Citigroup Reports Quarterly Earnings Tomorrow - Here's What To Watch For

Citigroup reports earnings tomorrow at 8:00 a.m. with conference call to follow at 11:00 a.m. - analysts expect earnings per share to come in at $1.09 and revenue of $18.8 billion, according to data compiled by Bloomberg.

That's only a slight improvement from Q3 2012, when the bank reported an EPS of $1.06 and revenue of $18.2 billion.

Yet, hot shot Wall Street analysts are bullish on the stock based on the company's efforts to cut costs and its continued divestment of assets held in Citigroup Holding, a unit that holds all the businesses Citi wants to get rid of.

Last month, CLSA's Mike Mayo called Citi a buy and smacked a $66 price target on the stock. The stock ended the trading day today at $49.60.

There are a few reasons, however, to worry about the numbers Citi will report tomorrow.

Firstly, both of the major banks that have reported so far - JP Morgan and Wells Fargo - took a hit in their mortgage businesses. The number of customers refinancing declined and the pace of new mortgage origination slowed as interest rates rose.

Analysts are worried that Citi's mortgage business will get hit the same way.

They're also worried that Citi will follow Deutsche Bank and Jefferies in reporting miserable fixed income trading revenue for the quarter. Jefferies, for example, reported an 88% decline in fixed income trading revenue year over year.

Another area of concern more specific to Citigroup has to do with its huge presence in emerging markets. For the last two years EM have fueled two-thirds of Citi's revenue growth. This summer those markets got spanked. That could be reflected in the numbers we see tomorrow morning.