Citigroup Inc. (NYSE:C) is a global diversified financial-services holding company. The company has a market capitalization of $151.02 billion. Citigroup Inc. (NYSE:C) expected to report FY 2013 second-quarter EPS of $1.17 on revenue of $19.76 billion, compared with a profit of $1.00 a share on revenue of $18.64 billion in the year-ago period. Citigroup is trading at around $49.63 a share. So far this year, the stock has gained 25.5 percent.
Credit Suisse Group AG (NYSE:CS) expect the capital markets sensitive banks to fare a bit better than the regional players given some support from improved core trading and IB results. In addition, mortgage banking revenues should hold up this quarter, although there is a concern about the inevitable decline in refinance volumes later this year which will likely overshadow an improvement in purchase activity.
The banking environment remains challenging in terms of the revenue and loan growth outlook; however, banks continue to make progress on controlling expenses and improving capital–which will be critical levers in 2013. The combination of persistently low rates and sluggish loan growth will put some pressure on profits in 2013; however, there will be differentiation between banks.
Citigroup Earnings Preview For Monday’s Release
Investors are looking forward to improving Citigroup Inc. (NYSE:C) second-quarter earnings before the market opens on July 15, 2013 The consensus opinion is presently $1.17 a share, a progression of 17 cents (14.5%) from $1.00 during the corresponding period last year. Analysts’ estimates this quarter range from $1.08, to a high of $1.24 per share.
Operating EPS in line with consensus estimate
Credit Suisse Group AG (NYSE:CS) 2Q’13 operating EPS is $1.17 and in line with consensus estimate of $1.17 (hi $1.24, lo $1.08). Operating EPS excludes $0.03/shr one-time items including an estimated positive CVA/DVA of $140mm ($0.03/shr). Their reported EPS estimate stands at $1.19.
Citigroup Securities and Banking revenues
Excluding CVA/DVA, they are forecasting core Securities and Banking revenues of $6.2Bn or up 18% y/y. Their core trading revenue forecast of $4.7Bn down 14% q/q although up 39% y/y. Trading estimate excludes $140mm of estimated positive CVA given credit spread widening.
Credit Suisse Group AG (NYSE:CS) forecasting $888mm investment banking fees; up 3% y/y given equity underwriting (+45% y/y), debt underwriting (+2% y/y) offset by weaker advisory revenues (-27% y/y). They are forecasting lending fees of $200mm in 2Q.
Citigroup Credit Quality and Capital
Credit Suisse Group AG (NYSE:CS) model contemplates $2.9Bn of credit losses of Citigroup Inc. (NYSE:C), down 2% q/q driven primarily by US consumer losses. They included about $550 million of reserve release, representing $0.14 per share. They forecast a reserve rate to 3.5%, down from 3.67% at the end of March. Their model contemplates operating expenses of $12.3Bn down 1% q/q.
Credit Suisse Group AG (NYSE:CS) estimate that Citigroup Inc. (NYSE:C) will have other factors affecting tangible book value this quarter, including a potential negative impact from foreign currency translation of an estimated $1.5 billion. Credit Suisse forecasting TBV to be flat to down modestly q/q (from $52.35 in 1Q’13).
Citigroup Dealing With The New Leverage-Ratio Standards
One new problem that Citigroup Inc. (NYSE:C) faces is dealing with the new leverage-ratio standards under Basel III and the combined regulatory authority of the Fed and the FDIC. Earlier this week, U.S. regulators proposed a rule raising minimum leverage buffer ratio above their current 3% level, requiring banks that fail to exceed 5% to face limits on bonus payments and capital distributions, and setting the standard for well-capitalized, systemically significant banks at an even higher 6%. With Citi coming in at about 4.5% currently, it will take further action for the bank to reach those higher levels, although the proposed effective date of the regulations would give Citigroup until 2018 to get there.