Citigroup Inc Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Citigroup's Q3 2025 earnings call highlighted strong financial performance with revenue growth across all businesses, progress in transformation efforts, and a focus on capital return. Key themes included digital asset innovation, particularly tokenized deposits, and strategic investments for future growth.
Key Financial Results:
Net income of $3.8 billion, with earnings per share (EPS) of $1.86, and a Return on Tangible Common Equity (RoTCE) of 8%.
Adjusted EPS of $2.24, excluding goodwill impairment from the Banamex transaction, with an adjusted RoTCE of 9.7%.
Revenues were up 9%, with record third-quarter revenue and improved returns across all businesses.
Positive operating leverage was generated for the firm and each of its five businesses.
Year-to-date, total revenues were up 7%.
Year-to-date RoTCE of 8.6% and 9.2% on an adjusted basis.
Business Segment Results:
Services: Revenues up 7%, driven by growth in TTS and Securities Services. AUC/A grew 13%, reaching nearly $30 trillion.
Markets: Revenues up 15%, driven by growth across both fixed income and equity. Equities grew nicely, with continued progress in prime, where balances were up over 40%.
Banking: Investment banking fees up 17%, with continued growth across all products.
Wealth: Revenue up 8%, driven by Citigold and the Private Bank. Record net new investment assets of $18.6 billion, with client investment assets increasing by 14%.
USPB: Record quarterly revenue of $5.3 billion, reaching 12 straight quarters of positive operating leverage and delivered an RoTCE of over 14%.
Capital Allocation:
Over $6 billion in capital returned to common shareholders during the third quarter.
$5 billion in share repurchases, $1 billion more than guided.
Year-to-date, $8.75 billion of shares repurchased as part of the $20 billion repurchase plan.
Ended the quarter at a common equity Tier 1 capital ratio of 13.2%, over 100 bps above the regulatory requirement.
Industry Trends and Dynamics:
Global economy proved more resilient than anticipated.
US continues to be a pace setter, driven by consumer spending and tech investments in AI and data centers.
China's domestic spending has slowed, but investments in technology are significant.
India's fundamentals of a young tech-savvy labor force and robust domestic consumption continue to drive high growth.
Europe faces structural challenges to escape a low-growth cycle.
Networks evolve towards an always-on future, with Citi integrating token services with its 24/7 Clearing platform.
Competitive Landscape:
Improved position in tech, healthcare, consumer, and with sponsors in banking.
Emphasis on growing investment assets in Wealth.
Citi Strata Elite card launch and introduction of a new mid-tier product to round out the Citi Advantage portfolio in USPB.
Macroeconomic Environment:
The US economy is cooling somewhat, but America's economic engine is still humming.
Pockets of valuation frothiness in the market require discipline.
Monitoring the labor market.
Growth Opportunities and Strategies:
Capitalizing on transfers from the retail bank to the wealth business.
Investing in technology to catalyze transformation and become a more agile and modern bank.
Embedding AI into processes end-to-end to drive efficiencies, reduce risk, and improve client experience.
Focus on tokenized deposits for institutional clients, delivering real-time money movement with minimal friction and low cost.
Partnership with BlackRock to manage $80 billion of clients' assets, aligning with an open architecture strategy.
Agreement with Fernando Chico Pardo to purchase a 25% equity stake in Banamex, progressing the overall timeline to deconsolidation.
Financial Guidance and Outlook:
Confident in exceeding $84 billion in revenues for the year.
Expect NII ex markets to be up around 5.5% for the full year.
Full-year expenses will come in higher than previously guided, but the efficiency ratio for the full year will be slightly below 64%, excluding the goodwill impairment.
Continued share repurchases in the fourth quarter under the $20 billion program.
Targeting an RoTCE of 10% to 11% next year and further improving returns over time.
Targeting a standardized CET1 ratio closer to 12.8%, which incorporates a two-year average SCB of 3.8% as well as a 100-basis-point management buffer.
Investor Day on May 7th of next year to share future strategies.
