Citi’s Earnings Pick Up 11 Pct Year On Year

While investors were ultimately bucked up by a buyback, results were missed when Citigroup reported earnings earlier on Monday (April 15).

By the numbers, earnings came above expectations at $1.87 per share, instead of the $1.80 predicted pre-release. Revenue, on the other hand, came in below forecasts, at $18.576 billion instead of the expected $18.634 billion. Fixed-income, currencies and commodities trading revenue beat expectations at $3.452 billion, ahead of the $3.05 billion forecast. Investment banking revenue also came in ahead of expectations at $1.354 billion versus $1.2 billion.

But equities trading lagged, coming in at $842 billion instead of the expected $930 million.

“Our earnings reflect the progress we are making to improve our return on and return of capital,” CEO Michael Corbat said in a release. “We remain committed to executing our strategy and continuing to make steady progress toward our financial targets.”

While earnings picked up 11 percent year-on-year, revenues were down 2 percent over the time period, mostly attributable to the sharp decline in equities trading. Citigroup said the drop reflected “lower market volumes and client financing balances.”

In North America, branded cards revenues were up 5 percent to $2.2 billion, excluding the Hilton gain, with purchase sales up 7 percent year-over-year, again excluding Hilton. Interest earning balance was also up in Q1, increasing about 9 percent year on year. Citi Retail Services revenues increased 3 percent to $1.7 billion increased — driven, according to Citi, by organic loan growth and the benefit of the L.L.Bean portfolio acquisition. Retail banking revenues were up 1 percent to $1.3 billion; excluding mortgage, retail banking revenues were up 2 percent. 

CEO Michael Corbat also touted recent growth in Citi’s digital platforms.

“We have already seen digital deposit sales in the first quarter of 2019 that are roughly equal to all of last year. More than two thirds of the new accounts from digital channels are new to our retail banks and more than half or outside of our branch footprint.”

Corbat in particular called out the launch of Flex loans, which allow eligible cardholders to convert a portion of their credit line into a fixed rate personal loan.  Moreover, Corbat hinted at upcoming efforts to leverage their already large consumer base.  Corbat noted they effectively have 28 million people in the United States that carry Citi Plastic, meaning no launch territory is really alien ground for Citi because there are almost certainly already Citi customers there. 

“We know who they are. We know what they spend on. We know who their bank is, right. We’ve seen their payments come in, if it’s not us. And we think we’ve got the ability around our value proposition to target them offers which has the ability — gives us the ability to compete on something other than rate. So, I think we feel excited about it. You’ll see us out in the market in Q2 with that.”

Citigroup shares fell 0.9 percent after the banking giant released its results. Citigroup’s stock price has been up nearly 30 percent over the last year, pushing it ahead of its peers at JPMorgan Chase, Wells Fargo, Morgan Stanley and Bank of America.

The uneven earnings report today follows the announcement last week of the retirement of President Jamie Forese, who had long been considered a potential successor to CEO Corbat.

Citi’s earnings beat follows similar reports from JPMorgan Chase and Morgan Stanley.