- Citigroup’s Q4 2025 results beat expectations on adjusted EPS $1.81, while GAAP EPS fell to $1.19 due to a ~$1.1–$1.2B Russia-exit loss.
- Revenue rose ~2% as investment banking surged (~35% fees growth), services grew ~15%, and wealth increased ~6%, offset by slightly lower markets revenue.
- Expenses climbed ~6%, keeping the 2025 efficiency ratio near ~65% as management targets ~60% in 2026.
- Citi reaffirmed its transformation outlook with 2026 targets of 5–6% NII ex-markets growth, 10–11% RoTCE, and continued capital returns including a ~$20B buyback plan.
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Citi’s Q4 2025 earnings show solid underlying momentum boosted by investment banking, wealth management, and its services business, offset by Russia exit charges and soft patches in markets and retail services. These dynamics illustrate both progress in its multi-year transformation and the residual frictions still to clear.
Performance Drivers: The 35% year-over-year investment banking fees growth, especially in M&A and underwriting, along with a nearly 80% jump in the broader banking segment underscore the success of recent strategic investments and deal activity tailwinds. Services revenue rose significantly, strengthened by Treasury & Trade Solutions and Securities Services. Meanwhile, wealth revenue lifted 6–7%, driven by Citigold and the Private Bank, though “Wealth at Work” lagged. Markets revenues declined ~1% YoY as strong comparative base and sector challenges weighed.
Challenges & Risks: The exit from Russia cost Citi $1.1–$1.2B pre-tax (held-for-sale), pulling down GAAP income and RoTCE for the quarter. Non-interest revenues ex-Russia contracted, and expenses rose ~6%, fueled by compensation, regulatory/legal costs, tech and tax. The efficiency ratio remains elevated against peers; at ~65% for 2025 with a 2026 target of ~60%, meeting that will require disciplined execution. Margin pressures persist in markets and in parts of the wealth and US personal banking segments.
Strategic Implications: Citi’s roadmap is now sharply focused: boosting capital returns, aligning business mix toward higher quality fee-based income, and operational streamlining through AI, automation, and legacy exits. The reaffirmed RoTCE target of 10-11% for 2026 suggests management believes the transformation levers are reaching inflection points. Growth in dealmaking and banking lends weight behind Citi’s repositioning from transactional income to longer-duration, relationship-based businesses.
Open Questions:
- Can the efficiency ratio drop meaningfully toward 60% amid rising compensation, legal, and regulatory costs, especially without compromising investment and compliance?
- Will markets revenue stabilize or grow given challenging macro and competitive conditions, especially in fixed income and equity segments?
- How resilient are margin and credit-quality assumptions if interest rates, inflation, or global volatility pick up again?
- What is the risk around the Russia exit beyond immediate losses — regulatory, reputational, execution risks?
Supporting Notes
- Adjusted EPS of $1.81 in Q4 2025 beat consensus ($1.62–$1.67); GAAP EPS $1.19 after a ~$1.1–$1.2B Russia‐related loss.
- Total revenue net of interest expense was ~$19.87B in Q4, up ~2% YoY; NII rose ~14%; non-interest revenue was down ~26% YoY.
- Investment banking fees up ~35%; banking segment revenue overall up ~78%; services revenues up ~14.8%; wealth up ~6.5%. Markets revenue down ~1% YoY.
- Operating expenses rose ~5.9–6%; efficiency ratio for 2025 around 65%, with a 2026 target of ~60%.
- Deposits at end-Q4 about $1.40T; loans roughly $752B; credit provisions $2.22-$2.5B, down YoY.
- Rotce stood at ~7.7% adjusted; management’s 2026 target is 10-11%.
- Capital position: CET1 ratio ~13.2%; enabled ~$17.5B in shareholder return via dividends and buybacks.