Citigroup C-N beat Wall Street estimates for fourth-quarter profit on Wednesday, buoyed by a rebound in dealmaking and stronger demand for services to corporate clients.
Wall Street banks benefited as mergers and acquisitions picked up late last year. Activity rebounded in the second half after tariff announcements weighed on markets in the first half and the U.S. government shutdown delayed deals.
Renewed corporate confidence and a more accommodating regulatory backdrop prompted companies to strike deals, lifting fee income for lenders advising on mergers and capital raisings.
Citigroup’s investment banking fees rose 35 per cent to US$1.29-billion, up from US$951-million a year earlier.
Citi’s shares gained 65.8 per cent in 2025, outperforming its peers and an index tracking bank stocks by a wide margin. The bank bought back US$13.25-billion in stock last year, and although shares still trade at a discount to rivals, they have narrowed the gap.
Industrywide global investment banking revenue rose 15 per cent from a year earlier to almost US$103-billion, the second-highest after 2021, Dealogic data showed. Citigroup earned the fifth-highest fees across banks over the same period.
Analysts expect deal momentum to extend into the new year, helped by lower interest rates.
Revenue in Citi’s banking unit climbed 78 per cent to US$2.2-billion in the fourth quarter, and the bank posted a record M&A performance in 2025.
“The turnaround story for Citi continues under Jane Fraser as investment banking and advisory services drove the beat,” said David Wagner, head of equity and portfolio manager at Aptus Capital Advisors. “Citigroup could be officially shedding its laggard reputation.”
The lender’s board approved the sale of its Russian unit, AO Citibank, to Renaissance Capital last month, resulting in a pre-tax loss of about US$1.2-billion, largely related to currency translation.
Citigroup’s return on tangible common equity was 5.1 per cent in the fourth quarter, far short of its 10-per-cent to 11-per-cent target for next year. Excluding the Russia loss, the return was 7.7 per cent.
Its shares were down 4.6 per cent in afternoon trading.
Citi last year completed the sale of a 25-per-cent stake in its Grupo Financiero Banamex to a company owned by Mexican billionaire Fernando Chico Pardo and his family.
“We are focused on the next step in the exit process (for Banamex), and we’re actively looking at selling some additional smaller stakes as we lead up to an IPO,” said CEO Jane Fraser on a call with analysts.
Last month, the Office of the Comptroller of the Currency withdrew a 2024 amendment to Citi’s 2020 consent order requiring it to improve controls and data quality.
Fraser pointed to the OCC’s action as evidence that regulators are seeing “demonstrable improvement” in the bank’s safety and soundness.
“Ultimately, the timing is up to the regulators,” she added.
The underlying 2020 order requires the bank to make numerous operational changes to address data management problems and implement controls to manage ongoing risks.
The clearance of the notices marks progress toward Fraser’s long-running effort to fix risk and control shortcomings that have pressured the bank’s profits.
Markets remained volatile in the fourth quarter as investors speculated about a potential bubble in artificial intelligence stocks, the Federal Reserve’s interest rate path and geopolitical tensions.
Citi’s total markets revenues fell 1 per cent in the quarter to US$4.54-billion, driven by fixed income and equities. Markets revenue grew 11 per cent for the full year, compared with 2024.
Market swings often boost trading income at banks as clients reposition portfolios.
Equity markets revenue was down 1 per cent in the quarter, driven by lower cash equities.
Prime balances in the markets division jumped more than 50 per cent, the firm said.
Rapid growth in prime brokerage, the business of lending cash and securities to hedge funds to finance large trades, has emerged as a profit engine for big U.S. banks, intensifying competition for clients. Fraser has emphasized prime services as a focus for fast-growing revenue.
Net interest income, the difference between what a bank earns on loans and pays on deposits, rose 14 per cent in the fourth quarter.
While lower interest rates can weigh on net interest income, they can also spur demand from borrowers.
On an adjusted basis, Citi reported a profit of US$1.81 per share in the fourth quarter, compared with analysts’ average estimate of US$1.67, according to data compiled by LSEG.
Revenue in Citi’s wealth management division, a key part of Fraser’s growth strategy, climbed 7 per cent to US$2.13 billion, driven by growth in Citigold and the private bank.
Expenses climbed 6 per cent in the quarter, driven by increases in compensation and benefits, tax charges, legal expenses and technology and communication. Fraser has carried out a sweeping reorganization and reduced headcount. The lender is set to cut about 1,000 jobs this week, a source familiar with the matter said on Monday.
“I would expect headcount to continue to decline in 2026,” said Chief Financial Officer Mark Mason. “As we continue to improve productivity and implement tools like AI, we see an impact, or expect to see an impact on headcount.” Rival JPMorgan Chase beat estimates for fourth-quarter profit on Tuesday, while Bank of America and Wells Fargo reported higher quarterly profits.
Citi’s total revenue rose to US$19.87-billion in the quarter, compared with US$19.47-billion a year earlier.