Citigroup Inc, Wells Fargo & Co Edge Out Earnings Estimates

Citigroup and Wells Fargo were two of at least four big financial firms that released their earnings reports before opening bell this morning. Citigroup reported earnings of $1.06 per share and $18.5 billion in revenue. Analysts had been expecting earnings of $1.05 per share and $17.87 billion in revenue.

Wells Fargo reported earnings of $1.03 per share and $21.6 billion. Analysts had been looking for earnings of $1.02 per share and $21.8 billion in revenue. In the fourth quarter of 2015, the firm reported earnings of $1.02 per share and $21.4 billion in revenue.

Michael Mauboussin: Here’s what active managers can do

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkThe debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More


Citigroup’s earnings surge

Including CVA/ DVA1, Citigroup’s earnings were $1.02 per share, compared to the previous year’s 6 cents per share in earnings. Citigroup’s revenues rose 4% year over year to $18.6 billion, while Citicorp’s revenues declined 2% to $15.7 billion. The Global Consumer Banking segment recorded a 9% decline in revenues to $8.2 billion, and the Institutional Clients Group’s revenue rose 4% to $7.4 billion. Citi Holdings revenue climbed 61% year over year to $2.9 billion.

The bank’s common equity tier 1 capital ratio was 12%, while its supplementary leverage ratio was 7.1%. Book value per share was $69.46, while tangible book value per share was $60.61.

Citigroup stock declined by as much as 2.75% to $44.13 per share in premarket trading this morning.

Wells Fargo sees growth in most segments

Wells Fargo’s total average loans climbed 7% to $912.3 billion, while its total average deposits increased 6% to $1.2 trillion. Return on assets was 1.27%, and return on equity was 12.23%. Net interest income climbed to $11.6 billion on the back of earning asset growth. Non-interest income declined from $10.4 billion the previous year to $10 billion in the fourth quarter of 2015. Wells Fargo had $247.6 billion in investment securities at the end of December.

The firm’s Community Banking unit saw a decline of 7% in net income to $3.3 billion, while the Wholesale Banking division’s net income climbed 9% to $2.1 billion. The Wealth and Investment Management business saw a 2% decline in net income to $595 million.

Wells Fargo’s common equity tier 1 ratio was 10.7%, fully phased-in.

The firm’s stock slipped by as much as 2.21% to $49.48 per share in premarket trading this morning.