Citi's Earnings Seen Hurt by New Tax Law -- Earnings Preview

This quarter, Citigroup Inc.'s fourth-quarter results will likely be overwhelmed by a giant one-time tax charge. Here's what to look for in Tuesday morning's release.

Earnings: Don't Expect Any

Citigroup said last month it expected to take a $20 billion charge to earnings in the fourth quarter because of the tax overhaul. That is such a big hit that analysts expect it to lose money both for the quarter and the full year of 2017.

Revenue: Steady as It Goes

Analysts polled by Thomson Reuters are expecting revenue of $17.22 billion, which would be up from about $17 billion a year ago.

The Tax Law Has Cometh

Citigroup isn't the only bank to have to take a hit for the quarter because of the tax law. JPMorgan Chase & Co. on Friday reported $2.4 billion in costs from the tax overhaul. But long term, the new law should be a windfall for banks, because it slashes the corporate tax rate to 21% from 35%. Investors will be interested in any guidance about what that means for Citi.

Trading With Less Tumult

Political surprises in late 2016 -- most notably, the election of Donald Trump -- stirred up volatility and made for trading booms. But now, in the relative calm, banks including Citigroup expect trading revenue to be down. JPMorgan's trading revenue fell 26%, though the bank said it would have been down 17% excluding the impact of the tax law and another one-time loss.

The Credit Card Bill Is Coming Due

Under CEO Michael Corbat, Citigroup has been spending heavily to spiff up its credit-card unit, including new rewards programs and marketing. Investors will want to know when that will start paying off.

Write to Christina Rexrode at

(END) Dow Jones Newswires

January 13, 2018 08:14 ET (13:14 GMT)