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Citi Misses Topline; EPS Beats

Tyler Durden's picture





 

Summary of results:

  • Citi Q1 revenue USD 19.7bln vs. Exp. USD 20.54bln; this is a whopping $5.7 billion drop from the $25.4 billion in Q1 2010. So much for revenue growth.
  • Q1 EPS USD 0.10 vs. Exp. USD 0.09
  • Q1 tier 1 capital ratio 13.3%
  • Q1 tier 1 common equity ratio 11.3%
  • Q1 net credit losses declined 25%
  • Q1 Loan Loss Allowance drops to $36.6 billion from $48.7 billion year over year.
  • Total deposits $865.9 billion compared $827.9 billion a year prior
  • And the kicker: Q1 reserve release was $(3.37) billion on $4.2 billion profit from continuing operations. In other words, absent accounting gimmickry the company would barely have been profitable

From the press release:

  • Earnings Per Share of $0.10, Up from $0.04 in The Fourth Quarter 2010
  • Tangible Book Value Per Share1 Up $0.24 Sequentially to $4.69 and Up 15% Over The Prior Year
  • First Quarter 2011 Revenues of $19.7 Billion, Up 7% Sequentially
  • Net Credit Losses Declined 25% from The First Quarter 2010
  • Tier 1 Common of $112 Billion, Tier 1 Common Ratio of 11.3%
  • Citi Holdings Assets of $337 Billion, Down 33% from The First Quarter 2010

New York – Citigroup Inc. today reported first quarter 2011 net
income of $3.0 billion, or $0.10 per diluted share. Net income declined
$1.4 billion from the first quarter 2010, but more than doubled
sequentially.

"After a full year of profitability, we continue to make progress in
2011 by executing our strategy with discipline. Citi Holdings losses
continued to decrease; we are investing in our core businesses in
Citicorp; our capital strength improved; and the mix of revenues
reflects the diversity of our businesses and our depth in both the
emerging and developed markets," said Vikram Pandit, Chief Executive
Officer of Citigroup.

Citigroup revenues in the first quarter 2011 were $19.7 billion, up
7% sequentially, but down 22% from the first quarter 2010. Citicorp
revenues of $16.5 billion were 16% higher sequentially, but 11% lower
than the prior year period. The year over year decline was mainly
driven by lower revenues in Fixed Income Markets and North America Regional Consumer Banking, as well as negative CVA.

Credit continued to improve during the quarter, as Citigroup net
credit losses declined for the seventh consecutive quarter to $6.3
billion. In addition, the current quarter included a net $3.3 billion
release of allowance for loan losses and unfunded lending commitments.

Citi Holdings' assets were $337 billion at the end of the first
quarter 2011, down $166 billion from the first quarter 2010. Citi
Holdings revenues of $3.3 billion were 50% lower than the prior year
period, reflecting the continued decline in assets and the revenue
impact of a $12.7 billion asset transfer from held-to-maturity ("HTM")
to trading.

In the first quarter 2011, Citigroup transferred $12.7 billion of assets in the Special Asset Pool
in Citi Holdings from HTM to trading. This transfer permits the sale
of those assets, which have disproportionately higher risk-weightings
under Basel III. The transfer resulted in a net $709 million pre-tax
charge to revenues, from the recognition of $1.7 billion in pre-tax
losses ($1.0 after-tax) which were previously reflected in accumulated
other comprehensive income (AOCI), partially offset by $946 million of
mark-to-market and realized gains on those assets.

Citi continued to improve its capital strength, with a Tier 1 Common
ratio of 11.3%, book value per share of $5.85 and tangible book value
per share of $4.69, each as of the end of the first quarter 2011.

"As America's global bank, we are focused on supporting the real
economy and creating opportunities for our clients to succeed. Our
sustained profitability has put us in a good position to accomplish our
next goal of responsible growth," concluded Mr. Pandit.

