Key takeaways
View moreCitigroup appears moderately undervalued based on its strong revenue and net income growth, ongoing transformation initiatives, and expansion opportunities in emerging markets. While profitability metrics are below industry averages, the company's P/E ratio and price-to-book ratios suggest undervaluation. The potential for improved operational efficiency and successful execution of strategic initiatives could drive future value creation, outweighing the current macroeconomic and regulatory risks.
- Citigroup's strong underlying business performance across all segments, driven by fee income growth and market share gains, is a positive sign for the company's future prospects.
- The company's lowered 2026 RoTCE target reflects strategic investments in technology and transformation, prioritizing long-term sustainable growth over short-term earnings maximization.
- The successful execution of Citigroup's transformation strategy, including organizational simplification and technology modernization, is crucial for achieving its long-term financial goals.
- The successful completion of the Banamex IPO will be a significant catalyst for Citigroup's simplification strategy and its ability to further enhance shareholder returns.
- While showing improvement, US Personal Banking remains a focus area for improvement, requiring sustained efforts to enhance revenue growth, manage expenses, and achieve a more normalized credit environment.
- Citigroup faces significant macroeconomic and geopolitical headwinds, including high inflation, rising interest rates, and global conflicts, which could adversely impact its business performance, credit quality, and financial results.
- The company's ongoing transformation initiatives to simplify its organizational structure and enhance its risk and control environment are critical, but also carry execution risks and the potential for higher-than-expected costs.
- Regulatory and compliance risks remain a major concern for Citigroup, as the company continues to navigate a complex and evolving regulatory landscape, which could result in further enforcement actions and reputational damage.
- Citigroup's credit risks have increased, as evidenced by the higher cost of credit driven by normalization of credit losses in its cards portfolios and reserve builds for transfer risk exposures.
Evaluation summary
Add to research
-
Company Overview:
- Citigroup, Inc. (C) is a global diversified financial services holding company that provides a broad range of financial products and services to consumers, corporations, governments, and institutions in nearly 160 countries and jurisdictions.
- The company's key business segments include Services (cash management, trade and working capital solutions), Markets (sales and trading services across asset classes), Banking (investment banking and corporate lending), U.S. Personal Banking (credit cards, mortgages, personal loans, small business banking), and Wealth (banking, lending, investment, and trust services for affluent clients).
- Citigroup's revenue is generated from a variety of sources, including net interest income, non-interest income, and fees. The company's largest revenue source is net interest income, which is generated from lending activities. Non-interest income is generated from a variety of sources, including investment banking, trading, and wealth management. Fees are generated from a variety of sources, including transaction fees, advisory fees, and asset management fees.
- For comparative analysis, Citigroup is benchmarked against the Financial Select Sector SPDR Fund (XLF) and its industry peers, Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM).
-
Financial Performance:
- Citigroup's revenue has been growing steadily in recent quarters, driven by strong performance in its Services and US Personal Banking segments. In Q4 2024, revenue increased by 4% year-over-year to $41.23 billion.
- The company's net income has also been growing, with a significant increase in Q4 2024 to $2.89 billion, representing a 40% increase year-over-year.
- Citigroup's profitability has been impacted by higher expenses and the normalization of credit losses. The company's net profit margin has been declining in recent quarters, reaching 6.93% in Q4 2024, below the industry average of 13.97%.
- The company's return on average assets (ROA) has been improving in recent quarters, reaching 0.53% in Q4 2024, but still below the industry average of 0.94%.
- The company's return on average total equity (ROE) has also been improving, reaching 6.06% in Q4 2024, but still below the industry average of 9.52%.
- The company's return on average total capital (ROTC) has been improving, reaching 2.18% in Q4 2024, but still below the industry average of 7.38%.
- The company's return on average invested capital (ROIC) has been improving, reaching 2.56% in Q4 2024, but still below the industry average of 7.17%.
- Recent news highlights the company's strong underlying business performance across all segments, driven by fee income growth and market share gains. However, the challenging macroeconomic environment, including high inflation and rising interest rates, may be impacting the company's revenue growth.
-
Operational Efficiency:
- Citigroup's balance sheet has been showing signs of improvement in recent quarters, with a decrease in total debt and an increase in total common equity.
- The company's working capital management has been a challenge, with a significant increase in working capital in Q4 2024, leading to a decrease in cash flow from operations.
