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Citigroup To Report Q4 Results: Earnings Preview


Financial services firm Citigroup Inc. (C) is scheduled to announce fourth-quarter results before the market opens Tuesday. On average, 15 analysts polled by Thomson Reuters expect the company to lose $0.33 per share in the quarter, with loss estimates ranging between $0.26 and $0.39 per share. Revenues for the quarter are estimated to be $18.43 billion. Analysts' estimates typically exclude special items.

Citigroup, the nation's third largest bank, is one of the worst-hit by the financial crisis. The company was on the verge of collapse when it received $45 billion in bailout funds in three tranches from the Treasury's TARP Capital Purchase Program, or TARP. In July 2009, Citi completed exchanges of about $58 billion of preferred and trust preferred securities into common stock and interim securities, which provided the U.S. Government with a 34% stake in the lender.

Late last month, Citi made a partial repayment of the bail-out funds by paying $20 billion through a combination of stock and debt offerings. Citi also terminated the loss-sharing agreement with the Treasury.

In October, Citi reported a net profit for the third quarter, compared to a loss last year. However, net loss available to common shareholders widened from last year due to certain exchange offers. Citi's net profit for the quarter was $101 million, compared to a net loss of $2.815 billion in the year ago-quarter. Net loss available to common shareholders widened to $3.242 billion from last year's $2.934 billion. Revenues for the third quarter were $20.39 billion, up from $16.258 billion in the prior year quarter. However, total provisions for credit losses, benefits and claims remained largely unchanged from the previous year at $9.1 billion.

When the company announces results later in the day, bad loans would be a key concern for the investors.

In the fourth quarter of 2008, Citi reported a net loss of $8.294 billion or $1.72 per share. Revenues for the quarter were $5.6 billion.

During the just concluded quarter, the Abu Dhabi Investment Authority filed an arbitration claim against Citi, alleging fraudulent misrepresentations in connection with the November 2007 sale of Citi equity units. The sovereign wealth fund is seeking rescission of the investment agreement with Citi or damages of over $4 billion. Citi said the charge was without merit and it would defend itself vigorously.

In another event, it was reported last month that the Kuwait Investment Authority, or KIA, sold its stake in Citi for $4.1 billion. The KIA bought preferred securities of Citigroup last year for $3 billion to help the bank raise capital and sold them later as common shares, booking a profit of $1.1 billion in the process.

The huge pay packets given to key executives of financial services companies have invited public criticism. However, on November 17, Citi said it raised the annual base salaries of certain senior executive officers, including that of the CFO. CEO Vikram Pandit's salary, however, continues at $1 per year.

The House Financial Services Committee is expected to hold a hearing this week to discuss the issue of compensation for top executives in the financial industry.

Last week, President Barack Obama proposed a 'Financial Crisis Responsibility Fee' on large banks with assets more than $50 billion to recoup the money spent on bailing out the financial industry. The $700 billion financial rescue package is expected to run roughly $117 billion in the red, even though many banks have already repaid the federal loans with interest. The fee is expected to stay in place for at least 10 years or until all losses from the TARP have been paid back.

For the full year, analysts expect Citi to lose $0.67 per share on revenues of $92.97 per share. In 2008, Citi reported a loss of $18.715 billion or $3.88 per share. Total revenues were $52.793 billion.

Among others in the industry, JPMorgan Chase & Co. (JPM) last week reported a four-fold rise in fourth-quarter profit, reflecting strong results from its Investment Bank and Asset Management businesses. The company's fourth-quarter net income jumped to $3.28 billion or $0.74 per share from $702 million or $0.06 per share reported a year ago. Total quarterly net revenues rose 34% to $23.16 billion from $17.23 billion in the prior-year quarter.

Bank of America Corp. (BAC), another peer, is expected to report a loss of $0.52 per share, when it releases fourth-quarter results on January 20. Wall Street looks for quarterly revenues of $26.84 billion.

C closed Friday's regular trade at $3.42, down $0.09 or 2.56%, on 540.49 million shares. For the past year, the stock traded in the range of $0.97-$5.43.

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