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Citigroup May Benefit as Japan Rebuilds, Mideast Creates Jobs, Bove Says

Citigroup Inc. (C), the U.S. lender emphasizing international growth, may benefit as Japan rebuilds from last week’s earthquake and the Middle East rebounds from political turmoil, according to analyst Richard Bove.

Citigroup may profit as Japanese corporations raise money for reconstruction after the quake and tsunami, and from Arab states trying to create jobs, Bove wrote today in a note titled “Buy This Stock Now.” Bove, based in Lutz, Florida, is an analyst with Rochdale Securities LLC.

“Citigroup is not going to suffer any meaningful setback due to the global issues currently under way,” Bove wrote. “The stock has fallen on a false premise. As this is better understood, the shortfall that has occurred in the past two months will be reversed.”

Shares of the New York-based bank, ranked third by assets among U.S. lenders, set a 16-month high of $5.15 on Jan. 14, following a 43 percent jump in 2010. They’ve since fallen below $4.45. Bove has attributed the drop to a slowdown in developing economies, which account for more than half of the bank’s profit, according to Chief Executive Officer Vikram Pandit.

Japan represents the bank’s third-largest concentration of credit outstanding, with $39.2 billion of investment securities, loans and trading assets linked to the Japanese government, according to a regulatory filing. Citigroup is likely to lose about $700 million on its Japanese investment, which the bank should be able to manage, Bove said.

Jon Diat, a spokesman for the bank, declined to comment on the report. The stock gained 2 cents to $4.41 as of 1:41 p.m. in New York Stock Exchange composite trading. Bove is forecasting the price will reach $7.


To contact the reporters on this story:
Donal Griffin in New York at 
Dgriffin10@bloomberg.net;

To contact the editor responsible for this story:
David Scheer at 
dscheer@bloomberg.net.


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