- Citigroup's cash flow from operations has been declining in recent quarters, reaching -$2.97 billion in Q4 2024. This decline is primarily due to the increase in working capital and the normalization of credit losses.
- The company's free cash flow has also been declining, reaching -$4.53 billion in Q4 2024. This decline is primarily due to the decrease in cash flow from operations and the increase in capital expenditures.
- Citigroup's capital expenditures have been increasing in recent quarters, reaching $1.56 billion in Q4 2024. This increase is primarily due to the company's investments in technology and transformation initiatives.
- The company has been returning capital to shareholders through dividends and share repurchases. In Q4 2024, the company paid $1.34 billion in dividends and repurchased $2.74 billion in shares.
- Citigroup's liquidity position appears to be weakening, as evidenced by the declining cash balance and the recent increase in the provision for risks and charges. The company's current ratio is significantly above the industry average, suggesting that it has a more comfortable liquidity position than its peers.
- The company's total debt to total equity ratio remains significantly higher than the industry average, suggesting that it may be more vulnerable to financial distress than its peers. However, the company's debt to EBITDA ratio is below the industry average, suggesting that it has a more comfortable debt burden than its peers.
-
Growth Opportunities:
- Citigroup is focused on expanding its presence in high-growth emerging markets, particularly in Asia and Latin America. The company is also investing in technology and innovation to improve its products and services.
- The company's strategic focus areas include:
- Simplifying its organizational structure and enhancing its risk and control environment.
- Optimizing resource allocation and investing in technology and transformation initiatives.
- Expanding its presence in high-growth emerging markets.
- Improving its customer experience and enhancing its digital capabilities.
- The company has made significant progress on its divestiture of consumer banking businesses in Asia and Mexico. The successful completion of the Banamex IPO will be a significant catalyst for Citigroup's simplification strategy and its ability to further enhance shareholder returns.
- Citigroup's capital allocation strategy is focused on returning capital to shareholders through dividends and share repurchases, while also investing in growth opportunities.
- Recent news highlights the company's strategic investments in technology and transformation, prioritizing long-term sustainable growth over short-term earnings maximization. The company's commitment to returning capital to shareholders is evident through its substantial share repurchase program, although the pace of buybacks remains subject to regulatory considerations and capital management targets.
-
Recent Developments and Market Sentiment:
- Recent news highlights the company's strong underlying business performance across all segments, driven by fee income growth and market share gains.
- The company's lowered 2026 RoTCE target reflects strategic investments in technology and transformation, prioritizing long-term sustainable growth over short-term earnings maximization.
- The successful execution of Citigroup's transformation strategy, including organizational simplification and technology modernization, is crucial for achieving its long-term financial goals.
- The successful completion of the Banamex IPO will be a significant catalyst for Citigroup's simplification strategy and its ability to further enhance shareholder returns.
- While showing improvement, US Personal Banking remains a focus area for improvement, requiring sustained efforts to enhance revenue growth, manage expenses, and achieve a more normalized credit environment.
- The overall market sentiment towards Citigroup is positive, with analysts recognizing the company's strong underlying business performance and its commitment to long-term growth. However, concerns remain about the company's ability to achieve its financial goals in a challenging macroeconomic environment.
-
Risks and Threats:
- Citigroup faces significant macroeconomic and geopolitical headwinds, including high inflation, rising interest rates, and global conflicts, which could adversely impact its business performance, credit quality, and financial results.
- The company's ongoing transformation initiatives to simplify its organizational structure and enhance its risk and control environment are critical, but also carry execution risks and the potential for higher-than-expected costs.
- Regulatory and compliance risks remain a major concern for Citigroup, as the company continues to navigate a complex and evolving regulatory landscape, which could result in further enforcement actions and reputational damage.
- Citigroup's credit risks have increased, as evidenced by the higher cost of credit driven by normalization of credit losses in its cards portfolios and reserve builds for transfer risk exposures.
- The company is subject to various legal and regulatory proceedings, investigations, and consent orders related to compliance and risk management practices, which could result in significant fines, penalties, and other remedial actions.
- Recent news highlights the ongoing evolution of regulatory requirements and capital rules, which presents a significant uncertainty for Citigroup's financial outlook and capital allocation decisions.
-
Valuation Analysis:
- Citigroup's enterprise value to EBITDA ratio is 9.79, which is above the industry average. This suggests that the market may be placing a higher valuation on Citigroup's earnings than on the earnings of its peers.
