To The Moon

$Citigroup(C)$ 

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💼 Q2 Earnings Season: Six Big Banks Test the Market—

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📊 Earnings Overview & Macro Setup

Q2 2025 earnings are upon us, featuring JPMorgan, Citi, Wells Fargo, Goldman Sachs, Bank of America, and Morgan Stanley. After strong Q1 results, analysts lowered Q2 estimates—setting up a likely beat dynamic. Yet with rising defaults and fading net-interest-margin tailwinds, success hinges on strength in fee-driven businesses and credit resilience.

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⬇️ Why Lower Rates Could Be Better for Banks

• Lower rates can reduce credit risk, easing defaults.

• Mortgage origination and credit-card usage typically pick up.

• Falling rates often buoy equity and wealth markets—boosting bank fee income.

• Bottom line: net interest income may dip slightly, but non-interest revenue can offset and even outperform.

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🏦 Citibank Is My Top Bank Pick—Here’s the Proof

Citi’s last three quarterly earnings illustrate its diversified strength and credit discipline:

Quarter EPS Net Income Revenue Key Highlights

Q1 2025 (Mar) $1.96 (+24% YoY) $4.1 B $21.6 B (+3%) Markets rev +12%; Equity trade +23%; $2.8 B returned via buybacks/dividends  

Q4 2024 (Dec) $1.34 $2.9 B $19.6 B (+12%) Turned $1.16 loss in Q4 2023 to profit; investment-banking fees up 44%; markets revenue up 36% ()

Q3 2024 (Sep) $1.51 $3.2 B $20.3 B (+1%) Beat estimates ($1.30); steady revenues and positive operating leverage ()

🔎 Earnings Takeaways

1. Q1 strength shows Citi benefited from macro volatility—strong trading/revenue execution—despite tariff uncertainties .

2. Funding its rebound: Q4 saw a sharp swing from loss to profit, driven by services and markets momentum.

3. Stable performance: Q3’s consistent EPS and revenue growth point to resilience across business lines even as macro tightened.

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🚩 Do Banks Always Win in High Rates? Not Always

High rates can push profits via net interest margins, but also trigger more defaults and weaken consumer lending. That’s why fee-based income and diversified exposure are essential:

• Citi is global—tap into cross-border FX, markets, and wealth.

• Institutional, retail, and card businesses balance the portfolio.

• Trading and IB divisions were strong in both Q1 and Q4.

• Ongoing buybacks signal confidence in capital deployment.

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🎯 Final Verdict: Citi’s Breadth is Its Edge

With estimates for Q2 already dialed down, Citi is well-positioned for earnings beats and optimistic guidance, especially as rate cuts and a fee-rich backdrop materialize. That’s why I’m allocating my bank exposure here—the best mix of credit resilience, fee upside, global diversification, and capital discipline.

@CaptainTiger @Wrtd @TigerStars