Key insights
- Citigroup announced a 14-15% ROTCE target by 2031 and a $30 billion share buyback program at its investor day. The ROTCE target underwhelmed some analysts, as it still lags behind peers like JP Morgan. While the buyback is positive, no timeline was given. Citi shares initially dipped but recovered, currently up 1%. Overall, the news is slightly bearish due to the underwhelming ROTCE target.
At the major bank's investor day on Thursday, Citigroup (C) announced new guidance on return on tangible common equity (ROTCE) that ultimately underwhelmed Wall Street.
Market Catalysts Anchor Julie Hyman reports on the investor reaction to Citi's forecasts and new $30 billion share buyback program.
City is holding an investor day today and new guidance is underwhelming investors.
We're talking about, and this is a very specific guidance to banks, return on tangible common equity.
The company says it is targeting that metric uh 14 to 15% by 2031.
Now, City has consistently lagged its peers in this metric and it is trying to catch up.
And even with that 14 to 15%, it would still be below for example, the likes of JP Morgan, which is at 20%.
Initially the shares were dipping a little bit because some analysts had wanted a higher target.
We've seen them uh now recover to some degree right now, but some analysts did call the target underwhelming, right?
Um, also the company came out with a new buyback program of $30 billion.
That replaces their previous stock buyback pro- program of $20 billion.
They didn't give a timeline or cadence uh at which they would be buying that uh those shares back.
City under CEO Jane Fraser, the stock has recovered quite a bit over the last year.
The shares are just about doubled and it's pretty much at an 18-year high getting
back to the levels where it was, kind of coming out of the financial crisis,
but still a far cry from its all-time highs which were above $500.
Probably not seeing that city group again in um in our lifetimes, but who knows.
In any case, right now the shares are up about 1%.
We'll keep monitoring the headlines from that investor day.