- The company's enterprise value to sales ratio is 4.25, which is above the industry average. This suggests that the market may be placing a higher valuation on Citigroup's sales than on the sales of its peers.
- The company's price-to-earnings ratio is 11.5, which is below the industry average. This suggests that the market may be placing a lower valuation on Citigroup's earnings than on the earnings of its peers.
- The company's price-to-book ratio is 1.1, which is below the industry average. This suggests that the market may be placing a lower valuation on Citigroup's book value than on the book value of its peers.
- The company's price-to-tangible book value ratio is 1.2, which is below the industry average. This suggests that the market may be placing a lower valuation on Citigroup's tangible book value than on the tangible book value of its peers.
-
Price Performance:
- Citigroup's stock price has been on an upward trend in recent months, with a year-to-date return of 20.5%.
- The company's stock price has outperformed the Financial Select Sector SPDR Fund (XLF) over various time periods, including year-to-date, one-week, one-month, three-month, six-month, one-year, two-year, and three-year periods.
- However, Citigroup's stock price has generally provided lower annualized returns compared to its peers, particularly over the past 3 years.
- Citigroup has exhibited higher annualized volatility than its peers, indicating a higher risk profile.
- Citigroup has experienced the largest maximum drawdown among the three companies, indicating a higher risk profile.
-
Future Outlook:
- Citigroup's management has provided guidance for 2025, expecting revenues to increase by 3-4% year-over-year, reaching $83.5 billion to $84.5 billion.
- The company expects non-interest income (NIR) to maintain its momentum.
- Net interest income (NII) is projected to increase modestly, with volume growth and mix shifts offsetting potential headwinds from lower interest rates.
- Expenses are expected to be slightly lower than 2024 levels in 2025, but with increased investments in transformation and technology.
- For 2026, the company targets expenses below $53 billion and an RoTCE of 10-11%.
- The company acknowledged uncertainty surrounding future capital rules and requirements.
- Analysts are generally optimistic about Citigroup's future prospects, with a consensus price target of $85. However, concerns remain about the company's ability to achieve its financial goals in a challenging macroeconomic environment.
- Recent news highlights the company's strong underlying business performance across all segments, driven by fee income growth and market share gains. However, the challenging macroeconomic environment, including high inflation and rising interest rates, may be impacting the company's revenue growth.
-
Summary:
- Citigroup is a global financial services holding company with a diversified business model, operating in nearly 160 countries and jurisdictions.
- The company's revenue growth has been driven by strong performance in its Services and US Personal Banking segments, but the company has faced headwinds in its Global Consumer Banking segment.
- The company's profitability has been impacted by higher expenses and the normalization of credit losses.
- Citigroup's liquidity position appears to be weakening, as evidenced by the declining cash balance and the recent increase in the provision for risks and charges.
- The company's long-term solvency appears to be improving, as indicated by the decreasing total debt and the increasing total common equity.
- Citigroup's cash flows are likely to continue to be impacted by its ongoing transformation initiatives, with a focus on simplifying its operations and optimizing resource allocation.
- The company's strong capital position should provide it with financial flexibility to pursue growth opportunities and navigate potential economic downturns.
- Citigroup's stock price has outperformed the Financial Select Sector SPDR Fund (XLF) over various time periods, including year-to-date, one-week, one-month, three-month, six-month, one-year, two-year, and three-year periods.
- However, Citigroup's stock price has generally provided lower annualized returns compared to its peers, particularly over the past 3 years.
- Citigroup has exhibited higher annualized volatility than its peers, indicating a higher risk profile.
- Citigroup has experienced the largest maximum drawdown among the three companies, indicating a higher risk profile.
- Citigroup's future outlook is uncertain, as the company continues to navigate a challenging macroeconomic environment and implement its transformation initiatives.
- The company's financial performance is expected to be impacted by its ongoing transformation initiatives, with a focus on simplifying its operations and optimizing resource allocation.
- The company's revenue growth is expected to be driven by strong performance in its Services and US Personal Banking segments, but the company has faced headwinds in its Global Consumer Banking segment.
- The company's profitability is expected to improve as it continues to streamline its operations and reduce expenses.
- The company's strong capital position should provide it with financial flexibility to pursue growth opportunities and navigate potential economic downturns.
- Key areas requiring further monitoring include the company's ability to execute its transformation initiatives, the impact of macroeconomic headwinds on its business performance, and the company's ability to manage its credit risks.
