Citigroup, the fourth-largest US bank, reported one of the largest quarterly losses in its history because of a new tax law. The bank took a $22 billion one-time charge related to the new tax law.
But as Fred Katayama reports, its rising adjusted profit and revenue beat estimates. Citigroup lost $18 billion in the latest quarter, dragging down earnings – a $22 billion one-time charge stemming from the new tax law. This added up to all of the bank’s 2017 profits. The bank would have otherwise made money and the bank would have beaten analysts’ estimates of its quarterly results. While it would have made money without this new tax, Citigroup said that it expects to benefit from the new tax law in future quarters, as its tax rate fell from 30% to 25%.
Citigroup hopes that it will help to save the bank billions over the next few years. Additionally, they hope it will lead to higher profits and increased returns. However, Citibank may not benefit as much as other banks from the new tax law because much of its revenue comes from overseas customers, where the tax rates are lower. Additionally, JP Morgan Chase had a charge of $2.4 billion in the fourth quarter due to the new law. The stock has risen more than 30 percent over the past year, causing Ken Leon of CFRA Research to raise his profit expectations for the bank.
