(May 7): Citigroup Inc shares dropped after the bank’s new guidance showed that it would take the lender more time to catch up to Wall Street peers, after years of pushing to remedy regulators’ complaints and shed its laggard image.
The bank said it would reach a return on tangible common equity of about 14% to 15% by 2031. That’s below JPMorgan Chase & Co’s 20% return posted in 2025.
Citigroup investors had been looking for a “more aspirational” target of 15% or more over the medium term, according to UBS Group AG analysts. Its guidance for return on tangible common equity — a key metric of profitability — “was underwhelming”, Gerard Cassidy, an analyst at RBC Capital Markets, said in a note to clients.
Citigroup shares, which have outpaced its biggest peers this year, had fallen 1.5% to US$125.75 ($159.13) at 8.50am in pre-market trading on Thursday.
The company also announced a new buy-back programme of US$30 billion, exceeding the US$20 billion from its 2025 programme, according to a presentation on Thursday. The bank gave no end date for the programme. Chief executive officer Jane Fraser also said the bank would hit an 11% to 13% return target over the next two years.
Citigroup, which posted its highest returns in five years in the first quarter, is pitching investors on the strategy for its next several years at its New York headquarters on Thursday. Fraser’s turnaround plan got a boost last year when a key measure showed that investors considered the bank to be worth at least the sum of its parts for the first time in more than seven years.
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“From here, we will drive to new return targets,” Fraser said at Citigroup’s headquarters on Thursday. “We have rebuilt the engine. It is stronger, it is more durable, and now, we will show you what it can deliver.”
Fraser has been seeking to pull back in certain overseas markets since taking the top job in 2021. The bank has struck deals in recent months with billionaire Fernando Chico Pardo and investment firms to offload stakes in its Mexican retail-banking business. The firm also sold off its remaining business in Russia.
Citigroup has also been working to fix back-office and regulatory-reporting problems that were the target of penalties from regulators. Those were about 90% of the way complete when the lender reported first-quarter results in April.
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The bank has had to revise down estimates before, after telling investors it would reach a 11% to 12% return on tangible common equity by the end of 2026. In January 2025, the bank lowered that goal to 10% to 11%.
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