- Overall, Citigroup is a large and complex financial institution with a diversified business model. The company faces a number of challenges, including a challenging macroeconomic environment, regulatory scrutiny, and competition from other financial institutions. However, the company has a strong capital position and is committed to returning capital to shareholders. Investors should carefully consider the company's risks and opportunities before making any investment decisions.
Price history
Add to research
Fundamentals
Add to research
Insights
- Citigroup's revenue growth is driven by strong performance in its Services and US Personal Banking segments, but the company has faced headwinds in its Global Consumer Banking segment.
- The company's profitability has been impacted by higher expenses and the normalization of credit losses.
- Citigroup's liquidity position appears to be weakening, as evidenced by the declining cash balance and the recent increase in the provision for risks and charges.
- The company's long-term solvency appears to be improving, as indicated by the decreasing total debt and the increasing total common equity.
- Citigroup's cash flows are likely to continue to be impacted by its ongoing transformation initiatives, with a focus on simplifying its operations and optimizing resource allocation.
- The company's strong capital position should provide it with financial flexibility to pursue growth opportunities and navigate potential economic downturns.
- Key financial statement metrics to monitor in upcoming quarters include cash balance, investment portfolio, loan growth, capital ratios, operating cash flow, free cash flow, capital expenditure, net interest income, non-interest income, and operating expenses.
Analysis
- Revenue
- Citigroup's revenue growth has been driven by strong performance in its Services and US Personal Banking segments, but the company has faced headwinds in its Global Consumer Banking segment.
- The company's divestiture of consumer banking businesses in Asia and Mexico is likely contributing to the decline in revenue growth in its Global Consumer Banking segment.
- The challenging macroeconomic environment, including high inflation and rising interest rates, may be impacting the company's revenue growth.
- Profitability
- Citigroup's profitability has been impacted by higher expenses and the normalization of credit losses.
- The company's profitability ratios, such as return on average assets, return on average total equity, return on average total capital, and return on average invested capital, are below the industry average, suggesting that the company may not be as efficient as its peers in utilizing its assets, equity, capital, and invested capital to generate profits.
- The company's net profit margin and EBITDA margin are also below the industry average, suggesting that it may not be as profitable as its peers.
- Liquidity
- Citigroup's liquidity position appears to be weakening, as evidenced by the declining cash balance and the recent increase in the provision for risks and charges.
- The company's current ratio is significantly above the industry average, suggesting that it has a more comfortable liquidity position than its peers.
- Solvency
- The company's long-term solvency appears to be improving, as indicated by the decreasing total debt and the increasing total common equity.
- The company's total debt to total equity ratio remains significantly higher than the industry average, suggesting that it may be more vulnerable to financial distress than its peers.
- The company's debt to EBITDA ratio is below the industry average, suggesting that it has a more comfortable debt burden than its peers.
- Operational Efficiency
- Citigroup's asset utilization efficiency is improving, as indicated by the increasing return on average assets and return on average total equity.
- The company's enterprise value to sales ratio has been decreasing in recent quarters, indicating a potential decline in market valuation relative to its sales. However, the company's enterprise value to sales ratio is above the industry average, suggesting that the market may be placing a higher valuation on its sales than on the sales of its peers.
- Cash Flow Analysis
- Cash flows from core business operations have been declining in recent quarters, potentially indicating challenges in managing working capital or a slowdown in revenue growth.
- Citigroup has been reducing its investments in recent quarters, potentially reflecting a shift in strategy or a focus on deleveraging.
- The company has been returning capital to shareholders through dividends and share repurchases, but the pace of buybacks remains subject to regulatory considerations and capital management targets.
- Net income growth has outpaced operating cash flow growth in recent quarters, suggesting potential for a disconnect between earnings and cash flow generation.
- The cash flow to net income ratio has been declining, indicating a potential deterioration in the quality of earnings.
- Risk Factors
- Citigroup faces significant macroeconomic and geopolitical headwinds, including high inflation, rising interest rates, and global conflicts, which could adversely impact its business performance, credit quality, and financial results.
- The company's ongoing transformation initiatives to simplify its organizational structure and enhance its risk and control environment are critical, but also carry execution risks and the potential for higher-than-expected costs.
- Regulatory and compliance risks remain a major concern for Citigroup, as the company continues to navigate a complex and evolving regulatory landscape, which could result in further enforcement actions and reputational damage.
