Citi investor day

Investment Analysis Clubs Liquid Lounge
1

Listening the investor day… for almost 4 hours.. Key themes are…

  • Transformation is over.. new citi focused on growth
  • Revenue growth to power future
  • Each line of business talking about where their growth is going to come
  • Higher bar.. 11%~13% RotCE NT (thru 2028); 14%~15% RoTCE (thru 2031), i.e., next 5 years of growth in earnings powered by higher returns; For context $JPM is targeting 17% RoTCE; Currently Cit is at 7.7% RoTCE, 8.8 excluding one time items; at 14% RoTCE (lower end), expect $18~$20 EPS, $200+ share price;

Recession is a major risk; The rest they are in a position to handle.

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On my favorite topic, Citi has completed the $20B buyback program they have announced in jan 2025. Today they have announced new $30 B buyback program.

On any weakness Citi is a buy.

2

That should be $BAC, $JPM is at 20% RoTCE… So, Citi is still guiding below their peers, they are setting a bar they can easily cross. There are couple of levers which they have specifically mentioned are not baked into their guidance, so $C setting themselves up for a positive surprise and deliver if some segments disappoint also. A conservative guide.

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3

This is from Morgan Stanley, doing waterfall to show how Citi can achieve 15% RoTCE. Expense reduction, from current 60% to 56% (guide is 55%), and higher earnings, and lastly using DTA, and reducing the CET1 ratio from current 12.1 to 11.5% (this will release capital for buybacks, over and above the earnings), and as capital is returned, it boosts RoTCE.

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