(FROM THE WALL STREET JOURNAL 1/12/15)
By Sarah Krouse
With oil prices tumbling 50% since June, the energy sector has
garnered much of the blame for what is shaping up to be a
lackluster fourth-quarter earnings season.
But there is certainly plenty of blame to go around, and some of
it will fall on the financial sector, thanks to a hefty increase in
Citigroup Inc.'s legal reserves in the fourth quarter.
J.P. Morgan Chase & Co. and Wells Fargo & Co. kick off
bank earnings Wednesday, and analysts expect financial companies in
the S&P 500 to report earnings per share shrank 1.7% in the
last three months of 2014 from a year earlier, according to
FactSet. That marks a significant pullback from the start of the
quarter when analysts expected per-share profit to grow by 8% for
the sector. Citi is the main culprit behind the decline in the
financial sector's expected earnings. Last month, the bank said it
would spend $2.7 billion to bolster its legal reserves, a major hit
to its expected fourth-quarter profit. Analysts now expect
Citigroup to earn 11 cents, down from $1.13 on Sept. 30, says
FactSet.
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