Citi beats on the bottom line, misses on the top

Citigroup just reported fourth-quarter earnings that beat expectations, but missed on revenue.

The firm reported earnings per share of $1.14 on revenue of $17.01 billion for the quarter.

Analysts were expecting adjusted earnings per share of $1.12 on revenue of $17.26 billion, according to Bloomberg. It was initially unclear whether the earnings Citi reported were adjusted.

The beat was described as “low quality” by KBW analysts, with lower than expected expenses, provisions and tax rate helping the bank surpass estimates.

“We had a strong finish to 2016, bringing momentum into this year,” CEO Michael Corbat said in a statement.

“We drove revenue growth in our businesses and demonstrated strong expense discipline across the firm.”

Here’s the break-down by business:

  • Trading revenues missed analyst expectations, coming in at $3.26 billion ($3.44 billion expected), excluding debt valuation adjustments.
  • Fixed income revenues missed, coming in at $2.21 billion ($2.83 billion expected), excluding debt valuation adjustments. Equity revenues also missed, at $603 million ($708 million expected), excluding debt valuation adjustments.
    • Including DVA, fixed income revenues were up 36% from the year-ago quarter thanks to strong performance in rates and currencies and spread products, according to the firm.
    • Equity trading revenues were up 15% if you include debt valuation adjustments, which the firm said reflected strong trading activity and an improvement in equity derivatives.
  • Investment banking revenues beat, coming in at $1.13 billion ($1.02 billion expected). The firm said advisory revenues decreased 2%, while debt underwriting revenues were up 4% and equity underwriting dropped 8% due to lower activity across the industry.

In the same quarter last year, Citi beat expectations, reporting adjusted EPS of $1.06 ($1.05 expected) on revenue of $18.64 billion ($17.93 billion expected).

In the third quarter, Citi also beat, reporting adjusted earnings of $1.24 per share ($1.16 expected) on revenues of $17.76 billion ($17.29 billion expected).

Bank of America, JPMorgan, Wells Fargo,
Morgan Stanley, and Goldman Sachs have already reported fourth-quarter earnings.

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