Citigroup Inc

Citigroup Inc. (NYSE: C) is a diversified financial services holding company. Its segments include Services, Markets, Banking, U.S. Personal Banking (USPB) and Wealth. Services segment includes treasury and trade solutions (TTS) and securities services.

Recent Business and Financial Updates

• Strong Revenue Growth Driven by Key Segments: In Q2 2024, Citigroup Inc. achieved revenues of USD 20.1 billion, reflecting a 4% year-over-year increase. Excluding divestitures, the revenue growth was 3%. This growth was largely fueled by robust performance across segments such as Banking, U.S. Personal Banking (USPB), and Markets. A significant factor contributing to this rise was a USD 400 million gain from the Visa B exchange, primarily benefitting the Markets segment, with a portion reflected in the All-Other category. However, this was partially offset by a decline in the All-Other segment.
• Net Income Surge and Improved Earnings Per Share: Citigroup reported a net income of USD 3.2 billion in Q2 2024, up from USD 2.9 billion in the same period last year. This rise was attributed to higher revenues and reduced operating costs, although it was tempered by increased credit expenses. Earnings per share (EPS) also improved, reaching USD 1.52, up from USD 1.33 per diluted share in Q2 2023, reflecting the higher net income and a slight reduction in the number of diluted shares outstanding.
• Effective Cost Management and Operating Expense Reduction: Operating expenses in Q2 2024 amounted to USD 13.4 billion, marking a 2% decline from the same period in the previous year. This decrease resulted from ongoing operational simplification, stranded cost reductions, and lower repositioning charges. Despite these cost-saving measures, Citigroup continued investing in transformation initiatives, and regulatory fines imposed by the Federal Reserve Board (FRB) and the Office of the Comptroller of the Currency (OCC) partially offset these savings.
• Elevated Credit Costs and Solid Reserve Coverage: The cost of credit increased to USD 2.5 billion in Q2 2024, up from USD 1.8 billion in the prior year. This rise was mainly driven by higher net credit losses in the cards segment, although a lower build in the allowance for credit losses (ACL) partially mitigated the impact. The total ACL stood at USD 21.8 billion, with the reserve-to-funded loans ratio slightly increasing to 2.68%, up from 2.67% in the prior year.
• Robust Capital Ratios and Shareholder Returns: Citigroup's Common Equity Tier 1 (CET1) Capital ratio improved to 13.6% at the end of Q2 2024, up from 13.5% in the previous quarter. This increase was driven by net income growth and reduced risk-weighted assets, despite the offsetting effects of dividend payments and USD appreciation. The bank also returned USD 1.0 billion to shareholders in the form of dividends, representing a payout ratio of 34%.
• Increased Book Value Amidst Declining Deposits: Citigroup’s book value per share rose by 2% year-over-year to USD 99.70, while the tangible book value per share increased by 3% to USD 87.53. These improvements were largely driven by net income, though dividend payments and adverse changes in accumulated other comprehensive income slightly offset the growth. Deposits at the end of Q2 2024 were approximately USD 1.3 trillion, reflecting a 3% decrease from the prior-year period, primarily due to a reduction in Treasury and Trade Solutions deposits amidst quantitative tightening measures.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 32.91, nearing oversold zone and downward trending, with the price near next important support range of USD50-USD55, with expectations of upward momentum in case those support levels holds. Additionally, the stock's current positioning is below both 50-Day SMA and 200-Day SMA, which can act as a short to medium term resistance levels.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

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

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is September 11, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.s

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.