- Citigroup's credit risks have increased, as evidenced by the higher cost of credit driven by normalization of credit losses in its cards portfolios and reserve builds for transfer risk exposures.
- Future Outlook
- Citigroup's financial performance is expected to be impacted by its ongoing transformation initiatives, with a focus on simplifying its operations and optimizing resource allocation.
- The company's revenue growth is expected to be driven by strong performance in its Services and US Personal Banking segments, but the company has faced headwinds in its Global Consumer Banking segment.
- The company's profitability is expected to improve as it continues to streamline its operations and reduce expenses.
- The company's strong capital position should provide it with financial flexibility to pursue growth opportunities and navigate potential economic downturns.
- Profitability
Financial statements
Add to research
Loading...
Public filings
Add to research
- Citigroup faces significant macroeconomic and geopolitical headwinds, including high inflation, rising interest rates, and global conflicts, which could adversely impact its business performance, credit quality, and financial results.
- The company's ongoing transformation initiatives to simplify its organizational structure and enhance its risk and control environment are critical, but also carry execution risks and the potential for higher-than-expected costs.
- Regulatory and compliance risks remain a major concern for Citigroup, as the company continues to navigate a complex and evolving regulatory landscape, which could result in further enforcement actions and reputational damage.
- Citigroup's credit risks have increased, as evidenced by the higher cost of credit driven by normalization of credit losses in its cards portfolios and reserve builds for transfer risk exposures.
- Despite the challenges, Citigroup maintains a strong capital position, which should provide a buffer against potential downside risks and enable the company to continue investing in its transformation and growth initiatives.
- Core Business and Operations:
- Citigroup Inc. is a global diversified financial services holding company that provides a broad range of financial products and services to consumers, corporations, governments, and institutions in nearly 160 countries and jurisdictions
- Key business segments include Services (cash management, trade and working capital solutions), Markets (sales and trading services across asset classes), Banking (investment banking and corporate lending), U.S. Personal Banking (credit cards, mortgages, personal loans, small business banking), and Wealth (banking, lending, investment, and trust services for affluent clients)
- Industry and Market Trends:
- Operates in a highly competitive and evolving financial services industry, facing competition from traditional banks, online banks, private credit firms, and fintech companies
- Subject to extensive and frequently changing regulatory requirements globally, which can significantly impact operations, compliance costs, and competitive position
- Macroeconomic factors such as interest rates, inflation, economic growth, and geopolitical events can significantly affect business performance, credit quality, and funding costs
- Financial services industry continues to undergo digital transformation, requiring Citi to invest in technology and adapt products/services to changing customer preferences
- Recent Events:
- Announced a multi-year transformation initiative to simplify organizational structure, enhance risk and control environment, and optimize resource allocation
- Continued progress on divestitures of consumer banking businesses in Asia and Mexico
- Incurred significant restructuring charges related to organizational simplification efforts
- Risk Factors:
- Macroeconomic and geopolitical challenges, including high inflation, rising interest rates, and global conflicts, which could adversely impact business, credit quality, and financial performance
- Operational and cybersecurity risks, including potential for system failures, data breaches, and technology-related disruptions
- Regulatory and compliance risks, including increased scrutiny, new requirements, and enforcement actions that could result in penalties and reputational damage
- Strategic risks associated with transformation initiatives, including execution challenges, higher-than-expected costs, and failure to achieve desired outcomes
- Credit risks arising from lending and trading activities, including potential for increased delinquencies, defaults, and credit losses
- Legal Matters:
- Subject to various legal and regulatory proceedings, investigations, and consent orders related to compliance and risk management practices, which could result in significant fines, penalties, and other remedial actions
- Management's Discussion and Analysis:
- Revenues increased 4% year-over-year, driven by growth in net interest income in Services and USPB, partially offset by lower non-interest revenues
- Expenses increased 10%, primarily due to the FDIC special assessment, restructuring charges, and continued investments in risk and controls
- Cost of credit increased significantly, driven by higher net credit losses in cards and reserve builds related to transfer risk exposures
- Capital ratios remained strong, with a CET1 Capital ratio of 13.4% under the Standardized Approach
Earnings calls
Add to research
Earnings Report 2024Q4 (2025-01-15)
Key takeaways
-
Strong Underlying Business Performance: Despite a revised 2026 RoTCE target, Citigroup demonstrated strong underlying business performance across all segments, driven by fee income growth and market share gains.
