A month has gone by since the last earnings report for Citigroup (C). Shares have added about 4.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Citigroup due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Citigroup Q4 Earnings & Revenues Beat, Expenses Fall Y/Y

Citigroup’s adjusted net income per share of $1.34 surpassed the Zacks Consensus Estimate of $1.25. The company had incurred a loss of $1.16 in the fourth quarter of 2023.

For 2024, adjusted net income per share was $4.04, which missed the Zacks Consensus Estimate of $5.88. This compares unfavorably with $5.94 reported in the year-ago quarter.

As expected, Citigroup posted a year-over-year increase of 35% in investment banking revenues, driven by strength in Debt Capital Markets. The company also witnessed a rise in total loan balance in the quarter. However, the deposit balance declined sequentially.

Net income (GAAP basis) in the quarter was $2.9 billion against a loss of $1.8 billion in the prior-year quarter.

For 2024, the company reported net income of $12.7 billion, up 37.4% year over year.

Citigroup’s Revenues Increase, Expenses Decrease

Revenues, net of interest expenses, moved up 12.3% year over year to $19.6 billion in the fourth quarter. The top line surpassed the Zacks Consensus Estimate of $19.55 billion.
 
Full-year revenues, net of interest expenses, aggregated to $81.2 billion, up 3% year over year. The top line surpassed the Zacks Consensus Estimate of $81.05 billion. 

Net Interest Income (NII) fell marginally year over year to $13.7 billion, while non-interest revenues (NIR) increased 62% to $5.8 billion.

Citigroup’s operating expenses declined 18% year over year to $13.2 billion. This decrease in expenses was primarily due to savings associated with the company’s organizational simplification and stranded cost reductions, partially offset by volume-related expenses, continued investments in transformation and other risks, and control initiatives.

Citigroup’s Segmental Performance

In the Services segment, total revenues, net of interest expenses, were $5.17 billion in the reported quarter, up 15% year over year. The increase primarily reflects a smaller impact from the Argentina currency devaluation and continued momentum across Treasury and Trade Solutions and Securities Services, both of which continued to gain market share this year. 

The Markets segment’s revenues increased 36% year over year to $4.6 billion, driven by growth in Fixed Income and Equity markets revenues.

Banking revenues of $1.24 billion moved up 27% year over year, primarily driven by growth in IB.

U.S. Personal Banking’s revenues were $5.2 billion, up 6% from the prior-year quarter, driven by higher net interest income growth in Interchange fees.
 
In the Wealth segment, revenues were $2 billion in the reported quarter, rising 20.4% year over year. The increase was driven by a 22% rise in non-interest revenues, reflecting higher investment fee revenues on growth in client investment assets, as well as a 20% jump in net interest income due to higher average deposit spreads and volumes.

Revenues in the All Other segment declined 34% year over year to $1.35 billion.

Citigroup’s Balance Sheet Position

At the end of the fourth quarter, Citigroup’s deposits were down 1.8% from the prior quarter’s levels to $1.28 trillion. Nonetheless, its loans increased marginally on a sequential basis to $694.5 billion.

Citigroup's Credit Quality Improves

Total non-accrual loans fell 16% year over year to $2.7 billion. The bank’s provisions for credit losses and benefits and claims for the fourth quarter were $2.59 billion, down 27% from the year-earlier quarter.

Nonetheless, the allowance for credit losses on loans was $18.5 billion, down 2% from the prior-year quarter’s levels.

Citigroup's Capital Position Strong

At the end of the fourth quarter, the bank’s Common Equity Tier 1 capital ratio was 13.6%, up from 13.4% in the fourth quarter of 2023. The company’s supplementary leverage ratio in the reported quarter was 5.8%, which remained unchanged from the prior-year quarter.

Outlook

2025

Management anticipates revenues to reach $83.5-$84.5 billion compared to $81.3 billion reported in 2024. This rise will be primarily driven by rise in investment banking activities along with continued fee growth in Wealth segment. 

NII (excluding Markets) is projected to be slightly up year over year compared to $54.1 billion in 2024. 

Management anticipates expenses to be slightly lower than $53.8 billion (excluding FDIC special assessment and Civil Money Penalties), suggesting a decline from the $54 billion reported in 2024. The decline will be driven by organizational simplification, cost reductions, and productivity savings, partially offset by increased investments in transformation, technology, businesses, and higher volume-related expenses.

Medium-Term Targets – 2026

Management expects revenue to grow $87-$92 billion, witnessing a CAGR of 4-5% in the medium term.

The company anticipates expenses to be below $53 billion, excluding FDIC fees, indicating a decline from the $56.4 billion reported in 2023.

Management expects the return on tangible common equity to be 10-11%.

The efficiency ratio is expected to be more than 60%.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Citigroup has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Citigroup has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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