Citi’s earnings report comes after a tough few months for the bank. Citigroup’s stock is down about 7.48 percent year over year and down more than 12 percent since the start of 2016. In November, Citigroup’s nonoperating holding companies were placed on a watch list by Standard & Poor’s as the government indicated it would be less likely to help them in a future crisis.
Earlier this week, Citi settled long-running litigation in which Allied Irish Banks accused it of helping a rogue currency trader rack up a $691 million loss. Terms of the settlement were not disclosed, but the dismissal averts a trial over a fraud that was at the time one of the largest on record to involve unauthorized trades.
In its third quarter, the company beat earnings expectations, posting earnings per share of $1.31 compared to an expected $1.28. Revenue, however took a hit from legal fees, falling to $18.49 billion from $19.98 billion a year earlier.
The banking sector will continue to see flat earnings until the economy picks up, said Paul Miller, an analyst at FBR Capital Markets.
“With 2 percent GDP growth, you’re not going to see a lot of top-line growth at [banking] institutions,” Miller said. “That’s why the guys are basically having flat earnings and ROEs (return on equities) ranging from eight to 12 to 13 percent.”