Stock Alert for Citigroup Inc. (C)

Citigroup Inc. (NYSE: C)

Citigroup Inc. (C) is a global diversified financial services holding company. The Company provides consumers, corporations, governments and institutions with a range of financial products and services. As of December 31, 2009, Citigroup had approximately 200 million customer accounts and did business in more than 140 countries. Citigroup operates through two primary business segments: Citicorp, consisting of its Regional Consumer Banking (RCB) businesses and Institutional Clients Group (ICG), and Citi Holdings, consisting of its Brokerage and Asset Management (BAM), Local Consumer Lending (LCL) and Special Asset Pool (SAP). In April 2010, Barclays PLC acquired Italian credit card business of Citibank International Bank plc.

The Company was founded in 1812 and is based in New York, New York.

Share Statistics (16-June-10)			FY 2007	FY 2008	% Chg	Q4 2008	Q4 2009	% Chg
Symbol	C	Revenue, $Mn	159.2B	105.8B	33.5%	16.3B	11.9B	27.0%
Current price	$3.99	Gross marg.	n/a	n/a	n/a	n/a	n/a	n/a
52wk Range:	$5.43-2.55	Oper. margin	23.5%	18.8%	20.0%	n/a	n/a	n/a
Avg Vol (3m):	818,595,000	Net margin	-2.3%	-26.2%	2156%	-105.9%	-63.7%	39.8%
Market Cap.	115.63B
Dil. Shares Outst.	29.0B	EPS, $	0.72	-4.72	755.6%	-4.12	-0.34	91.7%

Source: Reuters.com, SEC Filings.

Financial Summary

Citigroup recently reported first quarter 2010 net income of $4.4 billion or $0.15 per diluted share, and revenues of $25.4 billion.

Revenues grew $7.5 billion and net income increased $5.8 billion, excluding the $10.1 billion pre-tax loss from the TARP repayment and exit of the loss-sharing agreement with the U.S. government in the fourth quarter of 2009. Provisions for credit losses and for benefits and claims declined $2.4 billion sequentially to $8.6 billion, the lowest level since the first quarter of 2008. Expenses were down 6% sequentially to $11.5 billion.

Key Items

• Citigroup revenues were $25.4 billion, up $7.5 billion sequentially, excluding the impact of the TARP repayment and exit of the loss-sharing agreement in the fourth quarter of 2009.
• Securities and Banking revenues more than doubled to $8.0 billion from $3.3 billion in the fourth quarter of 2009. Excluding the impact of CVA from both periods, revenues increased $2.5 billion, or 48%, sequentially to $7.7 billion.
• Citigroup expenses decreased $796 million, or 6%, sequentially to $11.5 billion.
• Citigroup net credit losses declined $1.6 billion, or 16%, sequentially to $8.4 billion.
• Citigroup recorded a net release of reserves for loan losses and unfunded lending commitments of $53 million in the first quarter of 2010, versus a $755 million net build in the prior quarter.
• Citigroup’s allowance for loan losses was $48.7 billion or 6.80% of loans, up from $36.0 billion or 6.09% of loans in the fourth quarter of 2009, primarily reflecting the adoption of SFAS 166/167.
• Tier 1 Capital and Tier 1 Common ratios of 11.2% and 9.1%, respectively, increased significantly from the pro forma ratios as of year end 2009, after adjusting for the adoption of SFAS 166/167, which had a negative impact of 140 and 138 basis points, respectively.
• Book Value per share was $5.28, down from $5.35 in the prior quarter. Tangible Book Value⁵ per share was $4.09, down from $4.15 in the prior quarter. The adoption of SFAS 166/167 had a negative impact of $0.29 per share on both Book Value and Tangible Book Value.
• Continued support for U.S. economy and consumers. Since the start of the U.S. housing crisis in 2007, through the first quarter of 2010, Citigroup has helped more than 900,000 homeowners in their effort to avoid potential foreclosure. Citigroup has also been helping nearly 1.7 million credit card members manage their card debt through a variety of forbearance programs.

REVENUES

Citigroup revenues were $25.4 billion, up $17.5 billion from the fourth quarter of 2009. Excluding the $10.1 billion pre-tax loss from the TARP repayment and exit of the loss-sharing agreement in the prior quarter, revenues increased $7.5 billion or 42%. The sequential improvement reflected strong results in Securities and Banking (“S&B”), a positive CVA in the quarter ($289 million in the quarter compared to negative $1.9 billion in the fourth quarter of 2009) and higher positive net revenue marks in the Special Asset Pool (“SAP”).

