Weaker Trading Revenues, Higher Loan Provisions Will Weigh On Citigroup's Q2 Results

Citigroup (NYSE: C) will report its Q2 2019 results on Monday, 15 July. Consensus figures point to negligible change in revenues for the geographically diversified banking giant compared to the year-ago period, although the EPS is expected to jump 12% year-on-year. Per Trefis, Citigroup’s stock has a fair value of $78, which is 10% higher than the current market price. We have analyzed How Citigroup’s revenues & expenses have changed over recent quarters in an interactive dashboard along with our expectations for full-year 2019. You can modify Trefis forecasts to see the impact of changes on Citigroup’s valuation. Additionally, you can see more Trefis data for financial services companies here.

Citigroup reported $72.85 billion in Total Revenues in FY 2018. This included 3 revenue streams.

How Have Citigroup’s Revenues & Expenses Changed Over Recent Quarters?

M&A Advisory Fees: In Q1 2019, Citigroup reported M&A Advisory fees of $378 million which was 76% higher than the figure for the previous year. The primary reason for this increase was an improvement in Global M&A deal volumes, which is expected to continue in subsequent quarters.

Debt Underwriting Fees: It is a key driver of underwriting revenues in Institutional Client Group. In Q1 2019, it grew by 15% y-o-y to $804 million and is likely to continue the same trend in subsequent quarters. We expect it to increase by 10% y-o-y in 2019 as global debt capital market activity improves from the weak levels seen in the second half of 2018. However, a decrease in Fees as % of Debt Origination Volumes could mitigate the impact of higher volumes on Citigroup’s top line.

Security Trading Revenues: It is the major constituent of Institutional Client Group markets revenues and has trended lower in the last few quarters due to a widening credit spread, weaker equity valuations and lower activity levels. In Q1 2019, security trading revenues dropped by 5% y-o-y primarily due to a 24% decrease in equities trading compared to the previous year – although there was a slight tick in FICC (Fixed Income, Currency & Commodity) trading.

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Source: Forbes.com

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