One look at the level of Citigroup stock pre-open and one could get the impression that the bank had a whopper of a result. And, on the surface at least, it did, after it reported $1.30 in EPS, beating the $1.14 expected and revenues of $20.1 billion also beating the $19.4 billion expected if still a modest decline from the comparable result a year ago. What was not emphasized is that the bulk of the revenue, and thus earnings, upside was courtesy of the insolvent and bailed out Citi Holdings, where the top line increased by 58% from $914MM to $1.442Bn and the Net Loss shrink from $0.8 billion to $0.3 billion, while Citicorp - the main operating subsidiary - saw revenues decline by 5% from $19.7 billion to $18.7 billion, as Net Income dropped by 8% from $4.8 Billion to $4.4 billion.
In other words the entire beat was due to fudging the holdings and income statement in the rolloff, bailed out Holdings division (without which Citi wouldn't exist).
Why did Citi have to resort to such an algo-fooling cheap shoot? Simple: operations in its core banking group, the bread and butter of New Normal banks, Investment Banking and Fixed Income Markets, both declined by 10% and 18% respectively, as the US capital markets continue to deteriorate, leading to an 11% dump in the most important, Institutional Clients Group, EBT.
But what was worst, and naturally will not be discussed at all by the peanut gallery, about Citi's just announced results is that the amount of Citigroup mortgage originations - that key aspect of the trumpeted "housing market recovery" - did what it has done at every other bank. It plunged. Only at Citigroup, it plunged so badly, it just reached a new record low which at $5.2 billion is a 71% drop from a year ago! Long live the housing recovery... in which nobody seems to be participating.
And speaking of loan creation, based on reported data, so far in Q1, three of the four big banks: Citi, Wells and JPM have reported that total loan issuance is negative, something which drastically differs from what the Fed reports in its weekly commercial bank update report.
We eagerly look forward to the rest of the banks to conclude reporting Q1 numbers so we can determine just how wildly the Fed's H.8 statement is fabricating data.