Citigroup: Jobs Report Loser

NEW YORK ( TheStreet) -- Citigroup ( C) was the loser among the largest U.S. banks on Wednesday, with shares falling 4% to close at $42.50.

The broad indices all saw 1% declines after Automated Data Processing said private sector nonfarm employment in the U.S. grew by 158,000 in March, declining from an upwardly revised 237,000 in February. ADP also lowered its January private sector employment growth number to 177,000 from 215,000.

Economists polled by Thomson Reuters had estimated the ADP figure for March would show 200,000 new jobs being added. ADP said there were no new construction jobs added during March and, on a net basis, "average monthly gains of 29,000 in the three months prior." ADP also said that manufacturing employment grew by 6,000 during March.

Moody's Analytics chief economist Mark Zandi said in a press release, "Construction employment gains paused as the rebuilding surge in the wake of Superstorm Sandy ended," in March, and "anticipation of Health Care Reform may also be weighing on employment at companies with close to 50 employees."

The theme of slowing service-sector growth was underlined by a drop of the Institute for Supply Management's non-manufacturing index to 54.4% in March from 56.0% in February. An index reading above 50% indicates economic expansion. Economists were expecting the ISM non-manufacturing index reading for March to be 55.8%

The KBW Bank Index ( I:BKX) was down 2% to close at 54.68, with all 24 index components showing declines for the session. Stocks of major banks showing 3% declines included Bank of America ( BAC), with shares closing at $11.81, and State Street ( STT), which closed at $56.92.

Citigroup

Citi's shares have returned 7% this year, following a 51% return during 2013. The shares are cheaply valued, relative to most components of the KBW Bank Index, trading for 0.8 times their reported Dec. 31 tangible book value of $51.19, and for 8.1 times the consensus 2014 earnings estimate of $5.22, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $4.61.

Following the completion of the Federal Reserve's annual stress tests, Citigroup surprised some investors by saying on March 31 that it hadn't requested regulatory approval to raise its dividend from a token penny per quarter, although the company did request and receive approval for up to $1.2 billion in share buybacks through the first quarter of 2014.

Citigroup will announce its first-quarter financial results on April 15. The consensus among analysts is for the company to show a profit of $1.18 a share, increasing from 69 cents in the fourth quarter, and $1.11 in the first quarter of 2012. The fourth-quarter results were affected by $1.0 billion in charges related to the company's major series of expense cuts announced in December.

Deutsche Bank analyst Matt O'Connor rates Citigroup a "buy," and is slightly ahead of the consensus, estimating the company will post first-quarter EPS of $1.19. The analyst on March 22 said in a report that he expects the company's expenses to decline by 11% sequentially to $12.3 billion, "given lower repositioning costs."

Citigroup's huge layoffs and branch closings announced in December are meant to cut its annual expenses by $900 million during 2013, with annual savings increasing to $1.1 billion in 2014. After meeting with Citigroup CEO Michael Corbat and CFO John Gerspach, O'Connor said in a report on March 18, he saw "upside" to Citi's expense-cut projections.

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

>Contact by Email.

RELATED STORIES:




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 TheStreet.com 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.

If you liked this article you might like

Citi Will Refund $335 Million in Card Charges: LIVE MARKETS BLOG

Citi Will Refund $335 Million in Card Charges: LIVE MARKETS BLOG

Financial Stocks Make Great Buys After the Recent Market Downdraft

Financial Stocks Make Great Buys After the Recent Market Downdraft

This Is the Perfect Time to Buy Dividend Stocks

This Is the Perfect Time to Buy Dividend Stocks

Citigroup Gives CEO Corbat 48% Pay Raise as Profitability Misses Goal

Citigroup Gives CEO Corbat 48% Pay Raise as Profitability Misses Goal

Worst-In-Class Goldman Sachs CEO Blankfein Gets 9% Pay Raise

Worst-In-Class Goldman Sachs CEO Blankfein Gets 9% Pay Raise