C - Citigroup: Turnaround Traction Creates A Compelling Setup Into Earnings Season

2024-04-10 08:45:00 ET

Summary

• Recent news flow indicates the Citigroup turnaround is continuing to take shape.
• Expect more positive surprises as we enter the final phase of the transformation.
• The deep book value discount implies Mr. Market still isn't giving Citigroup enough credit.

Citigroup Inc.'s ( C ) latest proxy statement is out, and so is its final "organizational simplification" progress update ; both offered very positive insights into the bank's turnaround progress ahead of Q1 2024 earnings this week ( expected premarket Friday, April 12th). The bottom line, in my view, is that, as I outlined in my prior C coverage (see Citigroup: Invest Alongside Buffett In This Turnaround Story ), this time may be well and truly different. The fact that current CEO Jane Fraser has actually completed "organizational" simplification after only a few months is a case in point, bucking Citi's track record of poor execution under its prior leadership teams. From here, senior management's compensation policy (linked to return on tangible common equity ("ROTCE") and tangible book value growth) should keep interests well-aligned with shareholders; the latest tranche (linked to stock performance) is particularly interesting as Citi clears most of its one-off charges and frees up more capital....

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