Citigroup suffers on JPMorgan Chase results |
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| Economy | |
| Written by Roberta Murray | |
| Friday, 15 January 2010 | |
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JPMorgan may have beaten expectations but investors get some insight into what may be in store from Citigroup.
Citigroup (NYSE:C) is lower by 2.28% at 3.43 in early trade on Wall Street. What in the JPMorgan Chase results will be hurting sentiment at Citigroup? Indeed JPMorgan Chase reported better-than-expected profits of $3.3 billion equating to earnings of 74 cents on a per share basis during the final three months of 2009. But most of this success has been helped by healthy results from its investment banking business. David Buik, an analyst with BGC Partners, said that although JPMorgan’s bottom line was better, its revenues were light and writedowns, credit card lending and retail banking showed signs of weakness. Jamie Dimon, JPMorgan’s chief executive, said he remained cautious about the economy because of weak employment, pressure on housing prices and tight consumer credit. What JPMorgan Chase have shown the markets is that consumer and retail banking is still stuttering in line with continued economic weakness. This area of banking is something that Citigroup focuses on, and considering the losses posted in Q3 courtesy of a weak consumer facing business Q4 is not likely to be much better. As Michael Holland of the Eponymous firm in New York told us last time round, "There's no doubt the challenges are still enormous for Citigroup. If you put it in the context of what we heard from JP Morgan yesterday with its continuing concerns about the consumer, Citi is going to suffer, too. And Citi is heading into this from a weaker position." The same is very likely in Q4. Next week Citigroup, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley will all release their fourth-quarter and full year numbers. One could say that, save Goldman Sachs, the best of the banking season results may have come.
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