Should I buy Citigroup shares after Q4 results?

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Citigroup Inc. (NYSE: C) shares have advanced nearly 10% since the beginning of the 2022 year, and the bank reported strong fourth-quarter results this Thursday.

Citigroup continues to benefit from strong growth in investment banking, private banking, and securities services, while its management expects another EPS beat in the next fiscal quarter.

Outlook remains positive

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Citigroup reported strong fourth-quarter results this Thursday; total revenue has increased by 1.1% Y/Y to $17.01 billion, slightly above expectations, while the earnings per share were $1.46.

Embedded in these results are costs of approximately $1.2 billion related to the voluntary retirement program the bank offered in conjunction with the wind-down of its Korea consumer business, and excluding these impacts, EPS would have been $1.99.

Citigroup closed out the quarter with a net income of $3.2 billion, while the net income for the full fiscal year reached $22 billion.

Strong results reflect an improved credit environment, and the bank continues to benefit from strong growth in investment banking, private banking, and securities services.

Investment banking revenues have increased 43% year-over-year, private bank revenues were up 6%, while security services revenues rose 5%.

On a full-year basis, Citigroup returned almost $12 billion in capital to its shareholders and grew tangible book value per share by 7% to $79.16.

The current dividend yield stands around 3%, and it is important to mention that the board of directors declared a $0.51/quarterly share dividend this Wednesday (in line with the previous).

Citigroup continues to respond to the needs of its clients in the best possible way and return capital to its shareholders.

The outlook for bank returns is significantly more favorable currently than even a few months ago, and Mark Mason, Chief Financial Officer of Citigroup, added:

Interest rate hikes in 2022 are obviously going to play in our favor as well when you think about the number of accrual businesses that we have, whether it’s our TTS franchise or our private bank, et cetera, et cetera. So those are important factors that impact the top line and that we expect to help contribute to some growth coming out of 2022.

Citigroup is currently trading at a forward P/E ratio of 8.5, the book value per share is around $92, and with the market capitalization of $134 billion, shares of this bank are reasonably valued.

Technical analysis

Citigroup shares have advanced nearly 10% since the beginning of 2022 year, and according to the rules of technical analysis, the price could test the resistance level at $70 in the upcoming days.

Data source: tradingview.com

If the price jumps above $70 resistance, the next target could be at $72 or even $75.

Summary

Citigroup continues to benefit from strong growth in investment banking, private banking, and securities services, and the bank reported strong fourth-quarter results this Thursday. Citigroup shares have advanced nearly 10% since the beginning of the 2022 year, and according to the rules of technical analysis, the price could test the resistance level at $70 in the upcoming days.

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