Citi beats profit on trading strength but cuts return targets after ‘critical’ year

On By Littum

(Reuters) – Citigroup beat estimates for fourth-quarter profit, driven by strength in trading and dealmaking, and announced a $20 billion buyback program as it cut a closely watched return target.

Shares in the third-largest U.S. lender were last up 5% in premarket trading Wednesday after Citigroup said its board has approved a new share buyback program.

“2024 was a critical year and our results show that our strategy is delivering as intended and driving stronger performance across our businesses,” said Citi CEO Jane Fraser.

“While we now expect our 2026 ROTCE to be between 10% and 11% to make further investments in our businesses and transformation, this level is a waypoint, not a destination,” Fraser said. ROTCE is a measure of company performance.

Citi reported net income of $2.9 billion, or $1.34 per share, for the three months ended Dec. 31. That compares with a loss of $1.8 billion, or $1.16 per share, a year earlier.

Total revenue rose to $19.6 billion compared to $17.4 billion a year earlier.

Trading desks benefited from a banner year in US stocks, with the S&P 500 hitting record highs in the fourth quarter.

Market revenue at Citi rose 36% to $4.6 billion in the quarter, with fixed income and equity markets up 37% and 34%, respectively.

Wall Street’s dealmakers have also cashed in on a revival in mergers, acquisitions and IPOs after a nearly three-year dry spell. Banks’ capital markets businesses got a boost in the second half of 2024 as corporate clients issued more debt and equity.

Industry executives expect the momentum to continue this year as the Federal Reserve cuts interest rates and President-elect Donald Trump takes office. He has promised to implement more pro-business policies.

Citi’s investment banking revenue rose 35% to $925 million in the fourth quarter.

Global investment banking revenue rose 26% in 2024 to $86.8 billion, according to data from Dealogic. Citi earned the fifth highest fees across banks in the same period.

Total banking revenue came in at $1.2 billion, up 27% from the prior year.

On an adjusted basis, Citi reported a profit of $1.34 per share in the fourth quarter, compared with analysts’ average estimate of $1.22, according to data compiled by LSEG.

THE TRANSITION YEAR ENDS

Citi’s stock rose 37% in 2024, outperforming the broader banking index and equity markets, as investors cheered CEO Jane Fraser’s efforts to transform the bank.

Fraser laid out a plan in late 2023 to boost profits, streamline operations and fix long-standing deficiencies in the bank’s risk management and data management, and much of the reorganization was completed over the past year.