Citigroup Inc. (NYSE:C) will issue its third quarter results via press release at approximately 8 a.m. (ET) on Oct. 15, 2013. At 11 a.m. (ET), results will be reviewed via live webcast and teleconference.
Citigroup is a global diversified financial services holding company whose businesses provide consumers, corporations, governments, and institutions with a broad range of financial products and services. Citi has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi has approximately 260,000 full time employees.
Wall Street expects Citi to earn $1.06 a share flat with last year, according to analysts polled by Thomson Reuters. Citi has managed to beat Street view thrice in the past four quarters.
The consensus view dropped significantly in the past 90 days when it was estimated to be $1.16 a share. In the last 30 days, five analysts have cut their earnings view on Citi.
Quarterly revenues, however, are expected to increase 34.6 percent to $18.77 billion from $13.95 billion a year-ago.
By now, most investors have received the cautious third quarter message on both FICC trading and US mortgage originations. Mortgage banking activity slowed faster than prior expectations as higher mortgage rates led to a plunge in refinancing activity and much lower gain on sale margins
"We are roughly 20% below consensus on Q3 and expect to see consensus numbers falling into results. Looking out further, we are roughly 5% below consensus – we suspect driven by a more cautious outlook on FICC trading," UBS analyst Derek De Vries wrote in a note to clients.
While much of the investor concern on Citi this summer focused on emerging markets, the US mortgage business is a bigger headwind to growth in the second half.
Meanwhile, Citi will be less aggressive in releasing provision reserves – so more of the decline could fall to the bottom line at Citi than at peers.
FICC (Fixed Income, Currencies and Commodit! ies) trading faced difficult third quarter trading environment and longer term profitability questions. That said, Citi is expected to generate an economic return in the business this year and could emerge as one of a small handful of "bulge bracket" firms benefiting from higher market shares.
By comparison, the Transaction Services business is extremely attractive with Citi earning roughly a 70 percent ROE in what are currently depressed market conditions.
"Our forecasts call for FICC trading down 25% year on year and 17% quarter on quarter, so we think we have captured the difficult environment. We also highlight that the transaction services business continues to under earn as low rates are particularly difficult for this business line.
Meanwhile, investors would focus on the bank's investment banking performance, loan growth amid tough operating environment.
Among the key developments in the quarter, a federal judge approved Citi's $730 million settlement with bondholders, who claimed that the bank misled them about its exposure to billions of dollars of subprime mortgage assets prior to the financial crisis.
The bank also agreed to pay $395 million to mortgage guarantor Freddie Mac to settle potential future repurchase claims for faulty mortgages.
For the second quarter, Citi reported net income of $4.18 billion or $1.34 per share, up from $2.95 billion or 95 cents per share in the previous year. Adjusted earnings per share were $1.25 while it was $1.00 last year.
Revenues for the quarter climbed to $20.48 billion from $18.4 billion. Excluding items, second-quarter revenues increased 8 percent to $20 billion.
Wall Street remains bullish on Citi shares as 24 out of the 29 analysts covering the stock rate it as "buy" or "strong buy." Three analysts recommend "hold," while two have a "sell" rating on the stock, which trades at 9 times its 2014 consensus earnings estimate.
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