Summary Points:
- Capital adequacy and NIM is decent however Citigroup’s returns are behind its peers.
- Using regression we can calculate a multiple based on banks’ returns. The calculations show that there is upside when compared to both North American and global banks.
- Investors interested in adding exposure to the sector should consider Citigroup.
Valuing banks is always difficult no matter how you look at them. Black boxes to the majority of investors that can hide numerous skeletons in an infinite amount of closets. Having said that, I decided to add a bank into my portfolio for diversification purposes. The only other stock from the financials sector that I hold is Prudential (NYSE:PRU) which I am long from $76. Based on the operating and market ratios from Bloomberg I took a long in Citigroup (NYSE:C). In this article, I will display some of these statistics and show a valuation comparison among North American and Global banks.
