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Everything You Need to Know About the Citigroup Earnings Report

By David Hanson - Apr 15, 2013 at 4:01PM

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We breakdown everything you need to know about the mega-bank's first quarter earnings.

2013 will be Michael Corbat's first full year of calling the shots at Citigroup (C 6.07%). If the first quarter of 2013 is any indication of future results, Corbat seems to be on the right track. While's Citigroup's first-quarter net income of $3.8 billion wasn't wildly exceptional, the bank appears to be delivering on Corbat's early promises to wind down Citi Holdings, reduce legal uncertainty, and continue to build out its global network.

Here at the Fool, we try not to let earnings from one quarter get us too excited or too pessimistic about the overall position of a company, but we can learn about a company's strategy and outlook for the future. While it's still shaking the lasting effects of the financial crisis and cleaning up non-core assets, Citigroup's presence in the global markets business and unmatched consumer banking network are making investors who once spurned the stock rethink the company's position.

3 reasons to love Citigroup's earnings
The market was impressed with the company's earnings release, and there are several things to love about the bank's current position.

1. Loan improvements: As bad loans continue to run off, overall credit quality seems to be mending.

2. Growth in Securities and Banking: The bank's equities and fixed income segments appear well-positioned and are performing well.

3. Balance sheet strength: To the surprise of many investors, Citigroup now boasts some of the strongest capital ratios.

To learn more about these strength areas, click here to read Jessica Alling's full analysis.

3 reasons to hate Citigroup's earnings
Despite the strong earnings, it's not all smiles for Corbat and Citigroup.

1. Operating expenses: Although Corbat has pledged to purge expenses, the bank hasn't been able to do so thus far.

2. Loan-loss reserves: Despite being seen as a positive, releasing too much, too soon could hurt the bank in the long run.

3. Decreasing transaction services: Transaction services are at the heart of core banking, and Citigroup saw revenues decline in this relationship-centric business.

To learn more about these potential weaknesses, click here to read John Grgurich's full analysis.

Corbat on call
Despite the market's favorable reaction to the firm's earnings, CEO Michael Corbat was quick to remind analysts that the banking landscape isn't an easy one.

"We're sure to be tested as we go through the year" –Michael Corbat

To read more key quotes from Corbat from Monday's earnings call, click here.

Foolish conclusion
Although the company certainly faces headwinds in the form of uncertain global growth and additional regulation, Foolish investors have many reasons to be optimistic. Citigroup's profit engine seems to be starting up again, and the bailout-stigma appears to be fading. Despite only leading the bank for several months, Corbat seems focused on streamlining operations and leaving his mark on the company he has called home for over 30 years. 

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