Citigroup, Inc. is a holding company, which engages in the provision of financial products and services. It operates through the following segments: Global Consumer Banking, Institutional Clients Group, and Corporate and Other. The Global Consumer Banking segment provides traditional banking services to retail customers through retail banking, including commercial banking, and Citi-branded cards and Citi retail services. The Institutional Clients Group segment provides corporate, institutional, public sector and high-net-worth clients around the world with a full range of wholesale banking products and services. This segment includes fixed income and equity sales and trading, foreign exchange, prime brokerage, derivative services, equity and fixed income research, corporate lending, investment banking and advisory services, private banking, cash management, trade finance and securities services. The Corporate and Other segment includes certain unallocated costs of global staff functions, other corporate expenses and unallocated global operations and technology expenses, Corporate Treasury, certain North America and international legacy consumer loan portfolios, other legacy assets, and discontinued operations. The company was founded in 1812 and is headquartered in New York, NY.
2024-2025 Focus:
Citi can buy back stock at 0.6x BVPS, an accretive financial transaction.
C benefits from the capital markets rebound as >30% of revenues come from Banking & Markets.
New CEO is taking proactive strategic action to boost returns closer to peers, including firm-wide restructuring that removes net 20K headcount and simplifies the organizational structure. We model Citi delivering a 7% ROTCE in '25, below their 11-12% medium term target. Upside to our estimates if Citi hits targets.
Price Target:
In recent history, shares of Citi have traded as high as 13x forward PE (end of 2017). Given the company's ongoing transformation (which has been received positively by the public), applying 13x multiple to 2025's estimated EPS of $7.14 yields a $92.8 price target. In terms of price-to-book (PB) value, the high range of Citi's forward PB has been 1x. Applying this bullish PB multiple to 2025's estimated book value of $108.32/share yields a $108.32/share price target. Note that Citi is trading at the lowest P/B multiple (0.6x) amongst large-cap banks (Bank of America at 1.05x forward P/B, Wells Fargo at 1.12x, PNC at 1.39x, JPMorgan Chase at 1.70x, etc). We're not saying this gap is unreasonable, given the hardship that Citi has had to experience, but we believe the gap can be closed.