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Citigroup Misses Big On Top And Bottom Line: Earnings Negative Absent Loan Loss Release

Tyler Durden's picture




 

Following last week's Easter egg by JPMorgan, the misses by financials continue, with Citi crapping the bed following a big miss in both top and bottom line after reporting $17.2 billion and $0.38 EPS on expectations of $18.5 billion and $0.52 per share. The biggest hit to the top line was the DVA adjustment courtesy of tightening CDS spreads, which while adding to top and bottom line in Q3, took out $1.9 billion in Q4 - of course like everything else it was also priced in. And while we are confident the full earnings presentation will be a labyrinth of loss covering, the first thing to realize is that absent a $1.5 billion in loan loss reserve releases, the bank would have reported negative net income, which was $1.364 billion pretax. Yet there is no way to explain the absolute bloodbath in the Securities and Banking group, which saw revenues implode by 53% from $6.7 billion to $3.2 billion Y/Y, and down 10% Q/Q. Notably, Lending revenues down 84% from $1 billion to $164 million. RIP Carry Trade.

Some highlights from the earnings report, pre-spun for public consumption:

  • Fourth Quarter Revenues of $17.2 Billion Down 7% from the Prior Year Period
  • Fourth Quarter Net Credit Losses Declined 40% from the Prior Year Period to $4.1 Billion
  • Full Year 2011 Net Income of $11.3 Billion up 6% from $10.6 Billion in 2010
  • Full Year 2011 Revenues of $78.4 Billion Compared to $86.6 Billion in 2010 Driven by $6.4 Billion Decline in Citi Holdings Revenues
  • Citicorp Loans of $465.4 Billion Grew 14% versus Prior Year
  • Citi Holdings Loans of $181.8 Billion Declined 25% versus Prior Year
  • Full Year 2011 Net Credit Losses of $20.0 Billion Compared to $30.9 Billion in 2010
  • Loan Loss Reserve Release of $1.5 Billion in Fourth Quarter, Down 35% from the Prior Year Period
  • Tier 1 Common of $115.1 Billion, Tier 1 Common Ratio Increased to 11.8%
  • Year-over-Year, Book Value Per Share up 8% to $60.78, Tangible Book Value Per Share(2) up 12% to $49.81

Full earnings supplement presentation:

 

 

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Tue, 01/17/2012 - 09:16 | 2070598 Gauthijm
Gauthijm's picture

Why would anyone invest in this sector is beyond me..

What an absolute mess in every way

TC

JMG

Tue, 01/17/2012 - 09:30 | 2070643 HedgeAccordingly
HedgeAccordingly's picture

ill take jessica biel for 10 points - http://hedge.ly/gFWVSm

Tue, 01/17/2012 - 09:38 | 2070669 LawsofPhysics
LawsofPhysics's picture

Likewise, looking at her it is clear it will take at least two of us to do the job.

Tue, 01/17/2012 - 09:48 | 2070701 WonderDawg
WonderDawg's picture

This is what I was expecting when I bought Feb puts on Citi a couple of months ago. They went green for a little while, but they've been bleeding ever since the week after Thanksgiving as the stock price goes up and theta burns off. I can only hope this news has the desired effect, but of course the stock will probably jump two dollars today. It's a fucked up world.

 

Tue, 01/17/2012 - 09:33 | 2070645 Chief KnocAHoma
Chief KnocAHoma's picture

Yet the futures market is pointing to a +107 open.

Vexxing... yes provacative.

Is that day light I see at the other end of this tunnel, or a train?

PS - That Jesica Biel is okay if you like your women like that. I prefer mine pudgy and bitchy, or maybe that is just what i am used to.

 

Tue, 01/17/2012 - 09:34 | 2070655 cossack55
cossack55's picture

Train (diesel-electric engine, since coal is evil)

Tue, 01/17/2012 - 09:32 | 2070651 justanothernerd
justanothernerd's picture

It's the only sector that the government won't let go bankrupt.

Tue, 01/17/2012 - 10:06 | 2070759 SheepDog-One
SheepDog-One's picture

The ONLY reason people jump on this banking crap is that they expect to be rescued!

Tue, 01/17/2012 - 09:16 | 2070600 Hansel
Hansel's picture

Priced in.  Why else would S&P futures be sitting at 1300?  Now that they are, everyone can sleep in.  The market has already made its move for the day.

Tue, 01/17/2012 - 10:18 | 2070722 The Limerick King
The Limerick King's picture

 

 

Awash in liquidity traps

The market is like shooting craps

But no need to fear

Or cover your rear

World markets have priced-in collapse

 

Tue, 01/17/2012 - 10:30 | 2070847 Comay Mierda
Comay Mierda's picture

the technicals have been hinting for 2 weeks now that spx would target 1300+

Tue, 01/17/2012 - 09:17 | 2070606 brewing
brewing's picture

yamma hamma it's fright night...

Tue, 01/17/2012 - 09:18 | 2070613 Sheikh Dani
Sheikh Dani's picture

Maybe this was already priced in ....... ha

Tue, 01/17/2012 - 09:22 | 2070623 Rainman
Rainman's picture

Those loan loss reserve releases are a real moneymaker ( slaps self while typing ).

