ii view: is Citigroup the US bank to own in 2026?

Fourth-quarter results to 31 December

• Revenue up 2% to $19.9 billion
• Earnings per share (EPS) down 11% to $1.19 per share
• Capital cushion or CET 1 ratio of 13.2%, unchanged from Q3

Chief executive Jane Fraser said:

“We returned over $17 billion of capital to our shareholders - the most since the pandemic - including $13 billion through share buybacks. We enter 2026 with visible momentum across the firm.”

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ii round-up:

Citigroup Inc (NYSE:C) has reported adjusted earnings that beat Wall Street hopes, with the bank flagging a potentially reduced credit provision should President’s Trump suggestion for a 10% cap on credit card fees go ahead. 

Fourth-quarter revenues to late December rose 2% to $19.9 billion, aided by record annual revenue for each of its five divisions over the course of 2025. Earnings in the final quarter fell 11% to $1.19 per share, hit by charges made in relation to the sale of its Russian business. Adjusted earnings of $1.81 excluding Russia related charges exceeded analyst forecasts of $1.67 per share.

Shares in the S&P 500 bank fell 3% in post results US trading having come into these latest numbers up by almost 66% in 2025. That’s comfortably ahead of 51% and 34% gains for rivals Bank of New York Mellon Corp (NYSE:BK) and JPMorgan Chase & Co (NYSE:JPM). The S&P 500 index rose 16% last year. 

Under CEO Jane Fraser, Citi has embarked on an efficiency improvement programme including a move from two giant divisions to five core businesses, aiding a spotlight on areas of growth and reducing management layers and costs.

Fourth-quarter revenues at the US Personal Banking division rose 3% year-over-year to $5.3 billion, driven by growth of its own branded credit cards and secondary branded retail store cards. Competing against Barclaycard, Citigroup’s card business ranks third for market share in the USA. 

Quarterly revenues at its Services business rose 15% from a year ago to $5.9 billion, pushed by demand for treasury and trade solutions. The division facilitates trillions of transactional flows daily. 

Corporate banking revenues rose 78% year-over-year to $2.2 billion, driven by increased company lending and a 38% gain in investment banking services demand. Sales at the Wealth business improved 7% from a year ago to $2.1 billion. 

Citi forecast a 2026 expenses, or efficiency ratio of 60%, higher than management’s previous estimate of less than 60%, although still down from the 63% achieved at the end of 2025. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results. First-quarter numbers are scheduled for 14 April. 

ii view:

Citigroup is today focused on being a banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home US marketplace. 

US Personal Banking, Services and Markets each generated around a quarter of total group revenues over this latest financial year, with the balance split relatively evenly between Corporate banking and the Wealth.   

For investors, investment costs to modernise areas such as systems and infrastructure are expected to prove a drag on efficiency in 2026. US trade tariffs could yet hit corporate America, reducing business and potentially raising credit provisions. Potential actions by President Trump, like capping credit card rates, cannot be ignored. Previous overseas business sales as part of the group’s transformation programme have reduced geographical diversification, while a forecast price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap. 

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On the upside, management’s transformation programme is ongoing. Diversity across its operations persists despite a more focused strategy. A capital cushion, or CET1 ratio of 13.2% sits 1.6% above the regulatory requirement, while a focus on shareholder returns leaves the shares on a prospective dividend yield of just over 2%.

On balance, and despite ongoing risks, a continuing management push for efficiency and a consensus analyst estimate of fair value above $130 per share offers grounds for longer-term optimism. 

Positives: 

• Business transformation
• Attractive dividend payment (not guaranteed)

Negatives:

• Uncertain economic outlook
• Reduced geographical diversity

The average rating of stock market analysts:

Buy