(Reuters) – Citigroup Inc reported a fall in fourth-quarter profit on Friday, as the bank hiked provisions to brace for a worsening economy and investment banking revenue declined due to a sharp drop in dealmaking activity.
Merger and acquisition activity slowed dramatically last year as companies shunned deals amid higher interest rates, the war in Ukraine and growing economic uncertainties.
The U.S. Federal Reserve last year raised its interest rate by 425 basis points from the near-zero level to tame inflation, raising fears of an economic downturn, and thus, forcing many firms to forecast slower growth in revenue and profit.
Fears of a potential recession prompted Citi to add $640 million to its reserves in the fourth quarter. That compares with a release of $1.37 billion from its reserves in 2021 when pandemic-related loan losses failed to materialize.
Net profit came in at $2.5 billion, or $1.16 per share, for the three months ended Dec. 31, compared with $3.2 billion, or $1.46 a share, a year earlier.
(Reporting by Mehnaz Yasmin in Bengaluru and Lananh Nguyen in New York; Editing by Shinjini Ganguli and Subhranshu Sahu)
