http://finance.yahoo.com/news/vikram-pandit-steps-down-ceo-120900907.html
Press Release: Citigroup Inc. – 1 minute 48 seconds ago
http://www.zerohedge.com/news/2012-10-15/half-citis-adjusted-net-income-comes-loan-loss-reserves-home-equity-loan-losses-surg
Vikram Pandit Steps Down as CEO of Citigroup; Board of Directors Elects Michael Corbat as CEO
Board praised Vikram Pandit’s “leadership, integrity and resilience in guiding Citi through the crisis and positioning it well for the future.”
Mike Corbat has “demonstrated outstanding leadership qualities… [and] brings deep and varied operating experience across a broad spectrum of the financial services industry,” Chairman Michael E. O’Neill stated.
“Citigroup is well-positioned for continued profitability and growth, having refocused the franchise on the basics of banking,” Mr. Pandit said.
“The fundamentals we have in place today are solid, and we are on the right path… Citi’s businesses, footprint and talent are unmatched, and we will be relentless in our drive toward operating excellence and risk management,” Mr. Corbat said.
Press Release: Citigroup Inc. – 1 minute 48 seconds agohttp://www.zerohedge.com/news/2012-10-15/half-citis-adjusted-net-income-comes-loan-loss-reserves-home-equity-loan-losses-surg
Half Of Citi's Adjusted Net Income Comes From Loan Loss Reserves; Home Equity Loan Losses Surge
Submitted by Tyler Durden on 10/15/2012 09:15 -0400
The bottom line on Citigroup's just released results: the firm reported an adjusted adjusted Net Income number of $3.268 billion ($1.06 EPS), which was "better" than the expected $0.97 (just like JPM's bottom line was better and the initial spike higher in the stock price promptly reverted into the red once people realized the scam). How did Citi get to this number? It started with an unadjusted $964 million of Net LOSS and then added back a tax provision, CVA losses (as its spread tightened in the quarter), the loss for the sale of MSSB ($4.7 billion pre tax), and miraculously got to $3.3 billion. The MSSB and CVA/DVA adjustment also miraculously increased total revenues from $13.951 billion to $19.411 billion, making a sequential unadjusted 25% drop in Revenues equal to a 3% increase. But even if one were to assume that the bank's $3.3 billion uber-adjusted Net Income number is meaningful in any way, it is certainly notable that $1.509 million of this, or nearly 50% came from the tried and true gimmick: Loan Loss Reserves, which boosted EPS by the same percentage, even as the firm saw its Net Credit Losses soar by 11% from Q2, to $3.979 billion. This was a bigger LLR than in Q2 ($984MM) and Q3 2011 ($1,422MM). Same old goosing gimmicks, different day.
The most disturbing data point in today's Citi release: the surge in non-conforming loans: something which is not supposed to happen in a "recovery." Here is how Citi explains the highlighted area blow which has seen the NCL surge in Q3: '3Q’12 included approximately $635MM of charge-offs related to OCC guidance with respect to the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy, of which $186MM was attributable to residential first mortgages and $449MM to home equity loans.Substantially all of these charge-offs were offset by a reserve release of approximately $600MM."
In other words: here comes the home equity loan collapse: second time for this credit bubble, just as we warned over a month ago!
The other key charts from the Citi presentation.
The Income Statement, where we can see that loan loss reserve release amounts to nearly 50% of adjusted net income...
The firm's CVA (spread tightening) fudge:
Legal costs keep going up. No surprise there. Recall: "Home Banker: A Lawyer's Greatest... Enemy?"
And finally, the firm's exposure to the PIIGS. Just like with JPM, it increased on both a gross and net basis.
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