Q1 '19 Operation: -Moves the most institutional money in the world. Use receivables/payable data to move money efficiently. -World's largest issuer of cards -Investing R&D in fintech -50% revenue is movement of institutional money, treasury and trade solution. 50% revenue from global consumer banking(50% US, 50% global) -Emerging market is growing 2x the pace of developed markets. 2005 only 9% of Fortune 500 companies were in emerging market. That # has increased to 30% in 2016. C is involved in >75% of those companies. -Costco receivables $11B, 600 stores. -Strives for 11.5% tier 1 capital. Excess capital to be returned to shareholders in form of buybacks/dividends. -Deploying credit & expense discipline -Well prepared for a downturn d/t to regulations and company initiatives.
Trimming the fat: -Becoming just a bank, shed $800M of non core assets which had the potential to lose billions in a quarter. -Cut 70 businesses: asset management, hedge fund, insurance company, etc. Cut 40k jobs. This increased ROA 60-->80%. -Allocating money to markets w/ best returns. Reduced consumer footprints from 40--> 19 markets w/ focus on US, Mexico, China.
Valuation: -$5eps per analyst guidance -$10eps per company guidance Extra $4 is from... -50% $2 buybacks -40% $1.6 organic growth -10% $1 based on 1 rate hike/year $10 w/ a PE ratio of 13-->$130.
Revenue/Earning growth 6% annually over the past 5 years, returning 13% of market cap annually in dividends/buybacks. Management-Corbat has a cubicle. In a time of rebuilding, does not want to ask people to give up their offices if he isn't willing to.
Disclosure: I am/we are long C.