Citi CEO Fraser brushes off the notion of buying a bank

• Key insight: Citi's chief executive tried to stomp out speculation Tuesday that the megabank is thinking about buying a regional bank, saying Citi is focused on its existing businesses.
  
• Expert quote: "We are only interested in organic growth, period, end of story, for the whole firm." — Jane Fraser, CEO
  
• Forward look: The bank reaffirmed that it expects to achieve a key profitability target by the end of this year.
  

UPDATE: This story has been updated to include comments made during Citi's earnings call.

Citi CEO Jane Fraser is dismissing reports that the megabank wants to buy a regional bank, saying Tuesday that Citi has plenty of opportunities to grow without pursuing an acquisition.

She defended the bank's U.S. branch strategy, which is concentrated in six markets across the country and includes 650 branches, and said there's room to grow all five of Citi's businesses.

"I want to be crystal clear: We are only interested in and focused on organic growth, period, end of story, for the whole firm," Fraser told analysts during Citi's first-quarter earnings call. "If you walk away from this call thinking of nothing else, let it be this: Citi has a lot of momentum and we're not going to be distracted from it."

Her remarks come nearly three weeks after a Bloomberg article, citing anonymous sources, said the $2.8 trillion-asset Citi was thinking about buying a large regional bank as a way to tap into a new source of low-cost deposits. The subject came up twice during Tuesday's call.

Asked to confirm that Citi is not actively pursuing or thinking about a deal, Fraser doubled down, responding that the management team is "not interested in anything other than organic growth."

Investors appeared to like Fraser's message. Citi's stock was up by more than 3% as of mid-afternoon Tuesday.

The momentum that Fraser cited was reflected in the bank's first-quarter earnings results.

Net income surged 42% year over year, totaling $5.8 billion for the quarter ending March 31. Earnings per share were $3.06, handily beating Wall Street expectations. Analysts had predicted the bank would report earnings per share of $2.63, according to S&P Capital IQ.

Firmwide revenues were $24.6 billion, up 14% compared with the same quarter last year and driven by an increase in revenues in each of Citi's five core businesses, the bank said.

Equity markets revenues of $2.1 billion rose 39% due to growth in derivatives, prime services and cash equities, the bank said. Treasury and trade solutions, which is part of Citi's services business, reported a 17% year-over-year increase in revenues, while investment banking's revenues of $1.3 billion increased 19% compared with the year-ago period, the bank said.

In March, Citi entered its sixth year with Fraser at the helm. Since becoming chief executive in 2021, American Banker's Most Powerful Woman in Banking has been leading the bank through an ambitious, multiyear turnaround to improve its profitability and drive higher shareholder returns. The work has included the sale or wind-down of 14 consumer franchises in certain underperforming markets, a reduction in management layers and a business-model revamp.

On Tuesday, Fraser said most of overseas-market exits are complete, with the exception of Poland, where Citi expects to close the sale of its consumer businesses this summer, and Mexico, where Citi is in the process of selling another stake in Grupo Financiero Banamex.

In February, it closed the sale of a former Russian subsidiary, completing its yearslong exit from the country.

The bank also continues to make progress in updating its risk management and internal controls systems, which have drawn scrutiny from regulators over the years. Citi said that 90% of the risk-management programs are now operating at or near their target state, up from more than 80% three months ago.

Still, the bank is operating under two consent orders issued in 2020 by the Federal Reserve and the Office of the Comptroller of the Currency.

Citi remains on track to achieve a return on tangible common equity of 10% to 11% by the end of this year, Fraser reiterated Tuesday. For the first quarter, the closely watched financial metric came in at 13.1%, up from 9.1% in the year-ago period and compared with 7.7% for all of 2025.

During the call, Ebrahim Poonawala, an analyst at Bank of America Securities, questioned the bank's decision to stick with the return on tangible common equity goal of 10% to 11% by the end of the year, given the fact that the metric came in much higher for the first quarter.

"One great first quarter does not a full year make," Fraser responded, adding that first-quarter results are "always the strongest" and that the macro-economic environment is "unclear."

Net interest income for the first quarter was $15.7 billion, reflecting a 12% year-over-year increase. Noninterest income was $8.9 billion, up 17% from the same quarter last year.

Citi's first-quarter operating expenses totaled $14.3 billion. The bank said higher compensation and benefit costs, including higher severance expenses, contributed to a 7% year-over-year increase. The bank repurchased $6.3 billion of common shares in the first quarter. It said it expects buybacks this year to be higher than the $13.25 billion it repurchased for all of 2025.

The bank maintained its full-year guidance for 2026. It expects net interest income, excluding its markets business, to rise between 5% and 6% and it is forecasting an efficiency ratio of around 60%. For the first quarter, Citi's efficiency ratio was 58.1%.

Citi's latest quarterly earnings report comes about three weeks before the bank's May 7 firmwide investor day. It will be Citi's first such event in four years. Besides Fraser, investors will hear from Citi's new chief financial officer, Gonzalo Luchetti, as well as the heads of business lines.