What to Expect From Citigroup Earnings

NEW YORK (TheStreet) -- Citigroup (C) is due to report earnings for the fourth quarter on Thursday.

Analysts expect Citigroup to earn a profit of $3 billion or 96 cents per share on revenue of $18.18 billion for the quarter. Most analysts exclude accounting gains and losses from changes in the valuation of Citigroup bonds from their core estimates.

In the year-ago quarter, the bank earned a net income of $2.2 billion or 69 cents per share, excluding non-core items, on adjusted revenue of $18.7 billion.

Expectations are low ahead of the bank's earnings. As evident from earnings reports from JPMorgan (JPM) and Wells Fargo (WFC), fee income will likely be weak. The bank has also indicated that the pace of loan loss reserve releases will slow in the fourth quarter, partly due to the acquisition of a card portfolio from Best Buy  (BBY). Reserve releases have been a crutch that many banks have used to prop up earnings.

It also said legal expenses will remain elevated and that repositioning expenses in the fourth quarter would be somewhat higher than previous quarters.

Here's what will be in focus.

Core Expenses: Citigroup is in the middle of a massive $1.1 billion restructuring plan that it announced in late 2012. The bank is exiting unprofitable markets, refocusing its operations in many markets and reducing headcount in its institutional clients business, among other steps to boost efficiency.

Analysts have noted that the bank has made considerable progress. The efficiency ratio (operating expenses as a percentage of revenues) at Citicorp, its core banking arm, has declined from 63% in 2011 to 59% as of the 12 months ending Sept.2013. The bank has set a target efficiency ratio of the mid 50s by 2015.

If you liked this article you might like

SEC's Cyber-Gaffe Highlights Risk of Trump Budget Cuts at Agency

China's Banks Halt Business With North Korea Per United Nations Sanctions

Why Hurricanes Won't Force the Fed to Ditch a December Rate Hike

Fed Pares $4.5 Trillion Balance Sheet But Easy-Money Era Isn't Over

Bank Stocks Move Higher as Fed Decides to Start Unwinding Balance Sheet