Citigroup Q2 Earnings Beat Estimates on Y/Y NII Rise, Stock Up

Citigroup Inc. C reported second-quarter 2025 adjusted net income per share of $1.96, up 28.9% from the year-ago period. The metric also surpassed the Zacks Consensus Estimate by 21.7%.C shares gained 1.2% in the pre-market trading session on better-than-expected results.The company's results benefited from an increase in net interest income (NII). Citigroup also registered a year-over-year increase of 15% in investment banking (IB) revenues, reflecting growth in Advisory and Equity Capital Markets. However, increases in expenses and provision for credit losses were undermining factors. Also, a decline in non-interest revenues was concerning.Net income (GAAP basis) in the quarter was $4.1 billion, up 25% from the prior-year quarter.C’s Revenues & Expenses IncreaseRevenues, net of interest expenses, moved up 8% year over year to $21.7 billion in the second quarter of 2025. The top line surpassed the Zacks Consensus Estimate by 3.3%.NII rose 12% year over year to $15.2 billion, whereas non-interest revenues fell 1% to $6.5 billion.Citigroup’s operating expenses rose 2% year over year to $13.6 billion. This increase in expenses was primarily due to higher compensation and benefits expenses, largely offset by lower tax-related and deposit insurance costs, as well as the absence of the civil money penalties in the prior-year period.Citigroup’s Segmental PerformanceIn the Services segment, total revenues, net of interest expenses, were $5.1 billion in the reported quarter, up 8% 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 16% year over year to $5.9 billion, driven by growth in Fixed Income and Equity markets revenues.Banking revenues of $1.9 billion moved up 18% year over year, primarily driven by growth in IB and Corporate Lending.U.S. Personal Banking’s revenues were $5.1 billion, up 6% 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 20% year over year. The increase was driven by growth across Citigold, the Private Bank and Wealth at Work businesses.Revenues in the All Other segment declined 14% year over year to $1.7 billion.C’s Balance Sheet Position SolidAt the end of the second quarter of 2025, the company’s deposits rose 3% from the prior quarter to $1.36 trillion. Its loans also increased 3% on a sequential basis to $725.3 billion.Citigroup's Credit Quality: Mixed BagTotal non-accrual loans jumped 49% year over year to $3.4 billion. C’s provisions for credit losses and benefits, and claims for the second quarter were $2.9 billion, up 16% from the year-earlier quarter.The allowance for credit losses on loans was $19.1 billion, down 5% from the prior-year quarter.C's Capital Position WeakAt the end of the second quarter of 2025, the bank’s Common Equity Tier 1 capital ratio was 13.5%, marginally down from 13.59% in the second quarter of 2024. The company’s supplementary leverage ratio in the reported quarter was 5.5%, down from the prior-year quarter’s 5.89%.Citigroup's Capital DeploymentIn the reported quarter, C returned $3 billion to shareholders through common share dividends and share repurchases.Update on C Dividend Distribution PlanThe company cleared the 2025 stress test and increased its common stock dividend by 7.1% to 60 cents per share, starting in the third quarter of 2025.Our Viewpoint on CitigroupThe company’s second-quarter 2025 results continued to showcase momentum, positive operating leverage and improved returns in each of the five businesses. Increased NII looks encouraging. However, rising expenses and provisions for credit losses were concerning.The business transformation initiatives, including its consumer business exits and organizational simplification efforts, will help it in the long run. Focus on growth in the profitable business while eliminating non-viable segments will likely aid results in the long run. Citigroup Inc. Price, Consensus and EPS Surprise  Citigroup Inc. price-consensus-eps-surprise-chart | Citigroup Inc. QuoteCurrently, Citigroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Earnings Dates & Expectations of Other BanksCitizens Financial Group, Inc. CFG is slated to report second-quarter 2025 results on July 17. Over the past seven days, the Zacks Consensus Estimate for CFG’s quarterly earnings per share has been unchanged at 88 cents. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Fifth Third Bancorp FITB is scheduled to release second-quarter 2025 earnings on July 17. The consensus estimate for FITB’s quarterly earnings has been unchanged at 87 cents per share over the past seven days.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Citigroup Inc. (C): Free Stock Analysis Report Fifth Third Bancorp (FITB): Free Stock Analysis Report Citizens Financial Group, Inc. 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