Later this week Citigroup, Bank of America and Goldman Sachs will be among the banks announcing fourth-quarter earnings and expectations are that the tax law will deliver temporary pain from one-time accounting charges.
Citigroup, down -0.35% in after hours trading on 12 January, announced last month that it expected to take a $20m charge to earnings in the fourth quarter related to the write-down of deferred tax assets and charges to repatriating cash.
Trading revenues are also likely to have a negative pull on earnings but analysts say there are other factors that could counteract the downside.
Zacks Research points to ‘benefits of higher rates, decent loan growth and relatively better performance of the other segments - mainly consumer banking - are anticipated to offset the trading slump.” Consumer banking revenues may exhibit growth and there is expectation that investment banking fees will rise and supportive of bottom line figures.
All in all Zacks says Citigroup is likely to report an “impressive quarter”. However, there is less confidence of a positive earnings surprise and Zacks gives it an ESP of 0.00%.