A hobbled Citi could fall further behind JPMorgan and Goldman
Filed under: Company News, Investing, Earnings, Citigroup
Corporate dealmaking, securities trading and stock and bond underwriting have powered Wall Street's earnings this year, and that's bad news for Citigroup (C), some analysts say. Citi posted a $101 million profit in the third quarter, excluding dividends on preferred stock and costs related to a debt exchange that gave Washington a 34 percent stake in the company, but it may stand to lose ground to healthier rivals."We expect Citi will struggle to hang onto market share as more strongly capitalized players without meaningful operating limitations can respond to market opportunities more quickly," wrote William Tanona, a former Goldman Sachs analyst now with Collins Stewart in New York, in a note to clients Thursday.
Citi said Thursday that revenue from its investment banking and trading divisions fell to $4.9 billion, a drop of 29 percent from the previous quarter. However, Goldman Sachs (GS), which reported a $3.2 billion quarterly profit, had income of nearly $7 billion from those businesses, down just 15 percent. And JPMorgan Chase (JPM) has reported $7.5 billion in investment banking and trading revenues, a 3 percent gain.
Overall, Citi said it lost $8 billion on bad loans. It was the first quarter since the beginning of 2007 in which that total hasn't risen. But the company set aside just $802 million to cover future losses, about half of what much healthier JPMorgan added to its reserves when it announced its third-quarter results on Wednesday.
Citi is now holding reserves nearly equal to 6 percent of its loan portfolio as a buffer against future losses. But if Tanona is right and increased government oversight does in fact "dampen its ability to compete more aggressively in the near term," as he wrote in his note, it could be a while before robust investment banking and trading results like those at Goldman and JPMorgan can help offset Citi's loan losses.
Another area of uncertainty is Citi CEO Vikram Pandit's fate. While Goldman's Lloyd Blankfein and JPMorgan's Jamie Dimon seem in control of their own destinies, Pandit doesn't.
"This was an important quarter for us; sustainable profitability remains our primary goal in the near term," Pandit said in a statement. Whether he can achieve it is another question.
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Reader Comments (Page 1 of 1)
10-15-2009 @ 5:57PM
Donovansdanes said...
Sounds like Piti, yes PITI bank is having financial issues. Even after getting TARP money, canceling credit card accounts, lowering card holders limits, and raising card holders interest rates. So, lets not put all the blame on consumers defaulting on loans. Something else is also contributing to the financial woes of Piti bank.
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10-15-2009 @ 6:46PM
gleeminghope said...
I read an article on Goldman Sachs and it stated that George Soros purchased 3,446 shares in 2008 to bring his shares up to 18,000 shares or 40.63 holdings...now isn't that weird that Goldman Sachs received so much money from the government..and George Soros has ties to Obama dating back to 2004. Google George Soros, shadow party...I think there are a few very odd and very rich people playing with our money and this economy. Intentionally...too..isn't it also weird that all this economic/banking crisis came just in time for the elections. Not coicendental to me..
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10-15-2009 @ 7:00PM
RJ said...
As a U.S. taxpayer and consumer I will never use any financial institute or company even remotely connnected to JP Morgan Chase. This company should be investigated for fraud, corruption and basically abusing the U.S consumer. I hope there are some good guys left at the U.S. Attorney General's Office because they are milions of U.S.consumers filing complaints at the OCC office. Why isn't this making the main stream news?
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10-15-2009 @ 7:21PM
Rock Fossil said...
There is a latin idiom, "Divide et Impera", literally translated means Divide and Rule, the tool of wealthy corporatists and elitist politicians.There is a weapon however; "Vox Populi, Vox Dei", translation: The Voice of the People is the Voice of God coupled with "E Pluribus Unum"...out of Many come One. This is the true strength of "We the People" to stay focused for our own self interests and
know the truth. I will begin by presenting the basis of all truths and how it relates to the abysmal
situation we find our country, our economy and our world in today. I promise you, you will not find this
information anywhere in today's diluted, scripted Media outlets be it on TV, Radio or in newspaper print
G. Edward Griffin is a sheer genius! Why pay $100 for a financial seminar to tell you a lie. Wall street
is a casino, Banks are the cash cages and you and I are the dummies pulling the handles.....take
42minutes and 15 seconds to educate yourself in a way that even bankers aren't schooled in. Take this
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taken in a very large way! It won't cost you dime and if you think this is part of a conspiracy, just
look around you and see how what you will watch is exactly what you are seeing taking place in real time.
Click on the link or copy and paste:
http://video.google.com/videoplay?docid=6507136891691870450#
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10-15-2009 @ 7:59PM
Mike Sieberg said...
City Bank can twist in the wind for all I care!
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10-15-2009 @ 9:44PM
jake said...
Something fishy at Goldman Sachs is with ex CEO Paulson heading up major GOV dept., think it is time for a good old fashion investigation into G.S. dealings on behalf of USA Taxpayers. What was that AIG back door payment all about ?
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10-15-2009 @ 11:10PM
peter said...
Latin aside, we are getting screwed by the cabal of banks and government. Vote EVERY INCUMBENT OUT OUT OUT.
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