Citigroup to return to profit, says Pandit
CITIGROUP chief executive Vikram Pandit told investors yesterday the bank is on track to return to sustained profitability and losses from some of its worst assets should be manageable if the economy does not deteriorate.
The comments were uncharacteristically optimistic for Pandit. The bank’s improving performance is easing pressure on the chief executive, who has been criticised for being slow to recognise the seriousness of the financial crisis.
Citigroup shares rose 5.6 per cent on Pandit’s comments, bringing their gains since the end of last week to 19 per cent.
“Citi today is a fundamentally different company than it was two years ago,” Pandit said at the presentation, distancing himself from the bank’s prior missteps.
Pandit said Citigroup’s main businesses are aiming to generate annual profit equal to between 1.25 per cent and 1.50 per cent of their assets, up from 1.15 per cent last year, excluding some items.
If Citi boosts assets in its main businesses by about five per cent a year, the company could be earning about $20bn (£13.3bn) a year by the end of 2012, equaling its earnings before the credit crunch, when Citigroup had a much larger asset base.
The projections apply to Citigroup assets in its corporate segment and its Citicorp unit, where the company houses businesses it expects to hold onto.
Meanwhile, the company’s Citi Holdings unit, which holds businesses and assets that Citi is looking to shed, has set aside enough money to cover expected losses on its local consumer loans.