final paper

The sum of the information

1.

The financial intermediary I chose was Citibank. There are several reasons why I chose this financial institution. First, Citibank has a strong international influence. After nearly two centuries of development and acquisitions, it has become the third-largest bank in the United States by assets. So far, its total assets have exceeded the US $ 900 billion (Baron & Besanko, 2001). Muscular economic strength can guarantee that its stock has a guarantee. Secondly, as an international bank, Citibank has a wealth of wealth management products. These products include a wide selection of investments such as individual stocks, fixed income, mutual funds, as well as more sophisticated offerings, including alternative investments and structured products (Simons & Dávila, 1997). At the same time, because Citibank has cooperated with many overseas-listed companies to purchase this kind of financial management (Rucker, 2000). The product is equivalent to buying the shares of these listed companies. Therefore, I can easily find the products I need. Finally, the global epidemic has led to an economic downturn. Therefore, more powerful large banks have better financial support. The above is why I chose Citibank. I want everyone to understand the product structure and operation mode of Citibank.

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Reference

Baron, D. P., & Besanko, D. (2001). Strategy, organization and incentives: Global corporate banking at Citibank. Industrial and Corporate Change, 10(1), 1-36.

Rucker, R. (2000). Citibank increases customer loyalty with defect-free processes. the Journal for Quality and Participation, 23(4), 32.

Simons, R. L., & Dávila, A. (1997). Citibank: Performance Evaluation.

2.

Citibank began making huge profits during the era of the mortgage crisis. It salvaged itself from the losses it incurred during the crisis by dividing itself in two firms; City Corp and City holdings. City Corp became the source of the bank’s long term profitability and growth while City Holdings became the dumpsite of most of its toxic assets after the crisis (Grgurich, 2013). It also makes these huge profits since it is a global franchise and has branches all over the world so this gives it a huge customer base hence more profits. The bank operates ethically as it serves as a trusted partner to its clients and strives to maintain public trust by always adhering to the utmost ethical standards in all of its dealings with them and other concerned parties. During this pandemic of Covid-19, Citi’s New York branch has reported its Q2 earnings and based on them the bank’s interest rate margin dropped from 2.72% to 2.67%, but was able to make more money through its lending activities and net interest rose to 2% (Moise & Singh, 2019). Latest news; the bank declared common stock dividend of 0.51 per share to be paid to stockholders.

Word count:199

Reference:   

Moise, I., & Singh, S. (2019). Citigroup profit beats estimates on gains in consumer lending. Retrieved 22 April 2020, from https://www.reuters.com/article/us-citigroup-results/citigroup-profit-beats-estimates-on-gains-in-consumer-lending-idUSKCN1UA18V

Grgurich, J. (2013). How Citigroup Makes Its Money | The Motley Fool. Retrieved 22 April 2020, from https://www.fool.com/investing/general/2013/05/31/how-citigroup-makes-its-money.aspx

3.

Citibank faces competition from top banks like Bank of America due to differences in the decomposition on interest spreads, regulatory indicators that measure the contestability of the banking sector, and the direct measures of bank pricing behavior (The World Bank, 2013). Moreover, the growth in the shadow banking market poses a threat to the bank. According to John (2020), the new era of shadow banking market has posed a profound impact on the financial industry. In order to maintain operational and competitive, the bank ’s CEO has adopted a stabilization and recovery strategy, cutting costs, returning capital to shareholders, and ensuring compliance with regulations. Despite the current economic crisis, the bank will still provide sufficient capital and liquidity to help it maintain operations and remain competitive in the future. Due to the recent public health crisis, Citibank’s net income has declined by 46%, while the earnings per share of $1.05 decreased by 44% from the prior-year (Citigroup, 2020). Moreover, according to Kenwell (2020), the banks’ shares have fallen from a topping of $82 in January and hit a low of $32 in March.

Word count:183

Reference:

Citigroup, Inc. (2020). First Quarter 2020 Results and Key Metrics. Immediate Release. Retrieved From https://www.citigroup.com/citi/news/2020/first-quarter-2020-earnings.htm

Kenwell Brett. (2020). Will Citigroup Follow JP Morgan and Well Fargo Lower?The Street. Retrieved From https://www.thestreet.com/investing/how-to-trade-citigroup-stock-after-the-earnings-technical-analysis

The World Bank. (2013). Banking Competition. Global Financial Development Report. Retrieved From https://www.worldbank.org/en/publication/gfdr/gfdr-2016/background/banking-competition

4.

Recent financial reports show that the company’s net income has decreased as compared to that of 2019. The net income of the firm in 2020 is said to be $ 15.98 B and the shareholders equity is $192.98B. This illustrates that the organization’s ROE is 8.17% which is a decrease from the ROE of 9.25% which was recorded in 2019. Even though the money invested by shareholders has decreased from $ 193.95B, the company’s low value of ROE is as a result of decreased net income (Zhang, 2020).

The impact of the Covid-19 has reduced the company's net income. Citibank has been able to increase its revenue by 12% in this year unlike in the prior-year period. The firm has spent 41 million in repurchasing the common stock so as to shield their clients from the turbulences of the economy (Mooney, 2020). Moreover, there are reports that Citibank’s outstanding average diluted shares have reduced by 10%. The 7.0 billion cost of credit in the beginning of the years is very much high in comparison to the 2.0 billion cost of credit in 2019 which illustrates that many of their clients have been borrowing money (Ruziev & Dow, 2020).

Word count:198

Reference:

Mooney, C. W. (2020). An Essay on Pluralism in Financial Market Infrastructure Design: The Case of Securities Holding in the United States. a forthcoming edited volume published by Oxford University Press; U of Penn, Inst for Law & Econ Research Paper, (20-29). Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3581864

Ruziev, K., & Dow, S. (2020). A review of banking sector reforms in transition economies. Retrieved from https://uwe-repository.worktribe.com/output/940219

Zhang, X. (2020). Performance of China-owned banks in Hong Kong. International Journal of Banking and Finance, 9(3), 72-87. Retrieved from http://e-journal.uum.edu.my/index.php/ijbf/article/view/8459

5.

Michael Corbat is the CEO of Citibank from the year 2012.in which he has been leading Citi holdings, portfolio of non-core businesses and assets. He is driving through increasing the divestiture businesses where he has overseen more than 40 and divesting assets, which during this time, he has more than 500 billion dollar assets divested. He has reduced the risk of the company's balance sheet and freed up capital for investment in the banking business. In this time of the COVID 19 pandemic, Citibank has committed more than 65 million dollars in support of the COVID 19 related community relief efforts globally. The Frontline workers and the populations found within the communities most impacted get immediate relief to facilitate survival in terms of protective gear and food. Citi has assisted its consumers, especially the small and medium businesses in their operations. In most countries, it operates, it has put in place fee waivers, introduced hardship programs to aid the straining population, and support the small businesses by extending the banker's availability. The Citibank has expanded borrowing days for small companies' hours and on weekends. Citi plans to suspend any proposed cuts as it wants to support its staff during covid-19.

Word count:200

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