Citigroup Set to Report Q3 Earnings: How to Approach the Stock Now?

Citigroup Inc. C is slated to report third-quarter 2025 results on Oct. 14, 2025, before market open. In the first half of 2025, Citigroup witnessed increases in net interest income (NII) and non-interest revenues. The company also registered a solid increase in Investment Banking (IB) revenues.This globally diversified financial services holding company is expected to register bottom and top-line increases in the to-be-reported quarter.The Zacks Consensus Estimate for third-quarter sales is pegged at $21.01 billion, indicating a 3.4% year-over-year increase. The consensus estimate for earnings for the to-be-reported quarter has been revised upward to $1.91 over the past seven days. The figure indicates a 23.8% rise from the prior-year quarter’s actual.Estimate Revision Trend Image Source: Zacks Investment Research The company also has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 12.04%.Earnings Surprise History Image Source: Zacks Investment Research Factors to Influence Citigroup’s Q3 ResultsNII: The Federal Reserve reduced interest rates by 25 basis points to 4.00-4.25% in September. With rates remaining largely stable throughout most of the quarter, funding and deposit costs likely stabilized, supporting modest growth in Citigroup’s NII in the third quarter.The Zacks Consensus Estimate for NII is pinned at $14.6 billion, suggesting a 9.4% year-over-year rise.Loans: The overall lending activity was impressive in the third quarter. Per the Fed’s latest data, the demand for commercial and industrial and consumer loans was strong in the first two months of the quarter.Hence, C is expected to have witnessed a decent rise in loan demand, thereby improving the average interest-earning asset balance. The Zacks Consensus Estimate for Citigroup's average interest-earning assets is pegged at $2.4 trillion, indicating a 5.3% increase from the year-ago quarter’s reported figure.Fee Income: Global mergers and acquisitions (M&As) in the third quarter of 2025 rebounded impressively after reaching lows in April and May following President Trump’s announcement of ‘Liberation Day’ tariff plans. As corporates adapted to the rapidly evolving geopolitical and macroeconomic scenarios, deal-making activity picked up. This is likely to have supported C’s IB revenues in the quarter to be reported.At the Barclays Global Financial Services Conference held in early September, Citigroup’s CFO, Mark Mason, said that the firm is witnessing good momentum across all of its investment-banking products. Management expects Citigroup’s third-quarter 2025 IB fees to increase in the mid-single-digit percentage points on a year-over-year basis. Further, client activity and market volatility were solid in the third quarter, driven by the uncertainty over the impacts of tariffs on the U.S. economy and changes in the Fed’s policy stance. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. Therefore, Citigroup’s market-making revenues are likely to have witnessed a rise in the quarter to be reported.Citigroup projects markets revenues to grow in the mid-single-digit range on a year-over-year basis in the third quarter of 2025. The Zacks Consensus Estimate for markets revenues is pegged at $4.9 billion, which suggests a 3.3% increase on a year-over-year basis.The Zacks Consensus Estimate for income from commissions and fees is pegged at $2.7 billion, which indicates a 2.2% year-over-year rise.The Zacks Consensus Estimate for income from principal transactions is pegged at $3.5 billion, which suggests a 7.4% increase from the prior-year quarter’s actual.The Zacks Consensus Estimate for administration and other fiduciary fees is pegged at $1.1 billion, which implies a year-over-year rise of 5%.The Zacks Consensus Estimate for total non-interest income for the third quarter of 2025 is pegged at $6.5 billion, which suggests a 7.3% fall from the prior-year quarter’s actual.Expenses: Though Citigroup is focused on lowering expenses through organizational simplification, cost reductions and productivity savings, the bank’s increased investments in business transformation efforts, technological advancements and higher volume-related expenses are likely to have kept the expense base elevated in the third quarter of 2025.Asset Quality: The company is likely to have set aside a huge amount of money for potential delinquent loans, given the expectations of higher for longer interest rates, and the impacts of Trump’s tariffs on inflation. The Zacks Consensus Estimate for non-accrual loans is pegged at $3.7 billion, indicating a jump of 72% from the prior year’s reported figure.What Our Model Unveils for COur proven model predicts an earnings beat for Citigroup this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is the case here, as you can see below.Citigroup has an Earnings ESP of +0.97%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.The company carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Citigroup’s Price Performance & ValuationIn the third quarter of 2025, C shares gained 17.7% compared with the industry’s rise of 10.1%. Shares of its peer Bank of America BAC grew 7.2%, while Wells Fargo WFC shares rose 2.9% in the same period. Price Performance Image Source: Zacks Investment Research Bank of America is scheduled to announce quarterly numbers on Oct. 15, while Wells Fargo is scheduled to announce results on Oct. 14. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Now, let us look at the value Citigroup offers investors at current levels.Currently, C is trading at 10.45X forward 12-month earnings, below the industry’s forward price/earnings (P/E) multiple of 14.75X. The company’s valuation looks inexpensive compared with the industry average.Price-to-Earnings F12M Image Source: Zacks Investment Research Citigroup’s stock is also trading at a discount compared with Bank of America’s P/E of 12.08X and Wells Fargo's P/E of 12.18X.Evaluating Citigroup Stock Ahead of Q3 EarningsC is in the midst of a significant transformation aimed at simplifying operations, sharpening its focus on core markets, and boosting profitability. The bank has exited the consumer banking business in nine countries and continues to wind down operations in South Korea and Russia.As part of its broader efficiency drive, Citigroup launched a two-year cost-cutting initiative in January 2024 to eliminate 20,000 jobs, which is expected to yield $2-$2.5 billion in annual savings by 2026. Combined with its pivot toward higher-margin, fee-based businesses, the company is targeting annual revenue growth of 4-5% through 2026.Citigroup also rewards shareholders handsomely. Post-clearing the 2025 Fed stress test, the company hiked its dividend 7.1% to 60 cents per share. Additionally, in January, the board approved a $20-billion common stock repurchase program with no set expiration date, of which $16.3 billion remained available as of June 30, 2025. These measures signal confidence in the company’s long-term strategy and financial position.Though its restructuring strategy is encouraging, it carries execution risk and near-term uncertainty because of tariffs and interest rate fluctuations. Also, as the interest rates are less likely to come down substantially in the near term, it is expected to hurt borrowers’ credit profiles. Hence, C’s asset quality is likely to remain weak.Given these factors, investors may want to hold off on new purchases until after the upcoming quarterly results, which may provide greater clarity and a potentially more attractive entry point. Existing shareholders, however, may consider maintaining their positions, as Citigroup’s long-term outlook remains constructive despite near-term challenges.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free 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 Bank of America Corporation (BAC): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks