the first time in several years that asset quality trends showed some signs of stabilization

CHRIs KOTOWSKI de OPPENHEIMER uno de los mejores analistas del mundo de bancos,ha comentado el siguiente articulo,que es de especial interes.

• Citi’s fourth quarter earnings report was weaker than expected in P&L terms, but on balance we saw more positive than negative in the quarter, as it was the first time in several years that asset quality trends showed some signs of stabilization. As we have said on a number of other occasions, in the current environment we believe that asset quality trumps all other issues and thus on balance we breathe a small sigh of relief at the results, which seem to point to a turn in asset quality. We think the shares are fairly valued in the $3.50 to $3.75 range, which approximates pro forma tangible book value
• Pre-provision earnings (PPE) excluding a number of charges related to TARP repayment and the CVA charges related to improving credit spreads was about $4.7B, down from $8.2B in the prior quarter and our expectations of $7.8B.
• The shortfall came mainly from “principal transaction” or trading profits of $0.1B versus our $2.0B expectations. This weakness is basically consistent with what we saw from JPM last week and we would not read too many implications about 2010 or beyond into this number.
• Asset quality was substantially better than expected as NCOs declined from $8.0B to $7.1B, the second consecutive decline. NPAs were flattish at $33.8B vs. $33.6B in the prior quarter, indicating that the net new problem inflow was just $7.2B versus $23.3B in 3Q09.
• Most of the key early delinquency statistics appeared stable.
• We expect pro forma tangible book value, adjusted to reflect both the impact of FAS166/167 and the contractually agreed to ADIA share purchase, to be about $3.91 per share, and we believe that the share price discount is a bit too steep.