It wasn’t long ago that Mike Corbat was a figure of pity among his fellow bank CEOs, presiding over an ever-raging dumpster fire of a Zen-garden-less bank. But would you look at him now?

Citigroup was one of the hardest hit US banks during the 2008 financial crisis. But it's the king of Wall Street so far this year.

Shares of Citi have soared nearly 40% in 2019, outpacing the gains of big banking rivals JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo.

That’s no mean feat, given that every one of those banks not named Wells Fargo is having a pretty good year, too. And it continues:

Citigroup said Monday its second-quarter net income rose 7% from a year ago. Quarterly profit was $4.8 billion, from $4.5 billion from a year ago. Per-share earnings were $1.95 a share. Analysts had expected $1.81 a share.

Revenue at the bank was $18.76 billion, up 2% from $18.47 billion a year ago. Analysts polled by Refinitiv had expected $18.5 billion.

The success is going to Corbat’s head a bit. While the topline numbers were good, trading was less good, with revenue down 5% excluding a one-time gain. That’s pretty common among the big banks these days, but Mike Corbat isn’t willing to let this feeling go, even if it means going all Deutsche Bank on Citi’s investment bank.

At Citigroup Inc., bean counting and boring banking are in ascendance. Trading, not so much…. “We’re going to do everything within our power” to meet a goal of a 12% return on tangible equity this year, Chief Executive Officer Mike Corbat said in response to skepticism from analysts regarding the target during a conference call Monday. The firm won’t end planned investments in technology or risk its efforts to improve safety and soundness, he said. “But everything else is on the table.”

Citigroup Reports Profit, Revenue Boost [WSJ]
Citigroup is now the darling of Wall Street [CNN]
Citi CEO Vows Cost-Cutting Success to Continue as Trading Slumps [Bloomberg]



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Mike Corbat's Got Two Choices For Citigroup Employees

Choice number one: everyone starts earning more money for the bank, following an exhilarating pep rally run by Corbat in the cafeteria involving senior executives shooting Citi swag into the crowd out of tee-shirt guns, cheerleaders, and  a Spartacus Workout demo and before/after shots of MC, meant to inspire people and show them what they're capable of if they really put their minds to something. Choice number two: Bank of America-style layoffs. Michael Corbat, new chief executive officer, says he wants to run a more efficient bank. That means rousing or cutting one of Wall Street’s least productive workforces. Citigroup generated about $206,000 of revenue for each employee through the first nine months of the year, down 7.5 percent from the same period in 2011, while rivals including Wells Fargo & Co. posted increases, according to data compiled by Bloomberg. Excluding a one-time writedown of $4.7 billion, Citigroup’s productivity rose less than 1 percent...“It’s likely they will have some sort of headcount- reduction program more in line with Bank of America, which is looking to get rid of about 10 percent of employees,” said Erik Oja, an equities analyst at Standard & Poor’s in New York. “Having the lowest revenue per employee is something they will have to address, and growing the revenues is pretty tough right now with net interest margins falling and loan growth so low.” Pandit probably was distracted from his cost-cutting goal as he grappled with public rebukes while trying to sell unwanted assets, said David Knutson, a credit analyst with Legal & General Investment Management America in Chicago, which owns Citigroup debt. Disposing of Citi Holdings assets remains “the elephant in the room,” he said. “He had a lot of plates in the air, and there were a couple of setbacks,” Knutson said. “Expense cuts are painful, and you’ve got to gore some sacred cows,” Knutson said. “You can’t do that if you don’t have an explicit mandate, if you don’t have focus and you’re hamstrung with legacy issues.” Citigroup Productivity Worst of Big Banks Shows Challenge [Bloomberg] Earlier: Mike Corbat Will Torch The Fat Off Citi Like He Torched The Fat Off His Abs