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Citigroup leaves targets unchanged with 'difficult' 2016 ahead

US investment bank Citigroup cut its growth forecasts for the world economy on Thursday, and said that risks of a global recession were increasing.

[NEW YORK] Citigroup Inc's new financial targets look a lot like the old ones.

The bank is aiming for an efficiency ratio - which measures the cost of generating each US$1 of revenue - of about 57 per cent in 2016 at Citicorp, its main operating unit, chief financial officer John Gerspach said Friday in a conference call. The fourth-biggest US bank by assets finished 2015 at 57 per cent, and will improve in 2017 and beyond, he said. The lower the ratio, the better.

Chief executive officer Mike Corbat set 2015 financial targets in March 2013, less than six months after taking over from Vikram Pandit, as he sought to enforce tighter discipline on costs. Mr Gerspach said Friday that 57 per cent was "just over our target" of mid-50 per cent, though it was still more than 3 percentage points lower than in 2012. The conservative nature of the new targets is a reflection of an uncertain business climate, he said.

"As we look to 2016, we see both opportunities and challenges," Mr Gerspach said. "We expect the operating environment to remain difficult, with uneven global growth, sustained low commodity prices and a slow trajectory for US rate increases." The CFO stressed that Citigroup will continue to improve expense efficiencies this year. Using those benefits to invest in the company will result in an unchanged efficiency ratio, he said.

The bank's return on assets will stay at or above 90 basis points in 2016, he said, similar to 2015's target of a range of 90 basis points to 110 basis points. The bank met its goal in the fourth quarter, with an ROA of 94 basis points.