Citigroup, Inc.

C 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, etc.

Key Positives:

Rise in Tangible Book Value Per Share (Q1 FY 2022: $79.03, +5% YoY), Rise in Net Interest Income (Q1 FY 2022: $10,871 Mn, +3% YoY)

Key Negatives: 

Lower Net Income (Q1 FY 2022: $4.3 billion, -46% YoY), Lower Revenue (Q1 FY 2022: $19.2 billion,         -2% YoY)

Key Risks:

Risks Related to COVID-19 Pandemic, Global Slowdown

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

• C’s revenue stood at $19.2 Bn, down 2% YoY, as the rise in net interest income in Services and PBWM was offset by the non-interest revenue across Banking, Global Wealth Management, as well as lower revenues in Legacy Franchises.
• Its net income stood at $4.3 Bn, reflecting a fall of 46% from the prior-year period, driven by the higher cost of credit, higher expenses, as well as the lower revenues.
• Its earnings per share of $2.02 fell 44% from the prior-year period.

Source: Analysis by Kalkine Group

Recent Update

Citibank, N.A. stated that it has raised its base lending rate to 4.00% from 3.50%, effective May 5, 2022.

Outlook

Citigroup is witnessing health and resilience of the U.S. consumer through its cost of credit and their payment rates. Even though the geopolitics dampened the performance in Wealth Management, C is hiring bankers, enhancing its client offerings as well as is adding clients in both the Private Bank and in Citigold. The bank is committed to improving the returns over the medium term.

Key Risks

The group is exposed to the risk of uncertainties associated with the COVID-19 pandemic which could impact the broader business momentum.

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

Technical Overview:

Daily Price Chart

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

Source: REFINITIV

Stock Recommendation                               

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, we give a “Buy” rating at the current market price of $51.30 per share, as on 09:31 am New York Time, USA (GMT-4) as of 05 May 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:-

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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.