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Citigroup (C) Replies |
rffrydr
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 Posted: Tue Mar 20, 2012 7:26 am Post subject: |
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I couldn't disagree more; stress tests work. Flat is exactly what we want:
Citigroup: stressed out over tests
| Quote: | What a waste of everybody’s time. The day after the Federal Reserve was forced to release the results of its latest stress tests, the US bank index finished flat. (All of Wall Street was talking about the sore South African ping-pong pensioner anyway.) Shares in JPMorgan, which on top of “passing” the stress test announced a mega buyback and dividend hike, were also flat. And the highest profile bank to “fail”, Citigroup, was down just 3 per cent.
But Citi should feel hard done by, nevertheless. The ridiculously tiny numbers in table 2 of the Fed’s longer release show that by the third quarter of last year Citi had a tier one common capital ratio of 11.7 per cent, the sixth highest of the 19 banks under review. And its projected loan losses as a percentage of assets under the Fed’s stress scenario were broadly in line with relevant peers in all lending categories, save two.
Those two deserve much closer scrutiny. In the first, industrial and commercial loans, Citi scored a loss rate of 11 per cent of balances under stress conditions (table 4) in spite of the fact that 85 per cent of its loans in that category are investment grade. That is a higher quality loan book than many of the smaller banks have, whose loss ratios came out lower. The second bucket of loans in which Citi fared much worse than peers was labelled “other consumer”. Roughly two-thirds of this $30bn-odd portfolio (as defined by the Fed) was overseas consumer loans, mostly in booming emerging markets. The stress scenario must have absolutely murdered these, although in reality retail credit losses in Asia, and in Europe, the Middle East and Africa, are lower or in line with North America.
Sure, Latin American loss rates are higher, but the Fed did not even bother to model that part of the world. Citigroup is right to feel cross and demand details from the Fed. |
The "market" already knows....what? The magic of the stress tests is that they force everyone to apply their own unspoken irrationality in a rational way, across the board and uniformly at a single point in time. This trip to the mirror will be met with a big stupid clown-face staring back. And thus the market will see itself, collectively, as the fool it is. Humility can be a great tool of leadership.
And we have the added bonus of knowing that Citi is the most cyclically charged big bank going. If you believe in 250K/mo jobs this is the one to own.
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rffrydr
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| Posted: Mon Nov 28, 2011 10:48 pm Post subject: |
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....Judge says, "people have right to know." Right. By the time we "know" we'll have forgotten this case existed. Now Citi is free to litigate.
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HenryTo
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rffrydr
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| Posted: Mon Apr 18, 2011 9:52 am Post subject: |
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Citi is making money from RETAIL. It may not be the best global empire (few are: http://www.economist.com/node/18558236?story_id=18558236) but it's kicking in.
Already sold down it's not taking the bait today and after the split-back shenanigans are over should be a good beginning....dividend or no dividend.
Still hold my "free" half-position from '09. Not wise in hindsight as even free has its costs but this one's filed away. May start with some option-ins later in the quarter.
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rffrydr
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| Posted: Mon Mar 21, 2011 12:44 pm Post subject: |
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Nothing is obvious:
Citigroup Gets Hit Hard
By Timothy Collins
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Bigger may not be better. At least that may be true for the price of Citigroup. Shares are taking a beating today. There may be a little disappointment in the size of the dividend, but it may be more than that. This stock has been a dream for high-volume traders living on rebates. Once Citigroup moves from the $4s into the $40s, the volume will drop quite a bit, and so will the cash cow -- I mean rebates. I would expect to see some pressure on Citi as this high-frequency trading winds down, but it is a bit surprising to see it this early. I'm actually worried about the chart patterns on Citi. I was a bit early into this one last year, and out a bit early, but it held up better to technicals than many other financials. A close this week under $4.39,... |
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rffrydr
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| Posted: Wed Jan 19, 2011 9:33 am Post subject: |
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"75% overseas"...and we can barely surpass tangilble book value. Obviously when it comes to BRIC investing much depends on how "pure" your play really is.
