Citigroup plans to reveal updated financial performance goals during its investor presentation on Thursday, as the banking giant highlights improvements from its extensive corporate restructuring, Chief Executive Jane Fraser announced in a recent interview.
The financial institution has wrapped up a significant organizational transformation that streamlined operations, concentrated on core business areas, and eliminated multiple management tiers.
“We will be laying out new [return] targets … and the growth path for each of the businesses,” Fraser explained to Reuters, though she declined to provide specific details about the updated guidance. She indicated the bank intends to set higher benchmarks beyond its current 2026 objectives. Citigroup’s current annual target calls for a return over tangible common equity ranging from 10% to 11%.
Since assuming leadership in 2021, Fraser has aggressively divested unprofitable international retail operations and addressed regulatory sanctions as part of efforts to strengthen risk management and control systems. During her initial investor day presentation in 2022, financial analysts responded with doubt to Fraser’s promises of improved returns.
“We have credibility behind us now,” Fraser stated from the bank’s Manhattan headquarters. “It has just become clearer, as we sold the consumer franchises and reorganized the company, that we changed.”
Bank leadership will also address capital allocation strategies and establish specific objectives for its five core divisions: Services, Banking, Markets, U.S. Consumer Cards and Wealth Management.
Financial experts including Wells Fargo’s Mike Mayo and Piper Sandler’s Scott Siefers anticipate new return on tangible common equity targets reaching 15% by decade’s end. Citigroup has previously only provided earnings projections through 2026.
In a client research note, Siefers described the bank’s recent changes as its most significant strategic overhaul in decades. “It has been an extraordinary several years for a company that had otherwise spent the better part of two decades lacking clear direction,” he wrote.
Market observers are also monitoring potential removal of regulatory consent orders issued by the Federal Reserve and Office of the Comptroller of the Currency in 2020, following the bank’s accidental transfer of $900 million to Revlon creditors when attempting to make a $7.8 million interest payment.
Mayo from Wells Fargo anticipates the consent orders will be lifted this year. While Fraser avoided discussing specific timelines, she recently indicated the bank has finished 90% of required work involving compliance, risk management, technology and data systems.
Beyond new return and capital guidance, Citigroup expects to outline strategic plans for its five business segments. “We’ll lay out the growth path ahead for each of them,” Fraser said.
A primary focus involves improving the wealth management division’s performance, which generated a 10.8% return during the first quarter while overseeing $1.3 trillion in client assets. In contrast, Morgan Stanley, managing $7.35 trillion, achieved a 30.4% profit margin in the same timeframe.
During the most recent earnings conference call, Fraser rejected merger and acquisition speculation to bridge the performance gap, emphasizing the bank’s commitment to organic expansion.
Fraser told Reuters that artificial intelligence technology could enhance wealth division results in the near term. “We feel very confident in the path to get to more peer-like return levels in wealth,” she said, highlighting the rollout of Sky, the bank’s AI program designed to boost productivity.
“I wouldn’t want to buy something right now in wealth, even if I thought it was the right thing to do, because we have to see how much of this is going to be more heavily AI-driven, with humans still very much involved,” she added.
Industry experts expect expanded product lines from Citigroup’s Services division, which serves multinational corporations, including enhanced instant international payment capabilities. The unit serves 5,000 large multinational clients plus 12,000 medium-sized companies. Fraser calls it the “crown jewel” after it delivered 27% return on tangible common equity in the first quarter.
The banking division plans to identify growth opportunities after gaining market position under Vis Raghavan, who joined to head the unit two years ago. Banking and Markets achieved approximately 15% return on tangible common equity during the first quarter.
Throughout the organization, Citigroup will detail artificial intelligence’s impact. Fraser explained the new technologies extend beyond automating standard procedures. “Agentic commerce is much more revolutionary,” she noted. “It will help us grow revenue too.”
