Q4 2024 Earnings Summary
- Citigroup is guiding for three consecutive years of higher revenues and lower expenses, leading to positive operating leverage and improved profitability through at least 2026.
- The Wealth segment is demonstrating significant growth with ambitions to become a global leader, with Q4 revenue up 20%, operating margin at 21% (targeting 25%-30%), RoTCE at 10% (on its way to 15%-20%), and net new investment asset inflows up 40%, indicating strong future earnings potential.
- Citigroup authorized a $20 billion share repurchase program, reflecting a strong commitment to returning capital to shareholders and confidence in their earnings power and path ahead.
- Citigroup lowered its RoTCE target for 2026 to 10%-11%, down from the prior guidance of 11%-12%, indicating expectations of lower profitability due to higher expenses associated with transformation and technology investments.
- Net credit losses in the cards business are projected to be at the high end of guidance ranges, with branded cards expected to reach around 4% (up from 3.64%) and retail services to remain elevated at 6.25%, suggesting potential credit quality deterioration.
- Despite announcing a $20 billion share repurchase program, Citigroup is not committing to an accelerated pace of buybacks, citing uncertainties around regulatory capital requirements and stress tests, which may limit capital returns to shareholders in the near term.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | 12% increase (from $17,440M in Q4 2023 to $19,581M in Q4 2024) | Total Revenue increased by 12% driven by stronger performance across key operating segments, including heightened fee-based income in Services and robust trading activity in Markets. This improvement reflects both organic growth and favorable market conditions following the lower base in Q4 2023. |
Net Income | Rebounded from a loss of $1,839M in Q4 2023 to a profit of $2,856M in Q4 2024 | Net Income’s turnaround from a loss to a substantial profit was achieved through operational improvements, tighter cost control, and improved business fundamentals. The rebound indicates that challenges present in the previous period were effectively addressed, allowing a shift from a challenging Q4 2023 base to a strong Q4 2024 performance. |
EPS (Basic) | Improved from –$1.12 in Q4 2023 to $1.36 in Q4 2024 | Basic EPS improved significantly as a direct result of the turnaround in net income and slightly lower weighted-average common shares. The better earnings allocation to shareholders in Q4 2024 contrasts with the negative EPS seen in Q4 2023, underscoring the effectiveness of the company’s operational adjustments and revenue enhancements. |
Services Segment Revenue | Reported at $5,175M in Q4 2024 | Services Segment Revenue reached $5,175M, making a strong contribution to overall performance. This growth is attributed to increased fee revenues, higher deposit volumes, and improved client activity that built on previous trends and helped drive overall revenue improvements. |
Markets Segment Revenue | Reported at $4,555M in Q4 2024 | Markets Segment Revenue of $4,555M reflects robust trading operations, benefiting from elevated activity in equity and fixed income markets. This performance offset earlier headwinds and considerably contributed to the overall revenue growth by leveraging favorable trading conditions compared to Q4 2023. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Expenses | 2025 | no prior guidance | slightly lower than $53.8B | no prior guidance |
Repositioning Costs | 2025 | no prior guidance | ~$600M | no prior guidance |
Revenue Growth | 2025 | no prior guidance | continued growth from both NII and NIR | no prior guidance |
Branded Cards Net Credit Losses (NCL) | 2025 | no prior guidance | ~4% | no prior guidance |
Retail Services NCL | 2025 | no prior guidance | high end of 5.75%–6.25% range | no prior guidance |
Share Repurchase | Q1 2025 | no prior guidance | $1.5B | no prior guidance |
Expenses | 2026 | $51B–$53B | below $53B | no change |
Revenue Growth | 2026 | 4%–5% medium-term CAGR | continued revenue growth from both NII and NIR | no prior guidance |
RoTCE | 2026 | high-teens (USPB segment) | 10%–11% (enterprise-wide) | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Full-Year Revenue | FY 2024 | $80 billion to $81 billion | $81.14 billion (sum of Q1: 21,104, Q2: 20,139, Q3: 20,315, Q4: 19,581) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Share repurchases and capital returns | Q3 2024: Returned $2.1B in capital, with $1B in common share buybacks. Q2 2024: Planned $1B buyback. Q1 2024: $1.5B in total capital returned, including $500M in buybacks. | Announced a $20B share repurchase program, returned $7B to shareholders in 2024, repurchased $1B in Q4, and ended the year with a CET1 ratio of 13.6%. | Consistent focus on buybacks and capital returns, increasingly large repurchase commitments. |
