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Citigroup’s 4Q15 Earnings Beat Analysts’ Estimates

Rebecca Keats

Citigroup Had Better-Than-Expected 4Q15 Earnings: Stock Fell 6.4%

Citigroup’s 4Q15 earnings surpass expectations

Citigroup (C) reported its 4Q15 earnings on January 15, 2016. It announced better-than-expected profits for the quarter, topping analysts’ expectations. Despite the stellar earnings, shares of the company fell nearly 7%. Investors feared the impact of the oil price collapse on banks.

Citigroup set aside $250 million in reserves for its energy portfolio during the fourth quarter. Apart from the continued plunge in oil prices, the bank is also suffering from the collapse of China’s stock markets. Among the large US banks, it has the largest exposure to China—$20.5 billion of assets as of the third quarter. It has nearly 40% of revenues from emerging markets, according to its SEC filing.

Citigroup reported adjusted EPS (earnings per share) of $1.06, beating Bloomberg consensus estimates of $1.05 and up from the $0.06 reported during the same period in 2014. Excluding the effects of credit valuation adjustments, EPS came in at $1.02. Revenues came in at $18.5 billion, 4% higher year-over-year. Net income of $3.4 billion was considerably higher than the $344 million reported in 4Q14. Last year, legal expenses of $3.3 billion hurt Citigroup’s earnings.

But analysts considered revenue growth to be soft, as weak trading revenues and losses from its energy portfolio were a drag on earnings.

Company overview

Citigroup is a financial holding company incorporated in 1988 with a market capitalization of $158 billion as of January 15, 2016.

Citigroup’s businesses provide consumers, corporations, governments, and institutions with financial products and services. The company operates through two primary business segments:

  • Citicorp, consisting of Citi’s Global Consumer Banking businesses and Institutional Clients Group
  • Citi Holdings, consisting of businesses and portfolios of assets that Citi has determined are not central to its core Citicorp businesses

Citigroup’s peers in the United States (SPY) are the following:

  • JP Morgan (JPM)
  • Bank of America (BAC)
  • Goldman Sachs (GS)
  • Morgan Stanley (MS)
  • Wells Fargo (WFC)

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