Citigroup’s profitability set to grow by 2025: Moody’s

Thanks to continued robust liquidity and strong capital levels.
Citigroup and Citibank are expected to have a stable outlook, reflecting confidence in Citigroup’s transformation toward a simpler and safer business model, a core focus for the board, management, and regulators, according to Moody’s Ratings.

The stable outlook also reflects expectations of continued strategic transformation with robust liquidity and strong capital levels.

Citigroup’s medium-term profitability targets include a return on tangible common equity (ROTCE) of 11% to 12%, up from the current 7.5%. 

Profitability improvements in 2025 are anticipated through revenue growth and a reduction in stranded costs as the bank simplifies its operations. Achieving these cost savings remains crucial for Citigroup’s ability to invest competitively.

Citigroup is focusing on enhancing operational efficiency, including decommissioning legacy systems, automating processes, and achieving a targeted 60% efficiency ratio in the medium term. 

The services segment, providing treasury, trade, and securities services across nearly 100 countries, remains a strength with client revenue growth and a ROTCE in the mid-20% range for the first nine months of 2024. 

Treasury and Trade Solutions deposits have also outpaced other deposit growth over the last five years.

At the end of September, Citigroup reported a common equity tier one (CET1) ratio of 13.7%, 160 basis points above its 12.1% regulatory minimum. 

Moody’s noted that this capital surplus is a vital factor in Citigroup’s maintained creditworthiness. The ratings for Citigroup’s debt and liabilities were also upheld and supported by stable subordination and capital structure elements.