Tuesday, 17 January 2012

Financials slump as Citi and JP Morgan miss estimates

Shares in the third biggest US investment bank slumped 5.80% today after it announced that its revenues fell 7% Q/Q to $17.2 billion, and $0.38 earnings-per-share on expectations of $18.5 billion, and $0.52 EPS. This comes after the disappointing Q4 results of JP Morgan, which followed the same pattern: a loss in the debt valuation adjustment (DVA), lower investment bank fees, loss on the trading division all covered by an offsetting release from loan loss reserves.

Citigroup - the proverbial hot potato

What is mind boggling is that the company reported a 1.47$ billion release from loan loss reserves, on a net income of  $1.2 billion. It means that without this one-time "revenue", the company would have shown a loss. The real bloodbath took place in securities trading where the revenue shrunk 53% from $6.7 billion to 3.2 billion. Citi Holdings, created by the CEO Vikram Pandit, to fence its unwanted assets posted a loss of $806 million, down from the $1.02 billion loss posted in Q4 2010. The size of the holdings decreased 25% to $269 billion.

Citi Q4 Supplement

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