Citi bet on emerging markets not paying off

|By:, SA News Editor

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%.