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CI

CITIGROUP INC (C)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered broad-based growth with revenues $22.09B (+9% YoY, +2% QoQ), GAAP diluted EPS $1.86; excluding the $726M goodwill impairment tied to the Banamex stake sale, adjusted EPS was $2.24 and net income $4.47B .
  • Services posted a record quarter (+7% YoY), Markets also hit its best Q3 (+15% YoY), Banking grew sharply (+34% YoY), and USPB reached record revenues (+7% YoY) .
  • Versus S&P Global consensus: GAAP EPS modestly missed in Q3 ($1.86 vs $1.927*), but adjusted EPS beat; revenue beat ($22.09B vs $21.18B*). Q1–Q2 both beat EPS and revenue on a GAAP basis (see Estimates Context) *.
  • Management reaffirmed confidence to exceed $84B FY revenue, guided NII ex-Markets up ~5.5% for FY, flagged Markets revenue could decline more than typical from Q3→Q4, and set a CET1 target ~12.8% amid ongoing buybacks ($5B in Q3; $20B program) .

What Went Well and What Went Wrong

  • What Went Well

    • “Revenues were up 9% and every business had record third quarter revenue, improved returns and positive operating leverage,” with Services’ best quarter ever (+7%), Markets’ best Q3 (+15%), Banking +34% YoY, USPB +7% YoY; record Wealth NNIA $18.6B .
    • Strong client activity: TTS deposits/spreads and fee drivers (cross-border value +10%, USD clearing +5%); Securities Services AUC/AUA +13%, record prime balances in Equities (~+44%) .
    • Capital return: ~$6.1B to shareholders in Q3; CET1 ended at 13.2% with liquidity and LCR strength .

  • What Went Wrong

    • Efficiency ratio rose to 64.7% (+200 bps QoQ) as expenses increased 9% YoY, including a goodwill impairment ($726M/$714M after-tax) and higher compensation/severance and transformation costs .
    • Cost of credit remained elevated ($2.45B), with corporate non-accruals up 119% YoY to $2.1B (idiosyncratic downgrades) and consumer non-accruals up 32% YoY (California wildfires impact in Wealth mortgages) .
    • Corporate/Other revenues fell to -$336M from +$86M YoY on lower cash reinvestment benefit and NIR; All Other managed-basis net loss widened to -$705M (+46% YoY) .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$21.60 $21.67 $22.09
Diluted EPS (GAAP) ($)$1.96 $1.96 $1.86
Adjusted Diluted EPS (ex goodwill) ($)N/AN/A$2.24
Cost of Credit ($USD Billions)$2.72 $2.87 $2.45
ROE (%)8.0% 7.7% 7.1%
RoTCE (%)9.1% 8.7% 8.0%
Efficiency Ratio (%)62.2% 62.7% 64.7%

Segment revenues ($USD Billions):

SegmentQ1 2025Q2 2025Q3 2025
Services$4.89 $5.06 $5.36
Markets$5.99 $5.88 $5.56
Banking$1.95 $1.92 $2.13
Wealth$2.10 $2.17 $2.16
USPB$5.23 $5.12 $5.33
All Other (Managed)$1.45 $1.70 $1.54

Key balance sheet & capital KPIs:

KPIQ1 2025Q2 2025Q3 2025
CET1 Ratio13.4% 13.5% 13.2%
SLR5.8% 5.5% 5.5%
EOP Deposits ($USD Trillions)$1.316 $1.358 $1.384
EOP Loans ($USD Billions)$702 $725 $734
Book Value/Share ($)$103.90 $106.94 $108.41
Tangible BV/Share ($)$91.52 $94.16 $95.72

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenuesFY 2025N/A“Exceed $84B” New/affirmed
NII ex-MarketsFY 2025N/A~+5.5% YoY New/updated
Efficiency Ratio (ex goodwill impairment)FY 2025N/ASlightly below 64% Updated
Markets Revenue Q4 Seq.Q4 2025Typical -15% to -20%Could exceed typical decline Cautious
CET1 target (standardized)OngoingN/ATarget ~12.8% (SCB averaging uncertainty) New
BuybacksFY 2025$20B programContinue repurchases; $5B Q3 Maintained
Common DividendQ4 2025 (payable Nov-26)$0.60/share prior quarter$0.60/share declared Maintained

