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The Two Charts That Matter From Citi's Earnings Presentation

Tyler Durden's picture




 

Earlier today Citi reported earnings that missed expectations of $1.02 on an unadjusted basis ($0.95) but beat adjusted ($1.11). Same with revenue. And while one can go through the bank's 10-Q and earnings presentation, there are just two charts worth pointing out which show the same trend exhibited by JPM last week: loan loss reserve release was $1.2 billion or 40% of the $2.931 billion in after tax net income. Which is to be expected: the traditional primary driver of "earnings" continues to be an accounting fudge. Where things get dicier is when considering that in Q1 2012 mortgage credit trends are not exactly good, because just like in the case of JPM, net credit losses rose for the first time in, well, years. So: loan loss reserves are released even as the inflection point in credit losses is reached. Brilliant.

Loan Loss Reserves:

And Credit Trends:

Full presentation:

 

 

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Mon, 04/16/2012 - 08:37 | 2348150 AU5K
AU5K's picture

They can do whatever they want, knowing that worst case, they will be bailed out by taxpayers.

Mon, 04/16/2012 - 08:42 | 2348155 SheepDog-One
SheepDog-One's picture

What are these 'taxpayers' you speak of?

Mon, 04/16/2012 - 08:45 | 2348161 Id fight Gandhi
Id fight Gandhi's picture

Issue more nat. debt

Mon, 04/16/2012 - 08:47 | 2348167 LetThemEatRand
LetThemEatRand's picture

Citi would glady take a hamburger from the government today in exchange for payment of said hamburger by the taxpayers over the next 100 years or so.

Mon, 04/16/2012 - 08:58 | 2348190 AU5K
AU5K's picture

I guess I didnt pay my fair share because I got hit with the AMT.  Meanwhile, the fair share for nearly half of americans is "nothing"....

Mon, 04/16/2012 - 09:59 | 2348344 jeff montanye
jeff montanye's picture

and, for the properly positioned, something indeed.

http://www.coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=bb1c...

Mon, 04/16/2012 - 09:08 | 2348220 Divided States ...
Divided States of America's picture

Its amazing how quickly people forgot how Citi fared in the bank stress tests, and that joke of a test set the bar very very low already.

Mon, 04/16/2012 - 08:44 | 2348162 GOSPLAN HERO
GOSPLAN HERO's picture

The United States of Socialized Losses (USSL).

Mon, 04/16/2012 - 08:50 | 2348177 LawsofPhysics
LawsofPhysics's picture

I can not take credit for this saying, but I like it;

"A rolling loan gathers no loss"

Mon, 04/16/2012 - 08:44 | 2348163 mayhem_korner
mayhem_korner's picture

 

 

Well, they'll be bailed out by the Fed for sure.  Whether the transfer to the ultimate taxpayers will happen sans Civil War Part Deux remains to be seen...

Mon, 04/16/2012 - 08:40 | 2348151 mayhem_korner
mayhem_korner's picture

 

 

Yeah, but once that Case Shiller HPI turns positive, they can go into loss reserve "build" again...just like the Fed Gov't can go into "surplus" once the economy recovers.

/s

Mon, 04/16/2012 - 08:42 | 2348152 IToldYouSo
IToldYouSo's picture

I know this is off topic and I apologise in advance, but just seen this, unenforceable credit agreements......

http://www.bbc.co.uk/news/business-17670803

I love it when big finance gets slapped in the face by its own arrogance and starts shitting its pants. a sweet sweet feeling indeed

Mon, 04/16/2012 - 08:44 | 2348160 cossack55
cossack55's picture

Good news is never OT.

Mon, 04/16/2012 - 08:48 | 2348172 IToldYouSo
IToldYouSo's picture

cheers cossack, tho my -1 tends to disagree lol

Mon, 04/16/2012 - 08:51 | 2348178 mayhem_korner
mayhem_korner's picture

I love it when big finance gets slapped in the face by its own arrogance

 

...and what of the irresponsibility of the borrower?  Or is she just a victim?  You'll have to forgive me if I'm not "all in" on the theory that all of the world's indebtedness is a function of the lenders.

Mon, 04/16/2012 - 09:00 | 2348202 IToldYouSo
IToldYouSo's picture

Until 4 years ago I would have tended to agree with you but I guess its easy to forget sometimes that big finance is supposed to be professional (manage risk, follow regulation etc). Though now we know otherwise.

If they make bad/poor decisions they can live with the consequences, afterall they were happy to pass on their losses and still pay themselves hefty salaries

Now explain to me why i should care about this fraudulent industry

Mon, 04/16/2012 - 09:12 | 2348230 mayhem_korner
mayhem_korner's picture

 

 

I didn't ask you to care about any fraudulent industry.  The article is talking about revolving credit, not a mortgage or other "asset" underwriting.  Perhaps you believe that "big financial" has some special hypnosis ability to make folks spend money they don't have in a revolving credit agreement.  Personally, I don't have a lot of sympathy for folks who don't seem to have any familiarity with personal responsibility.

Mon, 04/16/2012 - 09:30 | 2348260 IToldYouSo
IToldYouSo's picture

Mayhem, please dont get me wrong. Responsibility is everything and we all have our part to play - because isnt that how civil society works.

All I know is that there will always be demand for 'easy' money. The finance industry has to professionally provide for this market in a responsible manner

Seems to me that they were happy to lead society up a blind ally with their liberal and irresponsible credit confetti and still want paying or bailing.... as you sow so you shall reap

Mon, 04/16/2012 - 09:00 | 2348193 Hard1
Hard1's picture

And that's the "slight" credit deterioration after they have put the lipstick on the pig and cooked a few numbers

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