SKN | Citigroup Signals Turnaround Momentum as Q4 Earnings Underscore Strong 2025 Finish

Key Takeaways

• Citigroup’s restructuring is translating into measurable revenue growth, improving returns, and stronger capital generation.

• Adjusted results highlight momentum masked by one-off Russia-related items, with ROTCE trending higher across core businesses.

• 2026 is positioned as a transition year toward structurally higher profitability, with efficiency and capital returns in focus.

Citigroup used its fourth-quarter earnings call to reinforce investor confidence that its multi-year restructuring is gaining traction. Management framed 2025 as a year of tangible delivery—marked by accelerating revenues, improving returns, and substantial shareholder distributions—while positioning 2026 as a bridge toward structurally higher profitability.

The tone of the discussion marked a clear shift in narrative: from repair and simplification toward execution and returns.

Fourth-Quarter Results Reveal Underlying Momentum

Citigroup reported fourth-quarter net income of $2.5 billion, or $1.19 per share, with return on tangible common equity (ROTCE) of 5.1%. Results were affected by a Russia-related “notable item” tied to held-for-sale accounting. Excluding this, adjusted net income rose to $3.6 billion, adjusted EPS reached $1.81, and adjusted ROTCE improved to 7.7%.

Adjusted revenues increased 8% year over year, underscoring stronger momentum than headline figures implied. Net interest income excluding markets grew 8%, reflecting the benefits of balance-sheet repositioning and a higher-yielding asset mix.

Expenses and Credit Costs Remain Central to the Debate

Quarterly expenses increased 6% to $13.8 billion, driven by higher compensation, legal and tax costs, and continued technology investment. Management emphasized that productivity initiatives and lower deposit insurance costs helped offset some of these pressures, keeping efficiency progress on track.

Credit costs totaled $2.2 billion, largely related to U.S. cards. While consumer credit remains a key variable for investors, management characterized trends as broadly consistent with expectations and manageable within current reserve assumptions.

Full-Year 2025 Marks a Step-Change

For full-year 2025, Citigroup delivered reported net income of $14.3 billion, rising to $16.1 billion on an adjusted basis. Adjusted revenues increased 7% to $86.6 billion, representing the strongest revenue growth in more than a decade.

Adjusted ROTCE improved to 8.8%, while the bank returned over $17.5 billion to shareholders, including more than $13 billion in share repurchases. Importantly, management highlighted positive operating leverage across all five business segments for the second consecutive year.

Business Lines Show Broad-Based Strength

The Services division posted 8% full-year revenue growth and delivered ROTCE above 28%, supported by fee income expansion and cross-border transaction growth. Markets produced record revenues in 2025, with equities at an all-time high and fixed income remaining resilient despite commodity-related headwinds.

Banking delivered its strongest year on record for M&A revenues, with ROTCE of 11.3%. Wealth revenues grew 14%, driven by organic inflows and operational improvements. U.S. Personal Banking more than doubled returns to the mid-teens, led by branded card growth and key partnerships including American Airlines and Costco.

2026 Outlook Centers on Efficiency and Returns

Looking ahead, management outlined a 2026 framework targeting net interest income growth of approximately 5–6% excluding markets, an efficiency ratio around 60%, and a clear path toward 10–11% ROTCE. Further strategic clarity is expected at Citigroup’s Investor Day on May 7, as the firm approaches completion of consumer divestitures and accelerates the use of AI across its platform.

Market Perspective

Citigroup’s Q4 earnings reinforced a growing conviction that its transformation is moving from promise to performance. While expense discipline and consumer credit remain watch points, the combination of revenue momentum, improving returns, and disciplined capital deployment positions Citigroup as one of the more credible large-bank turnaround stories entering 2026.

For a confidential discussion on how U.S. global banks and restructuring-led return profiles fit within a diversified cross-border portfolio strategy, contact our senior advisory team.

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