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Citigroup (C) Ratings Put Under Review for Upgrade by Moody's

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Moody's Investors Service, a rating arm of Moody's Corporation (MCO - Free Report) , placed the long-term ratings of Citigroup (C - Free Report) and its subsidiaries, including the principal bank subsidiary, Citigroup, N.A., on review for a possible upgrade.

Notably, the rating agency affirmed all short-term ratings and counterparty risk assessments of the company.

What Supports the Upgrade?

The completion of Citigroup’s restructuring to focus on core operations, resulting in strong asset risk profile and stability in earnings, along with strengthened capital market operations, propelled Moody’s to consider a possible upgrade. Per the rating firm, the company’s streamlining efforts have concentrated its geographic footprint and helped Citigroup in making its business more durable with increased focus on institutional clients and consumer base.

Sustaining strong consumer and institutional asset quality, Citigroup’s financials improved after Moody’s upgraded its rating outlook to positive in November 2017. Notably, the U.S. tax reform also benefited the firm leading to a higher return on equity, diminishing shareholder pressure to an extent.

Per Moody's, Citigroup faces tremendous competition in various key businesses, including retail banking and credit cards in the United States, as well as capital markets worldwide. The bank is striving hard to improve returns for its shareholders.

Notably, on the cost front, Citigroup targets $2.8 billion in cost savings through 2020 to invest in technology and bringing down efficiency ratio to nearly 53%. Moreover, consumer banking in North America and Mexico along with equity markets and securities services is expected to witness a recovery.

Overall, according to Moody's, Citigroup is well placed among competitors with its strategic streamlining efforts and unique global consumer strategy along with revised institutional strategy, which targets high-profile clients worldwide. This leads to steady earnings and huge deposits base.

Citigroup currently carries a Zacks Rank #2 (Buy). The company’s stock has lost around 2.7% compared with 0.9% decline registered by the industry over the past six months.



Other Stocks to Consider

Greenhill & Co., Inc. has been witnessing upward estimate revisions in the past 60 days. Additionally, the stock has rallied around 22% year to date. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

E*TRADE Financial Corporation has been witnessing upward estimate revisions in the past 60 days. Also, the company’s shares have risen nearly 3.8% so far this year. It sports a Zacks Rank of 1.

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