Mounting credit concerns and lethargic profit margins will plague “weak” Citigroup earnings over the next two years, said one Wall Street research firm.
Societe Generale reduced its rating on Citigroup shares to sell from hold Monday, citing deteriorating credit trends and increased loan loss provisions as detailed in the bank’s most recent earnings report.
“Although revenues were 2 percent ahead of consensus, boosted mainly by capital markets revenues, it is more worrisome that the credit quality of North American cards deteriorated and net interest margin was flat again despite the recent Fed fund rate increase,” wrote analyst Andrew Lim. “Earnings momentum is weak.”
