Citigroup (C) had one of those quarters where the numbers tell two different stories depending on which ones you're looking at. The bank's stock slipped on Wednesday after fourth-quarter results came in with earnings topping expectations but revenue falling short of what Wall Street wanted to see.

Here's what happened: The bank posted revenue of $19.87 billion for the quarter, up 2% from last year but missing analyst estimates of $20.53 billion. Strip out the messiness from selling its Russian operations, though, and revenue actually climbed 8%. That's a meaningful difference, and it highlights how divestiture-related losses can make an otherwise solid quarter look underwhelming at first glance.

Net income dropped 13% year over year to $2.5 billion, dragged down by a $1.1 billion after-tax loss tied to exiting Russia through the planned sale of AO Citibank. When you adjust for that hit, net income came in at $3.6 billion, and earnings per share landed at $1.81, comfortably ahead of the $1.68 consensus estimate. So yes, mixed results, but not exactly a disaster either.

The details underneath reveal where Citi is winning and where it's struggling. Net interest income rose 14%, powered by strength across Markets, U.S. Personal Banking, Services, Wealth, Legacy Franchises, and Banking. That's the good news. The not-so-good news: Non-interest revenue fell 27%, hit by weakness in Legacy Franchises, Markets, U.S. Personal Banking, and Wealth, though Banking and Services provided some offsetting gains.

Operating expenses climbed 6% to $13.8 billion, pushing the efficiency ratio up 250 basis points to 69.6%. Return on average tangible common equity slipped 100 basis points to 5.1%. The Common Equity Tier 1 capital ratio stood at 13.2%, about 160 basis points above current regulatory requirements, so the bank has breathing room there. Cost of credit ticked up 2% to $2.2 billion, mainly reflecting higher net credit losses in U.S. cards.

Business Lines Show Mixed Performance

Breaking down the segments, Services revenue jumped 15% to $5.9 billion. Excluding the Russia-related impact, growth was 8%, driven by continued expansion in Treasury and Trade Solutions and Securities Services. Markets revenue edged down 1% to $4.5 billion as fixed income and equity markets activity cooled off.

Banking was the standout, with revenue surging 78% to $2.2 billion. That growth came from corporate lending (excluding mark-to-market impacts on loan hedges) and stronger investment banking performance. Investment banking revenue climbed 38% to $1.3 billion, boosted by a 35% increase in fees from advisory and debt capital markets activity, though equity capital markets were weaker.

Wealth revenue rose 7% to $2.1 billion, supported by growth in Citigold and the Private Bank, partially offset by lower results in Wealth at Work. U.S. Personal Banking revenue increased 3% to $5.3 billion, with gains in Branded Cards and Retail Banking offsetting a decline in Retail Services.

CEO Jane Fraser highlighted the company's strong progress in 2025, pointing to record revenue and positive operating leverage across all five business lines. She noted that Services benefited from deeper client relationships and new mandates, Markets maintained a top-three industry position while improving returns, and Banking played a central role in many of the year's largest transactions. Wealth posted strong performance and launched several major partnerships, while U.S. Personal Banking doubled its returns by focusing on customer engagement and new product offerings.

Fraser also emphasized that Citi returned more than $17 billion to shareholders during the year—the largest capital return since the pandemic—including $13 billion through share repurchases. That's a significant vote of confidence in the bank's direction, even as it navigates regulatory pressures and restructuring efforts.

CFO Pushes Back Hard on Rate Cap Proposals

The bank took a stock hit earlier this week after President Donald Trump demanded a 10% cap on credit card rates. Revenue from branded cards rose 5% to $2.95 billion in the quarter, so this isn't a trivial issue for Citi's business model.

During the earnings call, CFO Mark Mason didn't mince words on the subject. While acknowledging that affordability is an important issue, Mason said Citi cannot support an interest rate cap on credit cards. He warned that such a cap would reduce credit availability, have a harmful effect on the broader economy, and create unintended consequences for the bank's business model. Translation: If you cap rates at 10%, a lot of people who currently have access to credit cards simply won't anymore, because the risk-reward equation won't work for lenders.

Mason also addressed other topics during the call. He said the bank is closely monitoring current market reactions and noted that Citi has minimal exposure to Venezuela, having sold both its corporate and retail businesses there in 2021. On deal activity, Mason pointed to sustained momentum in mergers and acquisitions, citing large transactions involving Boeing (BA), Mars, and Mr. Cooper. He added that Citi remains among the top three banks in debt capital markets.

The CFO said the U.S. economy has remained resilient despite ongoing geopolitical risks, and the U.S. consumer is holding up well, with spending by Citi credit card clients up 5%. On operations, Mason confirmed that Citi expects headcount to continue declining in 2026 and that the bank is still preparing for the Banamex IPO following the sale of a 25% stake to an investor.

Mason also underscored the importance of Federal Reserve independence, saying it's critical that the next Fed Chair operates with the same commitment to independence as current leadership.

Outlook and Workforce Cuts

Looking ahead, Citigroup expects fiscal 2026 net interest income excluding Markets to rise 5% to 6% year over year, driven by continued momentum in Services, Banking, and Wealth. The bank expects 2026 Branded Cards net credit loss rates between 3.50% and 4.00%, and Retail Services net credit loss rates between 5.75% and 6.25%. The allowance for credit losses build will depend on the macroeconomic environment and business volumes.

Fraser said Citi enters 2026 with clear momentum across the firm and remains focused on achieving its 10% to 11% return on tangible common equity target for the year, while positioning the company to deliver even stronger returns in the years ahead.

The restructuring continues. Citigroup plans to eliminate about 1,000 jobs this week as Fraser pushes forward with efforts to control costs and lift returns. The cuts advance a restructuring plan unveiled two years ago that targets 20,000 job reductions by the end of 2026. The bank is shrinking its workforce as it streamlines operations, exits much of its international retail business, and reorganizes core units to improve performance.

Citigroup employed about 227,000 people at the end of September and aims to bring that total down to roughly 180,000 by 2026. It's a massive reshaping of the organization, and the results so far suggest the strategy is starting to show up in the numbers, even if the path forward remains bumpy.

Price Action: Citigroup (C) shares were down 1.75% at $114.26 at the time of publication on Wednesday.