Citigroup lowers reported third-quarter results because of legal costs

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Citigroup cuts Q3 results

Citigroup lowered its third-quarter net income, the financial firm said Thursday, citing of legal costs.

The company, which reported quarterly earnings on Oct. 14, said it revised downward its third-quarter net income to $2.8 billion from $3.4 billion, lowering earnings per share to 88 cents from $1.07.

The announcement sent shares as much as 2 percent lower in after-hours trading.

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The adjustment reflects a "$600 million increase in legal accruals," the company said in a statement.

"The increase resulted from rapidly-evolving regulatory inquiries and investigations, including very recent communications with certain regulatory agencies related to previously-disclosed matters," the statement said.

Michael Corbat, chief executive officer of Citigroup Inc.
Andrey Rudakov | Bloomberg | Getty Images

For the third quarter, Citi initially reported legal and related expenses of $951 million.

Citi previously said its third-quarter earnings rose nearly 7 percent from a year ago, citing strong sales from its consumer banks and institutional business.

The low estimate of 22 Wall Street analysts for the company's third-quarter earnings had been $1.05 per share, which means a report of 88 cents per share would have badly missed expectations.

Citi also disclosed that five agencies in the U.S. and abroad—including the antitrust and criminal divisions of the U.S. Department of Justice, the Commodity Futures Trading Commission, the U.K. Financial Conduct Authority and the Swiss Competition Commission—are investigating or making inquiries about the company's foreign exchange operations.

The bank said it was fully cooperating with all of the authorities.

Citi lowered its fourth-quarter 2013 financial results by about $360 million, before taxes, in February after it discovered fraud at its Mexican subsidiary, Banamex.

In July, the bank said it agreed to pay $7 billion to settle a U.S. government probe into its use of mortgage-backed securities during the period leading up to the financial crisis.

Citigroup operates in more than 160 countries and jurisdictions with more than 200 million customer accounts.