Citigroup (C) fourth-quarter 2024 earnings beat expectations
Citigroup Shares rose on Wednesday after fourth-quarter profit beat estimates, reflecting the bank's overall strength.
“2024 is a critical year and our results demonstrate that our strategy is delivering as expected and driving stronger performance across our business. Our net profit increased by nearly 40% to $12.7 billion, outperforming the overall Annual revenue targets, including record highs in Services, Wealth and U.S. Personal Banking,” CEO Jane Fraser said in the release.
The company's stock price rose nearly 7%.
Here's how the company performed relative to LSE analyst consensus estimates:
- income: $1.34 per share, vs. $1.22 expected
- income: $19.58 billion vs. $19.49 billion expected
Citi reported a net profit of $2.86 billion, an improvement from a net loss of $1.84 billion a year ago, when its results were hurt by a number of charges it booked in the final period of 2023. Revenue increased 12% year over year.
The bank did say it expects tangible return on common equity to be between 10% and 11% in 2026 as it continues to invest and reshape the business. The range is below the bank's previous medium-term target of 11% to 12%.
Fraser called the level “a waypoint, not a destination” and said it should rise as the company continues to invest internally.
“As CEO, I want this company to be successful long-term and make sure we have the capabilities to invest in that,” Fraser said on a conference call with analysts.
“This level is a destination, not an end point. We intend to drive returns well above this level and deliver Citi's full potential to our shareholders,” Fraser said.
Citi also announced a $20 billion stock buyback. Chief Financial Officer Mark Mason said about $1.5 billion of that should occur in the first quarter.
The bank reported growth across a number of different business units in the fourth quarter. Investment banking was a particular bright spot, with revenue rising 35% year-on-year to US$925 million. Citi said continued momentum in investment-grade corporate bond issuance is helping to drive business in this area. As a result, total bank income grew by 12%, rising to 27% when the impact of loan hedging is taken into account.
Markets revenue increased 36% year over year to $4.58 billion as fixed income and equities businesses grew. Fixed-income market revenue was $3.48 billion, according to StreetAccount, well above analysts' forecasts of $2.95 billion.
Wealth and services segment revenue grew 20% and 15% year-on-year respectively.
Citi's credit costs for the quarter were $2.59 billion. That was down from $3.55 billion a year ago and $2.68 billion in the third quarter. The bank's net credit loss provisions increased by $203 million, also lower than the previous period.
Questions from Wall Street analysts on Wednesday's conference call focused on Citigroup's spending and its progress in turning a profit. The company expects spending to decline slightly in 2025, which Mason said will include about $600 million in costs related to the company's repositioning.
“We all want the transformation to be done quickly, and we want the transformation to be done right. That's why there is a temporary increase in fees – to invest in making that happen,” Fraser said.
The CEO also said a planned initial public offering of Bank of America's Mexican retail unit, Banamex, likely wouldn't happen until 2026.
Citi's stock price is set to perform strongly in 2024, rising nearly 37% year over year. As of Wednesday, the stock was up more than 4% year to date.