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Call participants
- Chief Executive Officer — Jane Fraser
- Chief Financial Officer — Mark Mason
- Head of Investor Relations — Jennifer Landis
Takeaways
- Adjusted EPS — $1.81 reported, excluding the Russia notable item, with corresponding adjusted ROTCE of 7.7%.
- Adjusted net income — $3.6 billion for the quarter; full-year adjusted net income reached $16.1 billion, up 27%.
- Adjusted revenue growth — 8% year over year, with total adjusted revenues of $86.6 billion, the highest in over a decade.
- Firm-wide positive operating leverage — Achieved in all five businesses and at the group level for the second consecutive year.
- Efficiency ratio — Improved to 63% on an adjusted basis; management targets around 60% for the upcoming year.
- Services segment performance — Revenues up 8%, with ROTCE of over 28% for the year; assets under custody and administration increased 24%.
- Markets revenue — Record annual revenue, with full-year ROTCE of 11.6%; fixed income up 10% despite commodity headwinds, equities revenues at $5.7 billion, and prime balances up over 50% for the year.
- Banking segment — Record investment banking fees, up 35%; M&A revenue up 84%; delivered 11.3% ROTCE for the year.
- Wealth segment growth — Revenue up 14%, organic net new investment assets up 8%, client investment assets up 14%, and full-year ROTCE above 12%.
- US personal banking (USPB) — Returns more than doubled for the year, with a full-year ROTCE of 13.2%; branded cards revenue up 8%, driven by customer spend and acquisition.
- Capital return — Over $13 billion in common share repurchases for the year; total capital return exceeded $17.5 billion, with CET1 ratio at 13.2% (160 basis points above regulatory requirement).
- Expense trends — Adjusted expenses (excluding Banamex impairment) at $54.4 billion, with drivers including higher compensation, technology, and benefits, partially offset by productivity savings and reduced deposit insurance costs.
- Cost of credit — $2.2 billion in the quarter, mainly from U.S. cards net credit losses; total reserves over $21 billion; reserve-to-funded loan ratio at 2.6%.
- Share repurchase outlook — “We are still targeting a 100-basis-point management buffer” above regulatory capital minimum, indicating intent to continue buybacks in 2026.
- Transformation progress — “Over 80% of our programs are now at or nearly at our target state,” as noted by Fraser, with the OCC terminating Article 17 of the related consent order.
- AI integration — Adoption rate above 70%, with proprietary AI tools used over 21 million times by staff in 84 countries.
- International divestitures — Signed agreement to sell Poland consumer business, closed sale of 25% Banamex stake, and final approvals in process to exit Russia.
- 2026 outlook — Net interest income excluding markets expected to grow 5%-6%; management aims for continued positive operating leverage and efficiency improvements.
- Management transition — Mark Mason’s final earnings call as CFO, with succession by Gonzalo [last name not specified in transcript].
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Risks
- Expenses increased 6% year over year to $13.8 billion in the quarter, attributed to increases in compensation and benefits, tax charges, legal expenses, as well as technology.
- Retail services revenues were down 7% for US personal banking, mainly driven by lower interest-earning balances and lower loan spread.
- Corporate other revenues declined due to lower NII from a lower benefit from cash and securities reinvestment, highlighting asset sensitivity management amid a declining rate environment.
- Delinquency and net credit loss rates in US cards continue to perform in line with management expectations, but NCL ranges for cards are maintained to provide cover around potential macro uncertainty.
Summary
Citigroup (C +4.33%) reported record adjusted revenues and robust adjusted net income growth, emphasizing firm-wide positive operating leverage and improved efficiency. Management highlighted progress on strategic transformation initiatives, with 80% of programs at or near target state and concrete steps in global divestitures. The call detailed a continued capital return focus, including policy for buffer management and plans for ongoing share buybacks in 2026.
- Jane Fraser said the OCC’s termination of Article 17 of the consent order reflects external validation of operational improvement and regulatory progress.
- AI-driven process improvements have exceeded 70% adoption among staff, supporting broad efficiency gains.
- Banking achieved record M&A revenues and broad-based market share growth in investment banking, with 15 of the 25 largest transactions advised by Citigroup.
- Strategic reinvestment in services and markets is prioritized, as management described 2026 as a waypoint for further operating and capital efficiency improvements.
- Mark Mason indicated, “NII ex markets to be up between 5%-6% in 2026,” attributing growth to volume and mix, primarily in cards, wealth, and deposits.
Industry glossary
- ROTC/ROTC(E): Return on tangible common equity, a key profitability metric for banks measuring net income returned as a percentage of average tangible common equity.
- TTS: Treasury and Trade Solutions, Citigroup’s global business segment focused on transaction banking, payments, and liquidity management for institutional clients.
- Banamex: Citigroup’s former Mexican banking subsidiary, subject to ongoing divestiture activities including partial stake sales and IPO planning.
- STB: Stress capital buffer, a regulatory capital requirement determined by the results of supervisory stress tests.
- NCL: Net credit losses, representing actual charge-offs of uncollectible loans minus recoveries in a given period.
- NIR: Noninterest revenue, comprising fees and other income sources not driven by net interest margin.
- ACL: Allowance for credit losses, a balance sheet reserve for estimated loan losses reflecting expected future credit deterioration.
- Efficiency ratio: A measure of noninterest expense as a percentage of total net revenue, indicating cost efficiency.
- Prime balances: Loan or trading book balances in the prime brokerage segment, generally reflecting assets held for hedge fund clients.
