The bear market in banking stocks has made Citigroup a very attractive purchase at a meaningful discount to tangible book value and less than 10 times earnings.
The bearish case on Citigroup is derived from the view that we will be in a recession soon, causing credit losses to mount.
Record-low unemployment rates and increasing wages don’t generally set the stage for a credit disaster in the near future.
On October 12th, Citigroup posted very strong 3rd quarter financial results. Net income was up 12% YoY to $4.622 billion. Earnings per share were up 22% YoY.
It took years to overcome the loan losses, legal costs, and to bolster the capital ratios, but Citigroup is now built to survive just about any economic environment.
Citigroup (C) is an interesting company nowadays, as many market participants struggle to understand the differences between it now and a decade ago. Citigroup’s global footprint provides diversification but also negatively impacts the