A rebound in dealmaking, steady demand from corporate clients, and progress on a long-running overhaul helped Citigroup Inc top profit expectations in the fourth quarter—offering fresh evidence that Chief Executive Officer Jane Fraser’s turnaround plan is gaining traction.
After a slow start to last year when tariffs, market uncertainty - and a U.S. government shutdown - sidelined corporate activity, confidence returned in the second half and Citi’s results reflect a broader shift across the banking industry.
Companies began dusting off mergers, acquisitions and capital-raising plans, and banks were quick to benefit.
For Citi, investment banking was the standout, with fees jumping 35% from a year earlier, fuelled by stronger advisory and debt capital markets activity.
Revenue in the bank’s core banking division surged 78%, and Citi posted record revenue from mergers and acquisitions (M&A) advisory work in 2025.
Across the industry, global investment banking revenue climbed to nearly US$103 billion, making it the second-strongest year on record after 2021.
This resurgence helped Citi deliver adjusted earnings of US$1.81 per share in the fourth quarter, comfortably ahead of analyst expectations.
Revenue rose modestly year on year to US$19.9 billion, driven by gains in investment banking, services, wealth managemen, and personal banking.
While headline net income fell due to one-off items, the underlying performance told a more encouraging story.
One of those one-offs was Citi’s planned exit from Russia.
The sale of its Russian unit resulted in a pre-tax loss of about US$1.2 billion, largely tied to currency translation.
Excluding that hit, profitability and returns looked healthier with return on tangible common equity reaching 7.7% for the year, up from 2024, as Citi inches closer to its medium-term goal of 10% to 11%.
Meanwhile, markets and trading offered a mixed picture.
Volatility tied to interest rate expectations, artificial intelligence (AI)-related stock speculation, and geopolitical tensions did not translate into a big quarterly boost.
Markets revenue dipped slightly in the fourth quarter although it was up double digits for the full year.
A bright spot was prime brokerage, where balances jumped more than 50%, underscoring Citi’s push to grow services for hedge funds and institutional clients.
Wealth management, another pillar of Fraser’s strategy, also showed progress.
Revenue rose 7%, driven by growth in Citigold and the private bank, reinforcing Citi’s ambition to deepen relationships with affluent and high-net-worth clients.
On the cost side, the story is less tidy, with expenses climbing 6% in the quarter, reflecting higher compensation, technology spending, legal costs, and taxes.
Citi has been hiring aggressively in parts of its investment bank, even as it trims elsewhere.
Management has been clear that job cuts remain part of the plan, with automation and artificial intelligence expected to reshape roles and reduce overall headcount over time.
Regulatory pressure, long a drag on Citi’s valuation, also appears to be easing.
The Office of the Comptroller of the Currency recently withdrew a key amendment tied to a 2020 consent order, signalling what Fraser described as “demonstrable improvement” in the bank’s controls and data management.
While the underlying order is still in place, the move marks incremental progress in fixing issues that have weighed on returns for years.
Meanwhile, Citi’s turnaround hasn’t gone unnoticed by the market, with the stock’s shares rallying last year, outperforming major rivals and the broader bank index, helped by buybacks and growing confidence in the strategy. |
However, the stock still trades at a discount to peers, which serves as a reminder that the turnaround, while real, remains unfinished.
As deal momentum carries into the new year and interest rates ease, Citi is betting that its streamlined structure, sharper focus and renewed corporate relevance will finally put it on equal footing with competitors.
As Fraser put it in a message to employees, the goal is nothing less than “a more disciplined, more confident, winning Citi.”
Citigroup (NYSE:C) shares ended yesterday’s trading 3.3% lower at $112.41, capitalising the bank at $201.14 billion.
