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What To Look For In Citigroup's Earnings Release Next Week

|Includes: Citigroup Inc. (C), WFC

Citigroup will help lead the charge next week as the bank earnings season begins again fresh off another quarter in the books, and there are a few things investors should know about what to expect.

First of all, the second quarter of the year has been a rather eventful one for the bank. It not only successfully disposed of its retail banking operations in Spain and Greece, but it seems that the long-awaited news of its mortgage-related settlement with U.S. regulators will accompany the earnings release. Here are some things to look for next week:


  • Citigroup set aside only $3 million in reserves to pay for the settlement, which means that the purported $7 billion it ended up agreeing to pay will likely result in the bank taking a pre-tax charge of $4 billion in Q2 to cover the gap.
  • Q2 trading revenues are expected to be 20-25% lower than what was reported a year ago.
  • Total revenue is expected to decline, with a consensus estimate of $18.92 billion, compared to $20.48 billion this time last year.
  • Citigroup's Mexico unit, Banamex, has been caught up in alleged accounting fraud this year, raising questions as well as investigations regarding the bank's ability to manage risks across its vast international operations.

With all of this in mind, shares closed Friday at $47, down 9.8% from the beginning of the year and 15% from the 52-week high of $55.28. The biggest question in my mind is concerning the bank's ability to keep growing in light of all of these recent setbacks. Competitive pressure across the industry won't let up or give them room to catch their breath.

It will be interesting to see how the numbers compare to Friday's release by Wells Fargo. A comparison between the two will help us know a little more about what to expect from Citigroup in the future.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.