Citigroup’s Fourth-Quarter Earnings Exceeded Investment Banking Expectations.

(VOR News) – Wednesday saw Citigroup’s shares rise as the bank as a whole is showing good performance based on fourth quarter results exceeding forecasts on both the top and bottom lines.

2024 was a pivotal year; the results of our firm operations demonstrate that our strategy is generating as expected and improving corporate performance.

In a news release, CEO Jane Fraser stated that we met our full-year income objective, with record years in Services, Wealth, and U.S. Personal Banking. Our net income increased by more than 40% to $12.7 billion, and we also exceeded our expectations.

Of the company’s shares, around seven percent have changed.

The company performed as follows in relation to the consensus forecasts of LSEG analysts:

Comparatively to the expected $1.22, earnings came in at $1.34 per share.

Comparatively to the expected $19.49 billion in revenue, $19.58 billion

After posting a net loss of $1.84 billion in the previous year due to the unfavorable impact of certain charges made in the later half of 2023, Citigroup posted a net income of $2.86 billion this year, an improvement over its previous performance. Twelve percent more money came in than the previous year.

The bank did note that although it is still Citigroup making investments and reorganizing its operations, it expected that its return on tangible common equity would be between 10% and 11% in the year 2026. This range is not in line with the previously stated medium-term target of the bank—between 11 and 12 percent.

Fraser said that level was “a waypoint, not a destination,” and he thought it should rise if the company keeps investing in the business. Fraser said, “As CEO, I want this company to be set up for long-term success and to ensure that we have sufficient capacity to invest for that,” over a conference call to investors.

This particular level serves more as a waypoint than a goal. Fraser says “We intend to improve returns significantly above that level and deliver Citigroup’s full potential to our shareholders through our efforts.”

A $20 billion stock buyback was also announced by Citigroup.

Mark Mason, the Chief Financial Officer, anticipates that approximately $1.5 billion of this amount will transpire during the first quarter. During the fourth quarter, the bank observed an increase in commercial activity in numerous sectors. One industry that performed exceptionally well was investment banking.

Its income grew by 35% year-over-year to reach $925 million. Citigroup said that the continuous momentum in the distribution of investment grade corporate debt helped that specific sector of the company’s activities expand. When loan hedges were taken into account, the final result was a 12% rise in total banking revenue—which rose to 27%.

Both the fixed income and equity sectors saw expansion, which helped to explain the 36% annual revenue increase of the market overall to reach $4.58 billion. Street Account reports that the fixed income markets brought in $3.48 billion, far more than the $2.95 billion analysts had projected.

Comparatively to the year before, the wealth and services divisions both witnessed a 20% and 15% rise in income correspondingly.

Citigroup credit costs throughout the quarter came to $2.59 billion. Conversely, this number was lower than $2.68 billion in the third quarter and $3.55 billion the year before. The Citigroup lowered its allowances for loan losses by a net $203 million, also less than the allowances it had in the past months.

Most of the queries asked by Wall Street analysts during the Wednesday conference call focused on Citi’s expenditure and the developments in its recovery. The company expects somewhat lower spending in 2025, which Mason said would cover around $600 million in expenses related to corporate repositioning.

We all want the transition to be finished right and as fast as feasible. Fraser claims that this is the reason our expenses are momentarily high: we need to make the investments required to reach them.

Furthermore mentioned by the chief executive officer was the possibility that Banamex, Bank of America’s retail operation in Mexico, would not make its first public offering until 2026.

With Citigroup shares rising by more than 37% over the year 2024, it performed really brilliantly. As of Wednesday, about four percent of the value of the stock has been gained thus far this year.

SOURCE: CNBC

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