Citigroup (NYSE:C) reported on Tuesday that the second-quarter fiscal 2025 revenue growth was 8% year-over-year and was $21.7 billion, beating the analyst consensus estimate of $20.9 billion. This growth was driven by each of the five interconnected businesses.
Excluding divestiture-related impacts in both periods, revenues were up 9%.
The U.S. banking giant reported earnings per share of $1.96, increased from $1.52 a year ago, beating the analyst consensus estimate of $1.63.
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Net income was $4.0 billion, compared to $3.2 billion in the prior-year period, driven by the higher revenues, partially offset by the higher expenses and the higher cost of credit.
Net interest income increased by 12%, driven by Markets, Services, U.S. Personal Banking (USPB), Wealth and Banking, partially offset by a decline in All Other. Non-interest revenue decreased 1%, driven by All Other, USPB, Markets and Services, offset by increases in Banking and Wealth.
Operating expenses rose 2% to $13.6 billion, and the efficiency ratio of 63% improved by ~340 bps year over year.
Return on average tangible common equity (RoTCE) reached 8.7%, up ~150 bps, and the Common Equity Tier 1 (CET1) Capital ratio was 13.5% for the quarter, ~140 bps above the current regulatory requirement.
The cost of credit, $2.9 billion, increased by 16%, driven by a higher net build in the allowance for credit losses (ACL) related to deterioration in the macroeconomic outlook in the current quarter relative to the prior-year period and a net ACL build related to transfer risk associated with client activity in Russia, largely offset by a lower net ACL build for volume and lower net credit losses in the card portfolios in USPB.
Services revenues of $5.1 billion were up 8%, driven by Treasury and Trade Solutions growth.
Markets revenues of $5.9 billion increased 16%, driven by growth in Fixed Income and Equity markets revenues.
Equity markets revenues of $1.6 billion increased 6%, driven by momentum in prime services, with record prime balances up approximately 27%, as well as higher client activity and volumes in cash equities and monetization of market activity in derivatives.
Banking revenues of $1.9 billion increased 18%, driven by growth in Corporate Lending and Investment Banking.
Investment Banking revenues of $981 million increased by 15%, driven by an increase in Investment Banking fees of 13%, reflecting growth in Advisory and Equity Capital Markets (ECM).
Wealth revenues of $2.2 billion increased 20%, driven by growth across Citigold, the Private Bank, and Wealth at Work.
U.S. Personal Banking (USPB) revenues of $5.1 billion increased by 6%, driven by growth in Branded Cards and Retail Banking.
The board approved an increase to the common stock dividend to 60 cents per share, up from 56 cents per share, starting in the third quarter of 2025.
Key Takeaways from Citigroup CFO Mark Mason’s Call
During the conference call, Citigroup CFO Mark Mason reportedly indicated an expectation of softer economic activity in the second half of 2025. However, he also noted that the risk of a recession has fallen.
Regarding consumer spending, Mason anticipates further cooling as tariffs come through. He also commented that inflation has shown only a limited effect from these tariffs thus far.
Looking at wealth management, Mason expressed an expectation for continued momentum in net new assets.
Outlook
Citigroup expects fiscal 2025 revenue of ~$84 billion (up from the prior forecast of around $83.1 billion-$84.1 billion), compared to the analyst consensus estimate of $83.84 billion. The banking firm reiterated expenses just shy of $53.4 billion.
The company expects 2025 Branded Cards NCL range: 3.50%-4.00% and Retail Services NCL range: 5.75%-6.25%.
It reiterated ACL build will be a function of the macroeconomic environment and business volumes.
Citigroup stock surged over 25% year-to-date (topping the S&P 100 index’s 7%), driven by stronger results in recent quarters as CEO Jane Fraser implemented a broad restructuring to drive profits.
Price Action: C stock is trading higher by 1.12% to $88.48 premarket at last check Tuesday.
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