Citigroup, Inc. (NYSE: C) navigated a rough fourth quarter, posting a $1.8 billion loss after absorbing hefty one-time charges. Despite the headline-grabbing red ink, the underlying business showed signs of resilience, setting the stage for a potential rebound in 2024.
The bank announced a 20,000-person headcount reduction over two years, aiming to streamline operations and boost profitability. These cuts, along with charges related to FDIC assessments, currency devaluations, and restructuring, weighed heavily on the quarter’s results.
Despite the charges, some segments delivered solid growth. Services revenue rose 5.5%, U.S. Personal Banking gained 12.1%, and Investment Banking saw a 27% increase in fees. However, Markets and Wealth businesses suffered due to market volatility and geopolitical uncertainties. Citigroup’s balance sheet remains robust, with deposits and loans both increasing. Capital ratios also improved, showcasing the bank’s financial strength.
Management expects 2024 revenue to land between $80 billion and $81 billion, above analyst estimates. The streamlining efforts are expected to drive cost savings and boost future profitability.
Technical
Citigroup’s current share price stands at $52.62, trading flat after breaking below an ascending channel. Despite the recent dip, the price action trades comfortably above the 50-SMA (blue line), 100-SMA (orange line) and 200-SMA (red line), indicating some underlying bullish sentiment.
If price action recovery can be sustained, short-term trading opportunities could exist towards the $54.80 resistance level. A break above the $54.80 resistance level would leave the $57.16 resistance level within the bulls’ reach in the short term.
However, a sustained push lower and a break below the 23.60% Fibonacci retracement level could offer trading opportunities towards the support level at $48.45. A successful break below the initial support would likely bring the $46.48 and $44.52 support levels within the bears’ reach in the short term.
Summary
Citigroup’s fourth-quarter performance was a mixed bag, with one-time charges obscuring underlying business resilience. The job cuts and restructuring signal a commitment to long-term growth, and 2024 revenue guidance appears promising.
Technically, the stock could experience a short-term pullback due to proximity to overbought conditions, but a sustained break above $54.80 could fuel a bullish run towards $57.16.
Sources: TradingView, Seeking Alpha, Reuters, Financial Times, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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