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In a recent interview with CNBC, Fraser pointed out that inflation has led to an increase in spending on essentials among these consumers. She acknowledged the role of the Federal Reserve in combating inflation, hinting at a potential rate hike in November.
The excess savings from the COVID years provided a buffer for many consumers, but as these savings are nearing depletion due to inflation, it’s causing financial strain, particularly for those with lower credit scores. This trend has been closely monitored by Citigroup and has influenced their decision to restructure and downsize.
According to InvestingPro data, Citigroup has a market cap of $79.7 billion and a P/E ratio of 6.54, which resonates with InvestingPro Tip that the bank is trading at a low earnings multiple. The bank has seen a revenue decline of -1.13% and a quarterly revenue growth of -3.04% in FY2023.Q2. This aligns with the InvestingPro Tip that the bank’s earnings and cash flow may be under pressure, potentially leading to dividend cuts.
Citigroup’s stock price has been quite volatile, with a 1-year price total return of 1.54% and a YTD price total return of -5.92%. This is in line with the InvestingPro Tip that the stock price movements are quite volatile and the bank is trading near its 52-week low.
Fraser’s comments underscore the broader economic pressures facing banks as they navigate a landscape marked by inflation and potential interest rate hikes. As Citigroup prepares for restructuring in response to these challenges, all eyes will be on the bank’s forthcoming reports in January for more detailed plans and projections.
Citigroup, a prominent player in the Banks industry according to an InvestingPro Tip, has maintained dividend payments for 13 consecutive years, with a dividend yield of 5.15% as of Y2023.D272. Despite the challenges, the bank is predicted to remain profitable this year, in line with another InvestingPro Tip.
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