Regulatory compliance and transformation | Q3 2024: Ongoing data quality and regulatory reporting improvements; closed a BSA/AML consent order. Q2 2024: Addressing amended consent orders, focusing on data governance. Q1 2024: Emphasized transformation as top priority, including automation and infrastructure upgrades. | Spent $2.9B on transformation in 2024, with data and regulatory reporting identified as needing further work. No mention of an asset cap. | Ongoing high-priority efforts; continued investment in automation, data, and control frameworks. |
Revenue guidance and growth | Q3 2024: On track for $80B to $81B in 2024, seeing broad-based growth. Q2 2024: Revenues up 4% YoY, driven by multiple segments. Q1 2024: Reaffirmed 4%-5% medium-term growth target, citing fee-based revenue momentum. | Expects $83.5B to $84.5B revenue in 2025 (+3% to +4% YoY). Reported $81.1B in 2024 (+5% ex-divestitures), with strong growth in services, markets, banking, wealth, and USPB. | Steady upward trajectory; diversified drivers of revenue across multiple businesses. |
Expense management | Q3 2024: Expenses at $13.3B (down 2% YoY), targeting $51B to $53B by 2026. Q2 2024: Expenses at $13.4B, with focus on stranded cost reductions. Q1 2024: Restructuring charges of $225M, aiming for $2B–$2.5B in run-rate savings. | Aiming for three consecutive years of lower expenses, projecting to drop below $53B by 2026, balancing cuts with transformation investments. | Continued push for lower costs while maintaining strategic investments in technology and controls. |
Credit quality and net credit losses | Q3 2024: Stable credit quality with cards NCL rising but within guided range; corporate NPLs at 31bps. Q2 2024: Higher card losses due to matured vintages, but signs of stabilization. Q1 2024: Retail Services NCL at 6.32%, slightly above guidance, yet well-reserved. | Branded cards NCL at 3.64%, expected to reach 4%; retail services NCL at 6.28%. Total cost of credit at $2.6B, well-reserved with ~$22B ACL. | Gradual normalization in consumer credit, with reserves remaining robust. |
Wealth Management performance | Q3 2024: Revenues +9%, improved operating leverage, RoTCE at 8.5% for the quarter. Q2 2024: Revenues +2%, client assets +15%, positive operating leverage. Q1 2024: Revenues -4%, but noninterest revenue +11% and increasing focus on segment returns. | Revenues +20% YoY. NIR up 20%, expenses down 3%, pretax margin at 21%, citing strong investment fee growth and cost discipline. | Strengthening revenue and margins; sustained focus on client asset growth and expense reduction. |
RoTCE targets | Q3 2024: Reported RoTCE 7% YTD, aims for 11%-12% medium-term. Q2 2024: Reiterated 11%-12% medium-term RoTCE expectations, with segments like Services in mid-20s. Q1 2024: Firm-wide RoTCE at 7.6%, highlighting roadmap for each segment. | Adjusted 2026 RoTCE target to 10%-11%, calling it a “waypoint” toward higher sustainable returns. | Slightly revised short-term goals but maintaining long-term ambition for higher RoTCE. |
NII trends | Q3 2024: NII ex-markets flat sequentially, slightly better full-year outlook. Q2 2024: NII down due to FX and lower rates in Argentina, though reinvestment tailwinds remain. Q1 2024: NII guidance reaffirmed at $80B-$81B with asset-sensitive balance sheet outside the U.S.. | Ex-markets NII expected up 2%-3% in 2025, supported by loan growth and repricing, offset by a possible declining rate environment. | Moderate growth forecast, balancing deposit trends, rate shifts, and reinvestment opportunities. |
Potential M&A activity | Q3 2024: Sole adviser/lead financier on a $36B acquisition, noting positive corporate sentiment. Q2 2024: M&A expected to stay active, with advisory fees up 63% YoY. Q1 2024: M&A revenues low industry-wide, but some major deals in energy and life sciences. | Cited leading roles in major deals (Celanova, Boeing, J&J acquisition), aiming for a top 3 investment bank ranking. | Ongoing momentum in advisory and financing, with a push to increase market share in M&A. |
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Share Buyback Plans
Q: Will you accelerate buybacks beyond $1.5B per quarter?
