It’s Looking Gloomy For Citigroup Heading Into Earnings

CItigroup, Inc. (C) Financials – Diversified Financial Services | Reports July 15, Before Market Opens

The banking industry has been on a roller coaster ride for some time now and things are only getting worse. This year the financial sector was expecting a number of rate hikes to provide earnings with a much need boost. On top of the Fed’s delayed decision has been the Brexit vote, which sent shockwaves through the financial sector. Since the Financial Crisis it seems like nothing has worked out for the banking industry with little possibility of changing anytime soon.

Amongst those most affected are Citigroup. Citigroup, like its peers, is scheduled to report Q2 later this week with tepid expectations. The Estimize consensus is looking for earnings per share of $1.12 on $17.65 billion in revenue, 3 cents higher than Wall Street on the bottom line and $80 million on the top. Compared to a year earlier this reflects a 22% decline in earnings and 7% in sales. Both per share and revenue estimates have come down in the past 3 months, reflecting analysts pessimism towards earnings this quarter. Shares of Citigroup are down 22% in the past 12 months.

In a recent report fellow bank, Wells Fargo, downgraded Citi stock, suggesting that bank’s extensive overseas exposure puts them at an elevated risk. The impact from Brexit won’t likely affect Q2 earnings but might be mentioned in its guidance as a limited factor moving forward. The biggest concerns this quarter will be the performance of trading revenue, M&A activity and its credit portfolio.

Last quarter, Citigroup saw declines across the board. Revenue and net income were reported significantly lower than the year prior as currency headwinds and a higher cost of credit took its toll. Citi has very low expectations heading into Q2, as do many of the banks, so any small win could be the boost shareholders need.