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Wall Street expects Citigroup’s second-quarter earnings to tumble from a year ago. The bank reports Friday before the market opens.
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Continued weakness in deal making is expected to weigh on
Citigroup
’s
profits when the bank posts second-quarter results Friday before the market opens.
Analysts surveyed by FactSet expect that Citigroup (ticker: C) will announce earnings per share of $1.31 on revenue of $19.3 billion. That’s down sharply from the year-ago quarter in which the bank earned $2.19 per share on revenue of $19.6 billion. Profits are projected to be down 40% to $2.7 billion, with much of the decrease coming from the bank’s institutional clients group, which houses trading and investment banking.
Citigroup is expected to see a modest increase in net interest income—to $13 billion from $12 billion a year ago—representing the widening spread banks net from the interest they earn on loans and the interest they pay out on deposits. Net interest income has been increasing at banks amid the Federal Reserve’s rate-hiking frenzy over the past year. This is because banks are able to reprice their loans faster than deposits since savers are usually slow to pull their savings in search of higher-yielding products. But with interest rates so high, banks have been under pressure to pay interest on deposits.
Like most banks, Citigroup is also expected to prepare for worsening credit conditions amid a challenging economy. Net charge offs are expected to climb to $1.5 billion from $850 million a year ago. Citigroup is also expected to have a modest reserve build for soured loans of $276 million, which comes in below the $375 million it set aside in the second quarter of 2022.
Citigroup stock has gained 4.8% so far this year, while the
SPDR S&P Bank
exchange-traded fund (KBE) is down 16%.
JPMorgan Chase
(JPM) and
Wells Fargo
(WFC) also report results Friday.
Bank of America
(BAC),
Goldman Sachs Group
(GS), and
Morgan Stanley
(MS) post their second-quarter results next week.
Write to Carleton English at [email protected]
Source: https://www.barrons.com/articles/citigroup-earnings-stock-price-af3e04ec?siteid=yhoof2&yptr=yahoo