Balancing these objectives is not easy, especially since Citi is highly levered to the global economy. In that regard, attention should be paid to how Citi performs in segments like Global Consumer Banking and transaction services, which disappointed last quarter. The lackluster results led to sluggish net interest income (NII), which was down 1% year over year and down 2% sequentially.
Let's also remember that loans were flat year over year and down 1% sequentially last quarter. This indicated to me that both Wells Fargo and JPMorgan were stealing market share from Citi. This also meant that despite the reasons to rejoice in Citi's strong showing in commercial lending, management is underperforming on the consumer side of the business.
Average retail loans were up only 2% sequentially while card loans were down 1% -- two key areas where Citi needs to focus its attention this quarter. So, how the stock performs on Monday will depend on how well management was able to repair the deficits in consumer lending, among other areas.
I've been bullish on Citi's revival for quite some time now, and I don't see any reasons to change sentiment especially with the housing recovery now in full swing. Although I believe Citi will beat its earnings-per-share estimates due to continued cost cutting and restructuring plans, I would caution about the revenue target. It seems too optimistic given not only the less-than-ideal interest rate environment but also Citi's dependence on Europe, which has yet to fully recover.At the time of publication, the author held no position in any of the stocks mentioned. Follow @rsaintvilus This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV