Citigroup Inc. released its financial results for the first quarter of 2025 on April 15, 2025. The bank reported net income of $4.1 billion, or $1.96 per diluted share, on revenues of $21.6 billion. These figures represent a significant improvement compared to the first quarter of 2024, when net income stood at $3.4 billion, or $1.58 per diluted share, on revenues of $21.0 billion. The reported 3% increase in revenues from the prior-year period was primarily driven by growth across each of Citi’s five interconnected businesses, though this expansion was largely offset by a decline in the “All Other” segment. Excluding divestiture-related impacts in both periods, revenues also rose by 3%. This in-depth analysis traces the primary drivers behind Citi’s first-quarter performance, examining the contributions of its core business segments and shedding light on the underlying financial metrics.

Overall Financial Performance: Revenue, Expenses, and Profitability

Citigroup’s first-quarter 2025 results reflect a period of positive operating leverage and improved returns across its business lines. Net income for the quarter reached $4.1 billion, an increase from $3.4 billion in the prior-year period. This growth was primarily attributable to lower expenses and higher revenues, despite being partially offset by an increased cost of credit. Diluted earnings per share (EPS) likewise saw an uptick, rising from $1.58 to $1.96, a reflection of the higher net income and a reduction in shares outstanding.

Total revenues, net of interest expense, stood at $21.6 billion in Q1 2025, marking an 11% sequential increase from Q4 2024 and a 3% year-over-year increase from Q1 2024. This revenue growth was largely propelled by a 4% increase in net interest income, driven by U.S. Personal Banking (USPB), Markets, Wealth, and Services segments. However, this was partially offset by declines in the “All Other” category and Banking. Non-interest revenue also saw a 1% increase, primarily from Markets, Banking, and Wealth, counteracted by declines in “All Other,” USPB, and Services.

Operating expenses totaled $13.4 billion, a 5% decrease on a reported basis compared to the prior-year period. This reduction was mainly due to a smaller FDIC special assessment, the absence of a restructuring charge, and lower compensation expenses. The decrease in compensation expenses was further influenced by a favorable foreign exchange (FX) impact, productivity savings from Citi’s organizational simplification, stranded cost reduction, and lower severance. These positive effects on expenses were partially mitigated by increases in technology and communications, professional fees related to Transformation efforts, and advertising and marketing expenses. Excluding the FDIC special assessment and divestiture-related impacts, expenses were down 3%.

The cost of credit for Citigroup rose by 15% to $2.7 billion in the first quarter of 2025. This increase was primarily driven by a higher net build in the allowance for credit losses (ACL), reflecting a deterioration in the macroeconomic outlook compared to the prior-year period, as well as higher net credit losses within the card portfolios in USPB. Despite this, Citigroup’s effective tax rate remained largely unchanged at approximately 25% compared to the first quarter of 2024. The total allowance for credit losses stood at approximately $22.8 billion at quarter-end, an increase from $21.8 billion at the end of the prior-year period. Total ACL on loans was approximately $18.7 billion at quarter-end, up from $18.3 billion in the prior-year period, with the reserve-to-funded loans ratio slightly decreasing from 2.75% to 2.70%.

Segmental Performance Highlights

Services: The Services segment generated revenues of $4.9 billion, an increase of 3% year-over-year. This growth was predominantly fueled by Treasury and Trade Solutions (TTS), which continued to gain market share. Net interest income within Services increased by 5%, driven by higher deposit spreads and an increase in deposit and loan balances. Despite this, non-interest revenue declined by 4%, primarily due to the absence of certain episodic fees in Securities Services from the prior-year period, higher revenue share, and the impact of FX, partially offset by strength in underlying fee drivers like U.S. dollar clearing volume and cross-border transaction value. Services’ net income rose by 7% to $1.6 billion, benefiting from higher revenues, lower expenses, and a reduced cost of credit.

Markets: The Markets segment delivered robust performance, with revenues increasing by 12% to $6.0 billion, driven by growth in both Fixed Income and Equity markets revenues. Fixed Income markets revenues rose by 8% to $4.5 billion, stemming from growth across rates and currencies (up 9% due to increased client activity) and spread products/other fixed income (up 7% from higher client activity and loan growth). Equity markets revenues saw a significant 23% increase to $1.5 billion, primarily attributed to equity derivatives amid increased market volatility and higher client activity, along with momentum in prime services. Net income for Markets stood at $1.8 billion, a 27% increase from $1.4 billion in the prior-year period, driven by higher revenues despite partially offset by increased operating expenses.

