Analyst: Citigroup Inc. Likely To Pass Capital Review Test

Citigroup Inc.

is likely to pass an upcoming regulatory capital review, while recent steps to bolster its business should make its stock a long-term performer, an analyst said Thursday. Citigroup, little changed Thursday at $53.46, has gained about 10 percent during the past month. Bank of America's Erika Najarian maintained a Buy rating and $63 target Thursday and said Citigroup is likely to get a passing grade March 11 from the Federal Reserve on Citigroup's annual comprehensive capital analysis and review. Najarian said the company's recent sub-prime lending exit and its win of a co-branded credit card agreement with Costco Costco Wholesale Corp.

outweigh its warning on Monday of lower trading revenue. Najarian estimated that Citigroup's deal with Costco will boost earnings by 1 percent and help grow Citi's U.S. card business. Financial terms of the deal, announced earlier this week haven't been disclosed. Citi's recent agreement to sell its sub-prime consumer lending business called OneMaine Financial for $4.25 billion will reduce its balance sheet risk while adding $1 billion in pre-tax profit. The company's disclosure at an investor conference Monday that trading revenue is "tracking down" in the middle single digits during the quarter so far got dismissed by Najarian, who said her earnings estimate already included an 11 percent revenue decline for the segment. The company's markets and securities services revenue last year fell 8 percent to $16.5 billion. Total revenue was nearly flat at $76.88 billion. recent steps can convince stockholders that Citigroup is "a long-term investment." Najarian said the next likely catalyst for the shares will be an annual regulatory review of Citigroup's capital that she believes the company is likely to pass. Called the comprehensive capital analysis and review, or CCAR, results for Citigroup are expected March 11.