Giant Banking Stock to watch: Citigroup Inc (NYSE: C)

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Citigroup Inc (NYSE: C) stock rose over 2.4% on 15th July, 2020 (as of 10:47 am GMT-4 ; Source: Google finance) on decent second quarter of 2020 performance.

The group managed to deliver a revenue growth at 5% while controlling expenses by 1% leading to a margin rise of 13%.  Given the recent solid market rally, the firm’s investment banking division delivered its best quarter performance with private bank revenues reaching $1 billion. The group’s Branded Cards revenues rose 1% yoy to $2.2 billion driven by a favorable mix shift towards interest earning balances which supported net increase revenues. The group’s capital position was also solid during the quarter with its common equity Tier 1 ratio rising to 11.5% on an advanced basis, which is well above the new regulatory minimum of 10%. The tangible book value per share reached $71.15 which is a rise of 5% against the prior corresponding period. Moreover, despite the current uncertain situation, the firm intends to keep paying its quarterly dividend.

However, Citigroup’s Global Consumer Banking Revenues took a hit which fell 7% yoy due to falling loan volumes and lower interest rates across all regions. The group tried to offset this pressure by cutting expenses by 8% by reduction in marketing and other discretionary spending. Total credit cost of $3.9 billion were up significantly from last year, including a reserve build of proximately $2 billion driven by the deterioration in the economic outlook. As per the North America consumer performance, the Second quarter revenues lost 5% yoy to $4.7 billion impacted by COVID-19. Asia Consumer Banking revenues fell 15% yoy while Cards revenues lost by 22% as purchase sales fell 29% on a yoy basis during the second quarter.Retail Services revenues fell 13% yoyo to $1.4 billion due to falling average loans as well as higher partner payments. Purchase sales lost 25% yoy during the second quarter but similar to Branded Cards, the firm witnessed better June performance with the pace of sales declines flowing to the mid-teens. Retail Banking revenues fell 3% yoy to of $1.1 billion hurt by lower deposit spreads.

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