Tue, 01/17/2012 - 09:23 | 2070629 fonzannoon
fonzannoon's picture

WFC beat. I wonder how far the bar was lowered so they could at least celebrate one bank hitting numbers.  I am so glad I am short financials because....oh wait.....I see green everywhere.

Tue, 01/17/2012 - 09:24 | 2070631 Sandy15
Sandy15's picture

So with this miss, WHAT is levitating this market?

 

Can anyone say F-E-D-E-R-A-L   R-E-S-E-R-V-E.............

Tue, 01/17/2012 - 09:31 | 2070647 Quincy
Quincy's picture

LTRO baby ... nothing like the smell of free money in the morning to turn shorts into longs!

LTRO is nothing but backdoor monetization that keeps rates at the short end of the curve manageable. We'll see nothing but short duration issuance while there's volatility.

Just wait until it's the FED's turn ...

Tue, 01/17/2012 - 09:41 | 2070676 RiverRoad
RiverRoad's picture

Yup.  And good for +100 on the DOW.

Tue, 01/17/2012 - 09:24 | 2070632 Dorky
Dorky's picture

When the fucking economy collapses and the S&P 500 is at 2,400, it is also priced in.

"Priced in" is such a cheap term that it is much cheaper than a whore.

My ass is "priced in" too.

Tue, 01/17/2012 - 09:26 | 2070634 Flesh Wound
Flesh Wound's picture

Friday is going to be interesting!

Tue, 01/17/2012 - 09:30 | 2070641 fonzannoon
fonzannoon's picture

No disrespect but why would Friday be interesting? US downgrade? Bullish. France downgrade? Bullish. Super Committe crapping the bed? Bullish....Greece default? Orderly....bullish.....what is going to happen Friday that is going to change anything?

Tue, 01/17/2012 - 09:37 | 2070667 cossack55
cossack55's picture

It will be reported that the strange noises being heard worldwide are actually Martian tripeds but Tom Cruise is available to respond with backup by Tim Tebow.

Tue, 01/17/2012 - 09:30 | 2070642 Cdad
Cdad's picture

Well, of course they need to pull from the loan loss reserves  After all, they need to start building up the bond loss reserve fund.

What an abysmal excuse of a company. 

Tue, 01/17/2012 - 09:40 | 2070671 cossack55
cossack55's picture

Hey, buddy! I'll have you know that is MY mortgage holder (maybe) you are bashing!!!!

Please continue.

Tue, 01/17/2012 - 09:44 | 2070654 Everybodys All ...
Everybodys All American's picture

How long will it be before another round of layoffs are once again announced at these banks so they can justify earnings expectations for the next qtr. 

Tue, 01/17/2012 - 09:39 | 2070659 LawsofPhysics
LawsofPhysics's picture

And the "markets" will rally on absolutely no volume.  Boring world indeed.  Where have all the "animal spirits" gone.  Oh that is right, selling is now illegal.

Tue, 01/17/2012 - 09:41 | 2070678 miker
miker's picture

Saving the banks is paramount.  The banks represent the foundation of the financial system.  If faith in them goes, people will pull their money; not just out of banks but stocks, bonds, etc.  Then the games up because the governement would have to stimulate (TARP) or print to keep everything propped up.  Once that begins, people lose faith in the currency and rush to get out.....hyperinflation and collapse of the system.

That is why the banks will not be allowed to fail.

Tue, 01/17/2012 - 09:52 | 2070714 WonderDawg
WonderDawg's picture

Wow. With insight like that, can you tell me who will win the 49er's/Saints game last weekend?

Tue, 01/17/2012 - 12:05 | 2071195 Defiant1968
Defiant1968's picture

Green Bay is a lock - they have a great pass rush  -  Book IT

Tue, 01/17/2012 - 09:57 | 2070731 francis_sawyer
francis_sawyer's picture

Gee piker thanks... I never looked at it that way...

Tue, 01/17/2012 - 09:58 | 2070735 LawsofPhysics
LawsofPhysics's picture

Soon enough, keeping the banks whole will be like trying to suspend gravity or plate tectonics.  The ONLY way the financial system can be saved would be through prosecution of the fraud.  So unless the financial elites are going to ask their political puppets to issue a grand jury summons on themselves, I am afraid it is too late, the moral hazard is growing each day.  History shows us how it ends.  Boring world indeed.  Thanks for making the PMs shine even brighter. 

Tue, 01/17/2012 - 10:13 | 2070779 Teamtc321
Teamtc321's picture

Standing ovation, Ogolfer clap. 

Tue, 01/17/2012 - 09:52 | 2070715 SnobGobbler
SnobGobbler's picture

if greece is ready for default;why not pad the indexes so a 200pt hit to the s&p wont hurt as bad...

Tue, 01/17/2012 - 09:58 | 2070737 azzhatter
azzhatter's picture

Has Cramer issued a buy, buy,buy yet? Has Bovine been fellating Vikles all morning? Rally time

Tue, 01/17/2012 - 10:56 | 2070934 lizzy36
lizzy36's picture

So when C rant 47% in October 2011, was the efficient forward looking market anticipating this AWESOME quarter?

Wed, 03/21/2012 - 04:56 | 2261134 kevin22
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