Did Citigroup Surprise Investors?

On Thursday evening, every bank investor held their breath as the Federal Reserve released the results of the Comprehensive Capital Analysis and Review, which examined the largest U.S. banks' ability to make capital distributions and maintain certain capital levels during an economic downturn.

That is, everyone except Citigroup (NYSE: C  ) investors.

While none of the other major U.S. banks gave much earlier indication of their capital plans, Citigroup CEO Michael Corbat and team announced the bank's intention to keep its quarterly dividend at a paltry $0.01 after the release of last week's Dodd-Frank stress test results. Although the bank will be initiating a $1.2 billion common stock buyback program, Citigroup investors will have to keep waiting for the day the megabank starts to put a little more cash in their pockets.

Source: Citigroup News Release.

Source: Comprehensive Capital Analysis and Review 2013: Assessment Framework and Results.

Despite his stinginess, investors have reacted positively to Corbat's decision to remain conservative and position the bank to continue bolstering its once-troubled balance sheet. After seeing Citigroup's plan get shot down last year and Bank of America's (NYSE: BAC  ) denied the year before, Corbat understands the stigma of overextending the bank's capital position just to appease pressures.

Citigroup's stock still looks tantalizingly cheap. Yet the bank's balance sheet is in need of more repair, and there's a considerable amount of uncertainty after the recent management shakeup. Should investors be treading carefully, or jumping on an opportunity to buy? To help figure out whether Citigroup deserves a spot on your Watchlist, I invite you to read our premium research report on the bank today. We'll fill you in on both reasons to buy and reasons to sell Citigroup, and what areas Citigroup investors need to watch going forward. Click here now for instant access to our best expert's take on Citigroup.

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9/26/2016 4:00 PM
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Citigroup CAPS Rating: ***