Citigroup profit hit by Russia charge as dealmaking and services shine

By Tatiana Bautzer and Prakhar Srivastava

Jan 14 (Reuters) - Citigroup's C.N profit fell 13% in the fourth quarter as it booked a $1.2 billion loss tied to the sale of its Russia business, offsetting higher revenue from dealmaking and services to corporate clients.

Earnings slid to $2.47 billion, or $1.19 per share, in the three months ended December 31, the third-largest U.S. lender reported on Wednesday. That compared with $2.9 billion, or $1.34 per share, a year earlier.

The lender's board approved the sale of its Russian unit, AO Citibank, to Renaissance Capital last month, resulting in a pre-tax loss of about $1.2 billion largely related to currency translation.

Citigroup's return on tangible common equity was 5.1% in the fourth quarter, far short of its 10% to 11% target for next year. Excluding the Russia loss, the return was 7.7%.

Wall Street banks benefited as M&A picked up late last year. Activity rebounded in the second half after tariff announcements weighed on markets in the first half and the U.S. government shutdown delayed deals.

Renewed corporate confidence and a more accommodating regulatory backdrop prompted companies to strike deals, lifting fee income for lenders advising on mergers and capital raisings.

Citigroup's investment banking fees rose 35% to $1.29 billion, up from $951 million a year earlier.

Industrywide global investment banking revenue rose 15% from a year earlier to almost $103 billion, the second-highest after 2021, Dealogic data showed. Citigroup earned the fifth highest fees across banks over the same period.

Analysts expect deal momentum to extend into the new year, helped by lower interest rates and a more accommodating regulatory backdrop.

Revenue in Citi's banking unit climbed 78% to $2.2 billion in the fourth quarter, and the bank posted a record M&A performance in 2025.

TRADING SHINES IN 2025

Markets remained volatile in the fourth quarter as investors speculated about a potential bubble in artificial intelligence stocks, the Federal Reserve's interest rate path and geopolitical tensions.

Citi's total markets revenues fell 1% in the quarter to $4.54 billion, driven by fixed income and equities. Markets revenue grew 11% for the full year, compared with 2024.

Market swings often boost trading income at banks as clients reposition portfolios.

Meanwhile, net interest income, the difference between what a bank earns on loans and pays out on deposits, rose 14% in the fourth quarter.

While lower interest rates can weigh on net interest income, they can also spur demand from borrowers.

Citi's shares gained 65.8% in 2025, outperforming its peers, and an index tracking bank stocks .BKX by a wide margin. The bank has bought back $13.25 billion in stock last year and although shares still trade at a discount to rivals, they have narrowed the gap.

CEO Jane Fraser carried out a sweeping reorganization and reduced headcount. The lender is set to cut about 1,000 jobs this week, a source familiar with the matter said on Monday.

Rival JPMorgan Chase JPM.N beat estimates for fourth-quarter profit on Tuesday, while Bank of America BAC.N and Wells Fargo WFC.N reported higher quarterly profits.