- Key insight: Citigroup's net income for the third quarter rose by double-digits.
- Forward look: The megabank slightly tweaked its guidance for full-year revenues and expenses.
- Supporting data: Revenues for Citi's banking business, which includes investment banking, rose 34% year over year.
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Citigroup's latest earnings performance once again topped Wall Street expectations, as each of the megabank's five business lines reported record third-quarter revenue and higher returns.
Citi's net income surged 16% year over year, totaling $3.8 billion for the quarter ending Sept. 30.
Firmwide revenues came in at $22.1 billion, up 9% compared with the same quarter last year.
Earnings per share totaled $1.86. Analysts had been expecting earnings per share of $1.72, according to S&P Capital IQ. Earnings per share would have totaled $2.24 if not for a previously disclosed goodwill impairment charge of $726 million that Citi took in connection to its deal to sell a 25% stake of Banamex, its Mexican retail banking franchise, to a local businessman.
In a press release Tuesday morning, CEO Jane Fraser said the bank's multiyear overhaul is finally paying off. Fraser — who is American Banker's Most Powerful Woman in Banking for the fifth consecutive year — has been overseeing the revamp for nearly five years.
"The relentless execution of our strategy is delivering stronger business performance quarter after quarter and improving our returns," Fraser said in the release. "The cumulative effect of what we have done over the past years — our transformation, our refreshed strategy, our simplification — have put Citi in a materially different place in terms of our ability to compete."
During the third quarter, each of Citi's businesses maintained their streak of achieving positive operating leverage, with revenues outpacing expenses. Citi's banking business, which includes investment and corporate lending, led the way with revenues up 34% year over year. Revenues for the markets business, which includes fixed income markets and equity markets, rose 15%, while revenues for wealth, services and U.S. personal banking rose by high single digits.
Firmwide expenses of $14.3 billion rose 9% compared with the year-ago quarter. The increase was due in part to the goodwill impairment charge as well as higher compensation and benefits.
The $2.6 trillion-asset company is still charging toward a key profitability metric target, return on tangible common equity, which it has set at 10-11% by 2026. During the third quarter, it came in at 8%. It would have been 9.7% if not for the goodwill impairment charge, the company noted in the release.
Citi returned $6.1 billion to shareholders, including $5 billion in share repurchases and the remaining in dividends. Year to date, the bank has returned $12 billion, Fraser said.
The company slightly tweaked its guidance for the full year. At the end of July, Citi said that revenues would be $84 billion and expenses would be $53.4 billion. Now the bank said both those figures would be higher, but didn't specify by how much.
Read more about Citigroup here: https://www.americanbanker.com/organization/citigroup
Citi's agreement to sell a 25% stake in Banamex to the businessman, Fernando Chico Pardo, is the latest chapter in its longstanding plan to exit that business. The deal is expected to close in the second half of 2026, pending regulatory approvals, Citi said Tuesday in an earnings presentation. The bank plans to divest the rest of the franchise through an initial public offering.
A little over a week later, Citi received a competing bid that offered to buy the entire franchise. In response, the bank maintained that its preferred path is to complete the deal with Pardo, though it planned to review and assess the competing offer, according to a Reuters report.
The Banamex divestiture is one of 14 overseas market contractions that Citi has pursued during Fraser's tenure. Earlier this year, Citi said its Polish subsidiary, Citi Handlowy, had agreed to sell its consumer banking business to Velobank. That deal is expected to close by mid-2026.
