Citigroup Earnings: Solid Quarter Overshadowed by Cautious Guidance

Key Morningstar Metrics for Citigroup

• Fair Value Estimate
  : $127.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Citigroup’s Earnings

Citigroup C reported solid third-quarter earnings, with net revenue up 8% and diluted earnings per share ex-notables up 27% from a year ago. Still, cautious guidance and declining net interest margins weighed on investors, sending shares down by a mid-single-digit percentage.

Why it matters: After a tremendous first half of 2026, when Citi was well ahead of full-year targets, we expected stronger guidance raises with only a quarter to go in a higher-rate environment, but we remain more cautious despite the firm’s strongest third-quarter revenue in a decade.

• The firm barely raised its target for 2026 returns on tangible common equity from a range of 10.0%-11.0% to simply “above 11.0%,” implying a fairly weak fourth quarter ahead considering the 12.6% return through the first three quarters on a larger capital base.
• We’ve been impressed by execution on the deposit-gathering front, with continued sequential growth raising average deposits 10.60% from a year ago, though 11 basis points of sequential net interest margin compression to 2.43% was disappointing, as Wells Fargo and JPMorgan Chase reported flat or higher.

The bottom line: After digesting results, we are lowering our fair value estimate for no-moat Citig to $127 per share from $130, viewing shares as fairly valued after updating our forecasts to account for lower near-term market revenue and higher deposit costs.

• The firm posted decent fixed income results, up 4% from a year ago, while JPMorgan reported a 4% decline, though equities were a bit disappointing, up just 14%, while JPMorgan grew 49% and Goldman Sachs grew 72%.
• Our forecasts still call for elevated trading revenue to persist near-term, followed by a pronounced contraction, though we’ve lowered our 2026 and 2027 estimates after seeing the bigger equities desks grab increasing share and management penciling in fourth-quarter results sequentially down over 20%.