Credit Suisse upgraded Citigroup to an "outperform" rating from "neutral" on Tuesday. Although one Credit Suisse managing director said the financial stock remains "underowned," he thinks that stability in Greece could change this.
"You've had fundamental improvement both in the capital position and in the earnings that we've seen through the past couple weeks," said Moshe Orenbuch, a managing director at Credit Suisse.
He added that the bank is "basically committed" to exceeding 8 percent Basel III Tier 1 capital by the end of 2012, and that it has said it will talk to the Federal Reserveabout a capital return program.
Orenbuch foresees Citigroup's raising its dividend next year to around 10 cents to 15 cents a share.
"Citi is trading at the lowest valuation it has since the government made its investment," he said. "You're actually below where the government made its investment, but its price-to-book is even below that, and it's got significantly more book value."
Orenbuch added that the bank is "significantly better positioned" since the financial crisis. He believes Citigroup and other major U.S. banks will not be exposed to risk in Europe unless a contagion effect spreads to those banks in Europe.
"At the same time, you've had some stabilization, or what was perceived as stabilization in Greece," he said. "Whether that holds or not obviously remains to be seen over the coming days."
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Moshe Orenbuch has an investment banking client conflict with Citigroup.