Do not show any initials.
The concept of profile for single persons and groups is entirely different, so you shouldn't show the initials for people in the group.
Think about this: you're adding a lot of friction, in visual terms this is really confusing, and in terms of usability nobody would get what all that noise means. It's really important to understand whether you're dealing with an individual or a group, so you shouldn't try to disguise the group as an individual.
But if the reasons above are not enough, think about lack of versatility. Take a look at a very common case you will face:
Group A was formed by
AB, CD, EF and thus you show the initials for these individuals.
GH and IJ join the group, while
AB and CD leave it.
Now the group is....
ABCDEF even though
AB and CD are not part of the group. Furthermore,
GH and IJ are not represented, which makes no sense at all.
So.... you can change the group to
EFGHIJ. Easy, right? Well, think twice: now anyone that interacted with
ABCDEF will not know who is
In short: get rid of those initials: they're really bad UX, they bring a lot of problems, and they bring no benefit at all!
PS: Also, aren't you allowing your users to name a group any way they want?