First Quarter 2011 Key Items:

  • Citigroup net income was $3.0 billion, compared to $1.3 billion in the fourth quarter 2010 and $4.4 billion in the first quarter 2010.
  • Citigroup revenues were $19.7 billion, up 7% sequentially.
    • Citicorp revenues of $16.5 billion were up 16% sequentially, driven by a 70% increase in Securities and Banking.
    • Citi Holdings revenues of $3.3 billion declined 17% sequentially, driven primarily by the impact of the asset transfer in Special Asset Pool.
  • Citigroup revenues declined 22% year over year.
    • Citicorp revenues were down 11% from the prior year period, driven by a 25% decline in Securities and Banking, partially offset by 5% growth in Transaction Services.
    • Citi Holdings revenues were down 50% from the prior year period, mainly due to lower overall assets and the impact of the asset transfer in Special Asset Pool.
  • Citigroup expenses of $12.3 billion were down 1%
    sequentially. Expenses increased 7% year over year reflecting higher
    legal and related costs, the impact of foreign exchange2,
    continued investment spending and increased business volumes, partially
    offset by productivity saves and a decline in Citi Holdings.
  • Citigroup provisions for credit losses and for benefits and claims improved by $5.4 billion, or 63%, year over year to $3.2 billion. Consumer net credit losses declined 32% from the prior year period.
  • Citicorp generated 62% of its revenues and 72% of its net income from its international operations in the first quarter 2011.
  • Citicorp end of period loans grew 10% year over year, with 6% growth in consumer loans and 16% growth in corporate loans.
  • International Regional Consumer Banking year over year:
    • Revenues of $4.6 billion, up 8%.
    • Net income of $1.0 billion, up 3%.
    • Net credit margin of $3.9 billion, up 16%.
    • Average deposits of $163 billion, up 13%.
    • Average loans of $126 billion, up 14%.
    • Cards purchase sales of $29 billion, up 20%.
    • Investment sales of $25 billion, up 5%.
  • Citigroup's total allowance for loan losses was $36.6
    billion, or 5.79% of loans, at the end of the first quarter 2011. The
    allowance for loan losses was 247% of non-accrual loans.
  • Citi Holdings assets of $337 billion comprised approximately 17% of total Citigroup assets as of the end of the first quarter 2011.
  • Tangible book value per share was $4.69, up $0.24 sequentially and $0.60 year over year.

CITIGROUP

Citigroup revenues were $19.7 billion, down $5.7 billion
(-22%) from the first quarter 2010. Net interest revenues of $12.2
billion were 16% lower than the prior year period, largely due to
declining loan balances in Local Consumer Lending. Net interest
revenues also included a $245 million pre-tax charge to increase
reserves related to customer refunds in Japan Consumer Finance.
Non-interest revenues were $7.5 billion, down 31% from the prior year
period, principally driven by lower Securities and Banking revenues, negative CVA, and the net charge resulting from the asset transfer in Special Asset Pool.

Citigroup expenses increased $808 million (7%) year over year to
$12.3 billion, reflecting higher legal and related costs, the impact of
foreign exchange, continued investment spending and increased business
volumes, partially offset by a decline in Citi Holdings as well as
productivity saves across the firm.

Citigroup total provisions for credit losses and for benefits and claims of $3.2 billion declined $5.4 billion (-63%) from the prior year period.

  • Net credit losses of $6.3 billion were down $2.1 billion
    (-25%) from the first quarter 2010. Consumer net credit losses declined
    $2.6 billion (-32%) to $5.4 billion, driven by continued improvement in
    credit in North America Citi-branded cards in Citicorp, and Retail
    Partner cards and residential real estate lending in Citi Holdings.
    Corporate net credit losses increased $485 million to $849 million year
    over year, primarily due to higher cost of loan sales as well as losses
    from loans to specific counterparties for which reserves had previously
    been established and were released in the current quarter.
  • The net release of allowance for loan losses and unfunded lending commitments
    was $3.3 billion, compared to $53 million in the first quarter 2010.
    The net reserve release in the current quarter consisted of $2.0 billion
    for consumer loans and $1.4 billion for corporate loans and unfunded
    lending commitments.
    • The net consumer reserve release was mainly driven by Retail
      Partner cards and North America Citi-branded cards. The $2.0 billion
      net reserve release compared to a net build of $224 million in the first
      quarter 2010.
    • The net corporate reserve release reflected releases for the
      overall portfolio, as credit trends continued to improve, as well as
      the release of previously established reserves for specific loans that
      offset charge-offs taken in the current quarter. The $1.4 billion net
      reserve release compared to a net release of $277 million in the first
      quarter 2010.

