- Citi CFO Mark Mason expects Q4 investment banking fees to rise about 25% year-over-year, driven by strong M&A and capital markets activity.
- He forecasts Q4 markets revenue will fall in the low-to-mid single digits versus a year earlier.
- Citi sees U.S. consumer spending as resilient but anticipates a moderate economic slowdown extending into 2026.
- Mason will step down as CFO in March 2026, to be succeeded by Gonzalo Luchetti, as Citi continues its cost-cutting and regulatory transformation efforts.
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The outlook Citi has provided for Q4 2025 suggests a bifurcated revenue environment: investment banking fees are expected to surge, while markets revenue may dip slightly. This divergence reflects broader trends in dealmaking and capital markets, with M&A and underwriting activity remaining robust despite macroeconomic headwinds.
Revenue Drivers and Risks
Investment banking fees rising by ~25% YoY signals strong momentum in M&A and underwriting. Mid- to large-cap issuers appear willing to engage actively, potentially due to favorable financing conditions and deferred deal pipelines. However, these gains will need to offset softness in market-making and trading, given expected declines in markets revenue. The risk is that trading volatility, regulatory pressures or capital requirement shifts could exacerbate the decline.
Macroeconomic Outlook & Consumer Dynamics
Citi sees the global economy remaining generally resilient through Q4, though with slowing GDP growth. U.S. consumer spending has shown strength through late 2025, providing a buffer. If inflation remains sticky or interest rates go higher for longer, though, consumer resilience may be tested, potentially impacting issuance and deal closures in IB and equity capital markets.
Strategic Implications for Citi
With the CFO transition to Gonzalo Luchetti in March, Citi may refine its priorities: the stated focus is on reducing transformation costs in 2026 and enhancing operational efficiency. Successfully managing the dual challenges of complying with regulatory consent orders and sustaining deal flow will be essential. Also, gaining share in investment banking fees may depend on maintaining strong underwriting and advisory capabilities while managing risk.
Open Questions
• How sustainable is the current deal flow if interest rates remain elevated or volatility increases?
• To what extent will the decline in markets revenue hurt overall returns, especially if investment banking revenues underdeliver?
• What impact will regulatory capital reforms have on Citi’s balance sheet and competitive position?
• How will Luchetti’s leadership shape risk appetite, cost discipline, and capital allocation?
Supporting Notes
- Citi CFO Mark Mason said at the Goldman Sachs U.S. Financial Services Conference that Q4 investment banking fees are expected to increase by approximately 25% YoY. [2]
- Mason noted continued momentum in mergers and acquisitions and that “mega-deals have increased this year.” [1][2]
- Markets revenue is expected to be down in the low-to-mid single digits vs. a year ago in Q4. [1][2]
- Consumer spending in the U.S. remained resilient through October and November. [1]
- Citi anticipates economic growth slowing in Q4, with moderate slowdown continuing into 2026. [1]
- Mark Mason will leave the CFO role in March 2026, replaced by Gonzalo Luchetti. [1]
- Transformation expenses reduction in 2026 is a priority; Citi reports significant progress, with about two-thirds of transformation efforts at or near their target state. [1]
Sources
- [1] www.reuters.com (Reuters) — 2025-12-09
- [2] www.investing.com (Investing.com) — 2025-12-09
- [3] www.thestar.com.my (The Star (Malaysia)) — 2025-12-11