Should I buy Citigroup shares ahead of first-quarter earnings results?

Citigroup Inc. (NYSE: C) shares have weakened more than 10% since the beginning of the 2022 year, and the current price stands at $52.33.

Citigroup is scheduled to announce first-quarter earnings results on Thursday, April 14, before the market opens, and the bank reported its outlook for the medium-term includes having revenue growth at a 4-5% compounded annual rate.

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Citigroup has the largest Russian exposure of any U.S. bank

Citigroup had strong growth in investment banking, private banking, and securities services in the last year, and the bank returned almost $12 billion in capital to its shareholders.

Citigroup closed out the previous quarter with a net income of $3.2 billion, while the net income for the full fiscal 2021 year reached $22 billion.

This week, the board of directors declared a $0.51/quarterly share dividend, which will be payable on May 27 to stockholders of record as of April 29, 2022.

The bank continues to respond to the needs of its clients in the best possible way, but there is a lot of uncertainty going forward.

The impact of the Russian-Ukrainian war continues to worry investors, and the global economy could soon be faced with one of the largest energy supply shocks ever.

Citigroup has stopped conducting new business in Russia amid the country’s invasion of Ukraine and remains in the process of winding down its remaining business in Russia. Edward Skyler Citi EVP of Global Public Affairs, said:

Due to the nature of banking and financial services operations, this decision will take time to execute. Citigroup will continue to manage its regulatory commitments and obligations to depositors, as well as support all of our employees during this very difficult time.

Citigroup has the largest Russian exposure of any U.S. bank, and the bank could lose billions of dollars on nearly $10 billion of exposure to Russia.

Chief Financial Officer Mark Mason expects actual losses to be less than that, but Jefferies analyst Ken Usdin downgraded Citigroup shares to Hold from Buy. Analyst Ken Usdin said that Citi’s capital remains strong, but it needs to be preserved due to potential losses from Russia.

Despite this, Chief Executive Officer Jane Fraser said that Citigroup is aiming for a return on tangible common equity (RoTCE) of 11% to 12% in the next three to five years.

Chief Executive Officer Jane Fraser also said that the bank’s expense efficiency ratio would improve to 60% to 63% in the near term, compared to 65% in 2021.

Citigroup is a stable bank, the current dividend yield stands around 3.9%, and with a market capitalization of $103 billion, shares of this bank are reasonably valued.

$50 represents current support

The current support level stands at $50, while $60 represents the first resistance level. If the price falls below $50, it would be a firm “sell” signal, and we have the open way to $45.

Summary

Citigroup has the largest Russian exposure of any U.S. bank, and the bank could lose billions of dollars on nearly $10 billion of exposure to Russia. Jefferies analyst Ken Usdin downgraded Citigroup shares to Hold from Buy but also said that Citi’s capital remains strong.

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