- 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.
The company's estimated Basel III Tier 1 common equity ratio increased to a strong 9.3% from 8.7%. Credit quality continued to improve, allowing the company to release $652 million in loan loss reserves. The release included $350 million in mortgage loan loss reserves. The company's total allowance for loan losses declined to $23.7 billion as of March 31, from $29.0 billion a year earlier. Corbat said the company "reduced the drag on earnings caused by Citi Holdings," which is Citigroup's runoff subsidiary, in keeping with former CEO Vikram Pandit's long-term "good bank/bad bank" strategy to right-size the company's balance sheet. Citi holdings had a net loss of $794 million in the first quarter, improving from losses of $1.049 billion in the fourth quarter, and $1.019 million in the first quarter of 2012. The runoff subsidiary's total assets were down 29% year-over-year to $149 billion as of March 31, or 8% of the firm's total assets. Investors were pleased, sending Citigroup's shares up up slightly to close at $44.87, on an otherwise sharply down day for the market. The broad indexes were all saw 2% declines. The The KBW Bank Index ( I:BKX) was down over 2% to close at 54.90, with all 24 index components seeing declines, except for Citigroup. Also on Monday, gold prices plunged more than 9%, for their worst one-day showing in 30 years. Wells Fargo analyst Matthew Burnell rates Citigroup "outperform," and in a note to clients after the earnings announcement called Citi's first quarter "an impressive result." According to the analyst, positive developments for the quarter included "1) Positive operating leverage in Citicorp driven by solid markets results; 2) Reserve release of $0.6B vs. our $0.1B estimate and $0.1B in 4Q 2012," and the increase in the company's Basel III capital ratio. Burnell added that a 19% quarter-over-quarter decline in mortgage loan delinquencies and a 17% sequential decline in net credit losses were "bigger future
reserve releases in Holdings." Atlantic Equities analyst Richard Staite rates Citigroup "overweight," with a $54 price target, and said in a note to clients on Monday that "it was a low quality beat in that it was driven by trading revenues and reserve releases but other aspects of the results were positive," including the DTA recapture. Staite was also impressed that Citigroup's estimated Basel III Tier 1 common equity ratio increased to 9.3% as of March 31 from 8.7% at the end of 2012. Citigroup's shares have returned 13% year-to-date, following a 51% return during 2012. The shares trade for 0.9 times their reported March 31 tangible book value of $52.35, and for 8.6 times the consensus 2014 EPS estimate of $5.20 a share. The consensus 2013 EPS estimate is $4.61. C data by YCharts
-- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn