155 billion. Equity brokerage saw revenue fall 14% to $789 million.
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The negative effects of rising interest rates
The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects on average an 18% increase in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.
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