Hi YXI friends,

It's been 16 years since the Great Financial Crisis, when the US Government bailed out the banks, the Fed unleashed truckloads of money through QE, and the capital requirements for banks became drastically stricter.

How are the biggest US banks doing today? Are there any opportunities?

Today, we are going to examine Citi’s latest Q3 earnings. We will go through the fundamental trends of Citi’s financials, its valuations, and its technical price action.

At the end of the article, I offer a trade idea in C as well as a summary stock rating.

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. Citi’s growth is backwards

Citi’s quarterly Net Interest Income has first slowed, then steadily declined since June 2023.

The quarterly revenue however, is still above flat growth due to a rise in non-interest incomes (e.g. Investment Banking Fees and Sales & Trading).

Credit provisions are flat. A rise in credit provisions shows worsening credit qualities of the borrowers of Citi, which is an advanced indicator of a recessionary economy.

The Net Income margin has been steady in 2023.

EPS has decreased both QoQ and YoY, but dividends increased by $0.03 in Q3.

This means Earnings to Dividend ratio is also declining, although the dividend yield on the book value has stayed the same.

2. Detailed Financial Performance Table

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