Tomahawk, WI 10/16/2013 (BasicsMedia) – One can learn a lot about a company by taking keen interest in the performance of its financials. Citigroup Inc (NYSE:C) has just released its latest financials for the quarter which ended on September 30, 2013. Prior to the release, Wall Street was rife with speculations to the effect that the company would be unable to achieve better results than the past. Citigroup is a major competitor with two other large U.S. banks based on assets, JPMorgan Chase & Co as well as Wells Fargo. Last week the other two released their results and suddenly there was hope for C.

Citigroup’s revenues should be around $18 billion for the three months leading to the quarter that ended on September 30, 2013. During a similar quarter in 2012, Citigroup reported revenues of more than $19 billion. Therefore, one clearly sees that this year’s revenues have dropped compared to those of last year. The single source of Citigroup’s troubles and which is responsible for the decreased revenue is mortgage. Large consumer banks such as Citigroup, JPM, BAC and Wells Fargo are quite vulnerable to what goes on in the mortgage sector.

Citigroup’s Falling Revenues Attributed to High Interest Rates

The mortgage department was severely hit thus leading to los of jobs in this sector. Citigroup is one of the banks that decided to send some of its workers in the mortgage department home. Interest rates rose incredibly and this had an impact on mortgages thus leading to low revenue from this division by Citigroup. The reason why Citigroup carried out layoffs is that business had dropped. Since this is what happened, I was not expecting Citigroup to report positive results in its latest quarterly financials, and this is what will happen within the industry as a whole.

High Interest Rates Not Good for Mortgages

If the interest rates in the U.S continue at their current levels, I expect Citigroup and the other major U.S. banks to report poor results. Interest rates have a direct bearing on mortgages and if they are high, mortgages will no longer be attractive to customers. This will affect the bottom line of all the major U.S banks, including Citigroup. However, this does not take away from the fact that 2013 has been a good financial year for Citigroup. It successfully beat all the earnings expectations for the first two quarters of the financial year, and its stock rose accordingly.

Citigroup’s Stock Improves in 2013

The stock price has increased by close to 23% in 2013 alone. This is further proof of the way 2013 has gone on quite well for Citigroup. It has been the best performing consumer bank in Wall Street by a large margin in 2013. It has outperformed its competitors and peers in almost every single sector. Its performance was best among consumer banks but poor compared to Morgan Stanley and Goldman Sachs Group Inc, the two leading investment houses both in the U.S and globally. There is still hope that the bank can post much better results in 2014.

My faith on Citigroup has not diminished in any way. I still believe that it has enjoyed 2013 and the positives far outweigh the negatives where Citigroup is concerned.

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