Citigroup Shares Fall Hard After a Disappointing 4Q

Citigroup Inc (NYSE:C) shares took a dive in response to the results the company declared for its fourth quarter, which came up short of analyst estimates.

Net income for the quarter was $1.6 billion (38 cents a share) as against $1.31 billion (43 cents a share) in the previous year. Analysts had expected earnings at 43 cents, revised downwards from an earlier estimate of 76 cents two weeks ago. Though provisioning for bad loans was down 41 percent to $2.9 billion, this was not enough to mitigate the fall in profits – securities and banking revenue fell about 29 percent from a year earlier.

The results are a stark reminder that the banks sticking to the knitting, which is to lend to businesses and consumers, are likely to do better in a recovering economy. This was visible in the results of Wells Fargo, which beat estimates on the back of better credit quality and loan off-take.

“Clearly, the macro environment has impacted the capital markets and we will continue to right-size our businesses to match the environment,” Citigroup Chief Executive Vikram Pandit said in a statement.

However, Citi’s earnings miss was described as “horrendous” by money manager Jeffrey Sica, of SICA Wealth Management, especially in the light of how much the estimates had already been downgraded by Wall Street.