Citigroup (C) Last Update 10/25/21
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TREFIS Analysis

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Potential upside & downside to trefis price

Citigroup Company


  1. Institutional Clients Group (Advisory & Underwriting, Sales & Trading, Treasury & Trade Solutions) constitutes 71% of the Trefis price estimate for Citigroup's stock.
  2. Global Consumer Banking (Consumer Banking, Citi Cards) constitutes 28% of the Trefis price estimate for Citigroup's stock.


Latest Earning

In Q3 2021, Citigroup reported Total Revenues of $17.2 billion, down by 1% y-o-y. The Institutional Client Group (ICG) reported a 4% y-o-y increase mainly driven by growth in investment banking and equities trading business, partially offset by lower revenues in fixed income markets and treasury & trade solutions sub-segments. However, the top-line mainly suffered due to a 13% decrease in the Global Consumer Banking segment.

Impact of coronavirus outbreak

The economic downturn could cause significant losses for businesses and individuals alike, impacting their loan repayment capability. This could result in sizable losses for Citigroup, as it has a substantial loan portfolio of consumer and commercial loans. Further, as the economy slows down, it will likely become expensive for the bank to attract funding, negatively impacting all its operations. Further, the lower interest rate environment is likely to hurt the net interest income of the bank. That said, the bank’s Sales & Trading operations are likely to drive positive revenue growth due to higher trading volumes, reducing the impact of weak revenues in other segments.

While the company’s results for Q2 2020 saw year-on-year growth in total revenues, the bank reported a decrease in Q3 and Q4. Overall, Citigroup's full-year 2020 revenues were around $74.3 billion - at par with the previous year's figure. The bank has delivered positive growth in Sales & Trading and investment banking segments. However, the same is not reflected in its earnings, as C has increased its provisions for credit losses to counter the risk of loan defaults on its sizable loan portfolio. On the flip side, the loan repayment capacity of the customers is tied to the economic slowdown. As the economy moves toward normalcy, the financial health of its customers is likely to recover, reducing the risk of loan defaults. The Q1, Q2, and Q3 2021 results were on similar lines with revenues remaining below the year-ago period and provisions for credit losses decreasing on a sequential basis. We expect the same trend to continue in Q4 FY2021.


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

  • Debt Capital Deployed: Citigroup’s debt trading desk saw its asset base swell from $288 billion at the end of 2006 to $414 billion in 2007. Following the global economic crisis, this figure fell steadily to below $176 billion by 2016 before trending upwards over 2017-18. If Citigroup decides to shrink its fixed-income business in the wake of criticism related to banks’ trading operations, and the actual annual decline in the size of deployed debt capital is 3% for years to come instead of the 2% growth we currently estimate, the debt portfolio would reach below $165 billion by the end of our forecast period. Should this occur there would be a downside of around 5% to the Trefis price estimate
  • Investment Banking EBT Margin: Citigroup’s investment banking business has reported margins of around 40% over 2013-2015, with the figure improving to over 45% in 2017 due to the bank’s cost-cutting efforts. The figure fell slightly to 42.8% in 2018, and we expect it to remain largely around this level going forward. However, if these margins fall to 35% over our forecast period, then there would be a downside 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.


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


Below are some key sources of value for Citigroup:

Sales & Trading

Citigroup generated nearly $15 billion in revenues from its FICC and equity trading desks each year over 2015-18. In comparison, the consumer banking business generated average revenues of $13.8 billion for the same period, with the figure falling to just $13 billion in 2016 before recovering to $14.1 billion in 2018. At the same time, Citigroup has achieved a higher operating margin of more than 42% on its investment banking business as a whole compared to about 37% on its consumer banking business. As a result of this, the bank’s Sales & Trading division is the primary source of value according to our estimates.

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 sub-prime crisis. This move also came about due to pressure from the U.S. government, which had to bail out the company. The consumer banking business earned a net interest margin of 6.4% over 2014-18 on a loan base of around $150 billion. In comparison, the company had treasury client assets worth around $450 billion in its Treasury & Trade Solutions business in 2018, on which it earned roughly 2% in fees. As the company focuses more on the consumer banking business, we expect solid asset growth even as the yield figure remains significantly higher.


Regulatory reforms expected to pressurize revenue growth going forward

Increased regulation on 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 CARD Act passed by the Congress has clipped card income by prohibiting issuers from raising rates, fees or finance charges on existing balances or prospective accounts in the first year
  • 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

Dominant 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. Customers are also increasingly becoming more risk-averse and turning to larger players with stronger deposit bases due to uncertainty. The number of operating commercial banks declined from 7,630 in 2004 to less than 4,800 by the end of 2018.