The Banking and Strategy Initiative

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Bank Earnings Season 2Q2015: Citibank Expenses down a whopper $5 B in

Citi finally delivered $4.8 Billion in net earnings after the year ago surprise that wiped out the quarter, making a net income of nearly $9.7 Billion in the two reported quarters with minor accretions from declining Credit losses and on line for an ennual earnings bonanza of $6 per share at $1.45 each of the two quarters including CVA/DVA

CET Tier I was up to 11.4% and ROA has improved to a best in class 1.04% for the two quarters with the bank continuing muted buybacks in the first year of CCAR approvals for the same

ROE remains way bnelow 10% at a 9.25% average for each of the two quarters reported in 2015 The bank compares well with erstwhile and new competitors including BofA and US Bank

The Citicorp ( core) efficiency ratios are down to 55% with a long awaited jump (<$1 Bln) in revenues instead of accruals and additions in Citi holdings revenues and has used up another $700 mln odd in DTA, the EBIT additionally making 9% from efficiency gains in the first half before or after DTA. EPS improving to $1.45 for June 15 over June 14’s 1.25 before provisions.

Core expenses were down $465 mln on linked quarter, mostly from favorable currency movements

Consumer Banking revenues moved up after a long gestation to $7.39 4 bln internationally and $9.817 bln in US and Canada, with reduced expenses increasing yield in both geographies by 8% and 5%. Credit expenses still offer great improvements in Asia for time to come. The revenue upticks include $300 mln odd from continued asset sales ($150-200 mln in RE sales and another $150 -200 continuing on other income from debt buybacks every quarter)

Efficiency ratios have been finally showing big gains, down to 53% (Cost to Income) for the six months

Institutional Clients remained split between Markets and Commercial and Transaaction Banking at $4.2 and $4.4 bln in topline, which holds up the group’s efficiency ratios with a Cost Income contribution of 57%

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This entry was posted on July 19, 2015 by in Uncategorized.

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