Citibank ($C) is both Good Price and Good Company no ?
My 3rd postt o Tiger_chat 's question of whether an investor profits from a good company or a good price ?
To that I have asked, "why not both" ?
Wouldn't that have more upside comparatively speaking ?
Let's take a look at $Citigroup(C)$ , its Q4 2022 earnings and see if it fits the bill.
Sidetrack: I have covered 4 other bank stocks to test out this theory.
- $Jefferies Financial Group Inc.(JEF)$ . click here to read. "Like" this post ok. Tks.
- $Wells Fargo(WFC)$ . If interested, click here to read. "Like" this post ok. Tks.
- $Bank of America(BAC)$ . If interested, click here to read. "Like" this post ok. Tks.
- $JPMorgan Chase(JPM)$ . If interested, click here to read. "Like" this post ok. Tks.
- Founded as "City Bank of New York" in 1812.
- In 1976, after undergoing several M&A it renamed to "Citibank" which remains till present.
- It has presence in 42 countries with a total of 4,000 branches
- It ranked #7 as the largest bank by Market Capitalization in the US.
- It made a bold move to exit Retail banking in 13 countries outside the US in a bid to chart its course in a strategic refresh.
- Its core financial services are in (a) investment banking, (b) financial services for consumers & small business, (c) commercial banking, (d) financial transactions processing and (e) asset management.
In 2022, a year where US market has been hammered by extremely volatility - how did Citibank perform ?
Current stock price < 18 Jan 2022 stock price by -23.55%
Citibank Q4 2022 - Summary
- Total revenue came in at $18.0 Billion (+6.0%) vs $17.90 Billion expected; as polled by Refinitiv.
- Compared to Q3 2022, revenue is -2.70%. Compared to Q4 2021, revenue is +5.81%.
- Net income came in at $2.5 Billion vs $3.50 Billion (Q3 2022) vs $3.17 Billion (Q4 2021)
- Earning per share (EPS) is $1.16 per share vs $1.14 a share, according to Refinitiv.
- Compared to Q3 2022, EPS is -28.83%. Compared to Q4 2021, EPS is -20.55%.
Revenue breakdown by Segment
- Above is a more detailed breakdown of Citibank's revenue source from the different business segment / line / dept
- Institutional Client Group % contribution has declined by -3% (Q3 2022) and +3% (YoY).
- Personal banking & Wealth Mgmt % contribution has declined by a massive -86% (Q3 2022) and -93% (YoY). This is expected as Citibank continued with its exit from Retail banking outside of US; targetted to be completed by early 2024 subjected to country-local regulatory approval.
- Legacy franchises % contribution has declined by -76% (Q3 2022)
- Corporates / Others % contribution has gained by +95% (Q3 2022)
Citibank - other information
- Citibank will make provision for credit losses to the tune of $1.85 Billion compared to $1.79 billion expected by analysts polled by StreetAccount. This is a +35% compared to Q3 2022.
- This move by Citibank is aligned with other banks (eg. JP Morgan, Bank of America, Well Fargo and Jefferies) as the Financial sector braces for the impending recession that is set to hit by H1 2023.
Citibank's CEO, on Q4 2022 Results :
One of our major goals in 2022 was to put in place a strategic plan designed to create long term value for our shareholders and I am pleased with the significant progress we have already made in terms of our Transformation, simplification and strengthening our five interconnected businesses, some of which delivered excellent results this quarter.... Jane Fraser, CEO, Citibank
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Why Citibank is Both A Good Price and Good Company ?
- Banking stocks are non-cyclical in nature unlike semiconductors, construction, retail etc..
- With interest rates forecasted to continue rising to the 5% terminal rate banding means more revenue "potentially" to be earned by US financial institutions
- With a generous annual dividend of $2.04 per share (4.09% to current stock price), what is there not to like. $Meta Platforms, Inc.(META)$ - No dividends. $Tesla Motors (TSLA)$ -No dividends.
- Comparing its current stock price and 18 Jan 2022 stock price, there is a lucrative potential upside of +23.55%
- Lastly, Citibank has the gumption to execute an exit from Retail banking that has been dragging the bank; preventing it to soar.
- Do you think Citibank's move is decisive and bold to exit Retail banking across 13 countries ?
- Do you think Citibank is worth a considerations as market continues to be on a roller coaster ?
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