The effective tax rate on continuing operations was 28%.

Citigroup's total allowance for loan losses was $36.6 billion
at quarter-end, or 5.79% of total loans, down from $48.7 billion, or
6.80%, in the prior year period. The improvement reflected asset sales,
lower non-accrual loans, and overall improvement in credit quality in
Citigroup's loan portfolio.

  • The consumer allowance for loan losses was $32.7 billion at
    quarter-end, down $8.7 billion from the prior year period. The
    allowance for consumer loan losses was 7.47% of total consumer loans,
    compared to 7.84% in the first quarter 2010.

Citigroup's non-accrual loans of $14.8 billion declined 48%
from the prior year. A significant portion of the reduction was due to
the recapitalization of Maltby Acquisitions Limited, the holding company
that controls EMI Group Ltd., during the first quarter 2011. The
allowance for loan losses was 247% of non-accrual loans.
Citigroup end of period assets were $1.95 trillion, down 3% year over year. Citigroup end of period deposits were $866 billion, up 5% year over year, driven by a 28% increase in non-interest bearing deposits. Citigroup's net interest margin
was 2.91%, down from 3.34% in the first quarter 2010, reflecting a
decline in loan balances and yields, and a higher reserve build related
to Japan Consumer Finance.

Citigroup's Tier 1 Capital ratio was 13.3% at quarter-end, while its Tier 1 Common ratio was 11.3%.

Citi Financial Supplement

 


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Mon, 04/18/2011 - 08:03 | Link to Comment Thomas
Thomas's picture

When the Fed gives you money, is that a revenue?

Mon, 04/18/2011 - 08:08 | Link to Comment Ivanovich
Ivanovich's picture

Under current FASB rules, sure!

Mon, 04/18/2011 - 08:05 | Link to Comment hubbywan
hubbywan's picture

When will any of these phantom banks and their phantom "numbers" be seen for what they are?!? The emperor has no clothes!

Mon, 04/18/2011 - 08:07 | Link to Comment Ivanovich
Ivanovich's picture

I'm rather annoyed that their tax rate is less than mine.

Mon, 04/18/2011 - 08:07 | Link to Comment The Axe
The Axe's picture

another 12 billion loan loss revision...If not  No Profits....NONE!!!

Mon, 04/18/2011 - 08:12 | Link to Comment Cursive
Cursive's picture

It's harder to fake topline than it is the bottom line.  It's not impossible to fake topline, just harder than the bottom line.

Mon, 04/18/2011 - 08:27 | Link to Comment Thomas
Thomas's picture

The bandwidth boys did a fine job.

Mon, 04/18/2011 - 08:22 | Link to Comment Loose-Tools
Loose-Tools's picture

Slikram Bandit's bean-counters "git er DUN"!

Mon, 04/18/2011 - 08:25 | Link to Comment FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Can we please have a donate button set-up straight to the Citi website, these poor guys are suffering, we need to help.

Mon, 04/18/2011 - 10:37 | Link to Comment Sock Puppet
Sock Puppet's picture

Here is a button to help reduce the national debt.

https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=23779454

 

Mon, 04/18/2011 - 08:35 | Link to Comment Cdad
Cdad's picture

absent accounting gimmickry the company would barely have been profitable

Of course.  The criminal syndicate known as Wall Street has now released three consecutive quarters of earnings reports that were designed entirely to give a false sense of the economy and of business in the banks.  

I'm sure the SEC will get right on it, just as soon as M. Shapiro finally wraps up those meetings with J. Dimon, L. Blankfein, and such about which rules she should forget about and which rules should can go ahead and enforce.

I'm equally sure that the BlowHorn [CNBC] will warn people that there are real problems with quarterly earnings reports out of the banking industry.  They will also probably explain now why they have not reported on this problem the last two quarters.

