C - Citi Post Q1: I Like The Cost Cuts
2024-04-18 14:08:53 ET
Summary
- Citigroup is implementing strong cost-cutting measures through headcount reduction and organizational streamlining to improve performance and stock price.
- The bank's diversified revenue streams, particularly in Treasury and Trade Solutions and Securities Services, will support its bottom line.
- Citigroup's forward P/B and PEG ratios indicate significant potential for stock price appreciation if it aligns with sector medians, suggesting an 85% upside.
Investment Thesis
Post Q1 earnings, I believe it's becoming super clear that Citigroup (C) believes that taking strong cost-cutting measures through headcount reduction and organizational streamlining are a key part of the way the bank expects to escape their mediocre performance over the last few years with their stock price trailing peers and business lines not growing in the way we are seeing with some of their other bulge bracket peers. Cost cuts mentioned on the Q1 call last Friday, including the reduction of over 7,000 roles, are expected to yield an estimated $1.5 billion in annualized savings over the medium term, with the bank guiding for higher savings over the long run?. On the loan side, the bank also implemented risk mitigation solutions by adding to their substantial reserves for loan losses and credit control, highlighted by their Net Charge-Offs to Loans ratio....
Citi Post Q1: I Like The Cost Cuts