On Tuesday, Keefe, Bruyette & Woods maintained a positive stance on Citigroup Inc. (NYSE:C), reiterating an Outperform rating and a $71.00 price target for the bank's stock. The endorsement comes in light of recent developments involving the Federal Reserve's Vice Chair for Supervision, Michael Barr, who announced his resignation effective February 28, 2025. The Federal Reserve Board has also indicated that it will not engage in major rulemaking until Barr's successor is confirmed.
According to Keefe, Bruyette & Woods, this interim period without significant regulatory changes presents a favorable opportunity for banking institutions, particularly Global Systemically Important Banks (G-SIBs). The firm anticipates that the Basel III Endgame—a set of proposed capital requirements for banks—may be revised to be less stringent and more capital neutral. Such a scenario is expected to benefit Citigroup significantly due to its current capital position and valuation below tangible book value.
In the recently published report titled "Where Do We Go From Here?," Keefe, Bruyette & Woods highlighted the potential advantages for G-SIBs if the final Basel III regulations are adjusted to be more lenient on capital requirements. The firm projects that a more capital-neutral outcome could lead to a roughly 6% increase in earnings per share (EPS) across the G-SIB group. Citigroup, in particular, could see an 18% boost in EPS, given its leverage to these potential regulatory changes.
The analysis by Keefe, Bruyette & Woods suggests that Citigroup is well-positioned to capitalize on the anticipated regulatory developments. The bank's stock is poised to benefit from a potentially favorable shift in capital requirement policies, which could translate into stronger financial performance and enhanced shareholder value.
In other recent news, Citigroup is making significant strides in several areas. The financial institution is on track to reach the upper range of its 2024 revenue projections, between $80 billion and $81 billion. Additionally, Citigroup has set a goal of $1 billion in share buybacks for the current quarter, with half of that amount already accomplished. The company's CFO, Mark Mason, has assured investors that neither buybacks nor dividends were impacted by recent regulatory penalties.
Analysts from BofA Securities, Keefe, Bruyette & Woods, Wells Fargo (NYSE:WFC), and Piper Sandler have all expressed confidence in Citigroup's future, with price targets ranging from $85 to $110. These upgrades reflect Citigroup's robust balance sheet, potential for book value growth, and a significant management reorganization, described as the most substantial change in 50 years.
Moreover, Citigroup has secured an exclusive 10-year extension with American Airlines (NASDAQ:AAL) to issue the AAdvantage® co-branded card portfolio starting in 2026. This partnership aims to enhance loyalty and rewards programs for both AAdvantage® members and Citi cardholders. Under the leadership of CEO Jane Fraser and CFO Mark Mason, Citigroup continues to prioritize profitability and rebuilding investor trust.
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