Earnings Preview: Citigroup

Citigroup (C) is expected to report Q2 earnings Friday, July 18 before market open with a conference call scheduled for 8:30 am ET.

Guidance

Analysts are looking for EPS of (61c) on revenue of $17.72B. The consensus range for EPS is ($1.25) to 2c, while the consensus range for revenue is $16.44B to $18.40B, according to First Call. On June 18 the investment bank said it would take "substantial" write-downs on CDOs for Q2. In addition, the company may take more write-downs related to monolines for Q2, the CFO said.

Analyst Views

Sandler O'Neill on July 9 slashed their Q2 EPS estimate for the investment bank to (53c) from 25c, due to continued deterioration in consumer credit quality, their forecast for larger asset mark-downs in Citi's investment bank, and preferred dividends on the $8B in preferred stock issued by Citigroup.

On July 8, J.P. Morgan also reduced their 2008 EPS estimates for Citigroup, to (87c) from 8c. The firm cited their forecast for additional write-downs as the reason for the downward revision. Citigroup announced on July 11 that it would sell its German retail banking operation for $7.7B plus earnings accrued in 2008. On July 15, a Japanese newspaper reported that the investment bank was seeking to sell its Japanese non-core investment firm.

Comments

[dougnhi]

Whatever they say, it will be assured that "Level-3" assets will be maxed out to make the hit seem less than what it actually is. The banks are insolvent, and all the off-balance-sheet games can't hide this fact from informed investors. Any other industry (Enron, WCOM) would find their CEOs in prison, but when the top regulatory people are bankers and corrupt, you have special rules to allow the falsificiation of records. Cox, Bernanke, and Paulson are all fully aware of what would be criminal activity in other sectors, but which is "business as usual" in banking. Sooner or later (hopefully sooner), the games will need to end. If they don't, expect a depression.

[jnsesq]

Yeah! What dougnhi said.