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Citigroup: Balance Sheet Improvement Winner

Staite was also impressed that Citigroup's estimated Basel III Tier 1 common equity ratio increased to 9.3% as of March 31 from 8.7% at the end of 2012.

In an interview on TheStreet, Jim Cramer said that "Citi has a tremendous advantage in that it's a worldwide bank. If the world economy comes back, Citi's the best chit."

Margin Pressure

Citigroup reported that its net interest margin (NIM) -- the difference between the yield on loans and investments and the average cost for deposits and borrowings -- widened to 2.94% during the first quarter, from 2.95% the previous quarter. While a one basis point improvement in the margin is quite small, it runs counter to the trend for the large banks that have reported their first-quarter results so far.

Wells Fargo (WFC - Get Report) on Friday reported record earnings, but also said that its NIM narrowed to 3.48% in the first quarter from 3.56% in the fourth quarter. Staite on Monday said in a report that he expected Wells Fargo to show "further NIM pressure" beyond the second quarter. The analyst has a neutral rating on Wells Fargo, and wrote that "with revenue under pressure and with increasingly few cost levers to pull we expect EPS growth will stall during H2 2013 and in 2014."

Wells Fargo's stock was down 2% to close at $36.57.

JPMorgan Chase (JPM - Get Report) also reported record earnings on Friday, but said that its deposit margin narrowed to 2.36% in the first quarter from 2.44% the previous quarter.

JPMorgan's shares were also down 2% to close at $47.93.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.


Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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