Citigroup revives Analysts and Investors conference

Although the event is invite-only, just about anyone with an internet connection can tune in to the event.

Citigroup Inc will be holding a day-long investor conference on Tuesday. This is noteworthy since this will be the first time, since having received 3 government bailouts during the 2007-2009 financial crisis, the bank is taking steps towards its recovering the big bank status of its heydays.

On Tuesday, the New York based bank will be hosting 250 invitees, including investors and stock analysts, and anyone else who wants to listen over the net, on the roadmap to its full recovery.

The development follows a statement by the Federal Reserve a month earlier wherein it had stated it would allow the bank begin trimming back the extra capital it has built up since the crisis.

“Citi’s restructuring is over and, given our latest capital plan and improving business performance, this is the right time to talk about our path to growth and higher returns,” said Ed Skyler, who oversees Citigroup communications and government affairs.

As of June 30, Citigroup is the fourth-biggest U.S. bank with assets worth $1.82 trillion. This is however down from $2.2 trillion when Citigroup last held its “Investor & Analyst Day,” in May 2008.

Earlier this month, the bank’s CEO, Mike Corbat had stated the revived conference would “go into a lot more detail” on Citigroup’s roadmap on churning out 10% more profits for 2019.

The bank’s return on tangible common equity was 8.2% during the first half of this year, in comparison to JPMorgan Chase’s 14%. Analysts typically like to see a minimum return of investment of 10%.

In 2015, Corbat had intended to hit that level, however that became a mirage once the Federal Reserve found fault with Citigroup’s capital planning and required it to build more of a cushion against losses.

On June 28, the Fed have permitted Citigroup to go ahead with a plan to buy back $15.6 billion of stock and pay $3.3 billion in dividends over the next 12 months.

These payouts would amount to nearly 130% of net income analysts expect from Citigroup in the next 1 year.

As per analysts and investors, such return on capital is likely to allow Corbat to reach the half way mark of his target, assuming big payouts continue.

However, investors are skeptical whether Corbat can produce high enough profits from Citigroup’s remaining businesses so as to reach 10% of the reduced capital base, much less the 14 percent that Corbat has said is ultimately attainable.

“Investors want to see additional drivers” of revenue beyond capital returns, said Michael Cronin, an analyst with Standard Life Investments who was traveling from Boston to the conference.

“Revenue growth is harder to control” than expenses, said Cronin, whose firm manages $350 billion of assets.

In order to showcase Citigroup’s earnings potential, Corbat has scheduled presentations at the conference from Stephen Bird, chief executive for global consumer banking, Jud Linville, chief executive for Citi-branded cards, and Jamie Forese, chief executive over institutional client businesses, including capital markets, investment banking, corporate lending and transaction services.

This could make a difference since investors seldom hear from these executives, much less in the context of corporate strategy.


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