Two large banks reported very different results for its mortgage sectors in their Q4 earnings statements released on Wednesday.
For U.S. Bancorp, the mortgage business is on the rise, reporting a 13.7 percent increase in mortgage banking revenue from $211 million in 2015 up to $240 million in 2016. Average residential loans for U.S. Bancorp in Q4 totaled $56.71 billion, up from $52.97 billion for the year-earlier quarter.
Overall, the bank finished 2016 with an all-time high net income of $5.88 billion for the full year ($1.47 billion for Q4).
“U.S. Bancorp delivered an outstanding performance in 2016 with record net income, EPS, and revenue,” U.S. Bancorp Chairman and CEO Richard K. Davis said. “In a challenging year where the economic environment was often unpredictable, we delivered industry-leading returns, we made important investments in our long-term growth strategy, and we returned 79 percent of our earnings to shareholders through dividends and share buybacks.”
Things did not go so well for Citigroup’s mortgage business in the fourth quarter, however. While the mortgage portfolios of most large U.S. banks were up in Q4, the portfolio for Citigroup was down. The bank's loans were $624 billion, up 1 percent from the prior year, though it reported “continued reductions in the North America mortgage portfolio.”
Citigroup overall reported $3.6 billion in net income in Q4, primarily driven by the lower operating expenses and cost of credit, and revenues of $17 billion. Those revenues represent a 9 percent decrease, driven by the absence of net gains on asset sales in Citi Holdings. Citigroup's operating expenses decreased 9 percent to $10.1 billion.
Citicorp, within Citigroup, reported net income of $3.5 billion, up 25 percent from Q4 of 2015. Citicorp revenues were $16.4 billion, up 6 percent. Citi Holdings revenues were way down from last year‒‒$657 million, a 79 percent decrease. The bank said the drop off mainly reflects the absence of net gains from asset sales.
Citi Holdings assets were $54 billion, down 33 percent from a year ago and down 11 percent from Q3. As of Jan. 18, Citigroup had signed agreements to reduce Citi Holdings assets by an additional $9 billion. At its peak, Citi Holdings had more than $800 billion in assets
Citi Holdings net income was $87 million, compared to $667 million in the prior year period, reflecting the lower revenue, partially offset by lower operating expenses and lower cost of credit.
Citi CEO Michael Corbat maintained that the bank “had a strong finish to 2016, bringing momentum into this year. Our core businesses are beginning to produce the returns our investors expect and deserve.”
Click here to view Citigroup’s Q4 2016 earnings report.
Click here to view U.S. Bancorp’s Q4 2016 earnings report.