Citigroup Inc

C Details

Citigroup Inc (NYSE: C) is the leading global bank. It provides various financial products and services that include consumer banking as well as credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.

Result Performance for Q4FY21 and FY21 (For the Period Ended 31 December 2021)

• Revenue rose by 1% YoY to $17.0 billion in Q4FY21 supported by robust growth in Investment Banking in the Institutional Clients Group (ICG) as well as higher revenues in corporate/other.
• Net income reduced by 26% YoY to $3.2 billion in Q4FY21 due to the impact of higher expenses and was partly offset by increased revenues and lower cost of credit.
• Q4FY21 results also comprised a pre-tax impact of approximately $1.2 billion ($1.1 billion after taxes) with respect to the divestitures of Citi’s consumer banking businesses in Asia.
• For FY21, Citigroup reported a net income of $22.0 billion compared to net income of $11.0 billion in FY20 with revenues of $71.9 billion in FY21 versus revenues of $75.5 billion in FY20.

Source: Analysis by Kalkine Group

Recent Updates

• On 24 February 2022, Citi declared its intention to eliminate overdraft fees, returned item fees, and overdraft protection fees by this Summer in a move towards its sustained commitment as a top leader in banking to increase financial inclusion in underserved communities.
• On 24 February 2022, Citigroup declared the redemption, in whole, comprising £99.9 million of the 6.829% Fixed Rate/Floating Rate Enhanced TruPS® issued by Citigroup Capital XVIII with the redemption date for the Redeemed ETruPS® on March 28, 2022.
• On 22 February 2022, Citi got the recognition for the Best Global Bank for Cash Management as well as for the Best Global Bank for Liquidity Management by Global Finance.

Key Risks

The group is exposed to the risk of uncertainties associated with COVID-19 pandemic that could adversely hurt its businesses as well as results and financial condition. Further, it is susceptible to the risk of changes in regulation and legislative uncertainties in the U.S. and globally. Moreover, it operates in a highly competitive environment.

Outlook

As part of Citigroup’s strategic refresh, Citigroup continues to build on strength in core franchises, as well as investing in growth prospects and exploit synergies across the firm and lower structural complexity. It is aligning its organization and reporting structure with its strategy, comprising the formation of the Personal Banking and Wealth Management and Legacy Franchises segments. This will enable Citigroup to better focus on its core businesses and optimize the businesses selected to exit.

Citigroup continues to Transform its bank with emphasis on simplification and setting a culture of excellence. Notably, Citigroup is focused on driving revenue growth, disciplined expense management, improving returns over the medium term as well as maintaining strong capital & liquidity.

Valuation Methodology: Price/BVPS Based Relative Valuation (Illustrative)

Technical Overview

Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)

Stock Information                                           

The stock has been valued using a Price/BVPS multiple-based illustrative relative valuation and the target price so arrived reflects a rise of low double-digit (in % terms). A slight premium has been applied to Price/BVPS Multiple (NTM) (Peer Average), considering its strong capital position as well as decent outlook.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Considering the aforementioned factors along with its progress in the execution of its growth strategy, we give a “Buy” recommendation on the stock at the current market price of $54.820 per share on 7th March 2022.

Citigroup, Inc. (C) is a part of Kalkine’s Global Big Money Product

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices

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