Citigroup Outpaces Q3 Estimates as Turnaround Gains Momentum and Shares Jump 2%

Citigroup posted a robust third quarter that highlighted meaningful progress in its multi-year turnaround, with results surpassing Wall Street expctations across most key metrics. Adjusted earnings per share came in at $2.24, comfortably ahead of the $1.90 consensus estimate, while total revenue reached $22.09 billion versus $21.09 billion expected. Net income rose 16% year over year to $3.8 billion, with reported EPS of $1.86 including the impact of a goodwill impairment tied to the partial sale of Banamex. The bank’s net interest income climbed to $14.94 billion, beating estimates, and return on tangible common equity improved to 8% (or 9.7% excluding the Banamex charge). Shares rose roughly 2% following the report as investors rewarded signs of sustainable progress in CEO Jane Fraser’s transformation plan.

The strong quarter reflected growth across all five of Citi’s core business segments—Services, Markets, Banking, Wealth, and U.S. Personal Banking (USPB)—underscoring the benefit of a more streamlined global franchise. Total revenue grew 9% year over year, driven by strength in both interest and noninterest income. Net interest income rose 12%, aided by higher loan and deposit volumes and better spreads in Services and USPB. Noninterest income advanced 4%, led by higher investment banking and wealth management fees. Operating expenses were up 9% to $14.3 billion, though on an adjusted basis they rose just 3%, as efficiency gains and cost-control initiatives helped offset higher compensation and technology investments. The efficiency ratio improved slightly to 64.7%, reflecting early returns from Fraser’s focus on simplification and digitization.

Citi’s largest division, Services, delivered record revenue of $5.4 billion—up 7% from a year ago—fueled by continued momentum in Treasury and Trade Solutions (TTS) and Securities Services. Both businesses benefited from strong deposit growth, improved pricing, and rising client transaction volumes. Markets revenue climbed 15% to $5.6 billion, reflecting broad-based strength in both Fixed Income and Equities. Within FICC, revenue grew 12% on solid client demand in rates and mortgages, while equities trading jumped 24% to a record level, driven by robust derivatives activity and record prime balances. The performance marked Citi’s best trading quarter since the first half of 2022, reinforcing its competitive positioning in global markets.

The Banking division delivered the sharpest recovery of any segment, with revenue up 34% to $2.1 billion. Advisory fees rose 17% year over year as dealmaking improved, while debt and equity underwriting activity surged on the back of a healthier capital markets backdrop. Leveraged finance and cross-border M&A were particular bright spots, and management said its investment banking pipeline remains healthy heading into Q4. The rebound in banking mirrored similar trends at peers, suggesting that corporate clients are once again tapping the markets after an extended lull.

Wealth management and consumer banking added stability and growth. Wealth revenue rose 8% to $2.2 billion, benefiting from higher deposit spreads and a 14% increase in client investment assets. U.S. Personal Banking revenue climbed 7% to $5.3 billion, with Branded Cards up 8% and Retail Banking up 30%, signaling that consumer spending remains resilient. Citi’s credit card portfolio saw continued loan growth, and deposit trends remained healthy even as consumers adjusted to a higher-rate environment. Credit quality within consumer portfolios improved, particularly in cards and retail services, where losses declined 5% year over year. Fraser noted that Citi’s U.S. franchise “continues to demonstrate strong momentum” and remains an essential growth engine for the bank.

On the credit front, the total cost of credit fell 8% to $2.5 billion, supported by lower net credit losses and modest reserve builds. Net charge-offs totaled $2.2 billion, while the bank added $236 million to reserves, primarily reflecting targeted adjustments in corporate exposures. Non-accrual loans rose to $3.7 billion, a 70% year-over-year increase tied mostly to isolated corporate accounts and mortgage loans impacted by California wildfires. The allowance for credit losses stood at $23.8 billion, keeping the overall reserve ratio steady at 2.65%. Management described credit performance as “stable and well-managed,” noting that the bank continues to see solid repayment behavior across its consumer base.

Citigroup’s balance sheet metrics also showed steady improvement. Loans rose 7% year over year to $734 billion, while deposits increased 6% to $1.4 trillion, maintaining a healthy funding mix. Tangible book value per share climbed 7% to $95.72. The bank’s CET1 capital ratio ended the quarter at 13.2%, down slightly from 13.5% in Q2 due to buybacks and higher risk-weighted assets but still well above regulatory minimums. Citi returned $6.1 billion to shareholders through dividends and repurchases during the quarter and announced an increase in its quarterly dividend to $0.60 per share, reflecting management’s confidence in capital flexibility. Year-to-date, total shareholder returns have reached $12 billion.

CEO Jane Fraser struck a confident tone in her remarks, emphasizing that Citi’s transformation efforts are “firmly on track” and producing visible results. She highlighted record revenues in multiple divisions and pointed to investments in technology, AI, and client platforms as key drivers of ongoing efficiency and innovation. Fraser described the partial sale of Banamex as “a major milestone in simplifying Citi’s footprint” and reiterated that the bank is now “in a materially stronger position to compete globally.” She also underscored Citi’s improving culture of accountability and focus on execution, adding that “the progress we’re making shows in our results and in how our clients are responding.”

Overall, Citi’s third-quarter performance reflected a franchise that’s stabilizing and starting to grow again. Revenue gains were broad, credit costs were contained, and efficiency improved despite inflationary pressures. While some credit normalization and expense creep remain risks, the bank’s diversified model, capital strength, and digital progress position it well for sustained improvement. The 2% post-earnings stock move signaled investor confidence that Fraser’s turnaround plan is gaining traction. In a year when peers are contending with mixed macro trends and regulatory overhangs, Citi’s steady progress and constructive capital outlook stand out as proof that the long-awaited transformation is beginning to pay off.