Citicorp revenues were $18.5 billion, up $4.8 billion or 35% from fourth quarter of 2009, driven by growth in S&B. Citicorp’s North America, EMEA, and Asia regions had double-digit sequential growth in revenues, up 58%, 64%, and 23%, respectively, while the Latin America region had an 8% decline. Excluding the impact of CVA from both periods⁴, Citicorp revenues were up 17% sequentially to $18.2 billion.

Citi Holdings revenues were $6.6 billion, up $1.4 billion, or 26%, from the prior quarter. Revenues in the SAP increased $1.3 billion sequentially to $1.5 billion, driven by higher positive net revenue marks, particularly on sub-prime related direct exposures and the Monoline CVA (see Appendix A). Local Consumer Lending (“LCL”) revenues were $4.7 billion, up slightly from the prior quarter. Brokerage and Asset Management revenues were $340 million, up $69 million or 25%, mainly due to gains on business dispositions.

Corporate/Other revenues were $349 million compared to negative $11.0 billion in the prior quarter, which reflected the $10.1 billion pre-tax loss of the TARP repayment and the exit of the loss-sharing agreement.

EXPENSES

Citigroup expenses were $11.5 billion, down $796 million, or 6%, from the prior quarter, reflecting continued expense discipline across businesses.

Citicorp expenses were $8.5 billion, down $266 million, or 3%, from the prior quarter.

Citi Holdings expenses were $2.6 billion, down $434 million, or 14%, from the prior quarter.

CREDIT

Citigroup’s total provisions for credit losses and for benefits and claims of $8.6 billion declined $2.4 billion or 22% sequentially, to the lowest level since the first quarter of 2008.

Citicorp credit costs of $2.8 billion were down $527 million, or 16% from the prior quarter, and included net credit losses of $3.1 billion and a $367 million net release for loan losses and unfunded lending commitments. The decline in credit costs reflected continued improvement in corporate credit and key consumer markets, particularly Mexico and India cards.

Citi Holdings credit costs were $5.8 billion, which included $5.2 billion of net credit losses, a net build for loan losses and unfunded lending commitments of $314 million, and a $243 million provision for policyholder benefits and claims. Net credit losses and reserve builds declined 21% and 59%, respectively, from the fourth quarter of 2009.

TAXES

The effective tax rate on continuing operations was 20%, reflecting taxable earnings in lower tax rate jurisdictions, as well as tax advantaged earnings.

NET INCOME

Citigroup net income was $4.4 billion compared to a net loss of $7.6 billion in the prior quarter. Excluding the $6.2 billion after-tax loss of the TARP repayment and the exit of the loss-sharing agreement in the fourth quarter of 2009, net income increased $5.8 billion. The sequential growth in net income was due to improved revenues, continued expense discipline, and lower credit costs.

Citicorp net income of $5.1 billion was $3.3 billion higher than the prior quarter, mainly driven by strong results in Securities and Banking, as well as lower credit costs. All four Citicorp regions showed sequential growth, with particular improvement in North America and EMEA.

Citi Holdings reported a net loss of $887 million, compared to a net loss of $2.6 billion in the prior quarter. The sequential improvement was driven by higher positive revenue marks in SAP, and lower credit costs and expenses.

Corporate/Other reported a net loss of $36 million compared to a loss of $7.0 billion in the prior quarter, which reflected the impact of the TARP repayment and exit of the loss-sharing agreement.

BALANCE SHEET

• Citigroup assets were $2.0 trillion at quarter end, up 8% sequentially. The adoption of SFAS 166/167 added $137 billion of assets to the balance sheet as of January 1, 2010.
• Cash and deposits with banks were $189 billion, or 9.4% of total assets, compared to $193 billion, or 10.4% of total assets in the prior quarter.
• Citigroup deposits were $828 billion, down 1% sequentially.
• Citigroup’s net interest margin was 3.32%, up from 2.65% in the fourth quarter of 2009, mainly due to the adoption of SFAS 166/167. Net interest margin expansion was also driven by the absence of interest payments on TARP trust preferred securities repaid in the prior quarter and the deployment of cash into higher yielding investments.

Financial Strength (17-Jun-2010)	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	–	0.00	3.60	0.81
Current Ratio (MRQ)	–	0.00	6.64	0.97
Long-Term Debt to Equity (MRQ)	290.10	75.08	93.36	132.94
Total Debt to Equity (MRQ)	491.27	252.65	232.99	198.04

Source: Reuters.com, SEC Filings.

Analyst Consensus

Buy

Outperform

Hold

Underperform

Sell

No Opinion

This is the consensus forecast amongst 18 polled investment analysts. Against the Citigroup Inc company.

