Citigroup Earnings: Firm Remains in a Turnaround

Key Morningstar Metrics for Citigroup

• Fair Value Estimate: $70.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Medium

What We Thought of Citigroup’s Earnings

Citigroup C ended the year with middling numbers, but its upbeat management guidance for 2025 and announcement of a $20 billion repurchase program led to a 7% rise in its share price. The bank reported fourth-quarter earnings of $1.34 per share, equating to an annualized return on tangible equity of 6.1%.

Why it matters: Fourth-quarter results were boosted by continued fee momentum across services, investment banking, and asset management, but management’s outlook for 2025 expenses and 2026 profitability remained the biggest highlights.

• Management projects that overall revenue will grow by 3%-4% in 2025 and expects net interest income to be up modestly compared with 2024. The impact lower rates will have on NII is expected to be more than offset by balance sheet growth and the deployment of maturing securities in higher-yielding assets.
• 2025 expenses are expected to be slightly lower than in 2024. Interestingly, management also published that it expects to hit a 10%-11% ROTE by 2026 due to continued revenue growth and a further decline in expenses in 2026.

Between the lines: The bank is currently achieving lackluster returns even though it has relatively big exposure to segments like credit cards, trading, and investment banking, which should ideally do well in the current environment.

The bottom line: We plan to maintain our fair value estimate of $70 per share after incorporating the firm’s fourth-quarter results.

• We are glad to see the expense control at the bank in recent years, and we believe that efficiency improvements, headcount rationalization, and resolving legacy issues in the bank’s cost structure are keys to achieving its medium-term target.
• Citi has a long history of announcing ambitious targets and not meeting them. We are skeptical about management’s 2026 ROTE commentary and would like to see more evidence before incorporating it into our models.