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Here comes Citi ...

Jan 16, 2018, 17:35 IST

REUTERS/Ueslei Marcelino

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Citigroup is set to release fourth-quarter results at 8 am Tuesday.

Analysts are expecting the bank to report adjusted earnings of $1.19 a share, as well as revenue of $17.25 billion.

Wall Street is also expecting a noisy quarter for bank earnings in general, thanks in part to the country's newly passed tax law, which has caused many banks to book losses on repatriated cash and deferred tax assets that declined in value.

JPMorgan reported a net $2.4 billion loss related to the tax law, though CEO Jamie Dimon praised the law's long-term benefits.

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Citi is primed to be the most affected bank by the tax law, at least in the short term. The massive losses Citi suffered during the financial crisis mean the firm will be writing down more deferred tax assets than any other bank. In December, the firm estimated tax reform would cost the firm $20 billion in the fourth quarter.

That means on a non-adjusted basis, Citi is looking at a giant fourth-quarter net loss.

Another wonky item investors will be on the lookout for: any impact from the $1.8 billion margin-loan that a handful of banks, including Citi, arranged for the ex-chairman of Steinhoff International, the South African retailer whose stock price has been ravaged by an accounting scandal.

JPMorgan reported a $273 million hit to its fourth-quarter earnings from the deal, and other banks are expected to have more exposure.

Citigroup, HSBC, Goldman Sachs, and Nomura initially extended the loan - backed by some 628 million shares of Steinhoff's now-crippled stock - to an entity controlled by Christo Wiese, then Steinhoff's chairman. The banks subsequently sold off parts of the loan to other banks.

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