- Legacy franchises: Citigroup’s businesses or geographic units subject to exit or wind-down, including those related to international divestiture strategy.
- Operating leverage: The difference between revenue growth and expense growth rates, with positive operating leverage indicating revenue outpaces expenses.
Full Conference Call Transcript
Jane Fraser: Thank you, Jen. And good morning to everyone. This morning, we reported another strong quarter to close out what was a very good year of progress indeed. We got a tremendous amount accomplished in 2025, and I am proud of our team. That said, and we’ve always been clear about this, we are on a multiyear journey. We remain focused on executing our strategy and transformation. I’m excited to update you on our progress in greater detail and to outline the next phase of our journey at our Investor Day on May 7. In terms of the quarter, excluding the impact of a notable item, our adjusted EPS was $1.81, and our adjusted ROTC was 7.7%.
For the full year, our returns improved to 8.8%, a 180 basis point improvement after adjusting for Banamex and Russia, and adjusted net income surpassed $16 billion. With adjusted revenues up 7%, we delivered positive operating leverage in every one of our five businesses, as well as the firm overall for the second straight year. Each business had record revenues and improved their returns by between 250 and 800 basis points. Services continued to deliver with revenues up 8% and an ROTCE of over 28% for the year. Fee revenue grew by 6% and cross-border transaction value by 10% as we deepened client relationships and supported them across our global network.
Security services assets under custody and administration grew 24% as a result of existing client growth and the onboarding of new client assets. We continue to innovate to provide our clients with always-on, cross-border multi-bank solutions. In 2025, we integrated Citi Token services with $24.07 US dollar tiering, launched in Hong Kong and Dublin, and added euro as a transaction currency. We also expanded our industry-leading Citi Payments Express to 22 markets, and it processed 40% of TTS’s payments during the fourth quarter. In October, we began the journey to a unified custody infrastructure and enabling near real-time asset servicing by launching single event processing. All the investments we have made translated to growth and robust market share gains.
Markets delivered record revenues even surpassing our 2020 performance. Combined with better capital efficiency, ROTCE increased to 11.6%. Fixed income was up 10% despite a challenging year for us in commodities. Equities revenues of $5.7 billion were also a record, with an over 50% increase in prime balances as that business continues to gain share. Banking had a record year, including the best quarter and year for M&A revenues in Citi’s history, as we gained share in our target sectors as well as in leveraged finance and with sponsors, resulting in an 11.3% ROTCE.
Citi had a role in 15 out of the 25 largest investment banking transactions of the year and advised Boeing, Pfizer, Nippon Steel, Mars, Johnson & Johnson, Blackstone, and TPG. This all drove a 30 basis point year-over-year increase in our investment banking wallet share. Overall, revenues were up 32% whilst keeping expenses flat, showing the discipline we are applying to this business. Wealth delivered another year of strong performance in 2025, including 14% revenue growth, 8% organic NNIA growth, and an ROTCE of over 12%. It’s a direct result of the strategy we’ve executed over the past two years, attracting and retaining industry-leading talent and driving better operating efficiency that’s allowed us to invest in key growth areas.
That includes notable partnerships with industry leaders such as BlackRock, that have enhanced our open architecture platform and are elevating the client experience. The integration of the retail bank into wealth makes it easier to deepen share with existing clients and unifies our US deposit franchise. USPB’s returns more than doubled for the year, reaching mid-teens driven by continued product innovation, solid customer engagement, and our high-quality card portfolio. Branded cards revenue grew 8% driven by robust engagement from customers in spend, borrowing, and new account acquisitions across our proprietary offerings, and our American Airlines and Costco partnerships. While retail services showed some revenue softness, businesses’ returns remained solid.
In terms of capital, we repurchased over $13 billion in common shares during the year, including $4.5 billion in the fourth quarter, as part of our $20 billion plan. Increasing our dividend resulted in a total capital return of over $17.5 billion, the most since the pandemic. We entered the year with a CET1 ratio of 13.2%, which is 160 basis points above our regulatory capital requirement. So we have ample capital to support our growth, and we will continue to return excess capital to our shareholders. We’ve reached some significant mass in terms of our simplification as we near the end of our international divestitures.
We signed an agreement to sell our consumer business in Poland, and we are receiving final approvals to sell our remaining operations in Russia. And just three months after announcing it, we closed the sale of a 25% stake of Banamex to one of Mexico’s most prominent investors. We have made significant progress in terms of our transformation. Over 80% of our programs are now at or nearly at our target state. And while there is more work to do, I’m very pleased with how far we’ve come, as evidenced by the OCC’s termination of article 17 of the consent order in December.
When combined with how we’re deploying AI, this bank is being truly transformed in terms of its operational capabilities, its controls, and its tech infrastructure compared to five years ago. But we’re also building AI into the processes that move money, manage risk, and serve clients. Colleagues in 84 countries have now interacted with our proprietary tools over 21 million times, and we continue to see adoption increase. It’s now above 70%. With much of our transformation behind us, we are shifting our focus to how we can use AI tools and automation to further innovate, reengineer, and simplify our processes beyond risk and controls to improve client experience whilst reducing expenses.
We have started with just over 50 of the largest and most complex processes in the firm, ranging from KYC to loan underwriting. And we’re moving with speed to systematically implement modern and efficient solutions. Turning to the macro, the global economy has powered through many shocks over the past few years, creating optimism and confidence that economic growth is poised to continue. With inflation now at normal levels globally, almost every central bank is becoming more accommodating. And while the labor market in the US has softened, capital investment remains strong, especially in tech.
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