Citigroup Stock Is Trading Below Its Intrinsic Value

Citigroup’s stock (NYSE: C) has lost 1% YTD, as compared to the 7% rise in the S&P500 over the same period. Further, the stock is currently trading at $45 per share, which is 21% below its fair value of $57 – Trefis’ estimate for Citigroup’s valuation. The bank posted better-than-expected results in the first quarter of 2023, with revenues increasing by 12% y-o-y to $21.45 billion. It was driven by a 23% growth in the noninterest income, partially offset by a 3% decline in the noninterest revenues. While the NII benefited from interest rate hikes and loan growth, the noninterest revenues suffered due to negative growth in investment banking, sales & trading, and investment product categories. On the cost front, the provisions for credit losses increased from $755 million to $1.98 billion. Overall, the net income increased 7% y-o-y to $4.6 billion in the quarter.

The bank’s top line grew 5% y-o-y to $75.3 billion in FY 2022. It was driven by a 15% rise in the net interest income, partly offset by a 9% decline in the noninterest income. In terms of business segments, personal banking & wealth management revenues improved by 4% y-o-y, followed by a 3% increase in institutional client group and legacy franchise segments. Despite higher revenues, the company reported a 32% y-o-y drop in the net income to $14.8 billion, mainly because of an unfavorable build-up in the provisions figure.