CITIGROUP INC (C)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue was $19.6B (+12% YoY) and diluted EPS was $1.34; the firm delivered positive operating leverage with expenses down vs the prior year on an adjusted basis and CET1 at 13.6% .
• Segments: Services (+15% YoY to $5.2B) and Markets (+36% YoY to $4.6B) were standouts; Banking (+27% YoY) saw broad-based investment banking fee strength; USPB grew revenue 6% YoY but credit costs remained elevated .
• Capital return catalysts: Board authorized a new multi-year $20B share repurchase program; plan to buy back $1.5B in Q1 2025; common dividend held at $0.56 in January 2025 .
• Guidance reset: management now targets 2026 RoTCE of 10–11% (vs prior 11–12%) to fund incremental Transformation and technology investments; 2025 revenue guided to ~$83.5–$84.5B and 2025 expenses “slightly below” 2024’s level .

What Went Well and What Went Wrong

What Went Well

• Services momentum and share gains: “Services was up 9% and had another record year… we grew share in both TTS and Securities Services” and remains the “crown jewel” of Citi’s portfolio .
• Markets execution: highest Q4 revenue in a decade; Fixed Income (+37%) and Equities (+34%) benefited from client activity, favorable trading environment, and cash equities strength (prime balances ~+23%) .
• Investment banking revival: fees +35% YoY in Q4 with strength across DCM, ECM and Advisory; management emphasized share gains in healthcare and technology amid a more conducive macro backdrop .

What Went Wrong

• Credit costs elevated in USPB: total cost of credit rose to $2.17B (+5% YoY), with branded and retail services NCLs at the high end of guidance ranges as multiple vintages mature amid inflation/interest-rate effects .
• All Other losses persist: All Other (managed basis) posted a $(1.07)B net loss in Q4 driven by investment securities repositioning losses, higher funding costs, and closed exits/wind-downs .
• Return target lowered: 2026 RoTCE was reduced to 10–11% to accelerate Transformation and data/regulatory reporting investments; while positioned as a “waypoint,” investors may view it as a near-term return headwind .

Financial Results

Segment revenues (reported basis):

Key KPIs:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “2024 was a critical year and our results show our strategy is delivering… net income up nearly 40% to $12.7 billion… record years in Services, Wealth and U.S. Personal Banking… Board… authorized a program to repurchase $20 billion in common stock.” — Jane Fraser, CEO .
• “We now expect our 2026 RoTCE to be between 10% and 11%… this level is a waypoint, not a destination. We intend to improve returns well above that level.” — Jane Fraser .
• “Market saw its highest fourth quarter revenue in a decade… Fixed income revenues increased 37%… Equities revenues increased 34%.” — Mark Mason, CFO .
• “Services generated positive operating leverage… net income of $1.9 billion… RoTCE 29.9%.” — Mark Mason .
• “As part of the $20 billion share repurchase program, we plan on buying back $1.5 billion of common stock in the first quarter.” — Mark Mason .

Q&A Highlights

• Buybacks and CET1 buffer: Management targets ~13.1% CET1 and will calibrate buybacks (including $1.5B in Q1) as reg rules and SCB outcomes become clear; no constraints from consent orders on parent-level capital actions .
• Expense trajectory: Expect three consecutive years of lower expenses (’24, ’25, ’26) and three years of revenue growth; severance normalizes by 2026 and stranded costs decline, aiding <60% efficiency ratio exit rate .
• Cards credit: Branded cards NCLs expected to creep to ~4% over 2025; Retail Services at high end of 5.75–6.25%; provisions reflect volume growth and scenario-weighted macro .
• Banamex IPO: Legal separation completed; IPO timing depends on approvals and market conditions; deconsolidation drives P&L impacts, full RWA release upon complete exit .
• Transformation scope: Focused on data/regulatory reporting and modernization; approach involves resource allocation and process redesign; progress across risk/compliance and platform consolidation .

Estimates Context

• Street consensus comparisons from S&P Global were unavailable due to request limits at the time of analysis; therefore beat/miss vs estimates cannot be assessed here. Values retrieved from S&P Global were unavailable due to API limits.
• Given reported strength in Markets and Services and the 2025 revenue guide (~3–4% YoY), sell-side models may need to revisit segment mix (higher fee momentum) and the expense glide path given incremental Transformation investments .

Key Takeaways for Investors

• Strong core momentum: Services and Markets delivered a high-quality quarter; continued fee mix shift reduces rate sensitivity and supports medium-term growth .
• Near-term stock catalysts: $20B buyback authorization and planned $1.5B repurchase in Q1 2025 provide capital-return visibility despite CET1 discipline .
• Return optics reset: RoTCE target to 10–11% in 2026 reflects an investment-heavy phase; management frames it as a waypoint, with intent to accelerate returns beyond 2026 .
• Credit normalization watch: USPB NCLs at high-end ranges; signs of delinquency stabilization but provisions remain volume/macro dependent—monitor vintages and CFPB late-fee developments .
• Expense trajectory supportive: Three-year plan to lower expenses while funding Transformation; stranded cost reductions and severance normalization aid efficiency improvements .
• Mexico optionality: Banamex IPO timing is market-dependent; eventual RWA release presents capital optimization upside longer term .
• Trading lens: Positive operating leverage and record Markets Q4 are supportive; the lowered RoTCE target may temper multiple expansion near term, partially offset by elevated buyback activity .