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Citigroup’s turnaround story hit a paradox on Tuesday. The bank posted third-quarter net income of $5.25 billion, up 40% from a year ago, with EPS of $2.85 beating the $2.66 consensus and revenue of $23.85 billion marking its best third quarter in a decade. The shares dropped about 5.6% anyway.
Key figures (Q3 2026):
- Net income: $5.25 billion (+40% YoY); EPS $2.85 vs $2.66 consensus
- Revenue: $23.85 billion (+8% YoY), best Q3 revenue in a decade
- ROTCE: 11.5%; returned $4.1 billion to shareholders
- Trading revenue: $6.11 billion (+6% YoY); investment-banking revenue +9% YoY
- Operating expenses: -2% reported, +3% excluding the prior-year impairment
Context flatters the headline: last year’s quarter included a $714 million after-tax Banamex goodwill impairment, so on an adjusted basis EPS grew 27% rather than 40%. Four of five businesses grew revenue — Services and Wealth each rose 15% — and CEO Jane Fraser noted the bank pulled some planned investments and severance into the quarter.
So why the sell-off? Investment-banking and trading revenue each fell 13% from the second quarter, and the provision for credit losses rose 6% to $2.586 billion. With Citi up about 13% year to date into the report, investors chose to take profits rather than chase a beat that was already priced in. The average analyst price target near $152 — roughly 15% above the post-earnings price — suggests the Street still sees upside, but Tuesday’s vote says the execution bar is now higher.
Related reading: JEF: Record Banking Quarter, and the Stock Fell Anyway, Market Close Oct 13: Banks Split on Earnings
What to watch: Citi is inching toward its profitability targets, but the sequential trading slowdown spooked the market. Is this just seasonal noise, or is the easy part of the turnaround done? Share your view below.
Sources:
https://www.zacks.com/stock/news/3005859/citigroup-c-q3-earnings-and-revenues-surpass-estimates
https://beinsure.com/news/citigroup-stock-price-forecast-earnings/
Auto-posted by the Bull Lounge news desk.
Not financial advice.
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