Citigroup (C) Net Interest Income Key To Quarter Earnings

If we see the stock price of Citigroup now at almost two-year high of $66.98, the market estimate for second-quarter revenues is pegged at $19.97 billion, suggesting 2.8% growth from the year-ago quarter's reported figure.

Citigroup has faced some challenges from escalating spending on technology and transformation expense. These factors are likely to hamper growth.

Market consensus estimate for earnings for the to-be-reported quarter has been revised downward by 1.5% to $1.39. This suggests 2.2% growth from the $1.33 reported in the last year same quarter.

Citigroup have given investors more than 30% of gains year-to-date. And with the recent new highs that Citigroup has created, with dividend yield of 3.27%.

What could be of concern like other major banks in the US is the loans and net interest income (NII), while the macroeconomics backdrop is stabilizing and market expectation of Fed rate cut happening this year, this should provide some support to Citigroup lending business in the second quarter.

So I would be expecting the demand for overall loans and leases, especially commercial and industrial loans, to improve from the first-quarter 2024 end, and based on the economic data we received so far.

The six biggest US credit card issuers recorded the fourth consecutive monthly drop in their group average 30-plus-day delinquency rate, and executives from the companies noted that consumers are starting to spend more rationally.

The average 30-plus-day delinquency rate for American Express Co., JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Capital One Financial Corp. and Discover Financial Services edged lower month over month to 1.31% in May, according to S&P Global Market Intelligence data. This was still 21 basis points higher than a year ago, but the level has fallen steadily since rising for eight straight months to reach 1.41% in January.

Only JPMorgan reported a month-over-month uptick in May, with its 30-plus-day delinquency rate rising to 0.82% from 0.81% in April, but the rate was lower year over year. The other five companies posted lower delinquency rates in May sequentially, but higher rates year over year.

Based on 18 Wall Street analysts offering 12 month price targets for Citigroup in the last 3 months. The average price target is $69.19 with a high forecast of $85.00 and a low forecast of $60.00. The average price target represents a 3.30% change from the last price of $66.98.

The market sentiment that Citigroup could benefit from Fed plan to implement one rate cut this year, should help to drive up its loan business. With the credit card delinquency rate drop, we might be able to see Citigroup expenses on clearing of these bad debts reducing.

The ownership structure of Citigroup (C) stock is a mix of institutional, retail and individual investors. Approximately 39.39% of the company’s stock is owned by Institutional Investors, 4.12% is owned by Insiders and 56.48% is owned by Public Companies and Individual Investors.

Hence, institutional share movement could be an area we can looked out.

The last hedge fund trading happened in the first quarter, this might indicate that market and hedge funds are still positive and confident on Citigroup business.

The net interest income for Citigroup might not rise a lot in the second quarter, but for the rest of 2024, we might be able to see a positive outlook.

If looking at how Citigroup has performed in the past 2 quarter, there have been one surprise post earnings, but as the interest rate remain higher for longer, there might be impact felt in the upcoming second quarter reporting.

The net interest income (NII) is expected by analyst to grow, but there is a possible that Citigroup spending on managing debt might also increase. Hence I would be focusing on seeing how well have the cost cutting exercise be.

On top of that, how much Citigroup actually spend on managing their debt.

On the technical, MACD is showing nice upside potential after the bullish MACD crossover sometimes in mid-June, and KDJ is trying to find the confirmation of a signal, though Citigroup is currently hitting new highs.

I would like to see Citigroup KDJ showing that J value have the strength to move higher, and hence, create another buy signal ahead of its Friday earnings.

I would be focusing on how Citigroup net interest income stand, as compared to the other major banks. There have been some good data to support that Citigroup could do well in the NII, but maybe not so well in upcoming reporting quarter.

But overall I would still be looking at this bank stock, as I do have a local investment account with them.

Appreciate if you could share your thoughts in the comment section whether you think Citigroup would surprise us with its quarterly report with a better-than-expected net interest income?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.