Taking a Bite Out of Citigroup on Earnings

Citigroup Inc. (NYSE: C) has announced its fourth quarter earnings and the headline data is both disappointing and somewhat not as representative as it seems on the surface.  Earnings were positive for the fourth consecutive quarter at $1.31 billion or $0.04 EPS.  Thomson Reuters was looking for as much as $0.08 EPS.  Total revenues in the quarter were $18.37 billion, about triple a year ago if you count all of the deductions that were taken a year ago off the revenue number. If you do not take the deductions off from a year ago, today’s revenue figure would compare to about $19.5 billion.

The miss is being placed $1.1 billion in charges tied to tightening of its credit spreads.  If you eliminate the charges, the earnings figure would have looked in-line with estimates.  Coming in at half of estimates is likely to pressure shares whether there are items or not, particularly after a more than 40% gain in Citigroup shares over the last year.

Citigroup also recorded a drop of about 11% at $6.9 billion in quarterly credit losses and it also released about $2.3 billion in prior loan loss reserves that went into earnings. After gains and losses on credit reserves, the total loss provisions came to $4.8 billion.

Shares of Citigroup had a close of $5.13 and shares have come back to the best levels since August 2009.  The pre-market reaction has shares down 3.3% at $4.96 so far this morning.

JON C. OGG