Citigroup said it will repurchase $20 billion worth of its stock in the coming years — unleashing billions of excess capital the bank had been keeping on hand in order to meet a key ask from shareholders.
The announcement was part of the bank’s stronger-than-expected results for the fourth quarter, in which revenue rose across all five of its main business lines. The lender said it now expects revenue to rise to $83.5 billion to $84.5 billion in 2025, higher than what analysts were anticipating.
The moves sent shares soaring to their highest level in more than three years as investors looked past signs that Chief Executive Jane Fraser is struggling to contain costs.
“2024 was a critical year and our results show our strategy is delivering as intended,” Fraser said in a statement. “We entered 2025 with momentum across our businesses.”
Elsewhere in the results, Fraser lowered a crucial profitability target that is central to her plans to turnaround the bank. The lender now expects return on tangible common equity to be between 10% and 11% by the end of next year, according to a statement.
It had previously forecast the metric would be between 11% and 12% by that time.
Citigroup’s move confirms what analysts have warned: That the lender may find it hard to keep a lid on expenses while it implements a plan to overhaul operations around the world and strengthen internal controls that have frustrated regulators.
The bank said that for 2025, costs will be only slightly lower than the $53.8 billion it spent in 2024 as it makes continued investments in its businesses.
The buyback program is a “clear indication of the continued confidence that we have around the earnings momentum of our franchise,” Chief Financial Officer Mark Mason said on a conference call with journalists. “We’ve got a path on bringing our costs down.”
Fraser told investors in early 2022 that she would need five years to execute her turnaround of Citigroup, the only major US bank worth less than it was a half-decade ago. The bank’s return on tangible common equity in 2024 was 7%. That compares with the 22% that rival JPMorgan Chase reported on Wednesday.
“This level is a waypoint, not a destination,” Fraser said in the statement, referring to her revised target. “We intend to improve returns well above that level and deliver Citi’s full potential for our shareholders.”
Citigroup plans to kick off the buyback program by repurchasing $1.5 billion of stock in the first quarter alone, Mason said.
Citigroup’s shares climbed 6.2% to $78.03 at 10:06 a.m. in New York, which was the highest level since June 2021. That made the stock the best performer in the 24-company KBW Bank Index.
Net income in the fourth quarter was $2.9 billion, or $1.34 a share, beating the $1.22 average estimate of analysts tracked by Bloomberg.
Revenue from fixed income trading soared 37% to $3.5 billion, trouncing the $2.94 billion average of analyst estimates. Equities trading revenue also climbed 34% to $1.1 billion.
While corporate lending and debt underwriting revenues were lower than expected, the firm’s investment bankers and equity underwriters topped predictions.
“We’re going to keep going until we get this work done,” Mason said.
Millions earmarked in severance for fresh job cuts
Citigroup is planning to reserve $600 million for severance payments in 2025 as it continues to trim its workforce and cut expenses, according to Mason.
The $600 million figure is down about 14% from last year, when the bank shed more than 10,000 jobs. Typically, Mason said, severance costs would hover around $300 million.
The bank is about halfway through a years-long reorganization that it initially anticipated would cull 20,000 jobs globally. Part of the overhaul includes investments in technology that would, Mason said, “allow us to eliminate manual processes.”
Bloomberg’s Paige Smith and Jenny Surane contributed reporting.
