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Citigroup Up 13% Post Earnings: Time for Citi-Heavy ETFs?
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Citigroup Inc.’s (C - Free Report) second-quarter 2022 income from continuing operations per share of $2.30 have handily outpaced the Zacks Consensus Estimate of $1.67. However, the reported figure declined 19% from the prior-year quarter. After reporting better-than-expected earnings, shares of the company moved up 13% in the key trading session on Jul 15, 2022. Basically, the rising rate environment went in favor the bank.
Revenues, net of interest expenses, moved up 11% year over year to $19.6 billion in the second quarter. The top line outpaced the Zacks Consensus Estimate of $18.43 billion. Management noted, “Treasury and Trade Solutions fired on all cylinders as clients took advantage of our global network, leading to the best quarter this business has had in a decade.”
Citigroup witnessed growth in both net interest income and non-interest revenues. However, a decline in investment banking revenues, loans and deposits were spoilsports. Net income was $4.5 billion, decreasing 27% from the prior-year quarter.
Total non-accrual assets declined 31% year over year to $3 billion. Also, Citigroup’s total allowance for credit losses on loans was $16 billion at the end of the reported quarter compared with $19.2 billion in the year-ago period. However, Citigroup’s costs of credit for the June-end quarter were $1.27 billion against a negative $1.06 billion recorded in the year-earlier quarter. At the end of the second quarter, Citigroup’s deposits were down 1% from the prior quarter to $1.32 trillion. The company’s loans declined marginally to $657 billion.
The company has delivered encouraging results this time around. Advancing its strategy to exit the consumer banking business in 14 international markets, Citigroup aims to simplify operations and expand institutional franchises in targeted regions. Net interest income is likely to be supported by the rising rates, going forward. However, elevated operating expenses remain major headwinds.
Management noted, “Treasury and Trade Solutions fired on all cylinders as clients took advantage of our global network, leading to the best quarter this business has had in a decade.” Citigroup witnessed growth in both net interest income and non-interest revenues.
Time for Citi-Heavy ETFs?
Citigroup has a Zacks Rank #3 (Hold) and an upbeat Value Score of B, but a downbeat Momentum Score of F. Those who believe basket approach is safer than the stock-specific approach, may want to opt for Citigroup-heavy ETFs. Below we highlight a few of them.
Global Beta Smart Income ETF – Citigroup Weight 4.50%
First Trust Nasdaq Bank ETF (FTXO - Free Report) – Citigroup Weight 3.91%
Bottom Line
However, bank stocks may be up for a gain on cheap valuation. U.S. financial institutions are trading at bargain-basement prices and continue to present a solid buying opportunity despite near-term market volatility, Oppenheimer said recently as quoted on Barrons.com.
Citigroup’s earnings result is another tailwind for space. Analyst Christ Kotowski said he sees a favorable fundamental trends for the U.S. financial sector over the course of the year. So, investors can bet on the Citi-heavy ETFs if above factors appear convincing to them (read: Time for Bank ETFs on Cheaper Valuation & Decent fundamentals?).
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Citigroup Up 13% Post Earnings: Time for Citi-Heavy ETFs?
Citigroup Inc.’s (C - Free Report) second-quarter 2022 income from continuing operations per share of $2.30 have handily outpaced the Zacks Consensus Estimate of $1.67. However, the reported figure declined 19% from the prior-year quarter. After reporting better-than-expected earnings, shares of the company moved up 13% in the key trading session on Jul 15, 2022. Basically, the rising rate environment went in favor the bank.
Revenues, net of interest expenses, moved up 11% year over year to $19.6 billion in the second quarter. The top line outpaced the Zacks Consensus Estimate of $18.43 billion. Management noted, “Treasury and Trade Solutions fired on all cylinders as clients took advantage of our global network, leading to the best quarter this business has had in a decade.”
Citigroup witnessed growth in both net interest income and non-interest revenues. However, a decline in investment banking revenues, loans and deposits were spoilsports. Net income was $4.5 billion, decreasing 27% from the prior-year quarter.
Total non-accrual assets declined 31% year over year to $3 billion. Also, Citigroup’s total allowance for credit losses on loans was $16 billion at the end of the reported quarter compared with $19.2 billion in the year-ago period. However, Citigroup’s costs of credit for the June-end quarter were $1.27 billion against a negative $1.06 billion recorded in the year-earlier quarter. At the end of the second quarter, Citigroup’s deposits were down 1% from the prior quarter to $1.32 trillion. The company’s loans declined marginally to $657 billion.
The company has delivered encouraging results this time around. Advancing its strategy to exit the consumer banking business in 14 international markets, Citigroup aims to simplify operations and expand institutional franchises in targeted regions. Net interest income is likely to be supported by the rising rates, going forward. However, elevated operating expenses remain major headwinds.
Management noted, “Treasury and Trade Solutions fired on all cylinders as clients took advantage of our global network, leading to the best quarter this business has had in a decade.” Citigroup witnessed growth in both net interest income and non-interest revenues.
Time for Citi-Heavy ETFs?
Citigroup has a Zacks Rank #3 (Hold) and an upbeat Value Score of B, but a downbeat Momentum Score of F. Those who believe basket approach is safer than the stock-specific approach, may want to opt for Citigroup-heavy ETFs. Below we highlight a few of them.
Invesco KBW Bank ETF (KBWB - Free Report) – Citigroup Weight 7.83%
Global Beta Smart Income ETF – Citigroup Weight 4.50%
First Trust Nasdaq Bank ETF (FTXO - Free Report) – Citigroup Weight 3.91%
Bottom Line
However, bank stocks may be up for a gain on cheap valuation. U.S. financial institutions are trading at bargain-basement prices and continue to present a solid buying opportunity despite near-term market volatility, Oppenheimer said recently as quoted on Barrons.com.
Citigroup’s earnings result is another tailwind for space. Analyst Christ Kotowski said he sees a favorable fundamental trends for the U.S. financial sector over the course of the year. So, investors can bet on the Citi-heavy ETFs if above factors appear convincing to them (read: Time for Bank ETFs on Cheaper Valuation & Decent fundamentals?).