Citigroup trims the fat under boss Michael Corbat's strict regime

'We have undoubtedly become a simpler, smaller, safer and stronger institution'

(Peter Macdiarmid/Getty Images)

Citigroup’s chief Michael Corbat showed off the benefits of keeping trim on Friday after his moves to streamline the bank paid off with the biggest set of profits since 2006.

The keep-fit fanatic – a devotee of the high intensity Spartacus workout – helped cut total operating expenses by a fifth to $43bn (£30bn) from $55bn last year, largely due to lower legal bills.

Mr Corbat has taken his lean, mean approach to the giant lender, leading it through a series of asset sales to try to torch some of bank’s fat.

The cutbacks helped Citi, which reduced staff by 10,000 to 231,000 last year, to record profits of $17.1bn – the largest sum since 2006. Revenues were $76.4bn.

He set aside 9 per cent less for compensation and benefits this year at $21.77bn, down from $23.96bn last year, due to lower employee numbers.

“We have sharpened our focus on target clients, shedding over 20 consumer and institutional businesses,” Mr Corbat said. “We have undoubtedly become a simpler, smaller, safer and stronger institution,”

Citigroup’s winding down of its so-called bad bank – Citi Holdings – has proved incredibly profitable for the bank, with the division morphing into a small profits centre for the firm.

The division, which now makes up 4 per cent of Citi’s balance sheet, scored a 61 per cent rise in revenue during the year to $2.9bn after selling a division called OneMain. Profits were $704m.

Citicorp, which includes Citi’s investment bank and its retail division, fared less well. Full-year profit at the consumer bank fell 6 per cent, while the investment bank – dubbed the institutional clients group – posted a 1 per cent fall in full year profits.

Investors are watching the banking earnings season keenly this year to spot further signs of how banks are operating in the post financial-crisis world.

Wells Fargo, America’s biggest mortgage lender, also revealed numbers yesterday, with profits flat despite a small rise in revenue while JP Morgan, a direct rival to Citi, followed its lead with profits rising thanks to a cut in expenses.

Bank of America Merrill Lynch and Morgan Stanley are due to report on Tuesday. Goldman Sachs, which this week agreed to pay up to $5.1bn to settle legal claims over the sale of toxic bonds, reports on Wednesday.