Citi CEO: Slow Growth Ahead, Europe a Factor
U.S. economic growth "is likely to be a little bit slower than we might have thought a couple of quarters back" because "the European situation is having an impact," Citigroup CEO Vikram Pandit told CNBC.
Speaking from Davos Wednesday, Pandit said Europe is "not only impacting the U.S., it's also impacting emerging markets. You're seeing that in capital markets and growth rates around the world. Anything that's markets-related has been challenging for the last few months."
One bright spot has been any business that is geared to consumers in emerging markets, he said, and Citi , with its many branches in Asia, Africa and Latin America, is up for the challenge.
"Those businesses that are geared toward the emerging-market consumer or geared towards global trade flows or corporate banking, they're doing well," Pandit said. "So it's almost as if the banking business has two different segments to it."
"It was a tough quarter" at Citi and after an evaluation the bank has "sized our businesses according to where growth is going to be. There are going to be some parts of the business where we have cut back and may cut back, and there will be other parts where we’ll grow," the CEO said.
One growth area is U.S. retail banking, where the plan is to go from 1,000 branches to 1,200. At the same time, Pandit said, "We’re completely focused on expenses" and Citi's cost structure is $2.5 billion to $3 billion lower than last year.
Will this be the year for a dividend? "We've said clearly to shareholders I hope this is the year we start returning capital," he said, but that won't take place until after Citi learns whether it passed the Federal Reserve's stress test "and see if we are in the same place." The Fed's review will determine whether the banks can raise dividends or repurchase stock. The banks had to submit their capital plans by Jan. 19.
Pandit added Citi can "more than easily" meet the Fed capital requirement with almost 12 percent in tier 1 capital.