VALUATION HIGHLIGHTS

1. Institutional Clients Group (Advisory & Underwriting, Sales & Trading, Treasury & Trade Solutions) constitutes 67% of the Trefis price estimate for Citigroup's stock.
2. Personal Banking constitutes 31% of the Trefis price estimate for Citigroup's stock.

WHAT HAS CHANGED?

Latest Earnings

For Q4 2024, Citigroup posted a better-than-expected set of results. Net income came in at $2.9 billion, or $1.34 per share, up from $1.16 per share a year earlier. Growth was led by strength in trading and dealmaking activity.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Citigroup's value that present opportunities for upside or downside to the current Trefis price estimate for the banking group:

Sales & Trading

• Institutional Clients Group Operating Margin: Citigroup's Institutional Clients Group Operating Margin stood at about 31.4% in 2024 and we expect the metric to stabilize at about 28% by the end of our review period. However, if these margins increase to 35% over our forecast period, there would be an upside of over 10% to the current price estimate.

For additional details, select a driver above or select a division from the interactive Trefis split for Citigroup at the top of the company page.

BUSINESS SUMMARY

Citigroup is a leading global financial services holding company with operations in over 160 countries. The company offers consumer banking, credit cards, corporate and investment banking, securities brokerage, and wealth management services worldwide to corporate, institutional, government, and individual customers.

SOURCES OF VALUE

Below are some key sources of value for Citigroup:

Consumer Banking Yields Greater than Treasury & Trade Solutions

Citigroup has decided to focus on its core consumer banking business after suffering severe losses during the subprime crisis. This move also came about due to pressure from the U.S. government, which had to bail out the company. As the company focuses more on the consumer banking business, we expect solid asset growth even as the yield figure remains significantly higher.

KEY TRENDS

Regulatory reforms expected to pressurize revenue growth going forward

Increased regulation of the financial industry is expected to reduce the top line for most financial institutions. In the past, decreased regulation led to greater risk-taking for many parts of the businesses, which drove earnings growth. Stricter regulation has affected the banking industry in several ways:

• Banks are now required to hold additional amounts of capital, which can potentially slow growth
• The Volcker rule has forced banks to scale back trading operations
• Securitization has become less appealing, as investors and regulators demand that banks retain some risk as well

Strong position in investment banking

Citigroup holds a strong position in the global investment banking space and has been able to grab a larger share of the emerging market share compared to its peers due to its geographically diversified business model.

Consolidation expected to continue

As a result of the financial crisis, the banking industry saw a period of mergers and consolidation. The financial crisis has seen nearly 15-20% of the market share change hands. The banking industry continues to see consolidation in almost every aspect of the business as players try and globalize and seek scale. Due to uncertainty, customers are also increasingly becoming more risk-averse and turning to larger players with stronger deposit bases.