I'm sure the wheels will not fly off the wagon today.  I'm sure Ben Bernanke will finally have an epiphany today.  I'm sure Congress will suddenly see that their plan to keep spending is in doubt.  I'm sure Europe will suddenly get religion on the fact that the Eurozone was a really nice thought...but cannot work.  

And I also know that UnicornDew aternative power is about to take the market by storm.

Mon, 04/18/2011 - 08:48 | Link to Comment topcallingtroll
topcallingtroll's picture

To their credit i temember joe and steve laughing at such reports nefore the crash. Kramer discussed how blatant the manipulation was when he was mock campaigning for sec chief. Kramer said he would be able to catch all the.manipulators because he knew all the tricks of manipulating financial statements and market prices.

Mon, 04/18/2011 - 09:03 | Link to Comment Cdad
Cdad's picture

That may be true...but for the last three quarters, the folk you are talking about have been all bulled up on the bullshit Qs.  During the last JP Morgan release, B. Quick was literally insistent that it was a beat, pinging it again and again until the stock went positive premarket...which of course ended in tears.

What we are talking about, of course, is the complete and utter proliferation of fraud within the banking industry, and the way in which the BlowHorn has been doing its best to carry water for said corrupt banking interests.

And I mention it all here because I know for a fact that things are only going to get worse until the ranks of the criminal syndicate Wall Street banking cartel are thinned, purged of its thieves who have been looting the nation's treasury via one bailout or another for two years now.  There is no shortcut to this cleansing process...except Marxism.

Capital will not form in banks as corrupt as ours.  

Mon, 04/18/2011 - 09:43 | Link to Comment Holodomor2012
Holodomor2012's picture

The criminal syndicate Wall Street banking cartel are the 'Marxists'.  Here are some references proving this point:

  1. The Kennan-Russel Anti-Tsarist Propaganda Campaign among Russian Prisoners of War in Japan, 1904-1905 by Frederick F. Travis
  2. New York Times, November 18, 1911. Article titled: “Denial from Mr. Hammond, Has Opinions on the Russian Question but Sought to Influence No One”
  3. :  http://www.reformed-theology.org/html/books/bolshevik_revolution/chapter_02.htm

Marxism ruined the USSR, and it has ruined the USSA. 

A simple resurgance of nationalism will quickly provide the chutzpah needed to identify and eradicate the source of this seemingly eternal parasitism.

Mon, 04/18/2011 - 08:38 | Link to Comment Urban Redneck
Urban Redneck's picture

"Paging Dr. FASB, we have another patient with weak vitals, should we call Dr. Bernank?"

Mon, 04/18/2011 - 08:43 | Link to Comment topcallingtroll
topcallingtroll's picture

Dr. Fasb now tries to hide the weak vitals rather than provide accurate health information.

Mon, 04/18/2011 - 08:38 | Link to Comment topcallingtroll
topcallingtroll's picture

Even Kramer has said before that he is tired of the bullshit, and joe and stevie used to make fun of such manipulated earnings before the crash scared them.

MISSES TOPLINE BUT EPS BEATS

Just incredible that some people are so stupid the stock may trend up.

Mon, 04/18/2011 - 08:55 | Link to Comment SheepDog-One
SheepDog-One's picture

A bit more on the Saudis cutting oil production, just in time for when bankrupt america is directed to commence 'driving season' where the tent cities apparently fold up and people journey around looking at carved mountains, holes on the ground, and feast on $9 burritos.

Shenandoah » Saudi Arabia Cuts Oil Output Right Before U.S. Summer Driving Season

Mon, 04/18/2011 - 09:00 | Link to Comment long juan silver
long juan silver's picture

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Mon, 04/18/2011 - 09:05 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

the fed can give banks FRN's but we all know that ain't money. the fed gives debt notes to all who will have them..I say good luck with that ..a new currency is coming just like old number 9 down the tracks..whoooo hoooo. clickity clak clickity clak..

Mon, 04/18/2011 - 11:12 | Link to Comment Sock Puppet
Sock Puppet's picture

.

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