Banking: Banking revenues reached $2.0 billion, a 12% increase year-over-year. This growth was propelled by Investment Banking, which saw a 12% increase in revenues to $1.0 billion, driven by a 14% rise in Investment Banking fees. Advisory fees notably increased by 84% as the business gained wallet share. However, Equity Capital Markets (ECM) fees were down 26%, and Debt Capital Markets (DCM) fees decreased by 3%. Corporate Lending revenues, excluding mark-to-market on loan hedges, decreased by 1% to $903 million. Banking’s net income increased by 4% to $543 million, a result of higher revenue and lower expenses, despite being offset by a higher cost of credit.

Wealth: The Wealth segment recorded a strong 24% increase in revenues, reaching $2.1 billion. This growth was broad-based, with contributions from Citigold, the Private Bank and Wealth at Work. Net interest income within Wealth climbed 30% to $1.3 billion, driven by higher deposit spreads despite lower deposit balances. Non-interest revenue also increased by 16% to $822 million, primarily from growth in investment fee revenues, with client investment assets up 16%. The Private Bank revenues increased 16% to $664 million, while Wealth at Work revenues surged by 48% to $268 million, and Citigold revenues increased 24% to $1.2 billion. Wealth’s net income significantly improved by 62% to $284 million, driven by higher revenues despite being largely offset by a higher cost of credit.

U.S. Personal Banking (USPB): USPB revenues increased by 2% to $5.2 billion. This was driven by growth in Branded Cards and Retail Banking, largely offset by a decline in Retail Services. Branded Cards revenues increased by 9% to $2.9 billion, partially due to an 8% growth in interest-earning balances and a 3% increase in card spend volume. Retail Services revenues, however, decreased by 11% to $1.7 billion, primarily due to higher partner payment accruals. Retail Banking revenues increased by 17% to $661 million, driven by higher deposit spreads. USPB’s net income saw a substantial 115% increase to $745 million, primarily driven by a lower cost of credit and higher revenues.

All Other (Managed Basis): This category experienced a 39% decrease in revenues to $1.4 billion. This decline was attributed to lower net interest income, the impact of mark-to-market valuation changes on certain investments in Corporate/Other, reduced revenue from wind-down and exit markets, and the impact of Mexican peso depreciation. The net loss for “All Other” widened to -$870 million, compared to -$477 million in the prior-year period. This was primarily driven by lower revenues and a higher cost of credit, partially offset by lower expenses.

Capital and Returns to Shareholders

Citigroup continued to return capital to its shareholders. During the first quarter of 2025, the bank returned a total of approximately $2.8 billion to common shareholders in the form of dividends and share repurchases. This included $1.75 billion in buybacks as part of its $20 billion plan. The payout ratio stood at 74%.

At quarter-end, Citigroup’s book value per share increased by 5% to $103.90 compared to the prior-year period, while tangible book value per share rose by 6% to $91.52. These increases reflect higher net income, common share repurchases, and beneficial net movements in accumulated other comprehensive income (AOCI), partially offset by the payment of common and preferred dividends.

The preliminary Common Equity Tier 1 (CET1) Capital ratio was 13.4% at quarter-end. This compares to 13.6% at the end of the prior quarter. The decrease was driven by the payment of common and preferred dividends, common share repurchases, higher risk-weighted assets, and higher deferred tax assets, largely offset by net income and beneficial net movements in AOCI. Citi’s Supplementary Leverage Ratio (SLR) remained stable at 5.8% for the first quarter of 2025, unchanged from the prior quarter.

Outlook and Strategic Focus

Citi CEO Jane Fraser commented on the strong quarter, highlighting continued momentum, positive operating leverage, and improved returns across all five businesses. She noted that Services recorded its best first-quarter revenue in a decade, Markets experienced a good first quarter with revenue up 12% driven by strong client activity, and Banking also saw a 12% increase with M&A revenue nearly doubling from the previous year. Wealth revenues increased 24% with progress across all three client segments, and USPB was up 2%, mainly driven by growth in Branded Cards, also showing improved returns.

Fraser reiterated Citi’s focus on executing its strategy, emphasizing a diversified business mix designed to perform across a wide variety of macro scenarios. She concluded by stating that despite an uncertain environment, Citi’s deep knowledge and breadth of capabilities across its many markets are a point of distinction as they continue to help clients navigate challenges.

Citigroup’s Q1 2025 results underscore a period of strategic execution and a return to profitability driven by growth in its core businesses and effective expense management. While macroeconomic factors and ongoing transformation efforts will continue to influence future performance, the bank’s diversified business model and strong capital position aim to provide resilience in an evolving global economic landscape.