Citigroup (C) delivered a stellar performance in the third quarter of 2025, with revenue and earnings easily surpassing estimates. Importantly, its five business segments posted record revenues in the quarter and showed good progress on the transformation plan under the leadership of CEO Jane Fraser. Citi is outperforming its big U.S. banking peers, including JP Morgan Chase (JPM), Wells Fargo (WFC), and Bank of America (BAC), and is up more than 40% for the year.
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Citi’s outperformance isn’t just a matter of 2025, and it’s up about 150% over the past two years, well ahead of most of its peers. In addition to capital gains, Citi investors are also rewarded with a generous 2.4% dividend yield, higher than many other big banks. In this article, we’ll examine whether Citi is still a good buy, starting with a snapshot of the company’s third-quarter earnings.
Banks overall posted solid numbers in the third quarter. Speaking of Citi, the third-largest lender in the United States, it posted revenue of $22.1 billion, up 9% year-over-year and ahead of the $21.09 billion analysts were expecting. Its adjusted earnings per share (EPS) rose 48% during the period to $2.24, while analysts were expecting the metric at $1.90. The company’s net credit losses increased 2% year over year, but total credit costs fell 8% during the period to $2.45 billion. In short, it was a good quarter for Citi, where it managed to grow its revenue and results while keeping delinquencies under control.
Following Citi’s third-quarter earnings, several brokerages raised their C-share price targets, with Morgan Stanley raising it to a high of $134, while maintaining its “overweight” rating. The company’s new estimate implies a 35% increase in the next 12 months.
Overall Street sentiment is reasonably bullish on Citi, and of the 24 analysts covering the C stock, 12 have a “Strong Buy” rating, while four rate the stock a “Moderate Buy.” The remaining eight analysts rate it C as a “Hold” or equivalent.
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One of the key pillars of Citi’s transformation is efficient capital allocation. During the third quarter earnings call, Fraser said that “we are disciplined stewards of our shareholders’ capital, investing it where we should and returning what we don’t use.”
As part of the transformation, Citi exited several markets, freeing up capital and increasing its return metrics. The company’s adjusted profitability on total capital employed was 9.2% in the first nine months of the year, which is already very close to the medium-term objective of between 10% and 11% that the company has set. Fraser reiterated his earlier views, calling the goal a “benchmark, not a destination,” adding that “we see many different areas of advantage.”
The company has a $20 billion buyback program, and during the third quarter, it spent $5 billion on share buybacks, $1 billion more than it had anticipated. While Citi did not provide guidance on buybacks for the current quarter, Chief Financial Officer Mark Mason hinted that the company would continue to prioritize buybacks. “While we’ve seen good performance in the stock throughout the year, we’re still at close to single tangible book value, and I think there’s more upside to the stock,” Mason said during the earnings conference call.
Citi has played a role in the transformation and the expected normalization of its valuation multiples.
The transformation has progressed very well, as Fraser summarized during the third quarter earnings call: “We have been relentless in our execution and we are delivering results. More than two-thirds of our transformation programs are at or near our target state and we are making very good progress in the remaining areas.”
Meanwhile, Citi’s outperformance has also meant its valuation gap with peers has narrowed. C shares now trade slightly above the $95.72 tangible book value it reported at the end of the third quarter. However, it is still trading below the book value per share of $108.41. I think the next milestone in Citi’s valuation rerating would be for the stock to reach book value, which is not an unreasonable expectation given where its peers trade.
As for dividends, the company should continue to increase payments, even when the priority with cash on hand would be to buy back shares. Overall, while not a spectacular buy like it was when it was trading below its tangible book value, Citi is still a decent buy, given still-low valuations. The dividend yield is still an icing on the cake and would only add to the total returns that patient investors are getting from the stock.
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On the date of publication, Mohit Oberoi held a position in: C, BAC. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
