Citigroup (C: 4.71*, -0.29, -5.80%) reported earnings Thursday, and although its shares dropped 5% in midday trading, management remained upbeat about the battered bank's prospects.
The complexity of Citi's post-collapse condition was reflected in the competing interpretations of its earnings; the bank was able to post a narrow profit, but early headlines cited a 27-cents-a-share loss. That figure, which came after taking out the cost of preferred dividends, was still ahead of Wall Street estimates of a loss of 38 cents a share.
"There were a lot of moving pieces," Deutsche Bank analyst Matt O'Connor said in a Thursday note published before the bank's conference call. Though Citi’s net interest margin dropped by 31 basis points as short-term funding costs rose, its "bottom line tangible book, regulatory capital, and the run off of Citi Holdings all came in slightly better than we believe expectations were."
Last month, some analysts criticized Citi for its massive preferred stock conversion and for dividing the company into Citicorp, which consists of assets the banks wants to keep, and Citi Holding, organized for assets it wants to sell or is selling.
Nevertheless, CEO Vikram Pandit, who job security has been a major topic of Street speculation, said in a conference call that the bank is making considerable progress in its attempts to regroup.
"As you know, for the past 18 months, we have been steadily executing our plan to build financial strength and to return Citi to sustained profitability and we have actually made very good progress on that each quarter," he said Thursday.
Citi's tangible common equity, a key measure of bank stability, rose to over $100 billion and its Tier 1 capital ratio, another key data point, stayed at 12.7%, stable from the last quarter. Its tangible book value grew to $4.47 a share and Citi now has $36 billion in loan loss reserves and is operating with much higher liquidity, Pandit said.
"So not only have we meaningfully improved the financial strength of the company, but our underlying franchise remains strong.” CFO John Gerspach added that the bank now is able to repay the money it received from the Treasury Department under the Troubled Asset Relief Program, or TARP, but didn't give a timeline for when that would begin.
Bottom Line: Hold
Investors who’ve stuck with this stock this long will be better served by taking a very long-term horizon. |
发表于 2009-10-15 10:18
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