C Stock Lost 4% but Is Up 2.5% Now as Citigroup Reports Better-Than-Expected Q2 Earnings

Citigroup Inc (NYSE: C) has posted Q2 earnings figures that surpassed Wall Street expectations. The investment banking firm was also given a fair quarter expectation due to the effects of the coronavirus pandemic on businesses. The Citigroup Q2 performance shows a 50 cents per share earnings against an expected 28 cents per share. The company also surpasses its $19.12 billion expected revenue to hit $19.77 billion while also recording a fixed income, currency, and commodities trading revenue of $5.6 billion in place of the projected $4.86 billion.

Since the announcement of the Q2 earnings, investors have taken a rather bearish response to Citigroup (C) stocks. The stocks ended the Tuesday training session with a 3.93% downward plunge to close at $50.15. However, in the pre-market today, C stock is 2.55% up, at $51.43. The unencouraging response from Citigroup investors could be attributed to the dissatisfaction in the company’s earnings when compared to better performances recorded by competing firms such as JP Morgan Chase & Co (NYSE: JPM) with Q2 earnings of $1.38 a share, exceeding the $1.04 per share projected. Goldman Sachs Group Inc (NYSE: GS) Q2 earnings which are expected to be announced on Wednesday are also pitched to surpass Citigroup earnings in all categories.

Peek Into Citigroup as a Wall Street Giant

Citigroup Inc is an American multinational investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking giant Citicorp and financial conglomerate Travelers Group in 1998; Travelers was subsequently spun off from the company in 2002. Citigroup owns Citicorp, the holding company for Citibank, as well as several international subsidiaries. Citi is incorporated in New York

Citigroup is ranked 3rd on the list of largest banks in the United States and, alongside JPMorgan Chase, Bank of America Corporation (NYSE: BAC), and Wells Fargo & Co (NYSE: WFC), it is one of the Big Four banks of the United States. It is a systemically important financial institution and is on the list of systemically important banks that are commonly cited as being too big to fail. It is one of the nine global investment banks in the Bulge Bracket.

Citigroup today boasts of about 200 million customer’s accounts and operates in about 160 countries. Citi’s importance in today’s Wall Street cannot be overemphasized, the firm’s analysts are instrumental in predicting stock calls that investors rely on. The company recorded a revenue of $74.286 billion in the 2019 fiscal year showing how financially robust the firm is.

Backdrop of the Released Citigroup Q2 Earnings

Despite the profitability recorded, the firm had a seemingly tumultuous Q2. The company’s Equity trading revenue dipped 3% to $770 million while Net credit losses jumped 12% year over year to $2.2 billion. The reported net income of $1.32 billion shows a 70% dip from the Q2 2019 figure. The earnings have triggered all thanks to the stimulus package businesses received from the Federal Reserve.

“While credit costs weighed down our net income, our overall business performance was strong during the quarter, and we have been able to navigate the COVID-19 pandemic reasonably well. The Institutional Clients Group had an exceptional quarter, marked by an increase in Fixed Income of 68%. Global Consumer Banking revenues were down as spending slowed significantly due to the pandemic. We entered this crisis from a position of strength. During the quarter, our regulatory capital increased and our CET1 ratio improved to 11.5%, comfortably above our new regulatory minimum of 10%,” Citi CEO Michael Corbat said in a statement.

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