Citi (C) Shareholders Could See Green as Bank Unleashes Penny Pinching Campaign

November 30, 2012 11:33 AM EST Send to a Friend
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The recent shakeup in management at Citigroup (NYSE: C) could turn up a few gems for investors in the form of cost savings. Maybe 'gems' isn't the right word. Dimes maybe? Pocket Money?

In any case, the savings would be more than just chicken feed, as the cost savings could significantly improved earns results.

Nomura securities analyst Glen Schorr put it this way:

"If Citi sharpened the pencil and announced a peer sized (4-12% of expense base) formal cost program on a gross basis, we estimate it could add between $0.20-$1.00 to run rate EPS of $4/share. Said another way, each 100 bps improvement in the efficiency ratio equals $0.16 per share."

Citi has taken some heat recently for not outlining the saving in more detail, but Schorr points out that Citi's efficiency saves for the past two years as a percentage of total expenses are actually in line to better than many of the named programs out there. And Citi actually has a better efficiency ratio than many peers.

With this in mind, the cost savings could go a long way, thinks Schorr, and that equals . . . cashola.

Nomura Securities has a Buy rating on Citi (NYSE: C) with a price target of $41.00.

For an analyst ratings summary and ratings history on Citi click here. For more ratings news on Citi click here.

Shares of Citi closed at $35.21 yesterday.




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