Citigroup Misses Big On Top And Bottom Line: Earnings Negative Absent Loan Loss Release

Submitted by Tyler Durden on 01/17/2012 08:13 -0500

• Book Value
• Carry Trade
• CDS
• Citigroup
• DVA

Following last week's Easter egg by JPMorgan, the misses by financials continue, with Citi crapping the bed following a big miss in both top and bottom line after reporting $17.2 billion and $0.38 EPS on expectations of $18.5 billion and $0.52 per share. The biggest hit to the top line was the DVA adjustment courtesy of tightening CDS spreads, which while adding to top and bottom line in Q3, took out $1.9 billion in Q4 - of course like everything else it was also priced in. And while we are confident the full earnings presentation will be a labyrinth of loss covering, the first thing to realize is that absent a $1.5 billion in loan loss reserve releases, the bank would have reported negative net income, which was $1.364 billion pretax. Yet there is no way to explain the absolute bloodbath in the Securities and Banking group, which saw revenues implode by 53% from $6.7 billion to $3.2 billion Y/Y, and down 10% Q/Q. Notably, Lending revenues down 84% from $1 billion to $164 million. RIP Carry Trade.
Some highlights from the earnings report, pre-spun for public consumption:

• Fourth Quarter Revenues of $17.2 Billion Down 7% from the Prior Year Period
• Fourth Quarter Net Credit Losses Declined 40% from the Prior Year Period to $4.1 Billion
• Full Year 2011 Net Income of $11.3 Billion up 6% from $10.6 Billion in 2010
• Full Year 2011 Revenues of $78.4 Billion Compared to $86.6 Billion in 2010 Driven by $6.4 Billion Decline in Citi Holdings Revenues
• Citicorp Loans of $465.4 Billion Grew 14% versus Prior Year
• Citi Holdings Loans of $181.8 Billion Declined 25% versus Prior Year
• Full Year 2011 Net Credit Losses of $20.0 Billion Compared to $30.9 Billion in 2010
• Loan Loss Reserve Release of $1.5 Billion in Fourth Quarter, Down 35% from the Prior Year Period
• Tier 1 Common of $115.1 Billion, Tier 1 Common Ratio Increased to 11.8%
• Year-over-Year, Book Value Per Share up 8% to $60.78, Tangible Book Value Per Share(2) up 12% to $49.81