FINANCIALS: Citigroup (C AA/A/A+) - Q4 Results

Citigroup (C AA/A/A+) - Q4 Results 

While a beat to expectations, and expectations are for continued improvement, the weakest of the US banks that report today

• Net interest income $13.19bn, -1.3% from Q3 and -4.6% vs Q4 23.
• Commission and fee income and other income down -5.1% and -28.6% respectively vs Q3, one offs in other income in Q4 23 make that a uninformative comp.
• They have done well on expenses, which are -1% QoQ and -17.6% vs one year ago, with most of the improvement flowing through the 'other operating expense' category.
• CET1 improves to 13.6%. Up 101bps from net income. Distributions subtract -58bps and RWA increases subtract a further -31bps.
• Impaired loans were lower, but so was total loans, so LLR edges up so 35bps and % impaired loans climbs to 0.36%.
• OpInc/RWA falls back down to 1.3% and RoTE was 7% for 2024, and improvement from 4.9% in 2023 and targeting higher than this in 2025, to reach 10-11% in 2026. While not stellar this would be an improvement likely worth of potentially increasing a notch on the ratings if managed.

Valuation: Citi arguably trades a little expensive for its rating in EUR, it seems the market is either complacents or has a high probability for that RoTE improvement discussed in the last bullet above priced in. Nonetheless the bonds could probably still trades 5bps back of where they are currently.