To The Moon

$Citigroup(C)$ is expected to report its quarterly earnings for fiscal Q1 2025 on 15 April 2025 before the market open.

The consensus estimate for revenues for the quarter is projected to reach $21.14 billion, which represent a modest 0.2% from the same quarter last year.

The earnings per share consensus estimate is expected to come in at $1.85 per share which would be an increase of 16.5% from the same period last year.

Citigroup (C) Last Positive Earnings Call Saw Decline Of 15.55%

Citigroup saw its share price decline by 15.55% since its last positive earnings call on 15 Jan 2025.

Citi reported strong financial results for 2024 with significant revenue and net income growth, supported by successful strategic initiatives. However, the adjustment of the 2026 RoTCE target and challenges in the banking segment indicate areas requiring attention. Despite these issues, the overall sentiment leans positive, driven by robust market performance and strategic clarity.

Citigroup (C) Guidance

During Citi's Q4 2024 earnings call, the management provided comprehensive guidance on various metrics and financial targets. They reported a full-year net income increase of nearly 40% to $12.7 billion, with revenues rising 5% excluding divestitures. The return on tangible common equity (RoTCE) grew by over 200 basis points. For 2025, they anticipate revenues to be around $83.5 to $84.5 billion, representing a 3% to 4% increase, while expenses are expected to slightly decline from the 2024 level.

They also aim to achieve a RoTCE of 10% to 11% by 2026, emphasizing that this is a waypoint rather than a final destination. Additionally, Citi announced a $20 billion share repurchase program, demonstrating their confidence in ongoing earnings momentum and commitment to returning capital to shareholders.

Key Factors Influencing Citigroup’s Q1 2025 Earnings

Markets were up 6%, with equities up 26%, marking a record year for Citi in a low volatility environment.

Restructuring Progress

Simplification Efforts: Citigroup’s multi-year reorganization (announced in 2023) aims to exit non-core markets, reduce bureaucracy, and cut costs. By Q1 2025, progress in streamlining operations (e.g., exiting consumer banking in 14 markets) could boost efficiency and reduce expenses.

Citi returned almost $7 billion in capital to shareholders in 2024 and announced a $20 billion share repurchase program.

Cost Savings: Investors will watch for updates on Citi’s $2–2.5B annual cost-saving target. Success here could lift profitability.

Net Interest Income (NII)

Interest Rate Sensitivity: Citi’s NII depends on the global rate environment. If central banks (Fed, ECB, etc.) maintain higher rates, NII could stabilize. Rate cuts in 2024/2025 might pressure margins. Net income was up nearly 40% to $12.7 billion, with revenues up 5% ex-divestitures and fee revenue up 17%.

Loan Growth: Corporate and institutional lending trends (especially in transaction banking) will be critical. Weak global growth or reduced trade finance demand could offset gains.

All five core businesses generated positive operating leverage for the full year.

Global Exposure

Emerging Markets: Citi’s large international footprint (e.g., Asia, Latin America) ties earnings to emerging market growth, currency fluctuations, and geopolitical risks (e.g., China slowdown, Middle East tensions).

Transaction Services: Strength in treasury services and cross-border payments (a Citi specialty) could offset volatility in other segments.

The 2026 RoTCE target was adjusted to between 10% and 11%, indicating a slower path to improved returns.

Investment Banking & Trading

Capital Markets Activity: A rebound in M&A, IPOs, and debt issuance in 2024/2025 would boost fees. Citi’s investment banking division (ranked top-tier globally) is a key revenue driver.

Revenue was up 7% for the year, including fee growth of 18%, with net new investment asset flows growing by 40%.

Trading Revenue: Fixed-income and equities trading could benefit from market volatility or shifts in investor sentiment.

Credit Quality

Loan Loss Reserves: Provisions for credit losses (PCL) depend on global economic health. A soft landing in the U.S. and stabilization in emerging markets would minimize defaults.

Corporate lending revenues decreased by 24%, driven by lower revenue share and volumes.

Commercial Real Estate (CRE): Citi’s exposure to CRE (particularly office loans) remains a risk if vacancy rates stay elevated.

Regulatory & Legal Risks

Capital Requirements: Stricter Basel III rules or stress-test results could impact capital returns (buybacks/dividends).

Compliance Costs: Ongoing regulatory scrutiny (e.g., risk management reforms) might inflate expenses. Transformation investments were up 1%, with increased expenses for technology and transformation expected to continue.

Citi acknowledged the impact of wildfires in Los Angeles on clients and colleagues, which may affect future credit and operational costs.

Citigroup (C) Price Target

Based on 16 Wall Street analysts offering 12 month price targets for Citigroup in the last 3 months. The average price target is $88.28 with a high forecast of $110.00 and a low forecast of $75.50. The average price target represents a 43.22% change from the last price of $61.64.

I think in order for C to move to the higher end of the price target, I think we need to watch the execution of the restructuring plan and progress in selling non-core assets (e.g., Mexico consumer unit Banamex) will set the stage for 2025.

On top of that analysts will look for signs that cost cuts and restructuring are translating to higher returns on equity (ROE), which lagged peers like JPMorgan in recent years.

It is also important to watch Citi’s performance relative to global banks (e.g., HSBC, $JPMorgan Chase(JPM)$) will highlight its competitiveness in transaction services and investment banking.

Technical Analysis - Exponential Moving Average (EMA)

We are seeing similar performance in terms of technical for Citigroup, as it is trading sideways last week ahead of its earnings result, and we are seeing some investor sentiment coming back, but it is still not enough to push into a significant momentum to get into this bank stock.

I think these two factors might be able to help Citigroup gain some ground to push into a stronger momentum.

1. Wealth Management Push: Citi’s expansion in wealth management (targeting high-net-worth clients) could diversify revenue streams.

2. Digital Transformation: Investments in AI and blockchain for transaction banking might enhance efficiency and client retention.

Summary

Citigroup’s Q1 2025 earnings will hinge on whether there is a successful execution of its restructuring plan (cost savings, divestitures).

We are facing some global market uncertainty so the global macroeconomic stability (interest rates, trade growth) might hamper Citigroup earnings growth. Recession risks, trade disruptions, or a stronger U.S. dollar could hurt international revenue.

Rebound in investment banking and trading activity and mitigation of credit risks (CRE, emerging markets) would need to increase amid the market volatilty. Delays in restructuring or failure to meet cost-saving targets would disappoint investors.

If Citi delivers on its simplification goals, Q1 2025 could mark a turning point in its long-term turnaround story.

Appreciate if you could share your thoughts in the comment section whether you think Citigroup could gather a RoTCE Growth even though there is market volatilty due to the tariff turbulence.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.