Citigroup CEO says bank on path to profitability

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Citigroup CEO says bank on path to profitability
Citigroup CEO says bank on path to 'sustained profitability' after asset sales, strategy shift

Stevenson Jacobs, AP Business Writer, On Thursday March 11, 2010, 5:55 pm EST

NEW YORK (AP) -- Citigroup Inc. says it's heading back toward sustained profitability after two years that saw the bank lose billions of dollars and be bailed out by the government.

CEO Vikram Pandit said Thursday that Citigroup has overhauled its operations, shed money-losing businesses in the U.S. and shifted its focus overseas.

"Citi today is a fundamentally different company than it was two years ago," Pandit told an investor conference in New York. "We are well positioned to return to sustained profitability."

Investors embraced his bullish view, sending Citigroup shares up 5.6 percent to $4.18. The stock is up nearly 20 percent in the past week.

Pandit didn't give a timetable for returning to profitability. But he said Citigroup, the hardest hit U.S. bank during the credit crisis, sees big growth in emerging markets including Latin America and Asia, which generated about half of Citigroup's 2009 revenue.

In 2009, Citigroup lost $1.61 billion, or 80 cents per share. It lost $27.68 billion, or $5.61 per share in 2008. Most of the losses were from soured residential and other consumer loans.

Going forward, Pandit said the bank will focus on client businesses in three core areas of its Citicorp division -- investment banking, consumer banking and transaction services like credit cards.

Citigroup split itself into two parts last year -- Citicorp and Citi Holdings, the division holding noncore, riskier assets including the mortgage backed securities that undermined the bank and other financial institutions.

Pandit said the bank would continue selling off Citi Holdings, which had $547 billion worth of assets at the end of 2009.

His remarks came a year after reports surfaced that Citigroup had returned to profitability in the first two months of 2009. The reports sent the Dow Jones industrial average up 379 points on March 10, 2009, pulling the overall market off of its 12-year lows.

Citing Pandit's upbeat outlook, prominent banking analyst Dick Bove raised his price target on Citigroup's stock from $3.75 per share to $4.25.

"Mr. Pandit's concepts ... are simple: Grow overseas and cut back operations domestically. Focus on client profitability rather than product profitability," Bove wrote in a research note. "I believe this program will work."

Still, some analysts have expressed concern over how the bank will perform once it cuts ties with the government.

Citigroup received $45 billion in government bailout money at the height of the financial crisis. It raised $20 billion in December to help repay the money it received as part of the Troubled Asset Relief Program. The remaining $25 billion was converted to stock last fall, giving the government what is now a 27 percent ownership stake.

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Interest in Citi (C) calls continues. 1.47 million traded in the name yesterday, creating 223,000 contracts in new open interest. Today, shares are up 14 cents to $4.14 and, in morning action, one player pays 10 cents for June 5 calls, 50000X -- which is the biggest equity options trade of the day. Another 1.3 million Citi calls traded total.

according to MM 阴谋论，they will try to kill those calls, right? Which one do you believe?