Revenue, expenses climb at Citigroup

NEW YORK — Fourth-quarter profit at Citigroup Inc. came in ahead of Wall Street expectations, but analysts and investors appeared concerned that the nation’s largest bank still had not gotten a handle on expenses.

Citigroup already has said it will cut spending on projects this year. Chief Executive Charles Prince said Friday while discussing the earnings report that further cuts could include consolidating administrative offices and merging branch operations.

The latest report indicated that although revenue was up a solid 15% in the fourth quarter, expenses rose 23%.

“It doesn’t make you comfortable,” said Amit Kumar, a financial industry analyst with First American Funds in Minneapolis. “You have to wonder how long that can continue.”

The New York-based bank said it earned $5.13 billion, or $1.03 a share, in the October-to-December period, down 26% from $6.93 billion, or $1.37, a year earlier. The year-earlier figure included a $2-billion gain on the sale of Citi’s asset management business to Legg Mason Inc.; excluding the gain, earnings in the fourth quarter of 2005 were 98 cents a share.

The latest quarter’s results included $415 million in charges stemming from cutbacks in the bank’s consumer finance operations in Japan.

Quarterly revenue was a record $23.83 billion, up from $20.78 billion a year earlier.

Analysts surveyed by Thomson Financial had expected earnings of $1 a share on revenue of $22.45 billion.

Like other banks, Citigroup faced some deterioration in credit quality. It raised provisions for losses to $2.3 billion in the fourth quarter from $2.1 billion in the third period.

For the full year, profit totaled $21.54 billion, or $4.31 a share, down 12% from $24.6 billion, or $4.75, in 2005. Revenue was $89.6 billion for 2006, up from $83.6 billion in 2005.

Citigroup shares rose 11 cents to $54.50.