The Banking and Strategy Initiative

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Bank Results Season: Citi comes back with another $1.9 bln (Q3 2011 $1.23 EPS / $49.50 TBVPS)

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Even as the press release triggers a lot of fact tweets in the social universe ( Follow @zerohedge for some good insights) one finds the CDS betting of Citi giving it the same extra on the topline and earnings that may be debated as accounting gain by WSJ and other American business papers as they did for JP Morgan. Citi earned a humongous $1.23 against the $0.84 without its gains from bets on its own debt spreads and beat last quarter’s $1.08 and last year’s $0.72 as well as the estimates for $0.81 for the quarter from analysts even after excluding the $1.9 bln from CVA related to its CDS and a third of it from its own asset book negated by counterparty losses in the credit book.

Revenues were a $20.8 bln, $15.9 bln from core businesses. A measured $1.4 bln was released from loan loss reserves and according to the bank (Vikram Pandit) all its Credit Cards business will move back from the Citi Holdings balance sheet to the main bank balance sheet after a $2.2 bln profit in the first nine months. Even without the transition Citi holdings ( bad bank ) is already only 1/7 th its size in 2008

The bank had $1.9 bln in loan loss reserve reduction profits in the previous quarter and the year ago September. Citi Holdings booked $3.8 bln in revenues and $800 mln in credit losses

Accordng to zerohedge’s reading of the release, the bank had $32 bln in exposures to France and Belgium (Dexia) Revenues were lower by 12% in the Trading businesses while Revenues rose in Trade Finance by 7%

Credit costs fell 26% to $3.4 bln for the bank allowing to report a Net Income of $3.8 bln, $1.9 bln ahead of the CVA booked for $1.9 bln in Securities and Banking revenue of $6.7 bln Th eBank’s Tier I and Tier I common was a great 13.5% and 11.7% respectively but likely based on earlier Basel rules and not the latest 2.5 regime

While Notrth America Consumer Banking seemed to have steadied ships at $3.4 bln revenues, International Retail Banking produced growths led by Mortgages in Korea, Singapore and Hongkong and Cards across the region

The fall in investment banking revenues was accounted almost totally b fall in North America revenues even as Equities revenue reduced to a paltry $289 mln, Fixed income $2.2 bln and Fee Advisory only $736 mln. Total Assets of $1953 bln and a Tangible Book Value of $49.56 reemhasises the bank’s return from the cataclysm and its journey across Oz of crisis completed by end 2012


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