A: Citi is committed to returning capital to shareholders through its $20 billion buyback program, reflecting confidence in earnings momentum. While managing toward a CET1 ratio of 13.1%, the pace of buybacks will consider regulatory developments and clarity on capital requirements, including upcoming stress tests. -
Expense Reduction Goals
Q: Is there still a path to lower efficiency ratios?
A: Management reaffirms their focus on reducing expenses and improving efficiency. They expect expenses to decrease slightly in 2025 and more significantly in 2026, aiming for an efficiency ratio of less than 60% beyond 2026. Cost reductions will come from eliminating parallel systems, reducing consultant spend, and realizing benefits from transformation investments. -
ROTCE Targets and Capital
Q: Does the 10%-11% RoTCE target assume a 13.1% CET1 ratio?
A: Yes, the 2026 RoTCE target of 10% to 11% assumes a CET1 ratio of 13.1%. Management recognizes that capital requirements may evolve and will factor in changes as they gain clarity on regulatory rules. -
Banamex Divestiture Impact
Q: How will Banamex IPO affect RoTCE and timing?
A: The Banamex IPO process is underway, with readiness efforts ongoing despite possible delays into 2026 due to market conditions and regulatory approvals. Financial impact will occur upon deconsolidation when gains or losses flow through the P&L, and capital benefits will be realized upon full divestiture. -
Credit Quality Outlook
Q: What are expectations for card net charge-offs?
A: Net credit losses are expected to remain at the high end of previous guidance ranges in 2025—around 4% for branded cards and 6.25% for retail services. Provisions will be influenced by continued loan growth and macroeconomic factors. -
Wealth Management Growth
Q: What drives growth in wealth management?
A: Citi aims to become a global leader in wealth management, leveraging $5.3 trillion in client assets. By enhancing investment offerings, improving client experience, and bringing in top talent, Citi has seen net new investment asset inflows of $42 billion, up 40% year-over-year. -
Banking Segment Performance
Q: Can we expect higher returns in banking?
A: Citi is experiencing strong performance in banking, gaining share across products and geographies. With strategic investments and talent acquisition, they anticipate improved operating margins and higher returns, targeting mid-teens RoTCE over time. Banking RoTCE was 7% for the full year. -
Improving US Personal Banking
Q: How will you raise US Personal Banking returns?
A: Citi plans to improve returns to mid-to-high teens through top-line revenue growth, expense improvements, and a normalized credit environment. Initiatives include co-brand extensions, proprietary card enhancements, and leveraging retail banking to feed wealth management. -
Technology Investment Levels
Q: How will tech investments affect expenses?
A: Technology and transformation investments will continue to increase in 2025 and 2026 to achieve strategic goals and regulatory commitments. While overall expenses are set to decrease, these investments are necessary for long-term efficiency and growth. -
Net Interest Income Outlook
Q: How will NII ex-markets evolve this year?
A: Net interest income ex-markets is expected to rise modestly by 2% to 3% in 2025, driven by loan growth in branded cards and deposit momentum, offsetting headwinds from a declining rate environment. -
Progress on Reorganization
Q: Is the reorganization process complete?
A: Management is pleased with the progress made in simplifying the bank's structure. The worst of the reorganization is behind them, and they anticipate realizing more benefits in performance and efficiency moving forward.