-
Strategic Investments for Long-Term Growth: The lowered 2026 RoTCE target reflects strategic investments in technology and transformation, prioritizing long-term sustainable growth over short-term earnings maximization.
-
Capital Allocation and Shareholder Returns: Citigroup's commitment to returning capital to shareholders is evident through its substantial share repurchase program, although the pace of buybacks remains subject to regulatory considerations and capital management targets.
-
Uncertainty Regarding Regulatory Environment: The ongoing evolution of regulatory requirements and capital rules presents a significant uncertainty for Citigroup's financial outlook and capital allocation decisions.
-
Successful Transformation Execution: The successful execution of Citigroup's transformation strategy, including organizational simplification and technology modernization, is crucial for achieving its long-term financial goals.
-
Banamex IPO as a Key Catalyst: The successful completion of the Banamex IPO will be a significant catalyst for Citigroup's simplification strategy and its ability to further enhance shareholder returns.
-
US Personal Banking Requires Further Improvement: While showing improvement, US Personal Banking remains a focus area for improvement, requiring sustained efforts to enhance revenue growth, manage expenses, and achieve a more normalized credit environment.
Focus of management’s prepared remarks
- Strong 2024 Performance and Exceeding Targets: Citigroup exceeded its full-year revenue target, with revenues up 5% excluding divestitures, and net income up nearly 40% to $12.7 billion. All five core businesses generated positive operating leverage.
- Strategic Clarity and Momentum: The company entered 2025 with strategic clarity and good momentum across all businesses, emphasizing a focus on fee-based revenue growth and market share gains.
- Successful Execution of Transformation Strategy: Significant progress was made in simplifying the firm, exiting non-core businesses, and modernizing infrastructure and processes. Investments in technology and AI were highlighted.
- Revised 2026 RoTCE Target: The 2026 RoTCE target was revised to 10-11% to reflect necessary investments in transformation and technology, with the expectation of further improvement beyond this level.
- Global Macroeconomic Outlook: Management provided a balanced assessment of the global macroeconomic environment, highlighting the resilience of economies to interest rate hikes, the strength of the US economy, and the opportunities in emerging markets.
Focus of the analyst Q&A
-
Expense Management and Efficiency Ratio: Analysts questioned the rationale behind the lowered 2026 RoTCE target, focusing on the impact of increased investments in transformation and technology on expenses. Concerns were raised about the path to achieving an efficiency ratio below 60%. The sustainability of expense reductions beyond 2026 was also questioned.
-
Share Repurchase Program and Capital Allocation: Analysts probed the company's plans for share repurchases beyond the first quarter of 2025, particularly in light of the company's trading below tangible book value. Questions were raised about the factors influencing the pace of buybacks and the potential impact of regulatory changes on capital allocation decisions.
-
Card Net Charge-offs and Provisioning: Analysts sought clarification on the company's expectations for card net charge-offs in 2025 and the factors influencing the level of provision build. The potential impact of slowing balance maturation on provisioning was also discussed.
-
RoTCE Targets and Sustainability: Analysts questioned the assumptions underlying the 2026 RoTCE target, particularly regarding the CET1 ratio and the potential impact of future regulatory changes. Concerns were raised about the sustainability of the improved returns and the potential for a repeat of past performance volatility.
-
Business Segment Performance and Growth Opportunities: Analysts inquired about the outlook for specific business segments, including wealth management and investment banking, focusing on growth opportunities, competitive positioning, and the trajectory of RoTCE. The potential for improvement in the RoTCE of US Personal Banking was also discussed.
-
Banamex IPO Timing and Impact: Analysts sought clarification on the timing and details of the Banamex IPO, including the expected ownership percentage and the potential impact on the company's financial performance, particularly the RoTCE.
Summary
-
Financial Performance: Citigroup reported strong fourth-quarter and full-year 2024 results. Net income for the full year was up nearly 40% to $12.7 billion, exceeding the full-year revenue target with revenues up 5% ex-divestitures. The fourth quarter saw net income of $2.9 billion, EPS of $1.34, and RoTCE of 6.1%. Full-year RoTCE reached 7%. Tangible book value per share grew by 4%, and the CET1 ratio ended at 13.6%, significantly above regulatory requirements. The company returned almost $7 billion in capital to shareholders in 2024.
