Is It Wise to Invest in Citigroup Shares Currently?
Citigroup, one of the world's largest banks, has undergone significant changes since the Great Recession. The bank, which was once large and diverse, is not the same institution it was before the financial crisis.
The post-recession Citigroup has scaled back, focusing on simplification and risk reduction. This shift in strategy is evident in the bank's financial performance. While the bank's revenue rose by 8% year over year in the second quarter of 2025, net income jumped an impressive 25%. However, the first quarter of 2025 was less exciting, with little change in revenue and a net income decrease of approximately 1%.
The bank's management today exhibits a more conservative bias due to the fall from grace. This conservative approach is reflected in the bank's stock price, which remains approximately 80% lower than its pre-Great Recession highs. The stock price advance may have overvalued the bank, leaving some investors questioning whether it is a worthwhile investment opportunity right now.
For investors who prioritize value, Citigroup may not be a good option at its current price. The bank's price-to-sales, price-to-earnings, and price-to-book-value (P/B) ratios are all above their five-year averages and materially above their long-term figures. The dividend yield of Citigroup has decreased from 3.7% to 2.6% during the past 12 months, and the dividend, which is growing again, is far below its pre-cut level.
Despite these challenges, Citigroup is currently more focused on stability and reliability compared to its pre-recession self. The bank's long-term financial metrics are materially higher than their five-year averages, indicating a slow but steady recovery.
The stock price of Citigroup for the 12 months leading up to 2025 was influenced by market factors and investor decisions, including significant portfolio moves such as Warren Buffett's complete sell-off of Citigroup shares in Q1 2025. These factors have contributed to the uncertainty surrounding the bank's future performance.
In conclusion, Citigroup has faced significant challenges since the Great Recession, but it has made strides towards recovery. The bank's focus on stability and risk reduction is a positive sign for the future, but investors should exercise caution due to the bank's high valuation and low dividend yield.
