Is Citigroup Worth a Spot in Your Portfolio Ahead of Q1 Earnings?

Core Viewpoint - Citigroup is expected to report first-quarter 2025 results on April 15, 2025, with anticipated increases in both revenue and earnings, despite some concerns regarding deposit balances and net interest income [1][3]. Financial Performance Expectations - The Zacks Consensus Estimate for first-quarter revenues is $21.14 billion, reflecting a year-over-year increase of 0.2% [3]. - The consensus estimate for earnings has been revised downward to $1.84, indicating a 16.5% rise from the prior-year quarter [3]. - Citigroup's net interest income (NII) is estimated at $13.7 billion, suggesting a 1.4% year-over-year rise [8]. Loan and Asset Performance - The average interest-earning assets are pegged at $2.26 trillion, indicating a marginal increase from the prior-year quarter [9]. - The company is likely to have seen a decent rise in loan demand, supported by a stable macroeconomic backdrop [9]. Fee Income and Market Activity - Market revenues are estimated at $5.57 billion, suggesting a 6.9% year-over-year increase [12]. - Income from principal transactions is estimated at $3.54 billion, indicating an 8.2% increase from the prior-year quarter [12]. - Total non-interest income is pegged at $7.54 billion, suggesting a marginal decrease from the prior-year quarter [13]. Expense Management and Investments - Continued investments in technology and risk management are expected to keep the expense base elevated [14]. - The company is undergoing a significant overhaul to enhance performance and reduce costs, including a plan to eliminate 20,000 jobs [26]. Shareholder Returns - Citigroup increased its quarterly dividend by 6% to 56 cents per share in July 2024 [27]. - A $20 billion common stock repurchase program was approved, with plans to repurchase $1.5 billion in the first quarter of 2025 [27]. Valuation Metrics - Citigroup shares gained 1.6% in the first quarter of 2025, outperforming the industry and S&P 500 Index [19]. - The stock is trading at 8.07X forward 12-month earnings, below the industry's forward P/E multiple of 10.59X, indicating an inexpensive valuation compared to peers [20][23]. Strategic Initiatives - The company is streamlining operations to enhance focus on core areas and drive fee-based income growth, projecting a revenue CAGR of 4-5% by 2026-end [24]. - Recent divestitures, including the separation of institutional banking operations in Mexico and the sale of its China-based consumer wealth portfolio, are part of this strategy [24].