Citi Earnings: What to Expect

NEW YORK ( TheStreet) -- Citigroup ( C) appears poised to report its first profitable year since 2007 on Tuesday, at which point investor focus will shift toward growth.

Citi, the first "supermarket" bank in the U.S., was the one that arguably got into the most trouble during the financial crisis. The U.S. Treasury Department had to convert its $45 billion preferred stake into common stock in 2009 and just recently sold off the last bit of its investment.

For the first time since the financial crisis touched off, Citi has been in the black every quarter so far this year. The New York-based bank earned $9.3billion, or 31 cents per share, during the first nine months of 2010, vs. a loss of $6 billion, or 19 cents per share, over the same period a year earlier.

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Wall Street expects Citi to report earnings of 8 cents per share for the fourth quarter on revenue of $20.5 billion, according to Thomson-Reuters -- which would be a drastic change from its loss of 33 cents per share in the fourth quarter of 2009. For all of 2010, analysts expect the firm to report a profit of 40 cents per share, vs. a loss of 80 cents per share in 2009.

Unlike money center competitors like JPMorgan Chase and Wells Fargo ( WFC), few expect Citi to increase its dividend in 2011.

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But just because it's a few steps behind some peers doesn't mean Citi should be ignored. In fact, its stock has remained far more resilient than other big banks through the regulatory reform and foreclosure battles of 2010, partly because it was so cheap relative to book value and forward-looking earnings. The share price recently started holding its ground above the $5 level, hitting a new 52-week high of $5.15 on Friday.

"Over the past two years, Citigroup has moved toward a more customer-driven model and run-down its problem legacy assets, which should ultimately reduce its risk and free up capital/resources," says Jason Goldberg, a sell-side analyst who covers Citi for Barclays Capital. "In addition, its international diversification should give it another source of loan growth and mitigate the impact of U.S. financial reform."

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