Citigroup: Different Bank, Same Story?

REPLAY VIDEO
Your next video will start in
Pause
  • Info

  • Comments

  • VIDEO TEXT

Oct. 11 (Bloomberg) -- Barclays' Jason Goldberg, KeeneOnTheMarket.com's Andrew Keene and Bloomberg's Julie Hyman preview Citigroup's earnings with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

And scale back operations in emerging markets.

He also won approval of the former chief that he is finally happy with management.

The bank is set to announce earnings on tuesday.

Should he get your approval?

Julie, what is the street looking for out of it?

One dollar for cents a share -- $1.04 is the average estimate.

Some of the rivals we have heard from, jpmorgan and wells fargo today, do not report increases in revenue.

Year over year, that would be a difference from its competitors.

We're looking for some of the same trends across the industry.

One of them is fixed income trading revenue.

Expect it to be weak at citigroup just like it was a jpmorgan and is expected to be at other banks.

The other trend is the mortgage lending trend.

We saw a decrease in mortgage lending activity last quarter.

Citi, like the others, is expected to be hurt by that.

One difference is more exposed internationally than any of the other large u.s. banks.

Last year it had 58% of its revenue coming from outside north america.

It is more vulnerable and more poised to benefit from some of what we are seeing a broad, particularly in emerging markets, but also europe and other parts of the world.

That is also interesting to look at.

International exposure.

Let me go to jason and talk about the mortgage side of the business.

Are you concerned about that?

Thanks for telling us about the client --declines in mortgage lending.

It is a concern.

Refinance revenues have declined as interest rates have gained.

The mortgage rates are not as large as jpmorgan or bank of america.

There has been a decline in the second quarter.

It was also the sale of loans we do not expect to repeat.

Consumer businesses will be adversely impacted by lower mortgage revenues.

There are things outside the u.s. that should help pick up the slack.

I look to see how other banks have performed on earnings.

Wells fargo and jpmorgan both looked like they had good results, but the stock did not move much at more.

Not much movement.

I'm looking for the same thing at citi.

It has been stuck in a range.

I want to sell them at the straddle.

On this trade, i make money as long as citi stays in the range.

If citi is going to report, i do not think there will be much reaction in either direction.

Revenue has been weak.

They will report in line.

I'm expecting a lack of movement on citi.

I am curious on your thoughts of michael corbat.

A lot of people are tying the success to his management.

Do you think what he is doing is trying to make this bank smaller?

Maybe citi had gotten too big for its own good?

I do not think smaller, but clearly more focused.

We have seen a better control on expenses.

Previously, it was investing everywhere.

Under corbat, they invest where they have a potential advantage.

They have exited some markets where they do not have competitive advantage to compete effectively with local competitors.

They have been shifting resources to countries or businesses or they feel like they have scale and competitive advantages to capitalize on the global strengths.

In this increasingly regulated environment, you question whether the big supermarket style bank has a future.

That goes to jason's point and the strategy we have been seeing from citigroup focusing itself.

It seems like this quarter for many of the banks has been well telegraphed.

You have seen the trading revenue going down potentially on fixed incomes.

Is there anything you feel like you do not know that you want to find out from this earnings report?

Mid-september, we had the global conference.

They laid out what this quarter would look like.

There are some questions around the emerging markets franchise.

You saw this with the slowdown in some of those markets.

We think they will do fine.

If em slows, it will outgrow the pace of the u.s. economy.

There are some questions of how they do where you may not get signs from other banks.

Lower mortgage revenues and subdued loan growth is expected.

That is the reason why you do not think we will see much movement in the stock.

I think a lot of it is factored in.

It is up 20% year to date.

Since july, it has been stuck in a range.

It seems performance is factored into the price.

We had a big rally yesterday.

Jpmorgan was up $1.50. it was a premarket and then moved back.

I do not think much happens on citi after earnings.

Coming up, deal or no deal?

We will tell you what is going

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change