Citigroup Reports Strong First Quarter Earnings Amid Economic Concerns

Citigroup Inc. reported a net income of $4.1 billion for the first quarter of 2025, marking a 21% increase from the same period last year. Earnings per share reached $1.96, surpassing Wall Street's forecast of $1.85. This strong performance was primarily driven by a 23% surge in equity trading revenue, contributing to a 12% growth in total markets revenue, which reached $6 billion. Fixed income revenue also saw an 8% increase, totaling $4.5 billion.

The banking division experienced a 12% revenue increase to $2 billion, while investment banking fees rose 14% to $1.1 billion. The wealth management unit achieved a record $2.1 billion in revenue, up 24%.

Despite these positive results, Citigroup cautioned that U.S. tariff policies could potentially impact economic growth and stir recession fears. CEO Jane Fraser expressed cautious optimism, emphasizing the enduring strength of the U.S. economy.

Under Fraser's leadership, Citigroup has been undergoing a multi-year effort to streamline operations and improve returns. This includes reducing reliance on IT contractors and enhancing compliance and operations. The bank repurchased $1.75 billion of its shares in the first quarter and plans similar buybacks in the second quarter.

Following the earnings announcement, Citigroup shares rose by 1.4% in premarket trading. However, the stock has declined by 10.2% year-to-date, reflecting broader market trends and investor sentiment.

As the third-largest U.S. lender, Citigroup operates in over 180 countries, offering a wide range of financial products and services to corporations, governments, investors, institutions, and individuals. Appointed as CEO in March 2021, Fraser has been steering the bank through significant transformations, focusing on streamlining operations, enhancing compliance, and improving financial performance.

Analysts are skeptical that Citigroup will meet its long-term profitability target of an 11-12% return on tangible common equity by 2026. Predictions suggest Citi will only reach just over 9%, starkly lower than rivals' forecasts. Despite Citi shares growing over the past year, they trade significantly below book value, reflecting doubts in Fraser's strategy. With Citi's return on tangible equity expected to be 5.6% in the upcoming Q4 report, any continued shortfall might lead to Fraser's exit. Fraser's efforts have included exiting consumer banking in 13 countries and streamlining operations, yet investors remain unconvinced and await tangible results.