Note: Prior-quarter numeric guidance not disclosed in the documents reviewed; management provided updated directional guidance in Q3 call .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2)Current Period (Q3 2025)Trend
AI / TechnologyTransformation and tech investments highlighted in results and expense commentary 180k colleagues using proprietary AI; ~7M uses YTD; Agentic AI pilot (5k), firm-wide AI embedding; ~100k hours weekly capacity created Accelerating deployment and impact
Digital assets / tokenized depositsN/A in Q1–Q2 8-KsTokenized deposits integrated with 24/7 USD clearing; interoperable multi-bank real-time payments; Stablecoin role vs tokenized deposits Strategic build-out
Macro (tariffs, regions)Resilient revenue across businesses; FX impacts noted US resilient on consumer & AI/data center capex; China slowing domestic spend; Europe structural challenges Mixed; US strong, Asia/Europe watch
Regulatory / capitalCECL fully reflected; CET1 13.4–13.5%; SCB decline noted in Q2 materials CET1 target ~12.8% with SCB averaging uncertainty; progress on consent order transformation; improved SCB two years in a row Improving predictability; buffer management
Products / segmentsServices, Markets, Banking, USPB all growing YoY Services +7% (TTS deposits/spreads up); Markets +15% (Rates +15%, Equities prime balances +~44%); Banking +34%; USPB record revenue Broad-based momentum
Banamex divestitureN/A in Q1 8-K; Q2 noted Mexico impacts 25% stake sale agreement; regulatory approval ~9–12 months; CTA capital-neutral at deconsolidation; full exit capital benefit via RWA release + gains/losses Path clarified; multi-step

Management Commentary

  • CEO prepared remarks: “Revenues were up 9% and every business had record third quarter revenue… Services posted its best quarter ever… Markets delivered its best third quarter ever… Banking revenues were up 34%… Wealth strategy continues to play out positively with record Net New Investment Assets of $18.6 billion… USPB saw a record quarter” .
  • Capital return and Banamex: “We returned over $6 billion... $5 billion in share repurchases... agreement to sell a 25% equity stake [Banamex] is a very significant step towards deconsolidation and full exit” .
  • AI strategy: “Nearly 180,000 colleagues... proprietary AI tools... Agentic AI pilot... firm-wide effort to systematically embed AI end-to-end to drive efficiencies, reduce risk, and improve client experience” .
  • Tokenized deposits: “Clients want interoperable, multi-bank, cross-border, always-on payments... best done by tokenized deposits... linking Citi Token Services to our 24/7 USD clearing network” .

Q&A Highlights

  • Transformation/consent order progress: Over two-thirds of programs at or near target state; preventative controls for large/anomalous payments in 85 countries; driving automation/AI in regulatory data .
  • Banamex timeline/structure: 25% stake approved in 9–12 months; deconsolidation CTA ($9B) flows through P&L but capital-neutral; full exit capital release on ~$37B RWA plus cumulative sale gains/losses .
  • Expense path/efficiency: Targeting ROTCE 10–11% next year; aiming for <60% efficiency ratio as they exit 2026; transformation spend <~$3.5B in 2025, declining in 2026 .
  • NII outlook: Expect continued growth into 2026 on deposits and loan momentum (branded cards, trade lending), and redeployment of investment portfolio; limited USD rate sensitivity .
  • Credit quality: Corporate NALs increased due to two idiosyncratic names; coverage >2x; consumer delinquency/NCL trends normal, portfolio prime-heavy (85% FICO≥660) .

Estimates Context

MetricQ1 2025Q2 2025Q3 2025
EPS Consensus (Primary) ($)1.8521*1.5910*1.9270*
Revenue Consensus ($USD Billions)21.287*20.962*21.182*
Actual EPS (GAAP Diluted) ($)1.96 1.96 1.86
Actual Revenue ($USD Billions)21.60 21.67 22.09

Values retrieved from S&P Global*.

Implications:

  • Q3 GAAP EPS modest miss vs consensus ($1.86 vs $1.93*), but adjusted EPS ($2.24) exceeded consensus as goodwill impairment reduced GAAP earnings *.
  • Q3 revenue beat ($22.09B vs $21.18B*), consistent with stronger Services/Markets/Banking *.
  • Q1–Q2 both exceeded EPS and revenue consensus on a GAAP basis (supporting estimate upgrades into 2H) *.

Key Takeaways for Investors

  • Broad-based strength with structural tailwinds: Services (deposits/spreads, fee drivers), Markets (rates, derivatives/prime), Banking (fee wallet gains), USPB (cards spreads/balances) support resilient top-line into 2026 .
  • Adjusted EPS quality in Q3: Excluding the Banamex goodwill impairment, earnings power is tracking above consensus, highlighting underlying momentum despite transitory charges *.
  • Capital strategy remains shareholder-friendly: Ongoing buybacks ($5B in Q3; $20B program) and a 12.8% CET1 target suggest continued capital return while absorbing regulatory uncertainties .
  • Watch near-term Markets seasonality: Management cautions Q4 Markets revenue decline could exceed historical -15% to -20% range; hedging expectations prudent .
  • Credit and non-accruals are manageable: Corporate NALs reflect idiosyncratic downgrades; consumer credit trends remain normal with prime-heavy book and robust reserves .
  • AI and tokenized payment rails are tangible efficiency and revenue catalysts: Rapid internal adoption and client solutions (24/7 clearing + tokenized deposits) can improve throughput and fee capture .
  • Mexico exit path clearer: Stake sale advances deconsolidation timeline; eventual full exit should unlock RWA capital and simplify the portfolio; monitor CTA accounting steps .