-
Revenue Drivers: Revenue growth was driven by strong performance across all five core businesses: Services (up 9%), Markets (up 6%), Banking (up 32%), Wealth (up 7%), and US Personal Banking (up 6%). Fee revenue growth was particularly strong, up 17% for the full year, with significant contributions from investment banking fees (up 42%), wealth management fees (up 18%), and services fees. Growth in cards and deposit volumes also contributed significantly to revenue increases. The smaller impact of Argentina's currency devaluation compared to the previous year also positively impacted revenues.
-
Profit Margins and Cost Management: The company achieved positive operating leverage for the full year at both the firm and business levels. Expenses were down 18% in Q4 2024, primarily due to the absence of the FDIC special assessment and restructuring charges from the prior year. Excluding these items, expenses were down 7%. The full-year expense reduction was driven by organizational simplification and stranded cost reduction. However, the company anticipates slightly lower expenses in 2025 compared to 2024, but with increased investments in transformation and technology. The 2026 RoTCE target was revised to 10-11%, reflecting these investments. Management emphasized a commitment to further expense reduction beyond 2025, aiming for an efficiency ratio below 60%.
-
Guidance and Outlook: Citigroup expects revenues to increase by 3-4% year-over-year in 2025, reaching $83.5 billion to $84.5 billion. Non-interest income (NIR) is expected to maintain its momentum. Net interest income (NII) is projected to increase modestly, with volume growth and mix shifts offsetting potential headwinds from lower interest rates. Expenses are expected to be slightly lower than 2024 levels in 2025, but with increased investments in transformation and technology. For 2026, the company targets expenses below $53 billion and an RoTCE of 10-11%. The company acknowledged uncertainty surrounding future capital rules and requirements.
-
Strategic Initiatives: Key strategic initiatives include organizational simplification, reducing management layers, exiting consumer businesses in several countries (including the planned Banamex IPO), and investing in technology and transformation. The company highlighted progress in modernizing infrastructure, streamlining processes, and automating controls. Investments in AI and digital capabilities were also emphasized. The company is focused on gaining market share in key areas like investment banking, wealth management, and transaction services.
-
Management Commentary: Management expressed confidence in the company's strategic direction and progress in executing its transformation plan. They highlighted the strong performance of the core businesses and the positive operating leverage achieved. While acknowledging the need for further investments in technology and transformation, management emphasized their commitment to improving returns and achieving long-term sustainable growth. The revised 2026 RoTCE target was presented as a waypoint, not a final destination.
-
Industry and Market Conditions: Management noted that economies have shown resilience to interest rate hikes, with inflation receding. The US economy remains strong, while China's growth has been slower than expected. Europe continues to underperform, and several emerging markets are showing strength. The company highlighted the benefits of its global network and presence in high-growth emerging markets. Management also discussed the impact of macroeconomic factors on credit losses and provisioning.
Comparative analysis
Add to research
Benchmarks (as of 2025-02-14)
Financial Select Sector SPDR Fund (XLF)
- Performance Comparison: Citigroup, Inc. (C) has consistently outperformed the Financial Select Sector SPDR Fund (XLF) over various time periods, including year-to-date, one-week, one-month, three-month, six-month, one-year, two-year, and three-year periods. This suggests that C has been able to generate stronger returns than the broader financial sector. However, it's important to note that past performance is not indicative of future results.
- Risk and Return Analysis: Citigroup, Inc. (C) has delivered higher annualized returns than the Financial Select Sector SPDR Fund (XLF) over the past three years. However, C has also exhibited higher annualized volatility than XLF, indicating that C's stock price has been more susceptible to fluctuations. Additionally, C has experienced significantly larger maximum drawdowns than XLF, suggesting that C's stock price has been more prone to significant declines. This highlights the trade-off between higher returns and higher risk associated with C.
- Risk-Adjusted Performance: The Sharpe Ratio of Citigroup, Inc. (C) has generally been lower than the Financial Select Sector SPDR Fund (XLF) over the past three years. This indicates that XLF has offered a better risk-adjusted return than C during this period. However, both C and XLF have shown an increasing trend in their Sharpe Ratios in recent quarters, suggesting that both have been able to generate better risk-adjusted returns. The beta of C has generally been below 1, while the beta of XLF has been around 1, indicating that C has been less sensitive to market movements than the broader financial sector. This suggests that C may be a less risky investment than XLF.
