Citigroup Inc ((C)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Citi’s latest earnings call highlighted a positive financial outlook for 2024, showcasing significant growth in both revenue and net income. The successful execution of strategic initiatives has played a key role in these achievements. Although the company faces challenges such as adjusting the 2026 RoTCE target and issues within the banking segment, the overall sentiment remains optimistic, buoyed by robust market performance and clear strategic direction.
Strong Full Year Performance
Citi reported an impressive financial performance for the full year, with net income rising nearly 40% to $12.7 billion. The company’s revenues grew by 5% excluding divestitures, while fee revenue surged by 17%. These figures underscore Citi’s ability to drive growth and profitability, even amidst a challenging economic environment.
Record Market Performance
The markets division of Citi witnessed a remarkable year, with overall market performance increasing by 6%. Notably, equities were up by 26%, marking a record year for the company, particularly in a low volatility setting. This performance highlights the strength of Citi’s market strategies and execution.
Successful Share Repurchase Program
In a significant move to return capital to shareholders, Citi repurchased nearly $7 billion in shares during 2024. Additionally, the announcement of a $20 billion share repurchase program demonstrates the company’s confidence in its earnings momentum and commitment to shareholder value.
Positive Operating Leverage Across Businesses
All five of Citi’s core businesses generated positive operating leverage throughout the year. This broad-based growth across various segments indicates strong operational efficiency and strategic execution.
Wealth Management Growth
Citi’s wealth management division experienced robust growth, with revenue increasing by 7% and fee growth reaching 18%. Net new investment asset flows grew by an impressive 40%, highlighting the division’s ability to attract new investments and clients.
Lower Than Expected 2026 Return Target
Citi adjusted its 2026 Return on Tangible Common Equity (RoTCE) target to between 10% and 11%, suggesting a slower trajectory toward improved returns. This adjustment reflects the challenges in achieving higher returns amidst evolving market conditions.
Challenges in Banking Segment
The banking segment faced headwinds, with corporate lending revenues declining by 24%. This decrease was driven by lower revenue share and volumes, indicating areas that require strategic attention to regain growth momentum.
High Transformation Costs
Citi’s commitment to transformation is evident in its increased investment in technology and transformation initiatives, which rose by 1%. These costs are expected to persist, underscoring the company’s focus on modernization and long-term growth.
Impact of Catastrophic Wildfires
Citi acknowledged the ramifications of the catastrophic wildfires in Los Angeles, which have affected clients and colleagues. The potential impact on future credit and operational costs remains a consideration for the company.
Forward-Looking Guidance
Looking ahead, Citi’s management provided robust guidance, forecasting a revenue increase of 3% to 4% for 2025, with expenses expected to slightly decline from 2024 levels. They aim for a RoTCE of 10% to 11% by 2026, emphasizing that this target is a waypoint rather than a final destination. The announcement of a $20 billion share repurchase program further reflects their confidence in sustained earnings momentum and commitment to returning capital to shareholders.
In conclusion, Citi’s earnings call painted a picture of strong financial performance and strategic clarity, despite some challenges. The positive sentiment was driven by robust market results, successful capital return initiatives, and promising growth in wealth management. As Citi navigates future challenges, its commitment to transformation and strategic execution remains a key focus.
