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Analysts applaud Citi, but expect more

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Was a round of extreme cost-cutting exactly the tonic for what ails Citigroup?

Shareholders applauded as Mr. Market bid the stock up nearly 10 percent, but the reality is that Wall Street will be looking for more action of this ilk soon. CLSA's Mike Mayo said this week that CEO Michael Corbat's move to cut 11,000 jobs (4 percent) was a "tremor" and that an "earthquake" is on the way, "likely ahead of the bank's April 16 annual shareholder meeting," as noted by Forbes.

Mayo, who had a rocky relationship with top Citi executives during the reign of Vikram Pandit, upgraded the stock to an "outperform" after Pandit was ousted and said this week's big move represented a "free call option for more aggressive restructuring."

Mayo thinks it's now much more attractive than Bank of America. Other analysts also think more aggressive cost-cutting is on the way. Nomura's Glenn Schorr says the expense reductions "clearly indicate there is still room to adapt to the current environment and improve profitability."

This will likely be the theme for the stock over the next 12 months or so. And if there really is room for expenses to decline, shareholders may be rewarded. But I've said all along that the main concern long-term is the lack of revenue growth potential. This is something that afflicts all the top banks right now. There doesn't appear to be a clear winner at the commercial banking or investment banking side.

At some point, the top-line will come back into the public discussion in a big way.

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