Citi Earnings

http://www.thedeal.com/dealscape/2009/10/citigroup_third_quarter_earnings.php

Citigroup Inc. (NYSE:C) reported a profit of
$101 million for the third quarter and a 27 cent loss per share with third-quarter revenues at $20.4 billion. Predictions from analysts forecast the bank would lose 21 cents to 38 cents a
share on revenues of around $20.95 billion.

The
third-quarter results compared with a loss of $2.82
billion last year (see chart below). Citi was mostly weighed down this
quarter by credit losses of $8.0 billion, which were probably impacted
by rising unemployment and a $802 million net loan loss reserve.

"They are being overly optimistic on the outlook for loan
losses," Jon Fisher, a fund manager at Fifth Third Asset
Management, told Bloomberg. "We are going to find out in
a couple of quarters that they are way under-reserved and they
are going to have to take a huge charge."

Citi Holdings had a $1.9 billion quarterly loss due to credit card losses and consumer loans. The unit contains toxic
assets that are up for sale. The divestitures impacted operating expenses, which were slightly down at $11.8 billion from $12.0
billion last quarter. Citi Holdings revenues were $6.7 billion versus $15.8 billion in the prior quarter,
which was high due to the the sale of part of its stake in Smith
Barney. Overall, revenue lost from the Smith Barney transaction since
last
quarter was about $10 billion (revenue was $20.4 billion, down from
$30.0 billion). Excluding Smith Barney, Citi Holdings' loss from
continuing operations was $1.8 billion, versus
a loss of $5.3 billion in the prior quarter, showing that discontinuing
some operations and divesting other nonprofitable businesses, such as
Primerica Financial Services and Monex Group Inc., are positive steps.
However, Citi has also been divesting some profitable businesses, which
has concerned analysts. See assets up for sale in The Deal Pipeline (subscription required).

You might have heard Citi was slimming down, but the bank actually grew in deposits: "Total assets were $1.9 trillion, up 2% from the prior quarter primarily
reflecting growth in cash and due from banks, and deposits with banks,
partially offset by declining loans and securities. Deposits were $833 billion, up $28 billion from the second quarter of
2009."

This is notable because Citi is showing a strengthening deposit base,
and with the government's 34% stake in it and being too big to fail it
should be growing stronger. What will be interesting to see going
forward is how its new retail banking strategy will affect its deposit base. The bank is expected to post a $1.74 billion net loss in
the fourth quarter, according to Bloomberg.

Citi
CEO Vikram Pandit and CFO John Gerspach are hosting a conference call
Thursday at 11:00 a.m. EST to discuss the earnings in more detail. - Maria Woehr

Snapman,
What really bothers me today is the way the media spins Goldman earnings vs. Citi earnings. For instance all of citi's numbers were better then the previous qaurter. I know this after doing extensive research on them this week. In addition, almost all of Goldman's numbers are off from last quarter. I know comparing yoy is more important for corporate earnings but come on. I honestly think analysts are not reading the press releases/10-qs. The comments they made on bloomberg look foolish considering Citicorp is an extremely profitable business. Not to mention loan-loss provisions are narrowing as consumer credit picks back up. Net charge-offs are down and loan loss reserves only increased 30 basis points. Take out the Smith Barney gain and we are looking at decent q2 earnings. Additionally look for the sale of Nikko securities to impact Citi's cash flow in q4. Undoubtedly, I cannot be too upset because if Citi gets beat up a bit, buying will be like steeling candy from analysts.

Its all about expectations my man. They were set to high from earlier with JPM and Goldmans as well.... either way its a temporary bump in the road. Check out my latest blog on the AC blog.

AC Blog <----