Why Citigroup Earnings Earnings Aren’t That Impressive

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When Citigroup Inc. (NYSE: C) released its fourth-quarter financial results before the markets opened on Monday, the bank said that it had $1.61 in earnings per share (EPS) and $17.1 billion in revenue. That compares with consensus estimates of $1.55 in EPS on revenue of $17.59 billion, as well as the $1.28 per share and $17.25 billion posted in the same period of last year.

Citigroup’s end-of-period loans were $684 billion as of the quarter’s end, up 3% from the prior-year period. Its end-of-period deposits were $1.0 trillion, an increase of 6% from a year ago.

In terms of its segments, Citigroup reported as follows:

  • Global Consumer Banking had revenues of $8.44 billion, flat year over year.
  • Institutional Clients Group had revenues of $8.21 billion, a decrease of 1%.
  • Corporate/Other had revenues of $470 million, a decrease of 37%.

In the quarter, Citigroup reported that it had a book value per share of $75.05 and a tangible book value per share of $53.79. At quarter’s end, Citigroup’s CET1 Capital ratio was 11.9%, up from 11.7% in the prior quarter, driven by a reduction in risk-weighted assets.

CEO Michael Corba commented:

We made solid progress throughout 2018 towards our longer-term financial targets, ending the year with an RoTCE of 10.9% and an efficiency ratio of 57%. Our institutional and consumer franchises each grew revenue on a full year basis and we continued to invest in our people and technology in order to better serve our clients. During the year, we also grew loans and deposits, improved ROA, and carefully managed both our expenses and balance sheet. We also returned more than $18 billion of capital to common shareholders.

Shares of Citigroup closed Friday at $56.69, within a 52-week range of $48.42 to $80.70. The consensus analyst price target is $76.31. Following the announcement, the stock was down over 1% at $55.94 in early trading indications Monday.