It has been about a month since the last earnings report for Citigroup (C). Shares have added about 3.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Citigroup due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Citigroup Q3 Earnings Beat Estimates on Y/Y NII Growth
Citigroup Inc. reported third-quarter 2025 adjusted net income per share of $2.24, up 48.3% from the year-ago period. The metric also surpassed the Zacks Consensus Estimate by 17.3%.
The company's results benefited from an increase in net interest income and non-interest revenues alongside lower provisions. Citigroup also registered a year-over-year increase of 17% in investment banking revenues, reflecting growth in Advisory and Equity Capital Markets. However, increases in expenses and a weak capital position were undermining factors.
Net income (GAAP basis) in the quarter was $3.8 billion, up 15.9% from the prior-year quarter.
Revenues & Expenses Increase
Revenues, net of interest expenses, moved up 9.3% year over year to $22.1 billion in the third quarter of 2025. The top line surpassed the Zacks Consensus Estimate by 4.5%.
NII rose 11.8% year over year to $14.9 billion, whereas non-interest revenues rose 4.4% to $7.2 billion.
Citigroup’s operating expenses rose 8.7% year over year to $14.3 billion. This increase in expenses was primarily due to a rise in almost all components except advertising and marketing costs and restructuring expenses.
Segmental Performance
In the Services segment, total revenues, net of interest expenses, were $5.4 billion in the reported quarter, up 6.9% year over year. The increase primarily reflects growth in Treasury and Trade Solutions, which continued to gain market share, and Securities Services.
The Markets segment’s revenues increased 15.5% year over year to $5.6 billion, driven by growth in Fixed Income and Equity markets revenues.
Banking revenues of $2.1 billion moved up 33.5% year over year, primarily driven by growth in IB and Corporate Lending.
U.S. Personal Banking’s revenues were $5.3 billion, up 7.4% from the prior-year quarter, driven by growth in Branded Cards and Retail Banking, largely offset by a decline in Retail Services.
In the Wealth segment, revenues were $2.2 billion in the reported quarter, rising 8.5% year over year. The increase was driven by growth in Citigold and the Private Bank businesses, partially offset by the Wealth at Work business.
Revenues in the All Other segment declined 15.7% year over year to $1.5 billion.
Balance Sheet Position Solid
At the end of the third quarter of 2025, the company’s deposits rose 1.9% from the prior quarter to $1.38 trillion. Its loans also increased 1.2% on a sequential basis to $733.9 billion.
Credit Quality: Mixed Bag
Total non-accrual loans jumped 69.8% year over year to $3.7 billion. Its allowance for credit losses on loans was $19.2 billion, up 4.6% from the prior-year quarter.
Provisions for credit losses and benefits, and claims for the third quarter were $2.5 billion, down 8.4% from the year-earlier quarter.
Capital Position Weak
At the end of the third quarter of 2025, the bank’s Common Equity Tier 1 capital ratio was 13.2%, down from 13.71% in the third quarter of 2024. The company’s supplementary leverage ratio in the reported quarter was 5.5%, down from the prior-year quarter’s 5.85%.
Capital Deployment
In the reported quarter, C returned $5 billion to shareholders through common share dividends and share repurchases.
Outlook
2025
Citigroup expects revenues to cross $84 billion compared with the prior expectations of $84.1 billion.
NII (excluding Markets) is projected to rise 5.5% on a year-over-year basis compared with the prior stated 4.4% rise.
Management anticipates expenses to be higher than $53.4 billion, including the impacts of FX translation and excluding the goodwill impairment.
The efficiency ratio is expected to be slightly less than 64%.
Branded Cards net credit loss (NCL) is expected to be 3.50-4%.
Retail Services NCL is expected to be 5.75-6.25%.
2026
Management expects revenue to grow $87-$92 billion, witnessing a CAGR of 4-5% by 2026.
The company anticipates expenses to be below $53 billion, excluding FDIC fees, indicating a decline from the $56.4 billion reported in 2023.
Management expects the return on tangible common equity to be 10-11%.
The efficiency ratio is expected to be more than 60%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
VGM Scores
At this time, Citigroup has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock has a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Citigroup has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Citigroup Inc. (C): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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