Can This Quarter Turn Citigroup Around?

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Citigroup Inc. (NYSE: C) released its third-quarter earnings report before the markets opened on Friday. The company posted $1.74 in earnings per share (EPS) and $18.39 billion in revenue, which compares with consensus estimates of $1.69 in EPS and $18.45 billion in revenue. In the same period of last year the bank said it had EPS of $1.42 on revenue of $18.17 billion.

During the latest quarter, loans increased 3% from last year to $675 billion, while deposits increased 4% to $1.0 trillion.

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

  • Global Consumer Banking revenues increased 2% year over year to $8.65 billion.
  • Institutional Clients Group revenues decreased 2% to $9.24 billion.
  • Corporate / Other revenues decreased 5% to $494 million.

Book value per share was $72.88, and tangible book value per share was $61.91. Both, as of quarter end, increased 1% sequentially, as the benefit of a lower share count and higher net income more than offset common share repurchases and dividends.

At quarter end, Citigroup’s CET1 Capital ratio was 11.8%, down from 12.1% in the prior quarter as net income was more than offset by common share repurchases and dividends, and risk-weighted assets increased due to client activity.

Citigroup has underperformed the broad markets with the stock down about 3% in the past 52 weeks. In just 2018 alone, the stock is down more than 5%.

CEO Michael Corbat commented:

Our results this quarter showed solid year-over-year revenue growth across many of our businesses, including Fixed Income, Treasury and Trade Solutions, Securities Services, the Private Bank and our consumer franchise in Mexico. We also grew loans and deposits while continuing to prudently manage risk as demonstrated by the stability of our credit portfolio. We returned $6.4 billion of capital to common shareholders through buybacks and dividends during the quarter. And over the past twelve months, we’ve reduced our common shares outstanding by over 200 million or 8%. Through a combination of earnings growth and capital return, our earnings per share were 22% higher than one year ago.

Shares of Citigroup traded up 2.8% early Friday to $70.32. The consensus analyst price target is $85.02 and the 52-week trading range is $64.38 to $80.70.

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