Seeking Alpha

Citi bet on emerging markets not paying off

  • The good news on Citigroup's (C -0.7%) exposure to weakening emerging markets might be that it's already reflected in the stock price - off 5% YTD vs. JPMorgan -1%, Wells Fargo +1.3%, and BofA +7.1%.
  • Over 40% of Citicorp revenue and earnings came from EM in 2013, says JPMorgan's Vivek Juneja, so expect declining revenues from slower EM trading activity, lower underwriting volumes, and weaker investment sale fees.
  • If the weakness persists, says Juneja, you can throw in boosted credit losses as creating a further hit. Loan loss reserves at Citicorp are at currently at a relatively low level of 2.29%.
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Comments (4)
  • joker
    , contributor
    Comments (132) | Send Message
     
    My understanding is that Citi's clienteles in EM are affluent people. If there is a FICO score there, I would say almost all of them would be at above 800! So talking about their high default on loans does not make too much sense. This is also backed by Citi's recent NCO rates in EM - very very low.
    14 Feb 2014, 12:15 PM Reply Like
  • uftigus
    , contributor
    Comments (19) | Send Message
     
    Awaiting Alpha's response
    14 Feb 2014, 12:31 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (10013) | Send Message
     
    Time to sell even more puts in (C)!
    14 Feb 2014, 12:59 PM Reply Like
  • Dougmayer
    , contributor
    Comments (215) | Send Message
     
    I wouldn't characterize Citi's commitment to being a truly global bank as a "bet" on emerging markets .
    14 Feb 2014, 06:31 PM Reply Like
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