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citi disappoints hopes for a kitchen sink quarter - reuters
by：KingKonree
2020-05-18
NEW YORK (Reuters)-
Citigroup (C. N)
Write down $18 billion in bad mortgage assets and loss of credit is not enough for many analysts and investors.
The largest bank in the United States said Tuesday it suffered $18 in losses.
The fourth 1 billion-quarter write-
The company said the decline and credit losses in the subprime mortgage portfolio are now valued at about $37. 3 billion.
The \"kitchen sink\" quarter is the time for a company to try to solve all its problems and post all the bad news at the same time.
The bank says it determines the proper size of the writing
Economic factors, including house prices and unemployment, and specific information on basic loans in securities and portfolios.
But some analysts believe Citi could record more
The decline is more in line with E * Trade Financial Corp (ETFC. O)
Sell assets worth $3 billion
Portfolio supported.
Hedge fund Citadel bought the portfolio for $0. 8 billion, including debt-backed bonds.
That means the dollar is valued at about 27 cents.
According to analysts at independent research firm CreditSights, Citi\'s portfolio is valued at nearly $60 cents.
If Citi chooses to evaluate its portfolio based on actual market prices rather than an estimate of the cash flow of securities, it may reduce its portfolio by another $15 billion, credit analysts led by David Handler wrote in a report.
\"There may be more CDO hits,\" analysts wrote . \".
Some analysts also questioned other decisions taken by Citi, including a 41% cut in dividends.
Some had expected a dividend cut of 50% or more.
The announcement of 4,200 layoffs, equivalent to 1% of the bank\'s total staff, is also a bit timid for some.
They are well behind as many as 10% of the World Bank\'s 375,000 employees.
The moves have led some observers to wonder whether the recently appointed Citi chief executive, Vikram Pandit, has shown the decisive touch needed to get the troubled bank on track.
Matt McCormick, portfolio manager and bank analyst at Bahl & Gaynor Investment Advisor, Cincinnati, Ohio, said: \"I\'m surprised that Pandit is not more active . \".
Pandit, a former hedge-fund executive who has never run a big bank, was named Citi CEO in December, ending the tough four.
Annual management of Prince Charles.
To be sure, there is a good reason that Citi may not have recorded more writing records --downs. Write-
Downs entered the capital.
Citigroup says it will raise at least $14.
5 billion of the new capital offset the expected losses and expenses, but even more so
In this environment, banks may be forced to seek more capital, which is not cheap.
It is difficult to evaluate the CDO portfolio, and Citi\'s portfolio may not be comparable to that of E * Trade for example.
But investors are obviously unhappy.
Citigroup shares fell 7.
$ 3% closed at $26 on Tuesday. 94. And the near-
For Citi, the short-term outlook is not optimistic, as the subprime mortgage crisis shows signs of spreading to other lending sectors.
\"There will be uncertainty in the coming quarters.
All you need to do is overcome some pain, \"said Lee Delaporte, research director at Dreman Value Management, who has recently been buying Citi stock because they have longterm prospects.
Citigroup (C. N)
Write down $18 billion in bad mortgage assets and loss of credit is not enough for many analysts and investors.
The largest bank in the United States said Tuesday it suffered $18 in losses.
The fourth 1 billion-quarter write-
The company said the decline and credit losses in the subprime mortgage portfolio are now valued at about $37. 3 billion.
The \"kitchen sink\" quarter is the time for a company to try to solve all its problems and post all the bad news at the same time.
The bank says it determines the proper size of the writing
Economic factors, including house prices and unemployment, and specific information on basic loans in securities and portfolios.
But some analysts believe Citi could record more
The decline is more in line with E * Trade Financial Corp (ETFC. O)
Sell assets worth $3 billion
Portfolio supported.
Hedge fund Citadel bought the portfolio for $0. 8 billion, including debt-backed bonds.
That means the dollar is valued at about 27 cents.
According to analysts at independent research firm CreditSights, Citi\'s portfolio is valued at nearly $60 cents.
If Citi chooses to evaluate its portfolio based on actual market prices rather than an estimate of the cash flow of securities, it may reduce its portfolio by another $15 billion, credit analysts led by David Handler wrote in a report.
\"There may be more CDO hits,\" analysts wrote . \".
Some analysts also questioned other decisions taken by Citi, including a 41% cut in dividends.
Some had expected a dividend cut of 50% or more.
The announcement of 4,200 layoffs, equivalent to 1% of the bank\'s total staff, is also a bit timid for some.
They are well behind as many as 10% of the World Bank\'s 375,000 employees.
The moves have led some observers to wonder whether the recently appointed Citi chief executive, Vikram Pandit, has shown the decisive touch needed to get the troubled bank on track.
Matt McCormick, portfolio manager and bank analyst at Bahl & Gaynor Investment Advisor, Cincinnati, Ohio, said: \"I\'m surprised that Pandit is not more active . \".
Pandit, a former hedge-fund executive who has never run a big bank, was named Citi CEO in December, ending the tough four.
Annual management of Prince Charles.
To be sure, there is a good reason that Citi may not have recorded more writing records --downs. Write-
Downs entered the capital.
Citigroup says it will raise at least $14.
5 billion of the new capital offset the expected losses and expenses, but even more so
In this environment, banks may be forced to seek more capital, which is not cheap.
It is difficult to evaluate the CDO portfolio, and Citi\'s portfolio may not be comparable to that of E * Trade for example.
But investors are obviously unhappy.
Citigroup shares fell 7.
$ 3% closed at $26 on Tuesday. 94. And the near-
For Citi, the short-term outlook is not optimistic, as the subprime mortgage crisis shows signs of spreading to other lending sectors.
\"There will be uncertainty in the coming quarters.
All you need to do is overcome some pain, \"said Lee Delaporte, research director at Dreman Value Management, who has recently been buying Citi stock because they have longterm prospects.
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