Citigroup Adds to the Incredible Shrinking Financial Services Sector

Citigroup (NYSE:C) CEO Vikram Pandit threw more tar on the financial services sector (NYSEARCA:XLF) when he announced his bank would cut about 4,500 jobs in the forthcoming quarters.

“Financial services faces an extremely challenging operating environment with an unprecedented combination of market uncertainty, sustained economic weakness in the developed economies and the most substantial regulatory changes we have seen in our lifetimes,” said Pandit. “These trends will likely significantly affect the competitive landscape in the coming years.”

Pandit is seeking to cut overhead in the face of headwinds like the European sovereign debt crisis, massive recapitalizations required by new regulations, and the disappearance of once excellent revenues from trading and investment operations.

“For the banking sector (NYSEARCA:KBE), both investment banking and commercial banking, the overhead expenses are too high,” said Gerard Cassidy, an analyst at Royal Bank of Canada. “The industry needs to do a better job bringing that expense level down to reflect the lower revenues vis-a-vis what they were two or three years ago.”

Citigroup (NYSE:C) is shifting focus to emerging markets (NYSE:EEM) as “developed economies are undergoing a long period of deleveraging of consumer, financial, corporate and government balance sheets, which will drive slow growth for years,” Pandit said at the conference sponsored by Goldman Sachs Group (NYSE:GS). “By contrast, emerging-markets growth is expected to continue, fueled by population growth, the rise of a powerful consumer base in the middle class and a growing share of world trade.”

The bank opened 65 new branches in the first three quarters of this year, most of these in Asia and Latin America (NYSE:ILF).

Here’s how top financial services stocks are trading on the news:

Citigroup, Inc. (NYSE:C): C shares recently traded at $29.36, down $0.39, or 1.31%. They have traded in a 52-week range of $21.40 to $51.50. Volume today was 21,566,984 shares versus a 3-month average volume of 57,300,800 shares. The company’s trailing P/E is 7.83, while trailing earnings are $3.75 per share.

The Goldman Sachs Group, Inc. (NYSE:GS): GS shares recently traded at $100.94, down $0.22, or 0.22%. They have traded in a 52-week range of $84.27 to $175.34. Volume today was 2,803,942 shares versus a 3-month average volume of 7,914,780 shares. The company’s trailing P/E is 15.35, while trailing earnings are $6.57 per share.

Morgan Stanley (NYSE:MS): MS shares recently traded at $16.65, up $0.07, or 0.42%. They have traded in a 52-week range of $11.58 to $31.04. Volume today was 11,805,285 shares versus a 3-month average volume of 36,619,600 shares. The company’s trailing P/E is 10.91, while trailing earnings are $1.53 per share.

JPMorgan Chase & Co. (NYSE:JPM): JPM shares recently traded at $33.57, up $0.34, or 1.02%. They have traded in a 52-week range of $27.85 to $48.36. Volume today was 13,950,949 shares versus a 3-month average volume of 47,072,300 shares. The company’s trailing P/E is 7.15, while trailing earnings are $4.69 per share.

Bank of America Corporation (NYSE:BAC): BAC shares recently traded at $5.83, up $0.05, or 0.87%. They have traded in a 52-week range of $5.03 to $15.31. Volume today was 97,921,502 shares versus a 3-month average volume of 271,219,000 shares. The company’s trailing earnings are $-0.31 per share.

Wells Fargo & Company (NYSE:WFC): WFC shares recently traded at $26.85, up $0.2, or 0.75%. They have traded in a 52-week range of $22.58 to $34.25. Volume today was 7,805,923 shares versus a 3-month average volume of 40,536,200 shares. The company’s trailing P/E is 9.94, while trailing earnings are $2.70 per share.

American Express Company (NYSE:AXP): AXP shares recently traded at $48.40, down $0.16, or 0.33%. They have traded in a 52-week range of $41.25 to $53.80. Volume today was 2,304,572 shares versus a 3-month average volume of 8,432,890 shares. The company’s trailing P/E is 12.13, while trailing earnings are $3.99 per share.

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