Bank Earnings Season 1Q 2014: Citi follows on to 2013 with a $1.23 earnings

Many were slow to comprehend the notch in Fee income and Retail Banking Income balance at JP Morgan, though analysts had updated their recommendation to a $1.25 EPS for the bank, but most are blindsided by a bad Q4 and the flurry of bad bank settlements for Citi as it wrote $1.1 Bln for its RMBS operations and another $400 mln odd for operations in Mexico. The RMBS settlement is expected to have cost them $100 mln in this quarter and the earnings call is later at 11AM ET ( I am travelling and may not develop further analyses on the same this week/month/quarter)

Citi walked into Q1 with a $2.5 Bln Net Income in Q4 but returned back to its March 2013 rate of $3.9 Bln NI, with a $11.76 Bln Net Interest Income and Principal transactions at $2.9 Bln matching drops in Fees and commissions to $3.1 Bln to make for a $8.3 Bln Non Interest Income. The $4 Bln quarter contained the usual $650 mln from loan loss reserves and Opex was down 1 % for the year even as the bank added back to its tax bills, engendering another question about its run of Deferred tax assets as it prepares for another reevaluation after its CCAR was turned down at the Fed and the bank is expected to prune its dividend and buyback plan

The $400mln increase in Capital added directly to Tier I core Capital from fund raising and the bank scored on Tangible Book Value to $56. Income from NA retail kept dialling base camp with no new RMBS issuing taking the place of old business and Institutional Clients held on to Global Business at $4.7Bln and $9.2 Bln respectively

NA remains its most profitable stream of retail business with Asia tipping only $381 million in Net Income with NA adding another $1.3 Bln in Net Income from Institutional Clients, and Asia another $559 mln with the bank still focussing on EMEA to deliver the lack of retail from the Institutional business which remains fee rich in EMEA

Lending and Investment AUM assets are up in retail globally even as Investment sales dried up. Net Credit losses in retail maintain a downward trend even as the Citi Holdings contribution zeros out and CitiCorp overall carries the same business