Citigroup Inc.’s

C 2.11%

third-quarter profit slumped 34% and the bank set aside billions of dollars to cover potential losses in the coronavirus recession.

Citigroup posted a profit of $3.23 billion, or $1.40 a share, down from $4.91 billion, or $2.07 a share, one year ago. Analysts had expected 91 cents a share, according to FactSet. In the second quarter, profit had fallen to 50 cents a share.

Revenue in the consumer bank fell as people continued to struggle through the recession. The Wall Street operations turned in higher revenue as trading surged in the uncertain market and bankers helped nervous companies raise cash and sell stocks and bonds to ride out the downturn. JPMorgan Chase & Co., which also reported results Tuesday, followed a similar pattern, though its overall profit rose 4%.

Still, the results were better than the second quarter’s and topped analyst expectations. The bank slowed the pace of bulwarking for its loan portfolio, socking away another $2.26 billion of loan-loss provisions in the quarter. It had put more than $7 billion aside in each of the past two quarters.

Citigroup has had its own upheaval as well. Chief Executive Michael Corbat surprised analysts when he announced last month he would retire in February, handing the reins to bank President Jane Fraser. Last week, regulators hit Citigroup with a $400 million fine and orders to take expensive, time-consuming steps to improve its risk management infrastructure. Citigroup’s shares are down 43% this year, underperforming the KBW Nasdaq Bank Index’s 30% drop.

Total revenue fell 7% to $17.3 billion from $18.57 billion. Analysts had expected $17.21 billion.

In the consumer bank, revenue dropped 13% and profit declined 30%.

The investment and corporate banking operations held up better than the consumer bank. Companies continued to raise new money from stocks

Portman RidgeImage source

Investment Thesis

Too many unknowns leave Portman Ridge Finance Corporation (PTMN) unsuitable for the risk-averse investor. Recent management changes and the anticipated merger with Garrison Capital (GARS) add a considerable amount of uncertainty for future performance. This is especially true given the new management’s lack of experience and PTMN’s disappointing historical performance.

Dividend Sustainability

Currently, PTMN pays $0.24 per share in dividends, annually. That translates to an 18% forward dividend yield. The sustainability of this dividend relies on two conditions:

  1. Affordable payout ratio
  2. Healthy portfolio

PTMN historically distributed more cash to shareholders than it earned. As a result, PTMN lowered its dividends every year since 2013 to try to match the income it brings in with the dividend it pays out to investors. At a $0.06 quarterly dividend, PTMN seems to have finally found its balance.

Source: Graph created by the author. Data is sourced from the company’s financial statements.

PTMN Portfolio

PTMN’s dividend sustainability depends on more than a payout ratio that is below 100%. A healthy portfolio is paramount to that end. PTMN manages $281 million worth of investments. Below is a portfolio breakdown by type and product mix.

Source: Investors’ presentation

PTMN has a relatively small stake in equity, which is a good thing. Equity is riskier than debt securities. Gladstone investment corporation’s (GAIN) revenue decreased by 40% in Q2, as portfolio companies suspended dividend distributions during the pandemic. During the same period, PTMN revenue increased by 6% because of limited exposure to equity and the expansion of the investment portfolio through borrowing.

CLO investments are also extremely risky. This is demonstrated by the ~50% decrease in PTMN’s revenue from these vehicles in Q2 as shown below:

Source: Company financial statements

Second lien loans constitute 40% of PTMN’s debt investments. This is a high percentage.

This article was written by Suvashree Ghosh and Jeanette Rodrigues. It appeared first on the Bloomberg Terminal. 

India has rolled out a fresh plan to tackle an old problem: the mountain of bad loans held by its banks. With the pandemic forecast to push soured assets to a two-decade high, Prime Minister Narendra Modi is struggling to find cash to support the state-run lenders that hold most of it, and to spur credit to a shrinking economy. Most of the risky debt is concentrated in two sectors — telecoms and utilities — that are vulnerable to the economic slowdown, meaning if they face more trouble, then a massive amount of debt goes bad.

1. What’s the plan?

When the pandemic slammed India early this year, the central bank allowed lenders to freeze loan repayments through Aug. 31. Jefferies estimates that borrowers accounting for 31% of outstanding loans took up the offer initially, though this eased to about 18% by the end of June as businesses gradually reopened and some realized that postponing repayments could end up being costlier. The focus then shifted to a one-time debt restructuring allowed by the Reserve Bank of India for borrowers that were on track to repay before the lockdown. Lenders can grant loan extensions of as long as two years with or without a freeze on repayments. They have until the end of the year to pick which loans to overhaul and until June 2021 to get it done, and will also need to set aside higher provisioning.

2. Why now?

India’s $1.8 trillion financial system entered the pandemic already weakened by about $140 billion of bad loans at its banks and a 2-year-long liquidity crisis at so-called shadow banks. Then business activity collapsed after Modi’s government instituted some of the world’s strictest shelter-at-home

The national personal saving rate is now running at double the pre-pandemic levels, in part due to government relief money that flowed into American households.

Among those driving that number is Melissa James, a 31-year-old diversity consultant in the Boston area. Prior to the pandemic, she led the life of a single professional whose spending habits supported the economy in Boston and beyond. Heading into her office at the We Work by South Station, she would grab a grande Starbucks iced caramel macchiato and order lunch from SweetGreen. She would eat out at a restaurant or get a drink at a bar four or five times a week, and take three to four international trips a year.

Now James works from home, and isn’t getting on a plane anytime soon. She bought her first cookbook and learned how to cook.

“I have perfected the chicken piccata,” said James, adding that she also knows how to whip up her family’s traditional Jamaican dish of salt fish and fried dumplings.

A financial planner had once advised her to change her lifestyle to save money, but James declined. Now, she estimates she is saving about $2,000 a month. “Apparently, all I needed is a stay-at-home advisory,” James quipped.

Then there is Gary McNabb, a retired registered nurse in Groton. He grew up “really poor” in Brighton public housing, he said, one of four kids whose father, a Boston Police officer, was killed in the line of duty in 1968. As an adult, he and his second wife lived frugally in a cramped condo until they got his children through private school and college.

Now 63, McNabb and his wife are hunkering down again because they don’t want to get COVID-19. The couple no longer eats out three or four days a week or

A new lawsuit alleges that U.S. Citizenship and Immigration Services (USCIS) has acted in bad faith against the spouses of H-1B visa holders. The plaintiffs argue H-1B spouses cannot renew their H-4 employment authorization documents (EADs) because USCIS changed procedures to prevent the spouses from working in the United States. The plaintiffs say USCIS added an unnecessary biometrics requirement and adopted an erroneous interpretation of government regulations by prohibiting automatic extensions of H-4 work authorization. Plaintiffs’ attorneys assert Trump administration officials wanted to eliminate the regulation that allows the spouses of many H-1B visa holders to work but after failing to do so instead changed its policies to accomplish the same goal.

Processing Change: In 2015, a regulation granting work authorization to the spouses of H-1B visa holders with approved immigrant petitions (i.e., long-pending employment-based green cards) went into effect. H-1B spouses are usually in H-4 status. A rule is pending with the Office of Management and Budget to rescind the 2015 regulation but it has run into difficulties and has remained on the administration’s agenda for years without being published.

Before March 2019, USCIS would typically adjudicate an H-4 dependent petition and the H-4 EAD (employment authorization document) application at the same time as the H-1B petition from the same family. Premium processing of the H-1B petition would ensure adjudication within 15 days. The wait times for H-4 EADS have grown from 3 months up to 18 months in some locations after USCIS changed its policies, including requiring H-4 spouses to supply biometrics.

A previous lawsuit