Analyst Detail	Buy	Outperform	Hold	Underperform	Sell	No Opinion
Latest	7	3	6	1	1	0
4 weeks ago	5	2	9	1	1	0
2 months ago	5	2	9	1	1	0
3 months ago	4	2	10	1	1	0
Last year	0	2	6	1	1	1

The 17 analysts offering 12-month price targets for C have a median target of 5.50, with a high estimate of 6.90 and a low estimate of 3.50. The median estimate represents a 37.84% increase from the last price of 3.99.

Source: www.ft.com

Consensus Estimates Analysis

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Quarter Ending Jun-10	10	22,778.40	24,272.00	21,691.00	–
Quarter Ending Sep-10	9	22,099.00	23,158.00	21,271.20	–
Year Ending Dec-10	12	92,130.50	95,334.00	89,457.40	91,606.40
Year Ending Dec-11	12	89,393.60	96,943.00	82,952.10	95,546.20
EARNINGS (per share)
Quarter Ending Jun-10	16	0.06	0.10	0.02	–
Quarter Ending Sep-10	15	0.06	0.10	-0.02	–
Year Ending Dec-10	18	0.33	0.45	0.07	0.23
Year Ending Dec-11	18	0.44	0.60	0.15	0.49
LT Growth Rate (%)	2	9.50	11.00	8.00	8.00

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=C

Investment Highlights

Citigroup Global Transaction Services and Euroclear Bank recently announced an agreement with Bloomberg’s Asset and Investment Manager (AIM) system and Euroclear Bank’s cross-border fund processing platform – FundSettle – to fully automate front-to-back-end fund-transaction processing for institutional clients.

Citigroup’s clients can now use Bloomberg AIM to access FundSettle, without extra communications fee, to route and settle transactions in more than 47,000 cross-border and domestic funds supported by a network of more than 510 transfer agents.

Citigroup has been polled as Asiamoney’s 2010 Structured Products biggest winner this year, dominating five out of seven categories across commodity-linked, currency and interest rate products.

Citigroup took top spot for both local currency-denominated and G3-denominated interest rate products; as well as for the first time was voted first for G3-denominated FX products and local currency FX products. Citigroup also voted top for commodities structured products.

This year’s Structured Products Poll received a total of 500 responses from senior finance and treasury executives involved in structured product transactions in the Asia Pacific region.

In recognition of its continued leadership of regional capital markets transactions, Euromoney Magazine recently named Citigroup the “Best Equity House in the Middle East.” The regional award was part of Euromoney‘s 2010 Awards for Excellence, considered to be among the most respected global awards for banking excellence.

During 2009, a difficult year for local and regional capital markets, Citigroup led the most significant equity transactions in the Middle East such as:

• The accelerated offering of part of Dubai Holding’s stake in EFG Hermes in December 2009; and
• The Orascom Telecom rights issue, the second largest equity offering in Egyptian capital market history which raised US$ 800 million.

Citigroup has been in the Arab World for nearly 50 years and views the region as critical to its global franchise. It currently offers full-scale corporate banking services across ten Arab countries, including Egypt, UAE, Lebanon, Jordan, Tunisia, Morocco, Algeria, Bahrain, Qatar, Kuwait and Pakistan.

In 2006, Citigroup established offices at the DIFC, which now houses Citigroup’s Investment Banking, Capital Markets Origination, Equity Sales & Distribution businesses, Global Transactions Services, Equity Research, and Global Islamic Banking serving the MENA region. Citigroup joined the NASDAQ Dubai Exchange as an individual clearing and trading member in 2005.

Source: http://www.citigroup.com/citi/homepage/

Technical Analysis

Source: http://stockcharts.com

C is trading above its 13-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

C has been relatively stable recently. This is evidenced by the width of its Bollinger Bands which are tighter than normal. Additionally, C is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

C’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below zero, which suggests that the underlying moving averages are bearish.

Comparative Analysis

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Jun-17-2010	symbol	Share, $	$ Mn	2010	2011	2010	2011
Wells Fargo & Company	WFC	27.76	144.63B	16.64	n/a	1.64	n/a
Goldman Sachs Group Inc.	GS	137.18	70.62B	5.72	n/a	1.36	n/a
Barclays PLC (ADR)	BCS	18.32	55.16B	13.37	n/a	1.29	n/a
Drug Manufacturers Median			90.13B	11.91	n/a	1.43	n/a
Citigroup Inc.	C	3.99	115.63B	42.50	n/a	1.52	n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHASE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	n/a	0
Sales	790,199	6
Net Shares Purchased (Sold)	(790,199)	26
Total Insider Shares Held	1.16B	n/a
% Net Shares Purchased (Sold)	(0.1%)	n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	(461,477,000)
% Change in Institutional Shares Held	(4.9%)

Source: Yahoo Finance

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