Citigroup reported fourth-quarter earnings that exceeded Wall Street expectations on Wednesday, supported by a rebound in dealmaking activity and stronger demand for services from corporate clients.
Major U.S. banks benefited as mergers and acquisitions picked up toward the end of last year. After a weak first half marked by tariff-related uncertainty and deal delays caused by the U.S. government shutdown, activity accelerated in the second half as market conditions improved.
Rising corporate confidence and a more supportive regulatory environment encouraged companies to pursue mergers and capital-raising transactions. This trend boosted advisory fees for lenders, including Citigroup, whose investment banking fees jumped 35% to $1.29 billion, up from $951 million a year earlier.
“With record revenues and positive operating leverage across all five of our businesses, 2025 marked a year of meaningful progress,” Chief Executive Jane Fraser said in a statement, adding that recent investments are driving solid top-line growth.
Citi’s shares climbed 65.8% in 2025, significantly outperforming both its peers and a broader bank stock index. The lender also repurchased $13.25 billion worth of shares last year. While the stock continues to trade at a discount to rivals, that gap has narrowed.
Dealmaking gains momentum
Global investment banking revenue rose 15% year-on-year to nearly $103 billion, the second-highest level on record after 2021, according to data from Dealogic. Over the same period, Citigroup ranked fifth among banks by total fees earned.
Analysts expect deal activity to remain strong into the new year, supported by lower interest rates and a more accommodating regulatory backdrop. Citi’s banking division revenue surged 78% to $2.2 billion in the fourth quarter, and the lender delivered a record year for M&A performance in 2025.
“The turnaround story at Citi continues under Jane Fraser, with investment banking and advisory services driving the earnings beat,” said David Wagner, head of equity and portfolio manager at Aptus Capital Advisors. He added that Citigroup may finally be shedding its long-standing laggard label.
Citigroup’s return on tangible common equity stood at 5.1% in the fourth quarter, well below its 10% to 11% target for next year. Excluding losses linked to Russia, the return would have been 7.7%.
Last month, Citi’s board approved the sale of its Russian unit, AO Citibank, to Renaissance Capital. The deal resulted in a pre-tax loss of roughly $1.2 billion, largely due to currency translation effects. Shares fell 2.6% in early trading following the earnings release.
Trading performs strongly in 2025
Market volatility remained elevated in the fourth quarter as investors weighed concerns over a potential bubble in artificial intelligence stocks, the Federal Reserve’s interest rate outlook and ongoing geopolitical tensions.
Citi’s total markets revenue slipped 1% in the quarter to $4.54 billion, reflecting weaker performance in fixed income and equities. On a full-year basis, however, markets revenue rose 11% compared with 2024, as client trading activity benefited from sharp market swings.
Equities revenue declined 1% in the quarter, primarily due to softer cash equities trading. At the same time, prime balances in the markets division surged more than 50%, highlighting rapid growth in prime brokerage services. This business, which involves lending cash and securities to hedge funds, has become a key profit driver for large U.S. banks and an area of intense competition.
Net interest income increased 14% in the fourth quarter, supported by loan growth. While lower interest rates can pressure margins, they also tend to stimulate borrowing demand.
Earnings beat expectations
On an adjusted basis, Citi posted earnings of $1.81 per share for the fourth quarter, surpassing the $1.67 consensus estimate, according to data compiled by LSEG.
Revenue from the wealth management division, a core pillar of Fraser’s growth strategy, rose 7% to $2.13 billion, driven by expansion in Citigold and the private bank.
Operating expenses increased 6% in the quarter, reflecting higher compensation, tax charges, legal costs and spending on technology and communications. Citi has been undergoing a broad reorganization and workforce reduction, with about 1,000 job cuts expected this week. Chief Financial Officer Mark Mason said headcount is likely to continue declining into 2026 as productivity improves and artificial intelligence tools are rolled out.
Elsewhere in the sector, JPMorgan Chase also beat fourth-quarter profit estimates, while Bank of America and Wells Fargo reported higher quarterly profits.
Citi’s total revenue for the quarter rose to $19.87 billion, up from $19.47 billion a year earlier.
