REUTERS - Citigroup Inc said it is pulling out of consumer banking in 11 markets, including Japan and Egypt, as the U.S. bank with the biggest international business looks to cut persistently high costs.

The third-largest U.S. bank, built with a series of acquisitions spanning back to the 1980s, has been trying to slim down since the financial crisis to be as profitable as rivals. It has shed hundreds of billions of dollars of bad assets.

The latest exits were the result of studies the bank began in early 2012 to figure out which countries were not profitable enough for retail banking.

Getting results took a long time, partly because the bank did not have standardized accounting systems across all countries to compare the units' profitability, sources familiar with the matter told Reuters in 2013. A spokesman for Citigroup said that the sources' comments were false, and the bank has long had systems in place to consistently measure profitability across businesses and geography.

The deliberate pace at which Chief Executive Officer Michael Corbat is fixing its business underscores how hard it is to fix a business as sprawling as Citigroup, which operates in more than 100 countries. Corbat told analysts that in shedding the poorly performing businesses the company is also taking a valuable step toward reducing complexity.

Chief Financial Officer John Gerspach, speaking earlier to reporters, said the bank first identified sub-standard businesses about a year-and-a-half ago, and tried to fix them before deciding to they had to go.

"Better late than never," said stock analyst Mike Mayo of CLSA.

Citigroup separately announced the results of a probe that also illustrates how hard it is to manage the bank: it found a new $15 million fraud at its Mexican unit, Banamex, which has been roiled by a series of mishaps.

The bank is showing some signs of progress in streamlining itself. On Tuesday, it posted stronger-than-expected third-quarter adjusted net income of $3.67 billion, or $1.15 per share, from $3.26 billion, or $1.02 per share, a year earlier. Profit was boosted by better results from its portfolio of troubled assets left over from the financial crisis and its shares rose 3.1 percent on Tuesday to $51.47.

Adjusted results exclude a tax benefit from last year and accounting adjustments linked to changes in the value of the company's debt.

Analysts had expected earnings of $1.12 per share, according to Thomson Reuters I/B/E/S.


But the bank still has work to do. Expenses at Citicorp, which houses the bank's main businesses, rose 11 percent, while revenue rose 8 percent. The increase in expenses came from money set aside to cover expected legal liabilities.

The bank has been trying to rein in its expenses for about a decade. At a meeting with 300 Citigroup executives in February, CEO Corbat stressed the need to focus on expenses and efficiency this year.

Shedding retail businesses in 11 markets may help — stripping out these units would have reduced operating expenses by $1.34 billion over the last year, while reducing net income by only $34 million. The bank said it will exit Costa Rica, Czech Republic, Egypt, El Salvador, Guam, Guatemala, Hungary, Japan, Nicaragua, Panama and Peru, as well as the consumer finance business in Korea. It will continue to serve institutional clients in these markets.

In December 2012, Citigroup said it was withdrawing from consumer banking in five other countries. After these latest exits, the bank will serve consumers in about 24 countries.