Citigroup Reports Solid Q3 But Lags Peers; Major Restructuring Underway to Boost Returns

Citigroup reported solid Q3 results but its stock has lagged peers like JPMorgan due to lower returns on capital. Management is undertaking a major restructuring to improve efficiency.

Citi's Institutional Clients Group revenue grew 12% in Q3 driven by services, markets and banking. Treasury and Trade Solutions revenue also rose 12%.

Investors remain cautious on Citigroup until there is more clarity that its restructuring will bridge the gap to meet medium-term return on capital targets.

Citi stock has dropped back to its October lows around the $40 support level. The stock needs to hold this area and wait for more progress on transformation efforts.

The analyst has a bullish long-term view on Citigroup based on mean reversion and cheap valuations. But downside risks remain if the $40 level is breached.