Investors on Wall Street (SPY) eagerly watch out for earnings in the financial sector, as they serve as a barometer for economic health. Citigroup (C) is set to declare its fourth quarter earnings on January 18 before markets open.
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Wall Street banks (XLF) like Citigroup (C), Goldman Sachs (GS), Bank of America (BAC), and JPMorgan (JPM) expect fourth quarter earnings to pick up. The rebound in oil prices from historical lows and fears of default on loans to these sectors are easing. Further, consumer banking is showing strength. Additionally, banks’ trading revenues are expected to demonstrate solid growth backed by heightened volatility following Trump’s unexpected victory in November. Margins could also improve slightly after the December rate hike, although the full benefit from the hike would only be reflected in 1Q17 results. All these factors point to a bright earnings season for the banking sector.
According to consensus data accumulated by Reuters, net revenues for Citigroup are expected to be $17.3 billion in 4Q16, 7% lower year-over-year. Net income is expected to be $3.2 billion for the quarter, 19% higher compared to the same period last year. Lastly, earnings per share (or EPS) are expected to be $1.12 in 3Q16. In the previous quarter, Citigroup reported EPS of $1.24.