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Morgan Stanley Values Citi’s Services Segment as Half of Bank’s Total Worth

Citigroup’s Services Segment Valued at $56 Billion, Nearly Half of Bank’s Market Cap

Citigroup Inc. is making waves in the financial world with its annual investor day, where CEO Jane Fraser unveiled a new strategy to redefine the value of its services segment. According to Morgan Stanley analysts, this move has paid off, as they now estimate the value of Citi’s services segment to be a whopping $56 billion, nearly half of the bank’s total market cap of $115.8 billion.

The services segment, which includes Treasury and Trade Solutions and Securities Services, handles around $5 trillion in transactions daily for major clients such as Microsoft, Walmart, and Stripe. Analysts from Morgan Stanley praised this segment as Citi’s “crown jewel” and highlighted its impressive Return on Average Tangible Common Shareholders’ Equity (ROTCE) of 21-23% over the past three quarters, the highest among all Citi segments.

Despite the challenges posed by lower interest rates, Citi remains optimistic about the growth potential of its services segment. The bank expects continued strength in cross-border transactions, US dollar clearing volumes, commercial card volumes, and trade loans to drive revenue growth of 4-5% annually until 2026.

Investors seem to be taking notice of Citi’s services segment, with the stock price rising 14% this year to $60.62. Analysts at Oppenheimer and Wells Fargo have even set target prices of $86.00 and $85.00, respectively, indicating further upside potential for the stock.

In a recent interview with Fortune, Citi’s acting CIO expressed confidence that the economy’s stability will help mitigate the impact of rapid artificial intelligence adoption on the job market. With a strong focus on its services segment and a positive outlook for the future, Citi is positioning itself for continued success in the financial industry.


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