Citigroup Inc (C) Earnings Preview: Mortgages Underwater

Citigroup Inc (C) Earnings Preview: Mortgages Underwater

Citigroup Inc. (NYSE:C) will release its earnings report for the quarter ended September 30 on Tuesday morning. The company’s earnings are expected to be relatively flat, though analysts are tentatively optimistic after the numbers released by two of the other big consumer banks, JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo Company (NYSE:WFC) last week.

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Citigroup Inc (C) Earnings Preview: Mortgages Underwater

Analysts are expecting Citigroup Inc. (NYSE:C) to announce earnings of $1.08 per share for the third quarter of the year. In the same period of 2012 Citigroup earned $1.06 per share. Revenue is expected to come in at $18.9 billion for the three months, a sight lower than the $19.4 billion the company managed to bring in in 2012.

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Citigroup mortgage troubles

Citigroup Inc. (NYSE:C) is, like the rest of the big consumer banks, vulnerable to changes in the mortgage market. In the third quarter of the year there was a notable decrease in the number of second mortgage originations as interest prices soared on taper talk.

The firm was one among the banks that began laying off employees at home lending operations during September. Those lay offs were taken as a sign that business was flagging in the face of higher rates, and the company’s results were likely to suffer on the back of that change in business.

These pressures were seen in the earnings reports delivered by the bank’s peers JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo Company (NYSE:WFC) last Friday. The interest rate situation in the United States has changed and it is going to impact negatively on the bottom lines at the major banks.

Citigroup earnings performance

The 2013 financial year has been a good one for Citigroup Inc. (NYSE:C) so far. The company beat earnings expectations in the first and second quarters, an earnings for the full year are expected to come in at $4.83 per share. That number is 25% higher than the $3.86 that the bank managed to earn for the full year 2012.

Shares in Citigroup Inc. (NYSE:C) have also seen some major growth this year. Since January 1 the price of the firm’s stock has increased by about 23%. That’s higher than the returns put up by the general S&P 500, and impressive for a large financial in 2013. The firm is the best performing of the consumer facing banks, but did not perform quite as well as investment houses Goldman Sachs Group Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS).

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