Citibank: Back Then Didn't Want Me, Now I'm Hot, They All On Me

A breakdown of Citi’s Q2 glow-up, from revenue growth to 24/7 tokenized payments, and how a bank everyone wrote off is quietly earning its way to another re-rating.

What if I told you in 2023 that a bank doing $4.00 a share in earnings, a 5.5% ROTCE, and trading at 58% of TBV would today be doing closer to $2.00 a quarter in EPS, trade at 96% of TBV, and be on the path to an 11% ROTCE and even more upside?

You’d probably have mocked me. And well, to be fair, I did tell a lot of you this and a lot of you did mock me. But here we are.

Not long ago, Citi felt like an absolute cluster you know what. A patchwork quilt stitched together by former empires, consent orders, half-repaired systems, and CEOs whose capital allocation strategy was “while the music is playing you have to dance”. Were they large? Yes. Were they profitable? No. Did everyone love to make fun of them? Absolutely.

I still recall doing a poll in the fall of 2023, and asking people what they thought of Citibank and the responses were amazing. Funny. Witty. And all relaying some version of “if I bought that one, I’d have to kick my own …”. And that right there was enough to get me digging into it.

The thesis back then for me was simple. Citibank, long the laughing stock of the bank universe, had a crown jewel services business, a bloated expense base, and a CEO in Jane Fraser that was either 3 or 4 years into her tenure and having overseen a pretty objective trainwreck. My core thesis was, Jane wants to keep her job and that what was needed was both unbelievably hard and simple on paper. Collapse reporting, tighten operations, reduce bloat, jumpstart wealth, and take this from train wreck into respectable path forward. And do it for a massive globally connected bank.

But this quarter, this quarter changed things big time. And it has a big impact on what it means for Citi going forward.

Why?