Categories: Business

Citigroup soars as Fraser plans to buy back $20 billion in shares

(Bloomberg) — Citigroup Inc. said it will repurchase $20 billion of its stock in the coming years, freeing up billions in excess capital the bank has been keeping on hand to meet a key shareholder demand .

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The announcement comes amid the bank’s better-than-expected fourth-quarter results, in which revenue rose across its five main business segments. The lender said it now expects revenue to reach $83.5 billion to $84.5 billion in 2025, more than analysts expected.

The moves sent shares to their highest level in more than three years as investors ignored signs that Chief Executive Jane Fraser was struggling to contain costs.

“2024 was a critical year and our results show our strategy is working as intended,” Fraser said in a statement. “We approached the year 2025 with momentum in all our activities. »

Elsewhere in the results, Fraser lowered a crucial profitability target that is central to his plans to turn around the bank. The lender now expects return on tangible equity to be between 10% and 11% by the end of next year, according to a statement.

He had previously predicted that the measure would then be between 11% and 12%.

Citigroup’s move confirms what analysts had warned: The lender could struggle to rein in spending as it implements a plan to overhaul its operations worldwide and strengthen internal controls that have frustrated regulators.

The bank said that for 2025, costs will be only slightly lower than the $53.8 billion it spent in 2024 as it continues to invest in its business.

The buyback program is a “clear indication of the continued confidence we have in the earnings momentum of our franchise,” Chief Financial Officer Mark Mason said in a conference call with reporters. “We have a way to reduce our costs.”

Fraser told investors in early 2022 that it would take five years to execute the turnaround of Citigroup, the only major U.S. bank worth less than it was five years ago. The bank’s return on tangible equity in 2024 was 7%. That compares to the 22% announced Wednesday by rival JPMorgan Chase & Co.

“This level is a waypoint, not a destination,” Fraser said in the release, referring to his revised goal. “We intend to improve returns well above this level and deliver the full potential of Citi to our shareholders.”

Citigroup plans to launch the repurchase program by repurchasing $1.5 billion worth of shares in the first quarter alone, Mason said.

Citigroup shares climbed 6.2% to $78.03 as of 10:06 a.m. in New York, marking the highest level since June 2021. That makes the stock the best performer on the index KBW bank composed of 24 companies.

Fourth-quarter net income was $2.9 billion, or $1.34 per share, beating the average estimate of $1.22 from analysts tracked by Bloomberg.

Revenue from fixed-income trading jumped 37% to $3.5 billion, beating the $2.94 billion average of analyst estimates. Equity trading revenue also climbed 34% to $1.1 billion.

Although revenue from corporate loans and debt underwritings fell short of forecasts, the company’s investment bankers and equity underwriters beat forecasts.

“We’re going to keep going until this work is done,” Mason said.