September 30, 2022

Citigroup sets new profitability targets to attract investors

A Citibank sign is seen outside a bank in New York March 4, 2009. REUTERS/Lucas Jackson

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NEW YORK, March 2 (Reuters) – Citigroup Inc (CN) set new profitability targets on Wednesday on its first “investor day” in five years, targeting a mid-term return on equity of 11% to 12 %, an improvement over its recent performance.

Analysts were looking for a mid-term return on tangible equity (RoTCE) target of 12%, along with details on how to achieve it. The metric measures how much a bank uses shareholders’ money to generate profits.

The bank said it expects spending to rise between 5% and 6% in 2022, excluding the impact of divestments.

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The third-largest U.S. bank by assets said its spending efficiency ratio will drop to 63% from 60% in the near term, from 65% in 2021. In the medium term, this metric is expected to be below 60% , the bank added.

In premarket trading, Citigroup shares fell 0.5% shortly after the presentation was released.

The bank, which has said its priority is to return capital, expects to pay dividends of nearly $1 billion in the first quarter of 2022. It seeks to achieve around 12% of the Tier 1 capital ratio of category 1.

Share buybacks during the quarter will be in line with previous guidance, the bank added.

When Fraser, 54, became CEO, she was tasked with transforming a company whose share price was lower than the two largest US banks, JPMorgan Chase & Co (JPM.N) and Bank of America, (BAC .N) compared to the eight of his predecessor Michael Corbat. years at the helm.

The Ukraine crisis and the disruption caused by the pandemic add to Fraser’s challenge of convincing skeptical investors who have been exhausted by years of failed turnaround plans. Read more

Citigroup said Monday that its total exposure to Russia was nearly $10 billion, significantly more than previously reported. The new figure takes into account cash held by the Bank of Russia and other financial institutions, overnight loans and additional exposures to Russian counterparties. Read more

On the same day, Fraser, who became CEO a year ago, had to change the Investor Day event from an in-person event to a virtual event after its two top executives tested positive for COVID. -19. Read more

Citigroup said its medium-term outlook calls for revenue growth to accelerate and increase to a compound annual rate of 4-5%, led by gains in its business payments business, as well as wealth management. world. The Wall Street bank defined the “medium term” as three to five years.

The bank also said it expects the cost of credit to normalize in the near term.

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Reporting by David Henry in New York and Noor Zainab Hussain and Niket Nishant in Bangalore; Editing by Sriraj Kalluvila

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