3 Things to Look Out For in Citi's First Quarter

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Investors have turned bullish on Citigroup (NYSE: C  ) , having pushed its stock up more than 27% this year. When the banking behemoth releases its first-quarter earnings report early this week, analysts expect earnings per share to come in at $1.04 -- 4% higher than $1 it reported a year ago. What else can we look forward to?

Giving it away, to give you more
Citigroup was one of only four banks that failed the recent round of Federal Reserve stress tests. While most big banks raised their payouts to investors by means of higher dividends and share buybacks, Citigroup's capital plans were quashed.

As a result, Citi has been trying to shore up its capital base by disposing of its non-core assets. Citi ended last quarter with a tier 1 capital ratio of 11.8%, and the bank hopes to strengthen its base further and eventually boost its dividends. The bank currently pays out $0.04, with a modest yield of 0.1%.  

Citi isn't alone in its quest to beef up its capital base. Fellow biggie Bank of America (NYSE: BAC  ) , which, unlike Citi, cleared the stress tests, chose to further bolster its capital instead of apply for a new payout rate. Like Citi, B of A pays out a nominal dividend of $0.04, with a yield of 0.5%.    

Emerging trend
In addition to bolstering its capital, Citigroup CEO Vikram Pandit is relying on emerging-market performance. In 2011, 46% of Citi's total revenue and 57% of income from continuing operations came from developing economies, and the company will possibly look to those markets to further drive growth. Citi, in fact, has more exposure abroad than American big bank JPMorgan Chase (NYSE: JPM  ) -- which just announced an estimate-beating quarter. In 2011, JPMorgan earned 75% of its revenue from North America and 17% from the Europe/Middle East and African regions.

As developed countries reduce their debt, Pandit and Citigroup think GDP growth will be sluggish in these regions for some time to come. So emerging markets are definitely an area to keep an eye on.

Loan growth
Another factor we'll have to watch out for this quarter is Citi's loan growth. With interest rates at all-time lows, it'll be interesting to see Citi's lending activities this quarter. Last quarter, Citi saw its loans grow by 14% 

This week will give us a clearer picture of what 2012 holds for the New York-based bank. For more earnings-season insight, check out our brand-new free report: "5 Stocks Investors Need to Watch This Earnings Season." It details what to look for from Apple and four other must-watch companies as they report their latest results. Get access right now.

Fool contributor Shubh Datta doesn't own shares in the companies listed above. The Motley Fool owns shares of JPMorgan Chase, Citigroup, Bank of America, and Apple. Motley Fool newsletter services have recommended buying shares of Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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10/21/2016 4:00 PM
C $49.57 Down -0.01 -0.02%
Citigroup CAPS Rating: ***
BAC $16.67 Up +0.11 +0.66%
Bank of America CAPS Rating: ****
JPM $68.49 Up +0.23 +0.34%
JPMorgan Chase CAPS Rating: ****