Tuesday, March 11, 2014
By CHRISTINA REXRODE/The Associated Press
NEW YORK - It's been nine months since Mike Corbat was handed the reins of Citigroup and tasked with turning around the struggling banking giant.
On Monday, the bank announced second-quarter results that beat Wall Street expectations, earning him praise from analysts who said he is steering the bank in the right direction.
Strong results from investment banking helped Citi's April-to-June results, and the bank also benefited from setting aside less money for potential bad loans. Profit shot up 26 percent, after excluding an accounting gain, and revenue rose 8 percent.
That isn't to say that Corbat's path is without roadblocks. On calls with analysts and reporters, Corbat and his chief financial officer, John Gerspach, were peppered with questions about a number of potential challenges.
Among them: Proposed regulations that could require big banks to hold more capital, rising interest rates that could dampen demand for mortgages and a slowdown in growth in emerging-market countries, on which Citigroup is heavily reliant.
Still, investors liked what they saw and heard, and sent the shares up nearly 2 percent.
Longtime banking analyst Nancy Bush called Citi's call with analysts "the most straightforward and clear in my experience."
"There were times when I listened to their earnings call (in the past) and it was just unintelligible. I couldn't tell where they were going, what they were doing, and neither did they, apparently," Bush said. "Isn't it amazing what having a real banker as CEO can do?"
Corbat became CEO in October, after Vikram Pandit's surprise resignation. The bank's board was reportedly unhappy with Pandit's failure to turn around the bank's stock price and his sometimes-strained relationship with regulators. Pandit, a former hedge fund manager, had been CEO for nearly five years. Before him was Chuck Prince, who was ousted after making disastrous bets on subprime mortgages.
Board members picked Corbat to do what Pandit had failed to accomplish.