After a record 13-day losing streak, financials finally rallied on Thursday. The amazing part for a stock like Citigroup (C) is that the massive capital return plans approved by the company provides substantial support for the weak stock and only enhances an already bullish investment thesis.
Image Source: Citigroup 2018 Stress Test presentation
CCAR Plan
Last week, Citigroup passed the Fed's stress test with flying colors. The large bank saw capital ratios that all passed the required capital ratios under the Supervisory Severely Adverse Scenario using Dodd-Frank Capital Actions.
Under the worst case scenario in an extreme recession scenario, Citigroup would see the common equity tier 1 capital ratio, or CET1, dip to only 7.2%. The bank would end the stress test period in 2020 with a CET1 of 9.2%.
