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Citigroup Inc C

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Mixed Q4 Results for Citi as Most Revenue Items Still Not Going the Bank's Way, Fee Outlook Not Good

Eric Compton, CFA Senior Equity Analyst

Analyst Note

| Eric Compton, CFA |

Narrow-moat Citigroup reported mixed fourth-quarter earnings, with EPS of $2.08 handily beating the Factset consensus estimate of $1.34 per share. This equated to a return on tangible common equity of 11.4%. As with several peers, the biggest swing factor, one we have highlighted in the past, was provisioning for credit losses. In the current quarter, Citigroup was able to release almost $1.5 billion in reserves compared with net charge-offs of just under $1.5 billion, resulting in provisioning of close to zero. Compared with credit costs of roughly $2.4 billion last quarter, this was a swing of roughly $0.93 in EPS, assuming a 20% tax rate. The possibility of reserve releases occurring had been talked about prior to the beginning of the fourth quarter, but it is nice to see it actually occurring as it signals that the banks are likely well reserved, which has been our thesis all along. Citigroup isn't the only bank seeing this trend, as JPMorgan and PNC reported positive reserve development as well today.

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Company Profile

Business Description

Citigroup is a global financial services company doing business in more than 100 countries and jurisdictions. Citigroup's operations are organized into two primary segments: the global consumer banking segment, which provides basic branch banking around the world, and the institutional clients group, which provides large customers around the globe with investment banking, cash management, and other products and services.

388 Greenwich Street
New York, NY, 10013
T +1 212 559-1000
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 200,000