This report is an updated version of the report published on 17 May 2022 at 10:20 AM New York Time, USA (GMT-4)

Citigroup, Inc.

Citigroup Details

Citigroup Inc (NYSE: C) is the leading global bank with around 200 million customer accounts. It provides various financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.

Result Performance for the First Quarter Ended 31 March 2022 – (Q1FY22)

• The revenue stood at $19.2 billion, down 2% YoY, as the rise in net interest income in Services and PBWM was offset by lower non-interest revenue across Banking, Global Wealth Management, and lower revenues in Legacy Franchises.
• Net Income declined by 46% to $4.3 billion during the quarter, when compared to the prior-year period. The decrease has been driven by a higher cost of credit, higher expenses, and lower revenues.
• The Group reported book value per share of $92.03 and tangible and tangible book value per share of $79.03, reflecting an increase on the back of accumulated net income and lower shares outstanding.
• Total allowance for credit losses on loans stood at $15.4 billion in Q1FY22, with a reserve-to-funded loans ratio of 2.35% versus $21.6 billion, or 3.29% of funded loans in Q1FY21.

Source: Company Reports, Analysis by Kalkine Group

Recent Updates

• The company launched a report on 12 May 2022 titled, Space: The Dawn of a New Age. The report has stated that space launch costs are expected to fall to $100/kg by 2040.
• On 11 May 2022, the Group has updated that it will issue its Q4FY22 results on 13 January 2023.
• On 4 May 2022, Citibank raised its base lending rate to 4.00% from 3.50%, effective from 05 May 2022.

Outlook

Citigroup continues to see the health and resilience of the U.S. consumer. The group realizes strong performance in key drivers like cards loan growth and vigorous purchase sales growth. While geopolitics dampened performance in Wealth Management, the group is hiring bankers, enhancing client offerings, and continuing to add clients in both the Private Bank and Citigold. While the group is making necessary investments in infrastructure, risk and controls and businesses, it remains committed to improving returns over the medium term.

Key Risks

The group is exposed to the risk of uncertainties associated with the COVID-19 pandemic that would adversely affect its businesses, results, and financial condition. The uncertain economic environment and macro conditions has impacted both equity and debt markets, thereby inducing reducing activity levels in capital markets

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

Technical Overview:

Daily Price Chart

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

Stock Information                                           

The company has delivered a 1-month ~-4.78%, respectively. The stock is trading lower than the average of the 52-week high price of $80.29 and the 52-week low price of $45.40.

The stock has been valued using a P/B 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 P/B Multiple (NTM) (Peer Average), considering its substantial capital, liquidity positions and business diversity.

Considering the aforementioned factors along with strategic investments towards growth, a “Buy” recommendation has been assigned on the stock at the current market price of $49.81 per share, as of May 17, 2022, 09:31 AM New York Time, USA (GMT-4).

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.