Citigroup continues string of upside surprises
Citigroup continued the early run of big banks releasing upside earnings surprises. Excluding the impact of a big debit/credit valuation charge, Citigroup earned $1.11 a share, compared with the average analysts' estimate of $1.00 to $1.02.
The news was received warmly by the market. Perhaps more importantly, the company also was able to post an increase in the top line as well. Revenue excluding the accounting adjustments was up 1 percent year-over-year and up 17 percent sequentially, powered by consumer banking, securities activities in specific markets and transaction services.
Revenue in securities and banking came in at $6.65 billion, up 6 percent from a year ago but more than 50 percent higher than the fourth quarter. As with other banks, the driver was its fixed income results; revenue rose nearly 20 percent from the previous year.
The results were buoyed also by a $1.2 billion release of bad-loan reserves, something we were expecting for consumer banks in general. The big diversified banks are benefiting from a pick up in the consumer environment and in the strong FICC sales and trading environment, despite lingering equity woes.
The stage is now set for Bank of America's earnings. The bank hopes to continue the string of good news. Not everyone is convinced the top line growth can continue across the industry. But with the economy recovering there may still be plenty of room for progress.