T = Trends Might Support the Industry
Trends currently support the industry thanks to improvements in loans, real estate, and unemployment. Big banks are also doing their best to deal with legal and regulatory problems so they can earn a fresh start. The one major risk is austerity, which would have the potential to lead to a deflationary environment.
Citigroup is making a concentrated effort to reduce non-core assets. This will lead to reduced risk and an increase in capital. However, this could also hamper growth potential.
Overall, the positives outweigh the negatives, but due to the recent deposit levy debacle in Cyprus, there is risk for contagion throughout Europe. We still don’t know how it will play out. That being the case, Citigroup is a WAIT AND SEE.
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