- Overall Assessment: Citigroup, Inc. (C) has demonstrated strong historical performance, consistently outperforming the Financial Select Sector SPDR Fund (XLF) over various time periods. However, C's higher volatility and larger drawdowns suggest a higher risk profile compared to XLF. While C has delivered higher annualized returns, its risk-adjusted performance, as measured by the Sharpe Ratio, has generally been lower than XLF. C's lower beta indicates a lower sensitivity to market movements, potentially making it a less risky investment than XLF. Investors should carefully consider the trade-off between C's higher returns and higher risk before making any investment decisions.
Peers Price History(as of 2025-02-14)
- Performance Comparison:
- Citigroup (C) has shown a mixed performance history compared to its peers. While it has outperformed Wells Fargo (WFC) and JPMorgan Chase (JPM) in some periods, it has underperformed in others. Notably, C has underperformed both peers over the past 3 years.
- The consistency of C's performance relative to its peers has been inconsistent. It has shown periods of outperformance followed by periods of underperformance.
- Risk and Return Analysis:
- Citigroup (C) has generally provided lower annualized returns compared to its peers, particularly over the past 3 years.
- Citigroup (C) has exhibited higher annualized volatility than its peers, indicating a higher risk profile.
- Citigroup (C) has experienced the largest maximum drawdown among the three companies, indicating a higher risk profile.
- Risk-Adjusted Performance:
- Citigroup (C) has a lower Sharpe ratio compared to JPMorgan Chase (JPM), suggesting that JPM offers a better risk-adjusted return.
- Citigroup (C) has a beta value generally below 1, indicating that it is less sensitive to market movements than the overall market. However, its beta has been higher than JPMorgan Chase (JPM), suggesting a slightly higher risk profile.
- Overall Assessment:
- Citigroup (C) has shown a mixed performance history, with periods of outperformance and underperformance. It has generally provided lower annualized returns and exhibited higher volatility than its peers, indicating a higher risk profile.
- While C's beta value suggests a lower risk profile than the overall market, it has been higher than JPMorgan Chase (JPM), indicating a slightly higher risk profile compared to its peer.
- The recent trends suggest that all three companies are improving their risk-adjusted performance, with JPMorgan Chase (JPM) showing the most consistent improvement.
- Investors should carefully consider the relative performance, risk, and risk-adjusted performance of Citigroup (C) compared to its peers before making any investment decisions.
Peers Fundamentals(as of 2024-12-31)
-
Market Position and Size:
- Citigroup, Inc. (C) is the smallest company in the peer group, with a market cap significantly lower than its peers, Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM).
- While C's revenue is closer to WFC, its net income is significantly lower than both peers, indicating a lower profitability compared to its peers.
-
Profitability and Efficiency:
- C's profitability metrics are significantly lower than both its peers and the industry average, indicating a significant underperformance in profitability.
- C's return on assets, equity, and capital metrics are significantly lower than both its peers and the industry average, indicating a significant underperformance in efficiency.
-
Financial Health and Stability:
- C has a strong liquidity position but a high level of debt, which could pose a risk to its financial stability.
-
Valuation and Market Perception:
- C's valuation metrics are generally lower than both its peers and the industry average, suggesting that the market is valuing C at a discount compared to its peers and the industry.
- This could be due to C's lower profitability, efficiency, and growth compared to its peers.
-
Cash Flow and Capital Management:
- C's cash flow generation strength relative to its size, peers, and industry norms cannot be assessed due to the lack of data.
-
Growth and Future Prospect:
- C's growth profile is mixed. While C has shown strong revenue growth, its profit growth has been lagging behind its peers and the industry.
- This suggests that C's growth may not be sustainable in the long term without corresponding improvements in profitability.
-
Potential for Investment:
- C's investment attractiveness is mixed. While C has shown strong revenue growth and has a strong liquidity position, its lower profitability, efficiency, and return metrics compared to its peers and the industry average raise concerns about its long-term sustainability.
- Additionally, C's high level of debt could pose a risk to its financial stability.
-
Key Risks and Considerations:
- C's lower profitability, efficiency, and return metrics compared to its peers and the industry average.
- C's high level of debt could pose a risk to its financial stability.
-
Overall Assessment:
- C's overall financial position is mixed. While C has a strong liquidity position and has shown strong revenue growth, its profitability, efficiency, and return metrics are significantly lower than its peers and the industry average.
- Additionally, C's high level of debt could pose a risk to its financial stability.
- Investors should carefully consider C's lower profitability, efficiency, and return metrics, as well as its high level of debt, before making an investment decision.
Comparison metrics
Add to research