Photo: oddomar via flickr
UPDATE:The number is out, and at least the headline EPS is well ahead of expectations at $1.23.
However, if you exclude credit valuation adjustments — which is basically the gain they get from the fact that their own debt has traded cheaper — EPS is just $0.84/share.
Revenue ex-CBA of $18.9 billion is below the $19.25 billion that analysts had expected.
The full announcement is here.
This part is key:
Third quarter revenues included $1.9 billion of credit valuation adjustment (CVA) reflecting the widening of Citi’s credit spreads during the third quarter. Excluding CVA, third quarter 2011 revenues were $18.9 billion, 8% below the prior year period and 8% below the second quarter 2011. CVA increased reported third quarter earnings by $0.39 per share.
This description of the earnings is also interesting:
Citigroup’s net income increased 74% to $3.8 billion, compared to the third quarter 2010, reflecting the impact of CVA and a $2.6 billion improvement in the cost of credit, which was partially offset by an 8%, or $940 million, increase in operating expenses from the prior year period. Total cost of credit during the quarter fell 43% to $3.4 billion. The improvement in credit costs was driven by a 41% decline in net credit losses to $4.5 billion and a $1.4 billion release of credit reserves, reflecting a lower level of inherent losses remaining in the portfolio. Operating expenses increased 8% from the prior year period to $12.5 billion, reflecting higher expenses from the impact of foreign exchange translation, higher legal and related expenses and ongoing investment spending, which were partially offset by ongoing reengineering benefits and lower expenses in Citi Holdings and Securities and Banking.
Citigroup’s total allowance for loan losses was $32.1 billion at quarter end, or 5.1% of total loans. The $1.4 billion net release of credit reserves in the quarter was down 28% from the prior year period as higher reserve releases in Citicorp were offset by lower releases in Citi Holdings. Credit reserve releases in Citicorp of $585 million were $159 million higher than the prior year period as additional credit reserve releases in North America RCB, largely related to Citi-branded cards, were offset by lower credit reserve releases from international RCB. Citi Holdings credit reserve releases fell $703 million to $838 million as releases in Local Consumer Lending (LCL) decreased, largely due to lower releases in the retail partner cards portfolio, and lower releases in the Special Asset Pool (SAP) where total loan levels continue to decline. Citigroup asset quality continued to improve as total non-accrual assets fell 44% to $13.5 billion from third quarter 2010. Corporate non-accrual loans fell 58% to $4.2 billion and consumer non-accrual loans fell 36% to $7.9 billion. Consumer loans that were 90+ days delinquent, excluding SAP, fell 39% versus the prior year period to $9.3 billion, or 2.3% of consumer loans.
Also, their investment bank got hammered:
The stocks is currently up about 2% in the pre-market.
Original post: Out in a few minutes.
Citigroup is expected to report EPS of $0.82 on revenue of $19.25 billion.
Of course, because it’s a bank it will be murky and contain all kinds of asterisks, most likely.
We’ll have the number here.