Image source: Roman Tiraspolsky © 123RF.com
The bank reported earnings for the third quarter on Tuesday before the US open. The findings of the report mostly surpassed the initial forecasts, demonstrating solid performance across the board.
The only notable disappointment for the period was recorded in the net interest income.
The consensus forecasts projected the earnings per share to reach $1.94, whereas the final performance came down to $1.97 EPS.
Thus, the revenue streams of Citigroup slightly exceeded the initial market expectations of $18.545 billion by reaching $18.6 billion.
Notable gains were also listed in the Fixed-income, currency and commodities trading revenue, as the final value of $3.211 billion surpassed the initially anticipated $3.09 billion.
The one prominent misfire came about as a result of the lower interest rates in the US, which were reduced by the FED over the last few months. The net interest margin was recorded at 2.56 per cent versus the initial forecast of 2.66 per cent.
Consequently, the net interest income suffered marginally as its reported value was at $11.64 billion versus $12.15 billion expected.
Conceding that there is little reason to expect further reductions in the underlying interest rate by the end of the year, Citigroup is likely to improve on its performance in those last two components in Q4.
Therefore, the year’s final report is likely to provide even better results comparing to the ones presented in Tuesday’s survey.
In its routine commentary on Citigroup’s quarterly performance, CEO Michael Corbat said that:
“Despite an unpredictable environment throughout the quarter, we continue to deliver on our strategy of improving shareholder returns through consistent, client-led growth while also executing against our capital plan. Our Global Consumer Banking franchise performed well in the quarter, showing solid underlying revenue growth of 4% and an EBT increase of 17%.”
After the commencement of Tuesday’s trading session, the share price of the company initially tumbled to 68. 70 from the opening price of 70.17, however, by the end of the trading day the share price had appreciated by 1.40 per cent, closing at 71.22.
The next few days will be quite important for the stock, as the price would struggle to remain above the fundamentally important resistance level at 71.00.
Provided that it manages to do so, the currently developing head and shoulders pattern might get broken, giving way for the formation of a renewed bullish swing.
In contrast, if the price fails to remain trading above the resistance level, and it eventually reverts itself below 71.00, the next crucial target level will be at 66.04.
Image source: Trendsharks ©, created with TradingView.com
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