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Citi may miss profit target - report

Tuesday, April 08, 2014 - 01:11

April 8 - Citigroup's reported warning comes after the Federal Reserve rejected the bank's plan to hike dividends and buybacks. Fred Katayama reports.

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Citigroup CEO Michael Corbat vowed to ramp up profitability, but he may miss a key target. The Wall Street Journal says the bank is warning investors it could fall short on its 10 percent goal next year for return on tangible common equity, a ratio of profit to equity owned by shareholders. This comes after the Fed's rejection of Citigroup's plan to hike its dividend and buybacks. Analysts say the bank was counting on a large share buyback to meet that 2015 target, according to the paper. Separately, Citi's first quarter profit will take a $100 million hit. The bank is taking that charge in connection with a $1.1 billion settlement with investors for residential mortgage securities it had sold. Credit Suisse analyst Moshe Orenbuch said, "This settlement is a positive in that it puts another legal issue behind the company." But last week, Sterne Agee downgraded the stock, citing the failed capital plan, heightened regulatory risk and slowing earnings growth. Citi also announced that it is closing a third of its branches in Korea. All this comes ahead of Citi's earnings report on Monday.

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Citi may miss profit target - report

Tuesday, April 08, 2014 - 01:11