A risk, that can increase revenue.
Citigroup's (C) first-quarter earnings reports for 2022 are due to release Thursday, April 14, before the Market opens, and with downward expectations. The report will cover the quarter ending March. While in the past four quarters, the company’s earnings surpassed the consensus estimate, and the surprise being 30.8% on average, for tomorrow, the consensus estimate for EPS is $1.51 with 18.32B revenue.
The City group was so active in the past months. They started to assign their consumer banking franchise in Bahrain, Taiwan, Indonesia, Malaysia, Thailand, Vietnam, and India, and it will reduce their general turnover and net income. On the other hand, and as a response to the Russia and Ukraine conflict, it announced that will retract its entire business from Russia. In the other part of the world, in Mexico, they will end the consumer, small business, and middle-market banking operations as well. It is too much change for the bank just in a few months, which is not a positive signal for investors. The result is visible in the bellow chart, with a 13.2% gain in the first half of this quarter, and then a 29% loss from the 2022 high ($69.14) to the 2022 low ($49).
After all these negative news and reports, in February it announced that will completely terminate overdraft fees, return item fees, and overdraft protection fees by this summer. Anyway, even if it could be positive news, still it will start not now, in the middle of the second quarter, later in summer, therefore, it will not affect the City's operating profit.
The central bank started to increase the rates, while the Mortgage rate and Bond Yields also are increasing, which is positive for the banking sector and their profit. In the last quarter, strong performances in investment banking, its private bank, and securities services brought $9.87 billion in revenue (a 4% yearly gain). For tomorrow's reports, besides EPS and Revenue, we should not forget to closely watch the investment banking (IB) data, which is supposed to increase due to higher fees that they are going to charge the clients with higher market risk. Also, the changes that the company made for sure will reduce the expenses as well, in line with overall turnover.
In short, we can say numbers seem can be seen in green in the report. From the technical point of view, it moves in a clear downtrend in the Daily chart with the first resistance at $54.20 and then stronger resistance at $57.60. A positive report that can push the price above $57.60, can open the doors for much higher levels. On the flip side, the report should not be that negative to send the prices lower. In the H1 chart, we can see the RSI trying to move higher from the oversold area, signaling that at these levels, we may see some changes in the movement direction.
