Source: Sharecast
The announcement, made at the same time as strong fourth-quarter earnings, was described by chief executive officer Jane Fraser as a necessary step to support the bank's continued transformation and growth.
For the fourth quarter, Citigroup reported net income of $2.9bn, or $1.34 per share, exceeding analysts’ average estimate of $1.22.
Revenue rose to $19.6bn, up from $17.4bn in the same period the prior year, driven by robust gains in trading and investment banking.
Fixed income trading revenue soared 37% to $3.5bn, while equities trading climbed 34% to $1.1bn.
Investment banking revenue also increased, by 35% to $925m, benefiting from a resurgence in mergers and initial public offerings.
The bank’s board authorized a $20bn share buyback programme, reflecting Fraser’s efforts to enhance shareholder value despite the reduced profitability target.
Fraser emphasised that the revised ROTCE target was “a waypoint, not a destination”, reaffirming her commitment to achieving sustainable long-term growth.
“2024 was a critical year and our results show our strategy is delivering as intended and driving stronger performance in our businesses,” Jane Fraser said.
“While we now expect our 2026 ROTCE to be between 10% and 11% in order to make additional investments in our businesses and transformation, this level is a waypoint, not a destination.”
Fraser’s transformation strategy, launched in 2022, was focussed on simplifying operations, addressing regulatory deficiencies, and strengthening core businesses such as wealth management, which saw a 20% revenue increase to $2bn in the fourth quarter.
The chief executive had also made strides in resolving legacy issues, including the termination of a 2013 enforcement action by the Federal Reserve related to anti-money laundering practices.
At 0925 EST (1325 GMT), shares in Citigroup were up 4.36% in premarket trading in New York, at $76.70.
Reporting by Josh White for Sharecast.com.
