<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published March 11, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Pandit shares good news: Citi is in the black
News drive up bank's shares in European trading
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(LONDON) Citigroup Inc was profitable in the first two months of this year and is confident about its capital strength after tough internal stress tests, chief executive Vikram Pandit told staff in an open letter.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Mr Pandit: '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.' </TD></TR></TBODY></TABLE>The news sparked a sharp rise in Citigroup's shares shortly after the market open. Citigroup surged 29 cents to $1.34. JPMorgan rallied $2.34 to $18.24.
It came after the cost of insuring Citi's debt against default hit a record on Monday, and days after shares in Citi, once the world's biggest bank by market capitalisation, tumbled below US$1 apiece for the first time.
By midday in New York, US stocks had advanced the most in three months, extending a global rally. The Dow Jones Industrial Average added 310.31 points, or 4.7 per cent, to 6,857.36. The S&P 500 Index rebounded from a 12-year low, rising 5.4 per cent to 713.15. Both gauges posted their steepest intraday rally since Dec 16.
'I am most encouraged with the strength of our business so far in 2009,' Mr Pandit said. '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.'
Revenues excluding externally disclosed marks came to US$19 billion in January and February alone, almost reaching the US$21 billion of the first quarter last year, although Mr Pandit warned market volatility in March could still hit results.
The letter said that the bank was confident about its capital strength after undertaking stress tests using assumptions that were more pessimistic than those of the Federal Reserve.
In the letter, Mr Pandit said that he was disappointed with Citi's stock price and 'broad-based misperceptions about our company and its financial position'.
'We believe our credit spreads are disconnected from our condition and are inconsistent with the government's announcements regarding support for the financial system.'
But David Williams, head of European bank research at Fox-Pitt, Kelton, said that Citi needed to come cleaner on the tests it had done, and investors had lost faith in both it and peers.
'Had you invested in on the back of anything said by these management teams over the last 12 months, you would've lost pretty much all of your money. So there is a credibility issue,' he told Reuters. 'A one-dollar stock price tells you the market has stopped listening.'
The market would 'significantly reward' Citi if first-quarter results reflected the letter's upbeat tone, he said.
The New York-based bank has received US$45 billion from the taxpayer-funded Troubled Asset Relief Program (TARP), and last month agreed to give the government up to a 36 per cent equity stake in the company to bolster its capital base.
Mr Pandit said that that deal would leave Citi 'the strongest capitalised large US bank as measured by tangible common equity (TCE) and Tier 1 ratios'.
The e-mailed letter was published in a filing with US regulators.
Earlier, The Wall Street Journal reported that US officials were examining what fresh steps they may need to take to stabilise Citigroup if its problems mount, citing people familiar with the matter. -- Reuters, Bloomberg
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Pandit shares good news: Citi is in the black
News drive up bank's shares in European trading
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>(LONDON) Citigroup Inc was profitable in the first two months of this year and is confident about its capital strength after tough internal stress tests, chief executive Vikram Pandit told staff in an open letter.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Mr Pandit: '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.' </TD></TR></TBODY></TABLE>The news sparked a sharp rise in Citigroup's shares shortly after the market open. Citigroup surged 29 cents to $1.34. JPMorgan rallied $2.34 to $18.24. It came after the cost of insuring Citi's debt against default hit a record on Monday, and days after shares in Citi, once the world's biggest bank by market capitalisation, tumbled below US$1 apiece for the first time.
By midday in New York, US stocks had advanced the most in three months, extending a global rally. The Dow Jones Industrial Average added 310.31 points, or 4.7 per cent, to 6,857.36. The S&P 500 Index rebounded from a 12-year low, rising 5.4 per cent to 713.15. Both gauges posted their steepest intraday rally since Dec 16.
'I am most encouraged with the strength of our business so far in 2009,' Mr Pandit said. '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.'
Revenues excluding externally disclosed marks came to US$19 billion in January and February alone, almost reaching the US$21 billion of the first quarter last year, although Mr Pandit warned market volatility in March could still hit results.
The letter said that the bank was confident about its capital strength after undertaking stress tests using assumptions that were more pessimistic than those of the Federal Reserve.
In the letter, Mr Pandit said that he was disappointed with Citi's stock price and 'broad-based misperceptions about our company and its financial position'.
'We believe our credit spreads are disconnected from our condition and are inconsistent with the government's announcements regarding support for the financial system.'
But David Williams, head of European bank research at Fox-Pitt, Kelton, said that Citi needed to come cleaner on the tests it had done, and investors had lost faith in both it and peers.
'Had you invested in on the back of anything said by these management teams over the last 12 months, you would've lost pretty much all of your money. So there is a credibility issue,' he told Reuters. 'A one-dollar stock price tells you the market has stopped listening.'
The market would 'significantly reward' Citi if first-quarter results reflected the letter's upbeat tone, he said.
The New York-based bank has received US$45 billion from the taxpayer-funded Troubled Asset Relief Program (TARP), and last month agreed to give the government up to a 36 per cent equity stake in the company to bolster its capital base.
Mr Pandit said that that deal would leave Citi 'the strongest capitalised large US bank as measured by tangible common equity (TCE) and Tier 1 ratios'.
The e-mailed letter was published in a filing with US regulators.
Earlier, The Wall Street Journal reported that US officials were examining what fresh steps they may need to take to stabilise Citigroup if its problems mount, citing people familiar with the matter. -- Reuters, Bloomberg
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