Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Citigroup Stock Is Falling on Friday

By Matthew Frankel, CFP® - Jan 15, 2021 at 11:35AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The bank's fourth-quarter results don't seem to be impressing investors.

What happened

The stock market was having a modestly negative day on Friday, with the Dow Jones Industrial Average and S&P 500 both down by less than 1% at 11:10 a.m. EST. However, large-cap bank stock Citigroup (C -0.06%) was a major underperformer, with shares down by 5% for the day.

So what

The short explanation for today's move is that Citigroup just reported its fourth-quarter earnings, and investors don't seem too impressed.

Man looking surprised while using laptop.

Image source: Getty Images.

While Citigroup's earnings surpassed analyst expectations, it was due to an unexpected $1.5 billion reserve release more than the bank's actual business performance. On the top line, revenue dropped by 10% from the fourth quarter of 2019.

However, the news wasn't all bad. Citigroup's book value per share grew 4% year over year. The bank's deposits grew by 20% from the same time last year, as Americans saved money at historically high rates during the pandemic. Retail loans grew by 4% year over year, and Citi's credit card business saw purchase volume rise 12% from the third quarter, indicating a nice rebound in consumer spending.

On the investment banking side, trading revenue (which has been a strong point throughout the pandemic) was up 13% year over year. However, investment banking revenue declined by 5% due to lower mergers and acquisitions advisor revenue and a slowdown in debt underwriting.

Now what

To sum it up, Citigroup had a good, but not great fourth quarter. And it's also worth pointing out that even after today's drop, shares of the bank are up by nearly 60% from the beginning of November, so I wouldn't be too concerned about the relatively slight pullback.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Citigroup Inc. Stock Quote
Citigroup Inc.
C
$49.75 (-0.06%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.