Citigroup Inc. (C) Stock and the $55 Billion Asset It Can’t Wait to Unload

The main problem here is that Citi earns the majority of its profits (61%) outside U.S. borders. Since most of its losses (which created the DTAs) were incurred within the U.S., though, offsetting foreign profits with domestic losses could be easier said than done. The numbers may not line up right. Still, assuming Citi continues earning Stateside profits at its current pace, 39% of total profits of $89 billion could absorb a goodly chunk of its DTAs — $35 billion worth, or thereabouts.

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Other options for Citigroup Inc. (NYSE:C) stock might include surprising analysts and earning more profits than are currently expected from its credit card division. Or Citi could “create” U.S.-based profits out of thin air by drawing down its reserves against mortgages going bad. When money is diverted into a loan-loss reserve, it decreases profits. Reversing such shifts, accordingly, helps to increase a bank’s reported profit.

The upshot, though, is that CFO Gerspach is right. Citigroup Inc. (NYSE:C) stock has lots of tools in its tool chest. One way or another, it’ll find a way to chip away at its DTAs.

The article Citigroup Stock and the $55 Billion Asset It Can’t Wait to Unload originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Citigroup and General Electric.

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