Earnings from global financial companies will collapse by a further 41% by the middle of next year, and could be wiped out completely in a worst case scenario, Citigroup analysts have predicted in a pessimist equity strategy report.

The Citigroup strategists have argued in the report, Global Equity Strategy - Stress Testing, that analysts' earnings estimates for the sector have been far too optimistic and that financial stocks still look the most expensive in the market as the anticipated fall in earnings has not been fully factored into valuations.