10 Best Diversified Bank Stocks to Buy Now

3. Citigroup Inc. (NYSE:C)

Number of Hedge Fund Holders In Q2 2024: 85

Citigroup Inc. (NYSE:C) is another GSIB with a presence in personal banking, markets, wealth management, and trading. When we consider the reshaping banking environment with interest rate cuts on the horizon and potential growth in trading and other activities, Citigroup Inc. (NYSE:C) has a more robust income statement when compared to other GSIBs, This is because the bank’s Service revenue, which covers receivables processing, payments, and cash management, accounts for $4.6 billion of its $19.4 billion in revenue. This is a high margin business, which contributed $1.2 billion of Citigroup Inc. (NYSE:C)’s $2.9 billion in net income in Q2 2024. This is key to the firm’s hypothesis, as Services introduces a reduced risk income stream into its operations, which should prove beneficial moving forward even if higher rates continue to stress net interest income. Citigroup Inc. (NYSE:C) has also realized benefits from a turnaround effort that led to its pre provision earnings (PPE) jumping by 11% to $6.6 billion in Q2. Further additions or synergies can prove beneficial for the stock.

Citigroup Inc. (NYSE:C)’s management believes the future is bright when it comes to realizing benefits from its recent restructuring. Here’s what it said during the Q2 2024 earnings call:

“Our transformation is addressing decades of underinvestment in large parts of Citi’s infrastructure and in our risk and control environment. And when you unpack that, those areas where we had an absence of enforced enterprise-wide standards and governance, we’ve had a siloed organization that’s prevented scale, a culture where a lot of groups are allowed to solve problems — the same problem in different ways, fragmented tech platforms, manual processes and controls and a weak first-line of defense, too few subject matter experts. So, this is a massive body of work that goes well beyond the consent order. And this is not old Citi putting in band-aid.

This is Citi tackling the root issues head-on. It’s a multi-year undertaking as we’ve talked about and you saw the statement by one of our regulators this week, we have made meaningful progress on our transformation — excuse me, and on our simplification.”