Chillin' out till it needs to be funded
The good new first, the bank expanded NIMs with global business and cost of funding managed well at 2.93% though its US mortgage footprint is not comparable with Wells Fargo. Provisions were almost a third of the amount at B of A at $1.3 bln and credit provisions were down in line with Industry by a 25%. Deposits also grew over last year by 7% to $930 bln. On the other side, the bank was one of the few that lost market confidence but its debt value falling enough for the bank to book a$1 B + losses on its own debt and Loan Loss reserves were not available for release leaving the bank with its Basel III ratio at a fine line of 8.7%. The bank would be incurring costs of capitalising each international subsidiary soonand might need more than the current available 12.7% capital. The bank had earlier changed CEOs on the heels of failing a stress test and diminishing market performance.
The bank chsoe to report conservatively under the new CEO seemingly and lay on a $0.38 ce nts per share while some street estimates expected a figure of $0.90 cents probably expecting more loan loss reserves. Margins are good and revenues stable at $18.2 bln. Expected restructuring charges (repositioning) were indeed $1 bln
Revenue was down on 2011 by a good 10% from $78 bln to $70 bln with profits of $7.5 bln but that was managed at the group level with revenues of $77 bln. Citigroup profits growing 18% to $11.9 bln. The conferenc call at 11 ET is likely to be agog with questions on the new CEO’s difference.