Key Takeaways:
– Citigroup’s fourth-quarter earnings exceeded estimates, leading to a rise in the company’s shares.
– Citigroup’s net income surged nearly 40% to $12.7 billion, exceeding its full-year revenue target.
– The company experienced significant expansion in various business units, particularly investment banking.
– High issuance of investment-grade corporate debt propelled the growth in investment banking.
– CEO Jane Fraser called the current return level “a waypoint, not a destination,” indicating the bank’s commitment to future growth and development.
Capitalizing on Investment Banking Strength
Citigroup’s fourth-quarter performance outdid estimates on both ends, triggering an increase in the company’s share value. This success reflects the overall robustness of the banking powerhouse. The company enjoyed broad strength, with CEO Jane Fraser asserting that the results showed their strategic approach was reaping the anticipated benefits and fueling amplified performance in its businesses.
Net income for the banking giant escalated almost 40% to an impressive $12.7 billion, surpassing its full-year revenue target. This achievement came with record-setting performances in the firm’s Services, Wealth, and U.S Personal Banking sectors. As a result, company shares exhibited a notable uptick of nearly 7%.
Compared to LSEG analyst consensus estimates, it was evident that Citigroup’s earnings and revenues outdid expectations. The firm managed to record $1.34 per share against an estimate of $1.22. Additionally, the company’s revenue reached $19.58 billion, slightly above the anticipated $19.49 billion.
Despite previous setbacks, boasting a net loss of $1.84 billion the preceding year due to several charges, Citigroup made a comeback by posting a net income of $2.86 billion—a clear indication of the banking giant’s resilience. Even better news followed as revenue grew 12% year-on-year.
Continuous Business Transformation
Citigroup’s bank has set some lofty expectations for the future, predicting its return on tangible common equity to be between 10% to 11% in 2026. This is a result of the company’s continuous transformation and business reshaping efforts, even though it’s falling a notch below the bank’s median-term ambition of 11% to 12%.
However, CEO Fraser reassured that this state was merely a waypoint. She emphasized that the company aimed to soar beyond current levels as it further bolstered internal investments. Fraser expressed Citigroup’s commitment to ensuring the organization’s long-term achievements while prioritizing ample investing capacity.
The company also revealed plans of a hefty $20 billion stock buyback. CFO Mark Mason hinted that approximately $1.5 billion of that would be executed in the first quarter.
Exceptional Business Unit Growth
Citigroup managed to sprout growth across various business units in the fourth quarter. The outstanding performer, however, was investment banking, which recorded a revenue rise of 35% year-on-year to $925 million. The continual surge in the issuance of investment-grade corporate debt played a significant role in support of the business area.
Additionally, total banking revenue ballooned 12%, extending to 27% upon factoring in the impact of loan hedges. The market’s revenue leaped 36% year on year to $4.58 billion, which brought about growth in both the equity and fixed-income businesses.
Worth noting is the positive performance in Citigroup’s cost of credit for the quarter, which was registered at $2.59 billion. This represented a drop from the $3.55 billion recorded a year ago and $2.68 billion in the third quarter. Citigroup also reduced its net $203 million to its allowance for credit losses compared to previous periods.
Analysts keenly observed the notable progress of Citigroup’s turnaround and enquired about the banking giant’s expenses. CEO Fraser stated that the firm was on course for a slight fall in expenses by 2025, inclusive of around $600 million in company repositioning costs. She further clarified that Citigroup’s expenses were momentarily elevated as the company invests towards its transformation goal.
Positively, Citigroup-as-a-stock made waves in 2024, observing a near 37% rise throughout the year. The upward trend has continued into the current year, with the stock climbing over 4% so far. All these demonstrate the firm’s current market dominance and future potential under the watchful eye of CEO Jane Fraser.