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Citigroup continued the banking sectors Q1 earnings before the market open Monday being hurt by equity markets trading. $C reported ahead of other money center banks Bank of America $BAC and after JPMorgan Chase $JPM, Wells Fargo $WFC, PNC Financial $PNC

Citigroup

Citigroup Inc NYSE: C · Reported Before Open Monday

$1.87 Beat $1.80 EPS Forecast With $18.60B Missing $18.65 billion forecast in revenue 

Earnings 

Citigroup Inc. (NYSE: C) reported earnings per share of $1.87, besting estimates set at $1.80 per share, and posted revenue of $18.6B increased 8% Q/Q and nearly in line with the  $18.65 billion consensus. Q1 net income of $4.71B increass from $4.31B, or $1.65 per share, in Q4 2018 and $4.62B, or $1.68 per share in Q1 2018. Earnings per share of $1.87 were largely was driven by a lower effective tax rate, which was reported at 21% in the current quarter compared to 24% in the first quarter of 2018 and also largely due to the extensive stock buybacks that Citigroup has completed over the past year to reduce the number of outstanding shares.

Analysts focus on the bank’s cost-ratio outlook for 2019. With the recent market turmoil there will be eyes on variables including geopolitics, loan growth, capital markets revenue and expense outlooks. In early December Chief Financial Officer John Gerspach cautioned that volatility may hinder 2018 targets.

Given that, in the conference call management’s take on the economy, global economic growth and the health of capital markets will be scrutinized. Indications about card margins and growth in North America retail banking with updates on the firm’s national digital bank and its growth prospects in Mexico and Asia are all key data points. Given the market risks and the Fed's so called more flexible policy look for investment banking pipeline talk and credit quality.

Bank stocks have rallied so far in 2019 after a dismal 2018.

Citigroup Inc NYSE: C

Market Reaction Pre-market $67.12   −0.30 (0.44%)

Highlights

"Our earnings reflect the progress we are making to improve our return on and return of capital. Both our consumer and institutional businesses performed well and we saw good momentum in those areas where we have been investing, such as U.S. Branded Cards, Treasury and Trade Solutions, and Investment Banking," CEO Michael Corbat said. "Importantly, our strategy in North America consumer banking is showing good early results as we introduce new products and engage with a broader range of customers, through digital channels."

Corbat said Citi focused on returning capital to shareholders so far in 2019.

"We returned over $5 billion to our shareholders during the quarter, contributing to the 11% increase in our earnings per share from a year ago," Corbat said. "We further reduced our common shares outstanding, down 9% from a year ago, while maintaining our Common Equity Tier 1 Capital Ratio at 11.9%."

The bank repurchased 66 million shares totaling about $4.06 billion in the first quarter and returned $1.08 billion to shareholders through dividends.

  • Equity-trading revenue saw a 24% decline in the first quarter due to lower market volumes and client financing balances
  • Global Consumer Banking revenue of $8.45B, essentially unchanged Q/Q and Y/Y.
  • Institutional Clients Group revenue of $9.69B, up 8% Q/Q, down 2% Y/Y.
  • Corporate/Other revenue of $431M, down 8% Q/Q and down 27% Y/Y.
  • Q1 provision for credit losses and for benefits and claims of $1.98B vs. $1.93B in Q4 and $1.86B in Q1 2018.
  • Common equity tier 1 capital ratio of 11.9% vs. 11.86% in Q4 and 12.05% in Q1 2018.
  • Tangible book value per share of $65.55 at March 31, 2019 vs. $63.79 at Dec. 31, 2018.

Mixed results did show an improved efficiency ratio, better expense control, higher-than-expected fixed-income revenue and strong results from the Mexico and Latin America business.

 

Citigroup Inc Q4 Earnings Recap

$1.61 EPS Beat $1.55 Forecast BUT $17.1B Missed $17.56 billion forecast in revenue 

Earnings 

Citigroup Inc. (NYSE: C) reported that 4Q adjusted net profit rose to $4.2 billion or $1.61 per share from $3.7 billion or $1.28 per share in the year-ago quarter. Revenues dropped 2% year-over-year to $17.1 billion in the fourth quarter and came in below analysts’ forecast.

Consensus was for an adjusted EPS est. $1.55 (range $1.47 to $1.63) on adjusted revenue est. $17.56b (range $17.27b to $18.47b)  Analysts expect 4Q total trading rev. est. $2.88b with equities $671.9m. Estimates were for FICC $2.23b and an international banking rev. est. $1.18b  

C Earnings Q4 18

Bank stocks have rallied so far in 2019 after a dismal 2018. The KBW Bank Index is up over 5 percent this year ahead of the S&P 500’s gain of 3.4 percent. Last year the bank index was down near 20 percent. 

Citigroup Inc NYSE: C

Market Reaction Pre-market $55.95 −0.74 (1.31%)

Highlights

      • Global Consumer Banking revenues $8.44 billion, flat year over year.
      • Institutional Clients Group revenues of $8.21 billion, a decrease of 1%.
      • Corporate/Other had revenues of $470 million, a decrease of 37%.
      • Citigroup  book value per share of $75.05 and a tangible book value per share of $53.79.
      • At quarter’s end, Citigroup’s CET1 Capital ratio was 11.9%, up from 11.7% in the prior quarter, driven by a reduction in risk-weighted assets.

During the quarter, the bank returned $5.8 billion of capital to common shareholders, which includes the repurchase of about 74 million shares.

“For 2019, we remain committed to delivering a 12% RoTCE and continuing to improve our operating efficiency during the year,” said Citi CEO Michael Corbat.

 

Caution hangs over the sector as auto and student loans also overhang the banking and finance sectors.  The new fall in home prices has challenged optimism for the mortgage business and banks profits thereto.

Source: Citigroup, Alphastreet

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