Should Citigroup Get More Credit for Q1 Earnings?

Banking, finance, and taxes

Published: April 15, 2019 9:10 am

Last Updated: January 30, 2020 10:08 pm

Citigroup Inc. (NYSE: C) released its first-quarter financial results before the markets opened on Monday. The firm said that it had $1.87 in earnings per share (EPS) and $18.6 billion in revenue, compared with consensus estimates of $1.80 in EPS and revenue of $18.63 billion. In the same period of last year, the financial giant said it had EPS of $1.68 on $18.87 billion in revenue.

Overall, first-quarter revenues decreased by 2%, reflecting the lower revenues in Equity Markets, as well as mark-to-market losses on loan hedges in Institutional Clients Group and the continued wind-down of legacy assets in Corporate/Other.

In terms of its segments, the bank reported as follows:

Global Consumer Banking revenues remained relatively flat year over year at $8.45 billion.
Institutional Clients Group revenues decreased 2% to $9.69 billion.
Corporate/Other revenues decreased 27% to $431 million.

At the end of the quarter, loans totaled $682 billion, an increase of 1% from last year, while end-of-period deposits totaled $1.0 trillion, an increase of 3%.

Citigroup’s book value per share of $77.09 and tangible book value per share of $65.55, both as of quarter end, increased 8% and 7%, respectively.

Michael Corbat, Citi CEO, commented:

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. 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.

The bank did not mention any guidance in the report. However, the consensus estimates call for $1.87 in EPS and $18.73 billion in revenue for the second quarter.

Shares of Citigroup closed Friday at $67.42, in a 52-week range of $48.42 to $75.24. The consensus price target is $77.60. Following the announcement, the stock was relatively flat at $67.55 in early trading indications Monday.