Citigroup Inc. (NYSE: C) is set to release its third-quarter earnings report on Tuesday, October 15, before the market opens. The results will be benefited by Branded Cards’ demand and deposits backed by digital efforts in the Consumer Banking segment. However, this could be pressurized by low-interest rates.
The Federal Reserve has been planning for two rate cuts during the third quarter in order to lower the chances of the economy slipping into recession. This could narrow the banks’ growth in the upcoming quarters. Also, the banks could be hurt by a considerable drop in the long-term interest rates that are impacted by the additional central-bank stimulus as expected by the bond market.
The results of Citi could be impacted by a sluggish environment for trading activities arising from the corporate lending slowdown and trade tariff concerns. However, the expenses are likely to fall due to the acceleration of cost-cutting plans as well as a possible decline in the income tax expense.
In addition, Citigroup is expected deliver positive operating leverage for the twelfth successive quarter and improve its efficiency. This will be driven by the benefits of a global franchise and product mix. The headwinds in market-sensitive revenues and the continued wind-down of legacy assets will be offset by continued momentum in consumer and accrual businesses in the Institutional Clients Group.
Analysts expect the company’s earnings to jump by 12.70% to $1.95 per share and revenue will rise by 0.90% to $18.56 billion for the third quarter. The company has surprised investors by beating analysts’ expectations in all of the past four quarters. The majority of the analysts have recommended a “buy” rating with an average price target of $82.31.
For the second quarter, Citigroup reported a 7% increase in earnings helped by higher revenue as well as lower costs and expenses. The top line rose by 2% reflecting a pretax gain on its investment in Tradeweb as well as higher revenues in the Global Consumer Banking division.
Citigroup’s peers JP Morgan (NYSE: JPM) and Wells Fargo (NYSE: WFC) will be publishing results for their most recent quarter on Tuesday while Bank of America (NYSE: BAC) is set to release its third-quarter report on October 16.