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Citigroup report Q3 earnings Thursday before the market. $C report this week with money center banks JPMorgan Chase, Goldman Sachs and Wells Fargo. Citi released more than $1 billion in reserves it had previously set aside to cover potentially bad loans from The Pandemic.

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Citigroup Inc NYSE: C · Report Before Open Thursday

$2.15 Beat $1.73 EPS Forecast And $17.15 billion Beat $17.10 billion Forecast in Revenue

Earnings

  • Q3 2021 earnings release: before the opening bell; conference call: 8 a.m.

Citigroup posted $2.15 a share, higher than an estimated $1.73 a share. Earnings were boosted Citi released more than $1 billion in reserves it had previously set aside to cover potentially bad loans. Citigroup on Thursday reported a 48% climb in net income for its third quarter, with the financial services firm posting gains in capital markets revenue while it released funds reserved to cover potentially bad loans. Citi posted revenue of $17.15 billion, versus the average analyst estimate of $17.10 billion.

Banks Reporting Earnings Reaction Today

  • Citigroup Inc NYSE: C Pre-market 71.35 +1.09 (1.55%)
  • Bank of America Corp NYSE: BAC Pre-market 44.21 +1.07 (2.48%)
  • Morgan Stanley NYSE: MS Pre-market 100.25 +1.68 (1.70%)
  • Wells Fargo & Co NYSE: WFC Pre-market 45.15 -0.90 (1.95%)

Allowance For Credit Losses

The allowance for credit losses (ACL) on loans has been the feature of this years banks reports. The ACL refers to the monies set aside when the pandemic started ahead of what it feared would be a cascade of loan defaults by consumers and small businesses. However the banks overestimated the level of defaults and are now unwinding those credit reserves, which is giving a boost to banks' earnings.

Highlights

"The recovery from the pandemic continues to drive corporate and consumer confidence and is creating very active client engagement," said Citi CEO Jane Fraser in the company's earnings report.

  • Investment banking revenue increased by 39% to $1.9 billion
  • Equities trading rose by 40% to $1.23 billion, ahead of the $909.4 million estimate from Bloomberg.
  • While overall revenue topped estimates, it declined by 1% due to the sale of its Australian consumer banking business.
  • Citi said revenue would've been up 3% excluding the impact of that sale.

Citigroup Focusing on Wealth Management

Citi in Q1 said that it will close most of its consumer banking operations in Asia, Europe, and the Middle East in order to focus on wealth management. Citi will operate consumer banking solely from four wealth centers: Singapore, Hong Kong, UAE, and London.

Citi will exit 13 markets where it does not have the scale to compete. Ms. Fraser as a former CEO of GCB knows the segment well. The bank is exiting consumer operations in Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam. T

"As a result of the ongoing refresh of our strategy, we have decided that we are going to double down on wealth," Fraser said in the release. The move to focus on the remaining markets "positions us to capture the strong growth and attractive returns the wealth management business offers through these important hubs."

 Big Banks Kick Off Third Quarter 2021 Earnings Season

The bank rally has been fueled by expectations for the economy reopening and infrastructure spending.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.

Citigroup Inc NYSE: C

Market Reaction 71.35 +1.09 (1.55%)

 

Source: Citigroup,

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