bloomberg Citigroup Chief Pandit Says Bank Having Best Quarter Since 2007 Share | Email | Print | A A A
By Edward Evans March 10 (Bloomberg) -- Citigroup Inc. Chief Executive Officer Vikram Pandit said his bank is having the best quarter since 2007, when it last posted a profit. "I am most encouraged with the strength of our business so far in 2009," Pandit wrote in an internal memorandum obtained today by Bloomberg. "In fact, we are profitable through the first two months of 2009 and are having our best quarter-to-date performance since the third quarter of 2007." The bank had $19 billion of revenue in January and February before disclosed writedowns, he added. Citigroup has logged five quarters of losses totaling more than $37.5 billion since it posted a $2.2 billion profit in the third quarter of 2007. Once the world's biggest bank by market value, the bank fell below $1 in New York trading last week for the first time as investors lost confidence that the shares can recover after losses and a government rescue. "I am, like you, disappointed with our current stock price and the broad-based misperceptions about our company and its financial position," Pandit wrote. The price doesn't reflect the bank's capital strength and earnings potential, he added. Citigroup jumped 14 percent to $1.20 in German trading today. The stock has tumbled 95 percent in the past year, cutting the bank's market value to about $5.8 billion, less than Japan's Nomura Holdings Inc. and Turkey's Akbank TAS, in which Citigroup owns a 20 percent stake. The bank is the smallest company and the worst-performing stock in the 30-member Dow Jones Industrial Average. Biggest Shareholder The government's plan to exchange its preferred stock for common shares will make Citigroup the strongest U.S. bank measured on tangible common equity, Pandit added. The transaction will also make the government Citigroup's biggest shareholder, with a 36 percent stake. The bank has also conducted its own stress tests, using assumptions more pessimistic that the Federal Reserve's, Pandit added. Citigroup is "confident" about its capital strength. Expenses totaled $8.1 billion in the year through February, less than Citigroup's target, Pandit said. The bank was created by the 1998 combination of Citicorp and Travelers Group Inc., which with a value of $85 billion was the largest merger in history at the time. The transaction helped persuade the U.S. government to repeal a Great Depression-era law, the Glass-Steagall Act, that prohibited banks that took consumer deposits from engaging in investment-banking activities. To contact the reporter on this story: Edward Evans in London at at eeva...@bloomberg.net
