Citigroup's International Plan Comes Up Short in 4Q (Update 2)

Story updated with analyst comment.

• Citigroup(C) reported a fourth quarter profit of $1.2 billion, or 38 cents per share.
• Revenue was down at $17.2 billion.
• Analysts expected earnings per share of 50 cents, according to consensus estimates from Zacks

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NEW YORK (TheStreet) - Citigroup(C), the nation's third largest bank by assets reported falling quarter-over-quarter revenue and profits on slowing emerging market earnings and a big drop at its investment bank.

Citigroup reported earnings per share of 38 cents, missing a 50 cent a share estimate, according to data compiled by Zacks . Meanwhile, fourth-quarter net income of $1.2 billion and revenue of $17.2 billion missed expectations compiled by ThompsonReuters of $18.5 billion and $1.55 billion, respectively.

Citigroup CEO Vikram Pandit

Nevertheless, those numbers, added to a mixed 2011, made Citigroup's $11.3 billion 2011 in profit its highest post-crisis earnings yet.

"Overall, we made solid progress in 2011. We increased our net income to $11.3 billion, up 6% from the previous year, and reached key benchmarks in our consumer businesses," said Citigroup Chief Executive Vikram Pandit. "Clearly, the macro environment has impacted the capital markets and we will continue to right-size our businesses to match the environment."

Shares of Citigroup fell over 5% to $29.07 on news of the earnings miss. In 2011, Citigroup shares fell over 40% as the company continued to face uncertainty over its mortgage and legal liabilities.

The earnings miss was a result of a big slowdown at its investment bank and a slowing of emerging market sales and profits, which saw quarter-over-quarter declines, but gains compared with 2010. Emerging markets have been a key initiative for Citigroup, as it cuts non-core assets.

Across all of Citigroup's core operations, quarterly revenue and profits fell in Asia and Latin America compared with 2010.

The biggest overall earnings drop came in Citigroup's investment bank, called the Securities and Banking division, which reported a $163 million loss on revenue below expectations. In the fourth quarter, the division posted revenue of $3.2 billion, a 53% quarter-over-quarter drop and an annual drop of 10%. For 2011, the unit saw revenue slow over 7% to $21.4 billion, while profits dropped 24% to $4.9 billion.

"The main driver of the [earnings] miss seemed to be in Securities and Banking, which generated weak revenues and higher than expected operating expenses," wrote UBS analysts in a note after earnings were released. However, UBS left unchanged its "buy" rating and $43 a share price target.

Revenue and profitability also stalled at the bank's Regional Consumer Banking unit, a key driver of growth in the first three quarters of 2011.