Citigroup (C) Getting Bullish on Lucrative Private-Label Card Biz
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Citigroup (NYSE: C) may be reversing course in one of it's key segments.
According to reports Thursday morning, Citi could cancel the possible divestiture of its private-label credit card arm.
Issuing customized credit cards for such companies as Sears Holdings (Nasdaq: SHLD) and Home Depot (NYSE: HD), Citi previously earmarked the segment for disposal and moved it into its Citi Holdings unit for businesses, loans, and investments that no longer fit with its strategy.
With credit conditions improving and economic outlooks clearing up, Citi may move the division from the holding segment into a place somewhere along side its core credit card operations business.
Net credit losses for the unit have dropped seven straight periods, with a recent 18 percent drop to $1.1 billion in 2011's first quarter. Loans were $41.3 billion in the first-quarter, down about 24 percent from the preceding year.
Analysts are constantly bullish on credit-card loans, with private-label segments generally generating higher margins than typical issues.
But Citi execs have been careful in switching direction for the unit too soon, lest it come under fire from regulators. Citi received about $45 billion from the U.S. during the financial meltdown of 2008 - 09.
Shares of Citi are trading 1.2 percent stronger pre-market, potentially on the back of solid JPMorgan (NYSE: JPM) second-quarter earnings results.
According to reports Thursday morning, Citi could cancel the possible divestiture of its private-label credit card arm.
Issuing customized credit cards for such companies as Sears Holdings (Nasdaq: SHLD) and Home Depot (NYSE: HD), Citi previously earmarked the segment for disposal and moved it into its Citi Holdings unit for businesses, loans, and investments that no longer fit with its strategy.
With credit conditions improving and economic outlooks clearing up, Citi may move the division from the holding segment into a place somewhere along side its core credit card operations business.
Net credit losses for the unit have dropped seven straight periods, with a recent 18 percent drop to $1.1 billion in 2011's first quarter. Loans were $41.3 billion in the first-quarter, down about 24 percent from the preceding year.
Analysts are constantly bullish on credit-card loans, with private-label segments generally generating higher margins than typical issues.
But Citi execs have been careful in switching direction for the unit too soon, lest it come under fire from regulators. Citi received about $45 billion from the U.S. during the financial meltdown of 2008 - 09.
Shares of Citi are trading 1.2 percent stronger pre-market, potentially on the back of solid JPMorgan (NYSE: JPM) second-quarter earnings results.
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