Tomahawk, WI 01/17/2014 (BasicsMedia) – Citigroup Inc (NYSE:C) has found itself in a very uninspiring situation after posting unpopular fourth quarter earnings. Warning shots had long been issued that the bank would falter in Q4, nonetheless, analysts kept a brave face to still expect the bank to exceed certain limits. But they have now been disappointed. The latest poor performance has also left a sour taste in the mouths of investors.

Investors reacted to the company’s dismal show in Q4 with heightened selling, sending the stock down the cliff by more than 4 percent on Thursday January 16.

Let’s see what the third-largest U.S. bank reported in Q4.

Fourth quarter results

Citigroup Inc (NYSE:C) announced that its Q4 net income reached $2.7 billion, thus doubling what it earned in the same period a year ago. However, this income figure fell short of meeting the expectation of analysts.

There are several factors which came into play resulting in the earnings miss and among them was collapse in fixed-income trading and mortgage banking.

As it is widely known, banks are dealing with a difficult housing market where high interest rates are keeping off mortgage origination. As a result revenues from mortgage are greatly compressed, thus hurting profits. Thus, Citigroup Inc (NYSE:C) has been caught up in this quagmire.

The bank is also hurt by weakened opportunities from fixed-income, currencies trading and commodities. These are the same problems that other banks have been going through for the past more than 12 months, yet it seems Citi was not well prepared to deal with the problems.

As concerns income from mortgage refinancing, Citigroup Inc (NYSE:C) has a leaf to borrow from peers Wells Fargo Co. (NYSE:WFC) and Bank of America Corp (NYSE:BAC) that succeeded in deal with the problem by turning focus to other businesses and products to mitigate the impact of the slowdown.

Fourth quarter in figures

Citigroup Inc (NYSE:C)’s Q4 revenue came in at $17.8 billion, 1 percent less than what it reached during the same period a year ago. Revenue from fixed-income trading fell 15 percent from a year ago to $2.3 billion. Sequentially fixed-income column fell 16 percent.

The bank thus ended up with $0.82 per share, instead of $0.95 that analysts had predicted for the stock.

While acknowledging that Q4 data was not as impressive as was expected, the bank’s CEO Michael Corbat sought to explain that the results pointed to the fact that the bank was getting many things correct in its key priorities.

Banks reporting

Citigroup Inc (NYSE:C) became one of the largest lenders in the U.S. which reported their Q4 this week. It however remained in the uninspiring list of stocks which failed to impress traders; in the list of poor performers the bank met JPMorgan Chase (NYSE:JPM) which also lost its spot to Wells Fargo Co. (NYSE:WFC) as the most profitable bank on annual basis.

Wells Fargo and Bank of American ended fiscal 2013 on a widely positive note after managing to exceed expectations even when they are operating under demanding conditions. BAC especially impressed that it overcame the many legal challenges and huge settlements to manage a profit growth.


The stock of Citigroup Inc (NYSE:C) is trading around $52.60 per share after it tanked 4.35 percent on Thursday. At least 27 analysts have issued sentiments on the stock, giving it an average price target of $61.

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