Citi Restores The Equilibrium

Things are getting better slowly,in the view of Citigroup Chairman Dick Parsons.Some people would call it anemic,but it's growth nonetheless.
It's not surprising to Mr.Parsons.What we're seeing is what you could have expected.People have to delever,and that's gonna impress some slowness on the economy.
Loan demand is down.Businesses as well as consumers are tightening their belts,while underwriting standards have gone up.Citi loaned as much in Q1-Q3 to small business as they did in all of last year,but the underwriting standards mean some people who used to get loans can't get them now.
It's axiomatic that economies crash from the bottom up,and heal from the top down.The market is coming back down to those who can't get credit,however.There's a restoraion of equilibrium going on.
Businesses are asking how do I adjust my own sales to catch the wind rather than be buffeted by the wind?We need a comprehensive economic plan,Mr.Parsons believes.
While Dick Parsons is Chairman,Vikram Pandit is CEO of Citigroup.The U.S. government has now fully exited its bailout of Citi,making 12 billion dollars in profit for the taxpayers.
Citigroup(C)

Citigroup's Continued Appeal

Citigroup continues to be seen as an attractive holding by many investors.By one measure,65% had a positive reaction to the firm.CEO Vikram Pandit says they've scaled back on proprietary trading,or trading that banks do for their own profit,and support the idea of a regulator who will impose capital requirements.We need global coordination on regulation and derivatives transparency.U.S. consumer credit remains an issue,in Mr.Pandit's opinion.
Citigroup is now focused on being a bank,not a financial supermarket,Mr.Pandit said.We're only as big as what is required to serve our clients in a competitive market.Citi still owes the U.S. government 25 billion dollars.The bank,which gets most of its deposits overseas,will only issue 15 billion dollars of debt this year,versus 85 billion in 2009,Vikram Pandit noted.The company has been shedding non-core holdings in an attempt to emerge from near-catastrophic damage brought on by amassing toxic assets.Since the market low of last March 8,Citigroup shares have risen from 1.05 to 3.56,as of the opening bell this morning.

Citigroup Tagged By Credit

Credit losses weighed down Citigroup's Q3 earnings.The company lost 0.27 cents a share.CEO Vikram Pandit said that,while consumer credit trends are improving internationally,the U.S. environment is still challenging.Citigroup experienced eight billion dollars in net credit losses.There was some improvement in late stage delinquencies,but there was still some stress in early stage delinquencies.Citi wrote down losses in leveraged loans,and it is likely that toxic asset losses will never be recovered.
The U.S. government owns a one-third stake in Citi,and Citi must pay the government and other investors dividends on preferred stock holdings.Prince Alwaleed bin Talal of Saudi Arabia,one of Citi's major shareholders,has urged the government to divest its position as soon as possible.This is unlikely to happen for some time,however,out of an abundance of caution.
Despite Citi's problems,Deutsche Bank has initiated coverage of the stock with a buy rating,and a target price of 5.50 a share.Citi did realize a Q3 profit of 101 million-much better than last year's Q3 loss of 2.8 billion dollars.An independent evaluation approved of Citigroup's management.

Citigroup Claims Progress Made

Citigroup,one of the world's largest financial institutions,claims it is making good progress towards recovery.CEO Vikram Pandit,in a letter to shareholders,summed up recent events,saying the company has been reorganized to best make use of its strengths.Citicorp focuses on providing best-in-class products and services to grow the franchise profitably,reduce volatility,and take advantage of its competitive advantages in more than 100 countries.We are making excellent progress divesting and exiting businesses from Citi Holdings,the non-core assets,Mr.Pandit indicates.We have significantly reduced our expenses and risk.Our balance sheet has been reduced by 25%.Our cost structure is also down by one quarter.We have also reduced our risky asset categories significantly.Our direct subprime exposure is down 65% year-over-year and highly leveraged financial commitments are down 75% year-over-year.
We still have a lot of work to do,Mr.Pandit admits,but we are continuing to build on the progress made in the past 18 months by focusing on our strategic priorities.We remain focused on managing costs and maintaining positive operating leverage and generating long-term profitability and growth from Citicorp,which comprises our core franchise,to benefit you,our shareholders,Vikram Pandit concluded.A reverse stock split may occur by June 30,2010,which means that several shares of Citigroup would be combined to form fewer,more highly-priced shares.The ratio of the split has not been determined yet.

Pandit Defends Citi

Vikram Pandit,Citigroup CEO,says their Tier One ratio is 12%.That's a very,very strong ratio.We feel very well-capitalized as a company.It's well above what regulators consider well-capitalized.We understand that the old model of corporate behavior no longer works,Mr.Pandit explained,and that the old rules no longer apply.I get it,and I will see that Citi gets it,Mr.Pandit promised the U.S. Congress.

A Big Investor's View

Prince Alwaleed bin Talal of Saudi Arabia,a Citigroup investor since 1991,described Citi as a core investment for him.The fact that CEO Vikram Pandit was left in office proves that the government doesn't want to run the company.I expect to see Citi's dividend raised in three years,the prince said.Until then,we are prepared to accept the dividend cut.We need to give Mr.Pandit some time.He's a man of a mission,of strong vision.Citi is still far from being a nationalized entity,Prince Alwaleed insisted.The deal allows a bounce-back if the markets improve.Frankly,the recent share price destruction is the fault of Citi's previous management,His Royal Highness observed.

Pandit's Plan

Vikram Pandit,CEO of Citigroup,has revealed his plan for the financial firm's recovery.In his vision,Citi is a Global Universal Bank,not a financial supermarket.The restructuring will take a couple of years,and full earnings will not be realized until the restrucuring is complete.There will be a 400 billion dollar U.S. cut in non-core businesses.The consumer finance and credit card businesses are strong.He aims to increase return on equity 18-20%,and earnings 8-10%.Over 2-3 years,Citi will get fit,restructure and maximize,returning to profitability.It will cut expenses by 15 billion dollars.At present,Citi has about 370,000 employees.Since last summer,it has cut more than 13,000 jobs,and there are more cuts to come.