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Brandon Tay
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I am a BBA graduated from Nanyang Technological University, Singapore. Now working in one of the best bank in the world. With 120% passion in the investment banking industry, I am seeking undervalued stocks and investment products with huge potential to share with others and fulfill the mantra... More
  • Latest Citigroup News Updates! 0 comments
    Sep 4, 2009 12:19 PM | about stocks: C
    Recent:  The company is now 33.6% owned by US taxpayers. Although there are constrains and limitations set by US government and pressure from public, top executives from US investment industry still making millions of dollars.  Companies benefited from TARP are now eagerly to pay back the fund as they will be able to enjoy more privileges and freedom in their employees’ compensation plan. By selling shares at $3.15, Citigroup is planning to use the fund to repay the bailout fund provided by the federal governemnt. Citigoup just posted a $7.6 billion loss as its investment banking arm has lagged behind its major rival such as JP Morgan.
     
    Statistics:
    Net Profits
    5.1 billion Loss in Q1 ‘08
    2.5 billion Loss in Q2 ‘08
    2.8 billion Loss in Q3 ‘08
    8.3 billion Loss in Q4 ‘08
    1.6 billion Profit in Q1 ‘09
    4.3 billion Profit in Q2 ‘09
    1.1 billion Profit in Q3 '09
    7.6 billion Loss in Q4 '09
     
    Pros:
    Large presence and growth in emerging markets such as Asia Pac (i) that can minimize the losses and decrease in revenue in US market, backed by US government and it might be “too big to fall’’, sign of economy recovery, better than expected pending home sales and lower than expected unemployment rate, stimulus package in US, China, US$2 millions in warehouse lending market in addition that the competition in this market has been shrinking to 40 firms from 115 four years ago, moderation in the pace of mortgage delinquencies.
     
    Cons:
    Huge TARP lending of US$50.8billion liabilities, pressure from US taxpayers and government, slowing demand for housing, car and personal credit loans, aftermath and goodwill affected by sub-prime mortgage crisis, world economy slow down, signs of increased deterioration in corporate credit (ii), last quarter inclusive of one-time gain of Smith Barney  transaction, risk of higher credit card defaults, falling consumer credit (iv). However, an unexpected drop of 0.3% in retail sales
    might be showing the weak momentum for recovery and a change in consumer spending habits.
     
    Conclusion: There is expectation for US credit cards and other financial systems reforms to be carried out in the near future. Most of the economic data have already shown a recovery in the economy. Just that consumer sentiment and confidence might take more time to recoup. However, there might be still risk and toxic asset that are not yet written off in the bank. Considered all the risks and rewards and optimism in the policies implemented and a sign of economy turnaround. With part of the repayment for the bailout and additional provision for bad loans have been factored in the financial statement for the year 2009. I am 
    expecting Citigroup to be back into the black again for the year 2010. The outlook for the banking giant will be coming back to the limelight and will become one of the best performer of the year.  
     
    (i)                  CITIGROUP earned $1.2 billion net from its Singapore operations last year as its consumer banking unit raked in record profits - information as at April 2009
    (ii)                The value of non-performing loans in Citi's corporate lending portfolio swelled nearly six fold to $12.4 billion in the latest quarter.
    (iii)               Credit-card defaults climbed to a record in June as more consumers fell behind on payments because of rising unemployment and bankruptcies
    (iv)              Consumer credit fell $10.3 billion, or 4.92 percent at an annual rate, to $2.5 trillion in June according to Federal Reserve data
     
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