Citigroup (C +4.4%) is working on "industrial strength solutions" to come to terms with the Fed over the CCAR process, says CEO Michael Corbat, kicking off the earnings call. "We don't believe it's an issue with our business model or our strategy or our capital."
Cuts to continue in global consumer banking (pg. 11): Headcount of 158K at the end of 2012 is down to 149K today and expected to be less than 145K by this year's end. Branches stood at 4,008 at the end of 2012, 3,601 today, and are expected to be less than 3,525 at the end of 2014. Cards products totaling more than 800 in 2012, are down to 478 today and expected to fall to less than 440 at the end of the year. CFO John Gerspach says U.S. branches will be concentrated in major urban areas and a shift to online banking will be a focus.
Progress at Citi Holdings: Mortgages at $71B are down from $73B in Q4 and $86B one year ago. Loan loss reserves of $4.6B provide for 42 months of net credit loss coverage.
Disclosed today is another fraud discovery at a supplier to Mexican oil giant Pemex. The new fraud involves "similar issues" to the previous one when the bank had to cut Q4 net income by about $235M. "We have not adjusted our result for these additional credit costs.”