Smith Barney Boosts Results, Lowers Headcount

Smith Barney’s fourth-quarter expenses grew 29 percent, Citigroup says, primarily due to increased customer activity, the impact of acquisitions, and a $41 million pre-tax charge related to headcount reductions. Net income increased 7 percent, as increased business volumes and the impact of acquisitions were offset by the charge related to headcount reductions.

For the full year, Smith Barney’s revenues were up 29 percent to $10.53 billion, as net income expanded 34 percent to $1.35 billion.

“Our financial results this quarter are clearly unacceptable. Our poor performance was driven primarily by two factors – significant write-downs and losses on our sub-prime direct exposures in fixed income markets, and a large increase in credit costs in our U.S. consumer loan portfolio. Looking beyond these two factors, revenues and volumes continued to grow strongly in a number of our franchises and we generated record results in international consumer, transaction services, wealth management, and advisory,” explains Citi CEO Vikram Pandit. “Over the past five weeks I have been touring our businesses and listening to many of Citi’s important constituents – employees, investors, clients, regulators, and many others. These discussions have only confirmed my deep belief in the power and strength of Citi. We have a unique franchise that is well positioned in growing markets with tremendous capabilities to serve clients around the world. We intend to build on our advantages to deliver superior results for our clients, investors, and employees,” concludes Pandit.