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VIDEOCitigroup Back from the Dead?
By
Scott Reeves Mar 10, 2009 1:30 pm
Brief scrutiny of today's headlines.
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Citigroup made money in the first 2 months of 2009, and it's having its strongest quarter since 2007, when it last reported a profit.
For the current quarter, the bank reported earnings before taxes and write-downs for bad loans of $8.3 billion. The bank had posted losses totaling about $37.5 billion since it reported a $2.1 billion profit in the third quarter of 2007.
But the company warned, market turmoil could quickly erode the results.
In a memo obtained by the Wall Street Journal, Citigroup’s CEO Vikram Pandit says, “Our stock price is not an indication of our financial strength.”
Pandit noted, “Our client businesses are strong: Our deposits are relatively stable, our client-driven securities and banking businesses have been performing well, including our recent number-one rank in M&A, and we continue to provide credit to consumer and corporate customers.”
Pandit says the government’s plan to exchange preferred shares for common stock will boost Citigroup’s prospect, making it the strongest bank in the US measured by tangible common equity.
The banking industry may be rebounding from its near-death experience.
Last month, Bank of America (BAC) CEO Kenneth Lewis said January’s results were “encouraging.” Colm Kelleher, Morgan Stanley’s (MS) chief financial officer, called January a “good start.”
Last week, Citigroup’s shares dipped to $0.97 as it became the first major banking company whose stock fell below $1. In mid-day trading Tuesday, the stock rose $0.28, or 27.7% to $1.33 a share.
But hold the champagne - Citigroup’s 52-week high is $27.35.
No positions in stocks mentioned.
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