President Trump Talks New Tax Bill At White House Press Briefing Time
Citigroup reported an $18.3 billion loss Tuesday, becoming the second major U.S. bank to have its earnings hit by the federal tax overhaul.
The net loss, equivalent to $7.15 per share, stemmed from a one-time non-cash charge of $22 billion, or $8.43 per share, related to the Tax Cuts and Jobs Act finalized by Congress and the Trump administration in December.
The charge was expected, though its record size was unknown until the New York City-based bank released its fourth-quarter earnings results before U.S. financial markets opened. JPMorgan similarly reported a 37% drop in fourth-quarter earnings on Friday because of a $2.4 billion one-time charge tied to the tax overhaul.
The tax law is expected to benefit U.S. banks in the long run because it cuts the top federal tax rate for corporations from 35% to 21%.
However, accounting procedures require Citigroup and other banks to write down previous tax credits and deductions that they have used to lessen future federal tax payments.
More: Citi to boost pay for women and minorities, closing gaps in the U.S., UK, and Germany
In all, $19 billion of the massive charge was related to Citigroup's deferred tax assets, the largest amassed by any U.S. bank. The additional $3 billion related to the deemed repatriation of unremitted earnings of Citigroup's foreign subsidiaries, the bank said.
Excluding the tax law writedown, Citibank would have earned $1.28 per share on net income of $3.7 billion
Citigroup reported nearly $17.26 billion in revenue for the fourth quarter, topping the $17.23 billion consensus forecast of Wall Street analysts surveyed by S&P Global Market Intelligence.
J.P. Morgan profit dinged by tax charge, but strong loan growth shows strong consumer
Wells Fargo earnings: Scandal impact lingers amid boost from federal tax law overhaul
Citigroup shares were up 1.6% at $78.07 in morning trading.
CEO Michael Corbat said the financial impact of the tax overhaul on Citigroup's regulatory capital was "much less significant." Subject to regulatory approval, Chorbat said in a written statement that Citigroup remains committed to returning at least $60 billion in capital to investors during the current and succeeding two cycles of the Federal Reserve's bank stress tests.
"Tax reform not only leads to higher net income and increased returns, but also serves to strengthen our capital generation capabilities going forward," said Corbat.
Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc