Citigroup will be the first of the big banks to report, releasing first-quarter earning Tuesday morning before the opening bell. Analysts are expecting earnings of $1.85 per share and revenue of around $21.29 billion, per LSEG estimates. The bank is likely under serious duress that might put a black eye on the bank’s financial results this quarter.
Citigroup’s trading division is much more tilted toward fixed income than equities. This strategic decision has raised red flags since trading in fixed income often brings in less lucrative returns than equity trading. As evidence of that, JPMorgan Chase, Morgan Stanley, and Goldman Sachs just announced boffo quarters on the back of sky-high equities trading revenue. In comparison, Citigroup’s heavy dependence on fixed income could dampen its capacity to capitalize on such favorable market conditions.
Expectations for Citigroup’s trading revenue show just how much of a disadvantage this is. And with StreetAccount projecting that fixed income trading alone will bring in a stunning $4.33 billion. By comparison, stock trading is only projected to raise $1.4 billion. The gulf puts a fine point on Citigroup’s ongoing difficulty even as many rivals have prospered during roiling conditions in the equity markets.
Compounding Citigroup’s struggles, as seen by Seeking Alpha, is the expected provision for credit losses, which is projected to touch $2.57 billion. This whopping figure suggests that the bank may be anticipating future defaults or delinquencies in its loan portfolio. That scenario would be all the more difficult given its already precarious financial future.
JPMorgan Chase, Morgan Stanley, and Goldman Sachs have all topped analysts’ expectations this quarter. Their outperformance has been all about equities trading revenue. Citigroup is under increased competitive fire as it heads into earnings. This coincides with a backdrop of falling share prices.
Citigroup’s shares are down 10% so far this year. This drop underscores deepening market fears over President Donald Trump’s tariff policies, which have contributed to a banking sector selloff. The bank trades heavily on the bond trading side, which has further depressed its profitability relative to peers. This more recent focus has only exacerbated the impact of outside economic pressures.
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