Citigroup Q4 Earnings Beat Estimates on Y/Y NII Growth, Stock Down

Citigroup Inc. C reported fourth-quarter 2025 adjusted net income per share of $1.81, up 35.1% from the year-ago period. The metric also surpassed the Zacks Consensus Estimate by 9.7%.

The company's results benefited from an increase in net interest income (NII) and lower provisions. Citigroup also registered a year-over-year increase of 38% in investment banking (IB) revenues, reflecting growth in Advisory and Equity Capital Markets. However, a decline in non-interest revenues, higher operating expenses, a loss related to the sale of its Russia business and a weaker capital position were undermining factors. Given the concern, C shares declined nearly 3.8% in the early trading session. A full day’s trading session will depict a clearer picture.

Results of the reported quarter excluded a notable item related to a loss on sale of $1.2 billion ($1.1 billion after tax), stemming from the held-for-sale accounting treatment associated with the planned sale of AO Citibank in Russia. After considering this, net income (GAAP basis) in the quarter was $2.5 billion, down 13.4% from the prior-year quarter.

For 2025, net income per share was $6.99, which missed the Zacks Consensus Estimate of $7.75. This compares favorably with $5.94 reported in the year-ago quarter. The company reported net income (GAAP basis) of $14.3 billion, up 12.6% year over year.

C’s Revenues & Expenses Increase

Revenues, net of interest expenses, moved up 2.1% year over year to $19.9 billion in the fourth quarter of 2025. The top line missed the Zacks Consensus Estimate by 4.9%.

Full-year revenues, net of interest expenses, aggregated to $85.2 billion, up 5.6% year over year. The top line missed the Zacks Consensus Estimate of $86.4 billion.

NII rose 14.1% year over year to $15.7 billion, whereas non-interest revenues declined 26.6% to $4.2 billion.

Citigroup’s operating expenses rose 5.9% year over year to $13.8 billion. This increase in expenses was primarily driven by higher compensation and benefits costs, along with rises in non-income tax charges, legal expenses, and technology and communication expenses, partially offset by productivity savings and lower deposit insurance expenses.

Citigroup’s Segmental Performance

In the Services segment, total revenues, net of interest expenses, were $5.9 billion in the reported quarter, up 14.8% year over year. The increase primarily reflects growth in Treasury and Trade Solutions, which continued to gain market share and Securities Services.

The Markets segment’s revenues decreased nearly 1% year over year to $4.5 billion, due to a decline in Fixed Income and Equity markets revenues.

Banking revenues of $2.2 billion moved up 78.1% year over year, primarily driven by growth in IB and Corporate Lending.

U.S. Personal Banking’s revenues were $5.3 billion, up 1.2% from the prior-year quarter, driven by growth in Retail Banking and Branded Cards, largely offset by a decline in Retail Services.

In the Wealth segment, revenues were $2.1 billion in the reported quarter, rising 6.5% year over year. The increase was driven by growth in Citigold and the Private Bank businesses, partially offset by the Wealth at Work business.

Revenues in the All Other segment declined significantly, recording a loss of $248 million compared with revenues of $1.3 billion in the prior-year quarter.

C’s Balance Sheet Position Solid

At the end of the fourth quarter of 2025, the company’s deposits rose 1.4% from the prior quarter to $1.4 trillion. Its loans also increased 2.4% on a sequential basis to $752 billion.

Citigroup's Credit Quality: Mixed Bag

Total non-accrual loans increased 34.7% year over year to $3.6 billion. C’s allowance for credit losses on loans was $19.2 billion, up 3.6% from the prior-year quarter.

C’s provisions for credit losses and benefits, and claims for the fourth quarter were $2.5 billion, down 14.4% from the year-earlier quarter.

C's Capital Position Weak

At the end of the fourth quarter of 2025, the bank’s Common Equity Tier 1 capital ratio was 13.2%, down from 13.6% in the fourth quarter of 2024. The company’s supplementary leverage ratio in the reported quarter was 5.5%, down from the prior-year quarter’s 5.8%.

Citigroup's Capital Deployment

In the reported quarter, C returned $5.6 billion to shareholders through common share dividends and share repurchases.

Citigroup's 2026 Outlook

Management expects NII (excluding Markets) to increase 5-6% on a year-over-year basis in 2026.

Management anticipates an efficiency ratio of approximately 60% in 2026, with another year of positive operating leverage.

Further, management continues to target a return on tangible common equity (RoTCE) of 10-11% in 2026.

Our Viewpoint on Citigroup

The company’s fourth-quarter 2025 results continued to showcase momentum, positive operating leverage and improved returns across most businesses. Increased NII and lower provisions look encouraging. However, rising expenses and a weak capital position were concerning.

The business transformation initiatives, including its consumer business exits and organizational simplification efforts, will help it in the long run. Focusing on growth in the profitable business while eliminating non-viable segments will likely aid in achieving results in the long run.

Citigroup Inc. Price, Consensus and EPS Surprise

Citigroup Inc. price-consensus-eps-surprise-chart | Citigroup Inc. Quote

Currently, Citigroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Dates & Expectations of Other Banks

Citizens Financial Group, Inc. CFG is slated to report fourth-quarter 2025 results on Jan. 21. Over the past seven days, the Zacks Consensus Estimate for CFG’s quarterly earnings per share has been unchanged at $1.11.

Fifth Third Bancorp FITB is scheduled to release fourth-quarter 2025 earnings on Jan. 20. The Zacks Consensus Estimate for FITB’s quarterly earnings has been revised 1% higher to $1.01 per share over the past seven days.

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This article originally published on Zacks Investment Research (zacks.com).

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