NEW YORK ( TheStreet) -- When Citigroup (C) reports its third-quarter results Monday, analysts and investors will be hoping to see early signs that the bank is benefiting from the nascent housing recovery.
Citigroup is no longer a big originator of mortgages in the U.S., with its North American residential real estate portfolio largely in run-off mode at its non-core Citi Holdings unit.
But the bank is likely to continue to benefit from improving credit quality trends.
A widespread rebound in home prices has helped over a million underwater borrowers recover equity in their homes in 2012, according to CoreLogic. If the trend continues, banks could see lower delinquency rates in the future, reducing the amount of profit they need to set aside as a cushion against future loan losses.This is largely priced in for bank stocks with a big exposure to mortgages, notably Bank of America (BAC) and Wells Fargo (WFC). But some analysts point out that the market is underestimating how levered Citigroup is to a housing recovery. "Despite its relatively small concentration of
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