Still holding my "free" half position from '08 and this, with GM, is my EEM exposure. I've been ripped off at enough of their tellers around the world to know this value will be realized. But we'll never be fashionable. Long term what will be interesting is if our very atypical CEO who was pasted up as a minority front on this monster will be part of a new vision in banking--perhaps a true realization of "global banking."
Don't have a lot of confidence in this trend but do believe in the compounding value of money. And since the position is free I can afford to leave it in the world's hands. The Reserves will keep giving back for a long long time. Still, I do not expect the shareholder to matter here for that same time and Citi will go on representing what most in Wall St. fear as, the "utility bank."
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HenryTo
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| Posted: Tue Jan 18, 2011 5:07 pm Post subject: |
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Morningstar on Citigroup's 4Q earnings:
| Quote: | | Citigroup C reported its fourth quarter of positive earnings, making $1.6 billion in the fourth quarter. The bank's underlying performance was marred by mark-to-market accounting on its debt, which caused a $1.1 billion loss in its principal trading. The mark to market caused the company to underperform our quarterly expectations, but our long-term assumptions remain unchanged. Consequently, we are maintaining our fair value estimate. More than 75% of Citigroup's earnings were derived from its international business. Overseas, the company is seeing improvement in India and Latin American credit cards, and most of its other regions are seeing stabilization in credit metrics. We believe the company will continue to see improvements in credit costs--which, while improving, are still higher than normal. In the United States, the company's mortgage loan book saw a decline in delinquencies and losses. This helped lead to a $2.2 billion release of loan-loss reserves during the quarter. However, Citigroup still maintains an allowance above 6% of loans, meaning it has plenty of reserves despite the release. On a capital front, Citigroup is very well off. Its Tier 1 common ratio of 10.7%, on top of its hefty allowance for loan losses has set the company up for an eventual reinstatement of its dividend and potentially a significant share-repurchase program. However, we expect Citigroup will remain cautious about returning funds to shareholders, as items like Basel III's capital levels are not yet set for systemically important banks. |
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rffrydr
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| Posted: Mon Oct 25, 2010 9:30 am Post subject: |
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Number one "selling on strength" today. Looks like no-one likes those Goldman analyst reports anymore.
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rffrydr
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| Posted: Mon Oct 25, 2010 7:10 am Post subject: |
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Added to Goldman "conviction buy" list, looking for 35% and end of government holdings mid-2001.
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rffrydr
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| Posted: Wed Sep 08, 2010 10:43 pm Post subject: |
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Ven
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| Posted: Mon Aug 30, 2010 4:16 pm Post subject: |
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C is a zero play, for all the rally we've had it's still at $3.67 and declining.
I think even Cramer has given up trying to get this thing over $5. |
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rffrydr
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| Posted: Mon Aug 30, 2010 12:33 pm Post subject: |
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It's only taken a year-and-half to discover Citi is an EEM play. The branch cluster model hasn't been the best approach but now anything is better than USof A:
http://www.cnbc.com/id/38919942
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rffrydr
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| Posted: Fri Aug 27, 2010 2:26 pm Post subject: |
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That DTN issue has been regurgitated almost as much as the evil mark-to-market of bank's own debt. What Mayo is saying is that Citi should be denied what any mom-and-pop liquor store could use. To qualify they just have to stay in business--that part they did.
The IRS ruling is a technicality the purpose of which is to prevent abusive buyouts xxx tax shelters.
And, if it's conspiracies you're huntin' go check out the WaMu handoff to JPM. The BK case opened up this week, is a window to the absurd.
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Ven
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rffrydr
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| Posted: Tue Jul 20, 2010 6:26 pm Post subject: |
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How's that for the ol' switcheroo?! Moody's upgrades Citi:
http://wallstreetpit.com/36220-moodys-raises-citi-outlook
What do we do with that? Since it's been trading above the MS government selling point we'll probably have to go with that.
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