ii view: forecast-beating Citigroup maintains 2025 guidance

First-quarter results to 31 March

• Revenue up 3% to $21.6 billion
• Earnings per share (EPS) up 24% to $1.96 per share
• Capital cushion or CET 1 ratio of 13.4%, down from 13.5% a year ago

Chief executive Jane Fraser said:

“We remain intently focused on executing our strategy, which is based on a diversified business mix and will perform in a wide variety of macro scenarios. When all is said and done, and long standing trade imbalances and other structural shifts are behind us, the U.S. will still be the world’s leading economy, and the dollar will remain the reserve currency. 

“The deep knowledge and breadth of capabilities we bring to the many markets where we operate are a point of distinction as we continue to help our clients navigate an uncertain environment.”

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ii round-up:

Citigroup Inc (NYSE:C) today detailed sales and earnings that beat Wall Street forecasts, with the US banking giant leaving full-year forecasts unchanged despite concerns regarding the impact of US trade tariffs on customers.

Buoyant equity trading helped drive revenue at its Markets division up 12% to $5.99 billion, nudging group-wide revenue up 3% to $21.6 billion. That and the bank’s ongoing transformation plan drove a 54% increase in earnings year-over-year to $1.96 per share. Analysts had pencilled in revenues and earnings of $21.3 billion and $1.85 respectively. 

Citigroup shares rose 2% in early US trading having come into these latest results up 8% over the last year. That’s similar to rival Wells Fargo & Co (NYSE:WFC). The S&P 500 index is up 7% over that time.  

Citi’s transformation programme has included a move from two giant divisions to five core businesses, aiding a spotlight on areas of growth and reducing management layers and costs. 

Revenue at the bank’s Wealth division climbed 24% to a record $2 billion, with those for US Personal Banking also hitting a record $5.23 billion, up 2% versus a year ago.

Group-wide costs fell 5% year-over-year to $13.4 billion, aided by an absence of restructuring charges and productivity savings related to its previous reduction of management layers. 

Quarterly shareholder returns of $2.8 billion included $1.75 billion of buybacks under a $20 billion plan. A previously announced dividend of $0.56 per share is unchanged from the prior fourth quarter. 

Second-quarter results are scheduled for 15 July. 

ii view:

Citigroup is today focused on being a banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home US marketplace. In 2024, US personal banking generated its biggest slug of sales at 25%. That was followed by Markets, including equity and fixed income trading, at 24.4%; then Services, offering treasury and trade solutions at 24.2%. Banking for corporations at 17% and Wealth Management makes up most of the balance.    

For investors, recently announced US trade tariffs may eventually impact the bank’s corporate customers, reducing business and potentially raising credit provisions. Credit provisions increased by $1 billion from the previous quarter to $22.8 billion. Competition across the financial sector remains intense, while previous overseas business disposals under the transformation programme have reduced geographical diversification. 

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To the upside, management’s transformation programme is ongoing, with improvements in performance now targeted. Diversity across its operations persists despite a more focused strategy. A capital cushion, or CET1 ratio of 13.4% is 1.3 percentage points above the current regulatory minimum, while a focus on shareholder returns puts the shares on a forecast dividend yield of around 3.7%.

For now, and despite tariff risks, the bank’s efficiency drive and a consensus analyst estimate of fair value above $86 per share are likely to keep investors interested. 

Positives: 

• Business transformation
• Attractive dividend payment (not guaranteed)

Negatives:

• Uncertain economic outlook
• Reduced geographical diversity

The average rating of stock market analysts:

Buy