Citibank (NYSE: C) CEO Vikram Pandit is expected to state on Thursday that the company will earn as much as $20 billion from its core businesses within the next few years, according to a report from the Financial Times.
Less than two years ago, the now-defunct business magazine Portfolio named Pandit as one of the twenty worst CEOs of all time. It appears that Pandit now may make a list of the CEOs that have done the most to turn around their companies, if Pandit’s forecasts are correct.
The paper added that Pandit predicts that Citibank may earn as much as 1.25% or more on its assets. The unit had $1.3 trillion in assets at the end of 2009. Citibank executives predict that this amount will increase by about 5% per year. On this basis, Citibank may earn as much as $20 billion by the end of 2012.
Pandit’s bold predictions may be tempered by the fact that Citibank will face years of losses from its consumer credit business as well as its portfolio of troubled commercial and residential real estate loans. The liabilities from loan losses will be a significant drag on the company’s growth through the middle of the decade. Citibank may also be limited significantly on the fees that it can charge for late payments and services such as overdraft protection.
Citibank is also faced with the task of selling its remaining assets in its Citi Holdings unit that it wants to divest itself from. There are more than $250 billion worth of assets in Citi Holdings that some consider toxic. The firm may not find buyers for many of the businesses that are currently on the Citi Holdings balance sheet.
