Monday, November 29, 2010

"The Overlooked Gem Inside Citigroup" (C)

From the WSJ's Deal Journal blog:

AFP/Getty Images
Nomura bank analyst Glenn Schorr today turned peeks under the hood of Citigroup’s Global Transaction Services unit, which he calls the bank’s “least-understood and most-underappreciated business.”
Global transaction services include under-the-radar back office support services to help companies, the public sector and investment funds manage cash, trade financing and a raft of other financial transactions.
Schorr writes:
While the IB, Cards and Retail Banking get most of the attention, GTS is a $10bn-a-year revenue business with low capital requirements (just 6% of Citi’s assets reside here), generous 40-50% pretax margins, very attractive returns (ROAs of around 500bps), and is a critical source of liquidity for the rest of the Citi franchise (45% of the firm’s deposits are generated here)….
As few companies have GTS’s scale and cutting-edge platform, which is able to handle an increasingly complex and more global world, we think it can accumulate more market share and produce double-digit growth
Net income is spread out across the world, with about 16% from North America, one-third from Asia and one-third from Europe, the Middle East and Africa, according to the Nomura report. The GTS unit pulled in $9.79 billion of total revenue in 2009, according to financial reports, and net income of $3.7 billion....MORE
Oct. 8 
Citigroup Poaches Nomura Energy Analysts, Nomura Retaliates by Initiating Coverage of Citi with a "BUY" (C; GS; MS; JPM)

We have so many posts on Citigroup it is probably easier to use the search blog box, keyword citi or citigroup. Here's one to note:
Citigroup's Consumer Banking Chief Buys 542,098 Shares-Open-market (C)