Why did Q4 2025 net income fall year over year despite higher revenue?

Citi recorded a $1.2B pre-tax loss ($1.1B after tax) on the held-for-sale reclassification of AO Citibank in Russia. The tax benefit on that loss was limited, which pushed up the effective tax rate to about 34%. Higher expenses also contributed, though lower credit provisions partly offset these effects.

What is the underlying performance excluding the Russia-related charge?

Excluding the Russia item, Q4 revenues rose 8% and net income was $3.6B, or $1.81 per diluted share. Revenue growth was led by Banking, Services, USPB, and Wealth.

Is Citi's capital position still strong after the buybacks?

The CET1 ratio was 13.2% at year-end, down slightly from 13.3% in Q3 and 13.6% a year earlier, mainly because of buybacks, dividends, and the temporary effect of held-for-sale accounting. Management says it has ample capital to support growth and continue returning excess capital.

What is management's return target for 2026?

Management reiterated a 2026 target of 10-11% RoTCE and aims to improve returns above that level in later years. Full-year 2025 RoTCE was 7.7%, and Q4 was 5.1%, reflecting the Russia charge.

Are credit quality trends a concern for investors?

Net credit losses were stable at about $2.2B per quarter. However, non-accrual loans rose 35% year over year to $3.6B, mainly in corporate Banking and Services and in Mexico consumer. The reserve-to-funded-loans ratio slipped to 2.6%, so investors should watch this trend.

CITIGROUP INC 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed January 14, 2026. Cited figures are marked; the original filing is the authoritative source.

Citigroup reported fourth quarter and full-year 2025 results on January 14, 2026.

Fourth quarter net income was $2.5 billion^a, or $1.19 per diluted share, on revenues of $19.9 billion, down from $2.9 billion ($1.34 per share) a year earlier. The decline is driven by a $1.2 billion pre-tax loss on sale ($1.1 billion after tax) tied to the held-for-sale classification of AO Citibank in Russia. Excluding that item, revenues rose 8%, net income was $3.6 billion, and EPS was $1.81.

For full-year 2025, net income was $14.3 billion^b on revenue of $85.2 billion, versus $12.7 billion and $80.7 billion in 2024. Excluding the Russia item and the Q3 Banamex goodwill impairment, full-year net income was $16.1 billion. Core franchises showed strength.

Banking revenues rose 78%^c on Advisory fees (up 84%) and Corporate Lending. Services grew 15% on higher net interest income and deposit spreads. Wealth and USPB also improved.

USPB net income more than doubled to $845 million^d in the quarter. Credit costs were broadly stable: quarterly net credit losses were $2.2 billion, the total provision was $2.2 billion, and the ACL fell to $21.4 billion, largely because of the Russia reclassification. Non-accrual loans rose 35% year over year to $3.6 billion, concentrated in corporate Banking and Services and in Mexico consumer.

Capital returns were significant: about $17.6 billion was returned in 2025, including $13 billion in buybacks, and the payout ratio was 133%. The CET1 ratio ended at a preliminary 13.2%, down from 13.6% a year earlier.

Management reiterated a 2026 RoTCE target of 10-11%. Fourth-quarter RoTCE was 5.1%, reflecting the Russia charge, versus 7.7% for the full year.

02—Key points

Key Highlights

Q4 2025 net income of $2.5B ($1.19 EPS) was down 13% year over year, but excluding the $1.2B pre-tax Russia (AO Citibank) loss, net income was $3.6B and EPS was $1.81.
FY 2025 net income rose 13% to $14.3B on record revenues of $85.2B; excluding notable items, net income was $16.1B.
Banking revenues rose 78% in Q4 to $2.2B, driven by Advisory fees up 84% and Corporate Lending revenues up sharply.
Services revenues grew 15% to $5.9B (8% excluding the Russia item), led by net interest income up 18% and fee revenue up 13%.
Citi returned about $17.6B to shareholders in 2025 (including $13B in buybacks), a 133% payout ratio on net income available to common shareholders.
CET1 ratio was a preliminary 13.2% at year-end, 160 bps above the regulatory requirement, and the SLR was 5.5%.
Non-accrual loans rose 35% year over year to $3.6B, with corporate non-accruals up 45% and consumer non-accruals up 24%; the reserve-to-loans ratio eased to 2.6%.

03—Questions

Frequently Asked Questions

Why did Q4 2025 net income fall year over year despite higher revenue?
Citi recorded a $1.2B pre-tax loss ($1.1B after tax) on the held-for-sale reclassification of AO Citibank in Russia. The tax benefit on that loss was limited, which pushed up the effective tax rate to about 34%. Higher expenses also contributed, though lower credit provisions partly offset these effects.
What is the underlying performance excluding the Russia-related charge?
Excluding the Russia item, Q4 revenues rose 8% and net income was $3.6B, or $1.81 per diluted share. Revenue growth was led by Banking, Services, USPB, and Wealth.
Is Citi's capital position still strong after the buybacks?
The CET1 ratio was 13.2% at year-end, down slightly from 13.3% in Q3 and 13.6% a year earlier, mainly because of buybacks, dividends, and the temporary effect of held-for-sale accounting. Management says it has ample capital to support growth and continue returning excess capital.
What is management's return target for 2026?
Management reiterated a 2026 target of 10-11% RoTCE and aims to improve returns above that level in later years. Full-year 2025 RoTCE was 7.7%, and Q4 was 5.1%, reflecting the Russia charge.
Are credit quality trends a concern for investors?
Net credit losses were stable at about $2.2B per quarter. However, non-accrual loans rose 35% year over year to $3.6B, mainly in corporate Banking and Services and in Mexico consumer. The reserve-to-funded-loans ratio slipped to 2.6%, so investors should watch this trend.

04—Continue

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