Citigroup (C, Financial) reported its earnings on Friday, ending the first week of major earnings reports for the first quarter with the banking sector leading with reports from JPMorgan (JPM, Financial), Bank of America (BAC, Financial) and Wells Fargo (WFC, Financial). In the banking sector, lower profits and trading revenues and higher credit provisions continued to be the key sector trends.
Citigroup reported revenue of $17.56 billion and EPS of $1.10. Revenue was down 11% and EPS were 28% lower year over year. The report did beat estimates, which expected revenue of $17.46 billion and EPS of $1.03. The better than expected results helped the company to trade just near zero for the day; however, year-to-date the stock is down 13.31%.
In Citicorp’s Institutional Clients Group, the business reported a trading revenue decline of 15% to $4.08 billion. Investment Banking revenue within the Institutional Clients Group was also lower by 27%. Net income for Citicorp overall was down 34%.
Higher credit provisions primarily due to increased default risk from energy companies also dragged on revenue and profits for the firm. For the quarter, credit reserve provisions increased to $233 million and the total cost of credit increased 7% to $2.05 billion.
In management’s earnings comments, it reported continued losses expected in trading as volumes are projected to be flat through the rest of the year. The outlook for credit reserves also continues to be bearish as oil prices will still be a challenge for energy companies. For the year, these industry challenges are expected to continue to drag on profits for Citigroup and the banking sector overall.
Disclosure: I do not own any shares of any stocks included in this article.
