BOOK VS MARKET-VALUE OF CAPITAL(table 6 & 7)
The book value of the company been somewhat stable over the years albeit showing a slight decline in value from 2016 to 2019 and increasing a little bit in 2020. Although total assets have been increasing in the last five years, the residual balance or the common equity has been declining although with a little recovery in 2020. The balance of common equity has been declining over the years because the bank has been continuously having common share repurchases since 2016 in amounts between $9.451 billion to $17.875 billion. The amount of shares repurchased has been increasing since 2016 and it was only in 2020 that the company only bough $2.925 billion worth of shares perhaps as a result of the COVID-19 pandemic and to save on much needed cash given the uncertainty in the market. These repurchases has pulled down common equity over the years (Citi Group 2020 Annual Report, 2020).
The market capitalization of Citigroup has been fluctuating over the last five years as a result of declining number of outstanding shares due to share repurchases and the fluctuating share prices. It is also worthy to mention that the company’s market value is well below its market capitalization which indicates that investor might feel that the assets of the bank is not worth it or that investors have lost confidence of the bank. However, we must consider the fact that the bank has been buying share in the past five years and this has affected its total market value due to lower shares outstanding.
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