What to Expect on Citigroup’s Q3 Earnings

It’s earnings season again this month and Citigroup Inc. (NYSE: C) is one of the companies to report its earnings for the third quarter. The banking industry has experienced a year-over-year drop in terms of earnings during the past two quarters because of market volatility and low interest rates.

A number of analysts anticipate that the earnings of the bank will plunge just like in the past three quarters. During the past two years, Citigroup holds the number one spot for the strongest bank as it passed the annual stress tests. The trading conditions appear to improve for Citigroup as the situation seems to become more stable. Moreover, the US Federal Reserve is also anticipated to hike interest rates by the month of December this year, as the chairwoman Janet Yellen has given hawkish comments during the previous FOMC meetings.

As for the bank, the consumer banking segment became much stronger as the growtn in terms of revenues is primarily driven by credit card sales. In addition, the earnings of Citigroup was also supported by its acquisition of Costco. The company decided to make this move in order to maximize the returns from a growing domestic economy. The acquisition deal between the bank and Costco is anticipated to weigh in on Citigroup’s earnings for the third quarter.

According to the Chief Financial Officer of the bank Mr. John Gerspach, “Citigroup continues to exceed our expectations for customer engagement and new account acquisitions, and revenue trends are above our expectations on an organic basis, driven by strong volumes on our existing U.S. card portfolios.”

Based on analysts’ estimates, Citigroup will report earnings per share of $1.16, down from the previous year’s $1.31 earnings per share. In addition, the bank is also expected to decline on a quarter-over-quarter basis from $1.21. Meanwhile, the overall revenues of the company are anticipated to drop from $18.7 billion to $17.3 billion. Yet, Citigroup managed to beat its estimates during the past 6 quarters.

At this point in time, the stock of Citigroup is lower by over 8 percent on a year-to-date basis after cancelling out significant sell off in the month of February in the current year.

The bank’s stock resumes its bullish trend as market players stay optimistic. The earnings release can definitely improve the stock price of the company if it manages to reach the estimates. Most of the analysts covering Citigroup has given a rating of Buy on the company’s stock as it is trading at a discount.

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