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Citigroup Profitability Targets (RoTCE)
Projected Return on Tangible Common Equity targets for the coming years.
Primary Sources
Jane Fraser turned Citigroup inside out. Now comes the hard part.
The Fear of 13 is a new play on Broadway starring Adrien Brody about a man wrongly imprisoned for murder. Brody’s character passes his time learning new words, including “triskaidekaphobia,” the fear of the number 13.A few miles away at Citigroup headquarters in lower Manhattan, employees may be all too familiar with triskaidekaphobia, as the long-beleaguered bank works through its 13th restructuring. The previous 12, the blunt-spoken Wells Fargo analyst Mike Mayo notes, “failed.”Not to disabuse a Wall Street truism, but this time might be different. Indeed, Mayo has had an Overweight rating on the stock since 2018, and at $130, Citi shares finally trade above their book value. And don’t look now, but Citi’s stock is up 161% over the past three years, crushing the performance of rivals Bank of America, Wells Fargo, and JPMorgan Chase, as well as the S&P 500 index.Going back to the 2008-09 financial crisis, however, the stock has been an absolute dog—essentially a two-decade wealth-destruction machine. It is that lingering perception that speaks to Citi CEO Jane Fraser’s charge: She must prove to her employees, customers, and investors that the recent run-up in the stock and rebound in its businesses are sustainable and that Citi is really, truly back.Fraser doesn’t dwell on the past. “That was decades ago,” she says when asked about Citi’s dark ages in a recent interview at the bank’s offices. “My eyes are on the destination. I see a lot more runway ahead that’s independent of where the world heads. I’m delighted to see the improvement in the performance, but there’s no victory lap.”As part of that future-forward mind-set, Fraser and her team are prepping for the bank’s May 7 investor day and “laying out a very clear path,” she says. Doubtless she will accentuate Citi’s improving return on tangible common equity, or RoTCE—widely considered to be the so-called truth metric of a bank’s health—which hit 13.1% in the first quarter, catching up to its peers. (JPMorgan’s 23% is the high for the group.)Another milestone will be winding down federal consent orders imposed six years ago when regulators became fed up with Citi’s weak internal controls. Fraser says the work is 90% done, and analysts will look for the feds to give the all-clear sign.Still, Fraser, who was named CEO five years ago and chair this past fall, knows she has more tough calls ahead—ones her predecessors failed to make, such as cutting costs, jettisoning units, reorganizing divisions, purging...
US market today: Citigroup targets stronger profitability as CEO Fraser ...
SynopsisCitigroup unveiled ambitious profitability targets for 2027-2028, aiming for 11-13% adjusted return on tangible common equity, with further growth expected by 2031. CEO Jane Fraser highlighted a company-wide overhaul and announced a $30 billion share buyback plan, signaling a focus on consistent performance and organic growth, particularly in wealth management.AgenciesThe bank also announced a multi-year $30 billion share buyback plan, expected to start in the second quarter of this year.Citigroup laid out stronger profitability targets for the next two years at its investor day on Thursday, as CEO Jane Fraser spearheads a company-wide overhaul to drive growth. Six years into her tenure, Fraser is heading her second investor day to present the results of a massive reorganization that shrank Citi by selling retail businesses worldwide, eliminating management layers and increasing risk and controls. "This is a bank built both to grow and perform consistently, and that's what underpins the path to our target returns," she said. Citi set a target range for adjusted return on tangible common equity of 11% to 13% for 2027 and 2028. That compares with its goal to achieve 10% to 11% for the current year and its 2025 return of 8.8%. The metric is an important industry figure that measures profitability on tangible assets. For 2029 and 2031, Citi said it was expecting a return in the range of 14% to 15%. Fraser said return levels over the medium term can be achieved organically. "We have rebuilt the engine," CFO Gonzalo Luchetti said. $30 BILLION SHARE BUYBACK PLAN The bank also announced a multi-year $30 billion share buyback plan, expected to start in the second quarter of this year. "The key target, ROTCE, was underwhelming in the near term but the $30 billion repurchase authorization was a clear positive," RBC analysts wrote in a note. Citi shares rose 2.4% in afternoon trading. They have risen more than 80% since Fraser took over in March 2021and are up more than 9% so far this year, compared with a 7.5% rise in the S&P 500 index. The bank beat Wall Street expectations for first-quarter profit last month, raking in strong revenue from its trading business and also benefiting from robust dealmaking that lifted investment banking fees. It posted an ROTCE of 13.1% in the quarter and reported its highest quarterly revenue in a decade at $24.6 billion. SPOTLIGHT ON WEALTH MANAGEMENT Citi, like some of its peers on Wall Street, has been increasingly fo...
Citigroup Targets Stronger Profitability as CEO Fraser Drives Overhaul
NEW YORK, May 7 (Reuters) - Citigroup laid out stronger profitability targets for the next two years at its investor day on Thursday, as CEO Jane Fraser spearheads a company-wide overhaul ...
Citigroup to Set New Profit Targets & Focus on AI at Investor Day
By Tatiana Bautzer NEW YORK, May 5 (Reuters) - Citigroup will unveil medium-term profitability targets at its investor day on Thursday, highlighting improvements in expenses and revenue from its multi-year overhaul, while betting on artificial intelligence to drive growth in its wealth business, CEO Jane Fraser said in an interview.
