Goldman Sachs’ Stocks With Highest Consensus Returns: 42 Stocks With The Highest Consensus ROE

16. Citigroup Inc. (NYSE:C)

Consensus ROE: 22%

Number of Hedge Fund Investors in Q2 2024: 85

Citigroup Inc. (NYSE:C) is a New York based mega bank with total assets of $2.4 trillion. This makes it one of the few important banks called GSIB by the US, and allows investors to have comfort in the fact that the government might help it in case of a failure. Citigroup Inc. (NYSE:C) also benefits from a diversified business model which is less exposed to lower revenues from dropping interest rates or higher costs of depositor payout. This is because as of Q2, $4.6 billion of Citigroup Inc. (NYSE:C) $19.4 billion in revenue came from its Services business. This business is involved in payments, receivables processing, and cash management for businesses and is margin heavy as well as it accounted for $1.2 billion of Citigroup Inc. (NYSE:C)’s $2.9 billion in Q2 net income. The bank’s turnaround efforts led to an 11% pre provision earnings jump to $6.6 billion in Q2, but the risk of further action from regulators against purported improprieties or its size can introduce headwinds.

During the Q2 2024 earnings call, Citigroup Inc. (NYSE:C)’s management commented on its restructuring efforts:

“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.”