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Citi backs off profitability target for 2020

Citigroup Inc. lowered its target for return on tangible common equity in 2020 to a range of 12% to 13%, down from a previous goal of 13.5%.

In a conference call on fourth-quarter earnings, CFO Mark Mason said the new target reflected evolving business conditions.

"The revenue environment has changed since we set our targets for 2020, with lower interest rates, slower global growth" and other pressures, Mason said. Citi still expects to increase both net interest and non-interest revenue in 2020 while keeping expenses flat.

In a note issued last week, D.A. Davidson analyst David Konrad wrote that he expected Citi to reduce its profitability target, noting that it was far higher than analyst projections. Still, he said he expected markets to react favorably given the progress Citi has made in improving its returns.

Citi did post return on tangible common equity of 12.1% for 2019, beating its target of 12%. It also outperformed analyst projections for the 2019 fourth quarter with an earnings report that investors cheered in early trading.