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Citi Beats Estimates on Stronger Trading (Update 3)

  • First-quarter EPS of $1.23 beats the consensus estimate of $1.17.
  • Earnings excluding DVA were $1.29 a share.
  • Revenue of $20.5 billion beats estimate of $20.17 billion.
  • Excluding DVA, first-quarter revenue was $20.8 billion.
  • Recaptured $700 million in deferred tax assets.

Updated from 10.39 a.m. ET with market close information and commentary, as well as comments from Atlantic Equities analyst Richard Staite.

NEW YORK ( TheStreet) --- Citigroup (C - Get Report) on Monday reported a solid first quarter for fixed income and equity trading, as the company continued to strengthen its balance sheet.

The bank reported first-quarter earnings of $3.81 billion, or $1.23 a share, compared to earnings of $1.2 billion, or 38 cents a share, in the fourth quarter, and $2.93 billion, or 95 cents a share, in the first quarter of 2012.

The first-quarter results beat the consensus estimate of a profit of $1.17 a share, among analysts polled by Thomson Reuters.

The fourth-quarter results included $1 billion in pretax expenses tied to the company's major expense reduction initiative announced in December.

Citi's first-quarter revenue, excluding credit and debit valuation adjustments (CVA and DVA) and minority interests, totaled $20.81 billion, compared to $18.66 billion the previous quarter, and $20.22 billion a year earlier.

CEO Michael Corbat said Citigroup "benefited from seasonally strong results in our markets businesses, sustained momentum in investment banking, continued year-over-year growth in loans and deposits in Citicorp, and a more favorable credit environment."

Securities and Banking revenue within main subsidiary Citicorp totaled $6.978 billion, increasing from $4.362 billion in the fourth quarter, and $5.342 billion in the first quarter of 2012.

Excluding CVA and DVA, Securities and Banking revenue totaled $7.288 billion in the first quarter, increasing from $4.872 billion in the fourth quarter, $6.718 billion in the first quarter of 2012. Investment banking revenue was up 6% sequentially and 22% year-over-year, to $1.063 billion in the first quarter.

Equity trading revenue totaled $826 million in the first quarter, increasing 78% from the previous quarter, but declining 10% from a year earlier.

Fixed income trading during the first quarter totaled $4.623 billion, increasing from $2.741 million in the fourth quarter, but declining from $4.781 billion in the first quarter of 2012.

The first-quarter bottom line was boosted by the utilization of $700 million in deferred tax assets (DTA). The company's DTA arising from losses from the credit crisis and foreign tax credits disallowed from equity capital totaled $49.805 billion as of March 31. The potential release of the entire DTA could be a pivotal event for the company and investors, with some analysts foreseeing a huge capital return down the line.
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