Market Underappreciates Citigroup

Investors continue to underappreciate the transformation that has occurred at

At the same time, we see risk as entirely manageable. Consumer credit quality around the world showed few signs of deterioration in the first quarter. Most markets experienced declines in both charge-offs and delinquencies. We think Citigroup’s retrenching resulted in relatively conservative lending for several years, and the stability in consumer credit supports our thesis. Energy lending is a bigger concern in the corporate space. However, a majority of energy exposure in the company’s institutional clients group ($57.2 billion of $59.3 billion in total exposure) is investment-grade. Furthermore, the bank’s earnings power and $153 billion in Common Equity Tier 1 capital dramatically reduce the risk of permanent capital impairment even in the event of a longer and more severe downturn in energy prices.

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