Citigroup Inc said it was pulling out of consumer banking in 11 markets, including Japan and Egypt, as the US bank with the biggest international business looks to cut persistently high costs.
The third-largest US bank, built with a series of acquisitions spanning back to the 1980s, has been trying to slim down since the financial crisis to be as profitable as rivals.
It has shed hundreds of billions of US dollars of bad assets.
Citigroup chief executive officer Michael Corbat told analysts that in shedding the poorly performing businesses the company is also taking a valuable step toward reducing complexity.
Citigroup chief financial officer John Gerspach said the bank first identified substandard businesses about a year-and-a-half ago and tried to fix them before concluding they had to go.
“Better late than never,” CLSA analyst Mike Mayo said.
Citigroup separately announced the results of a probe that also illustrates how hard it is to manage the bank: it found a new US$15 million fraud at its Mexican unit, Banamex, which has been roiled by a series of mishaps.
The bank is showing some signs of progress in streamlining itself.
On Tuesday, it posted stronger-than-expected third-quarter adjusted net income of US$3.67 billion, or US$1.15 per share, from US$3.26 billion, or US$1.02 per share, a year earlier.
Profit was boosted by better results from its portfolio of troubled assets left over from the financial crisis.
Its shares rose 3.1 percent to US$51.47.
Adjusted results exclude a tax benefit from last year and accounting adjustments linked to changes in the value of the company’s debt.
Analysts had expected earnings of US$1.12 per share, according to Thomson Reuters I/B/E/S.
However, the bank still has work to do.
Expenses at Citicorp, which houses the bank’s main businesses, rose 11 percent, while revenue rose 8 percent.
The increase in expenses came from money set aside to cover expected legal liabilities.
The bank has been trying to rein in its expenses for about a decade.
At a meeting with 300 Citigroup executives in February, Corbat stressed the need to focus on expenses and efficiency this year.
Shedding retail businesses in 11 markets might help — stripping out these units would have reduced operating expenses by US$1.34 billion over the last year, while reducing net income by only US$34 million.
The bank said it would exit Costa Rica, Czech Republic, Egypt, El Salvador, Guam, Guatemala, Hungary, Japan, Nicaragua, Panama and Peru, as well as the consumer finance business in Korea.
It is set to continue serving institutional clients in these markets.
Citigroup has previously flagged its reduced ambitions in Asia, where it faces tough competition in developed markets like Japan and South Korea from entrenched local players, and a rising challenge from regional rivals such as the Australia and New Zealand Banking Group and CIMB Securities Ltd.
In April, Citigroup said that it planned to close around a third of its branches in Korea, becoming the third global bank to trim its presence in the nation after Standard Chartered PLC and HSBC both pulled back.
Citigroup is screening bidders for its Japan consumer banking business, which includes Diners Club International Co, amid weak loan demand and falling interest margins in a market where the US-based lender has operated for over 100 years.
Four banks — Sumitomo Mitsui Trust Holdings Inc, Sumitomo Mitsui Financial Group Inc, Shinsei Bank Ltd and Mitsubishi UFJ Financial Group Inc — remain on the shortlist of potential buyers after the first round of bidding last month, people with knowledge of the matter said.
They said the second round of bidding was likely to take place next month.
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