The Banking and Strategy Initiative

Chillin' out till it needs to be funded

2015 Bank Earnings Season: Citi takes its place among the deserving again!

Cit scored a big $1.06 per share in Q4 EPS without the legal baggage of last year and outscored Wells Fargo for starters returning to our choice pedestal as example to Bank of America on how to manage with a safe equity base without pulling down investors. The Bank’s $3.3 Billion for the quarter helped it generate $17 Billion in Profits for the year

The revenues of $76 Billion were helped along by an Overhead ratio of 57% and a whittling down of Citi Holdings to 4% of the total bank. The bank’s profits thus rose more than the $3.8 Bln loss to settlements on RMBS and other CDO arraignments last year that were an almost $3 Billion in legal expenses for the bank in the corresponding period last year. Goldman Sachs is paying its dues to the regulators to the tune of $5 Bln this quarter ($875 mln in cash)

Loan Loss Provisions were down to 2% of total assets at $12.6 Bln from $16 Bln and Deferred tax assets ensured some steady profit as well

Q4 revenues in Citicorp were however down by 2% even as CET! rose to 12% with a 7.1% SLR

A 14% decline in GCB revenues Internationally meant a 9% decline in GCB revenues overall but net income for Consumer banking fell more steeply on new investment and GRC costs. Continuing revenue decreases in the North Aerica business remain a primary concern for the bank shoring up the bleeding with DTA and lower LLP now for donkey’s years

ICG revenues were up on the back of an almost 10% increase in markets revenues

There has not been a sunny disposition however in the end of year Financial conferences from the bank’s management and it remains to be seen how they become the no. 1 bank stock in 2016, which we hope to sit in on the conference call in 3 hours to find out.

Also of concern is that at $17 Bln in NI, the bank still has an ROE of below 10%. Citi  however enjoys challenged yet high 2.98% NIMs this year

 

 

 

 

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This entry was posted on January 15, 2016 by in Uncategorized.

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