Barclays: Citigroup Q2 Results Contained Several Positive Trends

Citigroup Inc C reported its 2Q EPS ahead of expectations on a lowered guidance, Barclays’ Jason M. Goldberg said in a report. He maintained an Overweight rating on the company, with a price target of $60.

Citigroup’s quarterly results showed several positive trends, including “improvement in profitability metrics (ROE, ROA and efficiency ratio), core y-o-y loan growth, lower y-o-y expenses, DTA utilization ($0.9bn), a continued reduction in Citi Holding assets (-10%) while remaining profitable, and tangible book value growth (+2%),” analyst Jason Goldberg wrote.

2Q Results

The company reported its 2Q16 EPS at $1.24, ahead of the consensus expectation of $1.10. Net income came in at $4.0bn, above the guidance of $3.5bn. Citicorp’s revenues were up 4 percent sequentially, with ICG recorded 10 percent growth and GCB remaining flat. Citi Holding’s revenues declined by 57 percent y/y and 43 percent q/q.

Compared to the 1Q16 results, Citigroup’s NII increased slightly, with average earning assets rising 2.1 percent, Goldberg mentioned. The company’s NIM declined 6bps and fee income remained stable, while the company controlled core expenses and recorded a lower loan loss provision.

Estimates Revised

The EPS estimate for 2016 has been raised by $0.10 to $4.75. The EPS estimate for 2017 has been reduced by $0.15 to $5.25, to reflect a lower net interest margin forecast.

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