SOURCE: The Bedford Report

The Bedford Report

February 01, 2011 11:25 ET

Assessing the Recovery of the Financial Sector

The Bedford Report Provides Analyst Research on Citigroup & Morgan Stanley

NEW YORK, NY--(Marketwire - February 1, 2011) - Banks deemed "too big to fail" have garnered significant attention already in 2011. Once again investors are looking to banks as "safe" companies that will post steady profits and hopefully begin providing steady dividends. While certain major banks have said dividend increases are a top priority, others explained there is still too much uncertainty in the sector to return cash to shareholders. The Bedford Report examines the outlook for companies in the Financial Sector and provides research reports on Citigroup, Inc. (NYSE: C) and Morgan Stanley (NYSE: MS). Access to the full company reports can be found at:

When Citigroup reported earnings last month, the company's CEO, Vikram Pandit, said that "2012 is the right year for us to return capital." Pandit added that Citi wants "to make sure that we are in exactly the right place on Basel III." According to the Basel Committee on Banking Supervision, Basel III will set a tougher standard for the quality of capital as well as the assessment of risks on a bank's balance sheet. According to the proposals under Basel III, only if a bank operating in a steady economic environment maintains a Tier 1 capital ratio of 12% would it be allowed to pay or increase common dividends.

In the fiscal fourth quarter Citigroup posted 4 cents in EPS on $18.37 billion in revenue. The analyst consensus estimate was for 8 cents of EPS on $20.40 billion. Shares of Citi have struggled since posting earnings as some investors expected a resumption of dividend payments following the bank's release from the US Treasury's $45 billion taxpayer-funded bailout in 2008, which went from a 54 cents in 2007 to zero in 2009.

The Bedford Report releases regular market updates on the Financial Sector so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous analyst reports and industry newsletters.

Last month Morgan Stanley reported fourth quarter net income of $867 million, or 41 cents per share, compared with $460 million, or 29 cents per share, in the year-ago period. Morgan Stanley was among 19 banks that submitted a capital plan to the Federal Reserve last month as lenders seek permission to raise dividends and buy back shares.

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