Citigroup reported fourth-quarter financial results on Wednesday that surpassed market expectations, driven by stronger interest income and lower-than-anticipated provisions for bad loans. The performance suggested improving operating conditions for the banking giant, even as one-time charges weighed on its headline profit.

For the quarter, Citigroup delivered adjusted earnings of $1.81 per share, exceeding analysts’ forecast of $1.67. Adjusted revenue reached $21.0 billion, also above the expected $20.72 billion, according to data compiled by LSEG.

Despite beating expectations on an adjusted basis, the bank’s reported net income declined 13 percent compared with the same period a year earlier, falling to $2.47 billion, or $1.19 per share. The drop was largely attributed to a $1.1 billion after-tax loss related to Citigroup’s ongoing plan to exit its operations in Russia.

When excluding this Russia-related charge, Citigroup’s underlying performance appeared significantly stronger. Profit would have totaled approximately $3.6 billion, translating to adjusted earnings of $1.81 per share. Revenue, excluding the impact of the divestment charge, rose 8 percent year over year to $21.0 billion, supported by solid growth across banking, wealth management, and institutional services.

A key driver of the quarter’s outperformance was net interest income, which represents the difference between what banks earn from loans and investments and what they pay out to depositors. Citigroup’s net interest income climbed 14 percent to $15.67 billion, roughly $815 million higher than estimates from StreetAccount. This increase reflects the continued benefit of higher interest rates and improved asset yields.

Another notable factor was the bank’s lower loan loss provision. Citigroup set aside $2.2 billion to cover potential credit losses during the quarter, around $330 million less than analysts had expected. Similar trends have been observed at other major U.S. lenders, including Bank of America, and may point to growing confidence in the broader economic outlook and borrowers’ ability to meet their financial obligations.

Commenting on the results, Chief Executive Officer Jane Fraser emphasized the progress the company has made across its core businesses. She noted that each of Citigroup’s five divisions achieved record revenues and delivered positive operating leverage, signaling that the bank’s long-term investments are translating into tangible top-line growth.

According to Fraser, 2025 marked a meaningful step forward for the firm, and Citigroup is entering 2026 with strong momentum across its operations. She reaffirmed the company’s commitment to achieving a return target of at least 10 percent by 2026 and expressed confidence that returns could improve further in the years beyond that milestone.

Despite the earnings beat and optimistic outlook, Citigroup’s stock fell more than 4 percent in afternoon trading. The decline suggests that investors may remain cautious, possibly due to restructuring-related uncertainties or broader market volatility.

Under Fraser’s leadership, Citigroup has been undergoing a major transformation, including the sale of several international consumer banking businesses as part of a broader effort to streamline operations and focus on core strengths. At the same time, the bank has benefited from a more favorable regulatory environment in the United States. These factors have led some analysts to take a bullish stance on the stock, with Wells Fargo banking analyst Mike Mayo recently describing Citigroup as his top pick among large U.S. banks.

Looking ahead, analysts are expected to closely watch management’s commentary for signs that the momentum achieved in 2025 can be sustained into 2026. Confidence in continued earnings growth and improved efficiency will be critical in shaping investor sentiment.

Citigroup’s results followed a strong earnings report from JPMorgan Chase earlier in the week, where better-than-expected trading revenue helped lift profits above forecasts. Bank of America and Wells Fargo also released their fourth-quarter results on Wednesday, while Goldman Sachs and Morgan Stanley are scheduled to report their earnings on Thursday. Together, these reports are providing a clearer picture of the health of the U.S. banking sector as it enters the new year.