What legitimate well run bank would reduce their loan loss reserves as their credit losses are going up and the economy is headed back into recession? The answer is NONE. But Citicorp is a criminal insolvent institution pretending to be making money. They’ll keep pretending to be solvent until they can’t. Then they’ll beg to be saved again. Bennie and Timmy will claim they are Too Big To Fail. The American taxpayer will take it up the yazoo again. Rinse and repeat.
The Two Charts That Matter From Citi’s Earnings Presentation
Submitted by Tyler Durden on 04/16/2012 08:30 -0400
Earlier today Citi reported earnings that missed expectations of $1.02 on an unadjusted basis ($0.95) but beat adjusted ($1.11). Same with revenue. And while one can go through the bank’s 10-Q and earnings presentation, there are just two charts worth pointing out which show the same trend exhibited by JPM last week: loan loss reserve release was $1.2 billion or 40% of the $2.931 billion in after tax net income. Which is to be expected: the traditional primary driver of “earnings” continues to be an accounting fudge. Where things get dicier is when considering that in Q1 2012 mortgage credit trends are not exactly good, because just like in the case of JPM, net credit losses rose for the first time in, well, years. So: loan loss reserves are released even as the inflection point in credit losses is reached. Brilliant.
Loan Loss Reserves:
And Credit Trends:
Administrator says:
Subprime credit card debt shot up by around 55% in just a year, a rate of increase that has “red flag” written all over it.
Are banks crazy? They say they’re not. They claim they’ve learned their lesson and figured out how to tell which borrowers will blow off their debts entirely and which ones might fall behind but eventually will cough up their payments (along with any late fees the bank tacks on).
It’s the targeting of this latter group that has consumer advocates worried. Subprime borrowers are often less financially sophisticated; they may take credit offered to them even if the APR is sky-high or other terms are unfavorable. Even with financial reforms that have made things like credit card applications and statements easier to understand, there’s still a lot of fine print. Car loans, in particular, still have a lot of potential pitfalls for less-savvy consumers because this slice of the lending market was less affected by recent regulations.
http://moneyland.time.com/2012/04/11/uh-oh-subprime-lending-comes-roaring-back/#ixzz1sEjxnCyX
Like or Dislike:
0 
0
16th April 2012 at 4:21 pm
Kill Bill says:
Given the too big to fsil mentaliity of late – I wouldnt have reserve funds either If I had the FED paying my casino losses.
Like or Dislike:
2 
0
16th April 2012 at 1:41 am