What happened
The stock market was having a modestly negative day on Friday, with the Dow Jones Industrial Average and S&P 500 both fell by less than 1% at 11:10 am EST. However, large-cap bank shares Citigroup (NYSE: C) had the worst performance, with shares falling 5% on the day.
And
The short explanation for today’s move is that Citigroup has just released its fourth quarter earnings, and investors do not seem very impressed.
Image source: Getty Images.
Although Citigroup’s profits exceeded analysts’ expectations, this was due to an unexpected $ 1.5 billion reserve release, more than the bank’s actual business performance. In revenue, revenue fell 10% compared to the fourth quarter of 2019.
However, the news was not all bad. Citigroup’s equity value per share grew 4% year over year. Bank deposits increased by 20% over the same period last year, while Americans saved money at historically high rates during the pandemic. Retail loans grew 4% year-over-year, and Citi’s credit card business saw purchases volume increase 12% over the third quarter, indicating a good recovery in consumer spending.
On the investment banking side, commercial revenues (which have been a strong point during the pandemic) have increased by 13% year over year. However, investment bank revenue decreased by 5% due to lower merger and acquisition consultant revenues and a slowdown in debt underwriting.
What now
In short, Citigroup had a good, but not great, fourth quarter. And it’s also worth noting that, even after today’s drop, the bank’s shares have risen almost 60% since the beginning of November, so I wouldn’t be too concerned about the relatively small downturn.