CITIGROUP 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 (M&A) picked up late last year. Activity rebounded in the second half after tariff announcements weighed on markets in the first half and the United States 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 percent to $1.29 billion, up from $951 million a year earlier. Revenue in Citi’s banking unit climbed 78 percent to $2.2 billion in the fourth quarter, and the bank posted record revenue with M&A advisory in 2025.
Citi’s shares gained 65.8 percent in 2025, outperforming its peers and an index tracking bank stocks by a wide margin. The bank bought back $13.25 billion in stock last year, and although shares still trade at a discount to rivals, it has narrowed the gap. The bank’s shares were down 3.9 percent in early afternoon trade.
Deals pick up
Industrywide global investment banking revenue rose 15 percent from a year earlier to almost $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.
“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.
The lender’s board approved the sale of its Russian unit, AO Citibank, to Renaissance Capital last month, resulting in a pretax loss of about $1.2 billion, largely related to currency translation.
Citigroup’s return on tangible common equity was 5.1 percent in the fourth quarter, far short of its 10-percent to 11-percent target for next year. Excluding the Russia loss, the return was 7.7 percent.
Citi last year completed the sale of a 25-percent 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 (initial public offering),” said CEO Jane Fraser on a call with analysts.
Regulatory progress
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.
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.
Earnings beat expectations
On an adjusted basis, Citi reported a profit of $1.81 per share in the fourth quarter, compared with analysts’ average estimate of $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 percent to $2.13 billion, driven by growth in Citigold and the private bank.
Expenses climbed 6 percent in the quarter, driven by increases in compensation and benefits, tax charges, legal expenses and technology and communication.
Rival JP Morgan Chase beat estimates for fourth-quarter profit on Tuesday, while Bank of America and Wells Fargo reported higher quarterly profits.