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Citigroup Inc. Message Board

  • hopping_on_bandwagon hopping_on_bandwagon Dec 23, 2011 10:28 AM Flag

    Bank Stocks

    The reason the bank stocks performed poorly in 2011 is the European problem, and that is still going to weigh on C in 2012. A macro problem. Universal banks are JPM and C. The uncertainty about regulation (Volker, derivitive) also hurt the universals. Does not impact regional banks. Need clarity. We should get that in 2012. Expect bank profitability to be done 30% relative to the great times of 1997-2006. But still good profitability in 2012. The yield curve is important. Banks generate profits from the spread. A flattening of the curve makes it difficult. May not get better in 2012. Will we see more lending? Lending will continue to grow. It's turned positive (see H8 data). About 3.5%. Commercial/industrial lending. Not commercial real estate lending, but expect that to go up in 2012. Mortgages should be positive in 2012. How cheap are the bank stocks? About 91% of book. In 2007, they were trading 2x book. When things get back to normal, expect them to trade at 1.2x book. HOP

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