Banking, finance, and taxes

Citi Beating Earnings, Still at Deep Discount to Book Value

Paul Ausick

Published: April 13, 2017 9:15 am

Last Updated: January 12, 2020 1:00 pm

Citigroup Inc. (NYSE: C) reported first-quarter 2017 results before markets opened Thursday. The global bank posted diluted quarterly earnings per share (EPS) of $1.35 on revenue of $18.1 billion. In the same period a year ago, the bank reported diluted EPS of $1.10 on revenue of $17.6 billion. First-quarter results also compare to the consensus estimates for EPS of $1.24 on revenue of $17.8 billion.

At Wednesday’s closing price of $58.51 per share, the stock trades at a discount of about 23% to a book value per share of $75.86.

Net income totaled $4.1 billion, up 17% compared first-quarter 2016 net income of $3.5 billion. The bank attributed the increase to higher revenues and lower cost of credit. EPS growth was attributed to growth in net income and a 6% reduction in shares outstanding.

Revenues at Citicorp rose 3% year over year and 7% sequentially, driven by increases of 16% in the bank’s institutional clients group and a 1% boost in its global consumer banking group.

The bank’s allowance for loan losses totaled $12 billion for the quarter, down from $12.7 billion in the prior year quarter. Citi’s cost of credit fell 19% year over year, primarily due to a release of $77 million in loan loss reserves.

CEO Michael Corbat said:

The momentum we saw across many of our businesses towards the end of last year carried into the first quarter, resulting in significantly better overall performance than a year ago. Revenues increased in both our consumer and institutional lines of business, most notably in areas where we have been investing such as Equities, U.S. Cards and Mexico.

The bank did not offer guidance in its press release, but the consensus estimates call for second-quarter EPS of $1.30 on revenues of $17.91 billion. The EPS estimate for the 2017 fiscal year is $5.17 on revenues of $71.36 billion.

Shares traded down about 0.2% in Thursday’s premarket to $58.40, having closed on Tuesday at $58.51. The current 52-week range is $38.31 to $62.53. The consensus 12-month price target on the stock was $64.74 before results were announced.