Citigroup (C) Q3 2026: Services Deposits Lift NII Above Guidance

Citigroup (C) reported third-quarter 2026 results on October 13, 2026, in a Form 8-K covering the quarter ended September 30, and the results came in ahead of the company's earlier guidance, with the improvement in returns driven mainly by business profits [1]. Citi's net interest income excluding Markets grew 7% year over year, above its full-year guidance of 5% to 6%. Going into the quarter, the research questions were whether Services deposits could support that 5% to 6% growth, whether the efficiency ratio could stay around 60%, whether U.S. Consumer Cards could return to revenue growth after onboarding the American Airlines co-branded portfolio, and how much of the improvement in returns came from the business itself. In the quarter, the efficiency ratio was 58.5% and return on tangible common equity (RoTCE) was 12.6% for the first nine months [1][2]. Card revenue was still flat year over year, although management expects the full-year credit card net credit loss rate to be about 4%, at the low end of the prior range [2][3]. The main uncertainties are when card revenue turns and the one-time loss expected when Banamex is deconsolidated next year.

Citigroup is a global bank that reports five businesses (Services, Markets, Banking, Wealth and U.S. Consumer Cards), with the Mexico Banamex business it is separating held in All Other [1]. Services provides treasury, payments and custody services to companies and institutions with cross-border needs and earns mainly deposit spreads and fees. The card business earns mainly loan spreads and interchange fees.

Net interest income excluding Markets beats full-year guidance

Citi's net interest income excluding Markets grew faster than the company guided. In the second quarter, the company projected full-year growth of 5% to 6% and expected the unusually high Services deposit growth to normalize [4]. In the third quarter, this income was $13.709 billion, up 7% year over year, and it was also up 7% for the first nine months; about two-thirds of the $947 million year-over-year increase came from Services [2].

The company attributed the 17% rise in Services net interest income to higher average deposit balances and deposit spreads [1]. Services average deposits were $1.037 trillion, up 16% year over year, a modest slowdown from 19% in the second quarter, and cross-border transaction value rose 10% [1][2]. The earnings call summary does not say whether the company changed its full-year guidance [3].

U.S. Consumer Cards revenue is flat as partner costs exceed plan

Card loans and spending are growing, but revenue has not followed. Third-quarter U.S. Consumer Cards revenue was $4.664 billion, flat with a year earlier; net interest income rose 6%, while non-interest revenue was negative $758 million, down 62% [1]. The company attributed the decline to higher partner payment accruals and rewards costs, which together rose 22% year over year [1][2]. In the second quarter, management said second-half non-interest revenue would stay at the second-quarter level of negative $659 million; the third quarter came in about $100 million below that level [5].

The American Airlines portfolio was onboarded once in the second quarter, and organic account acquisition has not accelerated since. General purpose card new accounts fell 2% year over year, while general purpose average loans rose 9% and spend volume rose 13%; the annualized net credit loss rate was 3.66%, better than the prior range [2]. The card business still built $208 million of reserves in the quarter because of changes in the macroeconomic outlook, and its net income fell 8% year over year [1].

Returns rise on profits, and Banamex sales reach 49%

Citi's returns are now above its original full-year target, and profits are the main driver. In the second quarter, the company maintained its full-year 2026 RoTCE target of 10% to 11% [6]; in the third quarter, management raised the full-year target to above 11% [3]. Net income available to common shareholders rose 41% year over year while average tangible common equity fell only 2%, so almost all of the 3.5 percentage-point year-over-year improvement came from profits [2].

Capital actions and the divestiture are on plan, but buybacks slowed. The CET1 capital ratio was 12.8%, unchanged from the prior quarter, and Citi repurchased about $3 billion of stock in the quarter, down from $4 billion in the second quarter [1][3]. Citi sold another 1.4% stake in Banamex during the quarter, bringing the total sold to 49% [2]. According to the earnings call summary, the company is preparing to deconsolidate Banamex next year and expects to recognize a loss of about $9 billion through the income statement; the capital impact has not been disclosed [3].

Conclusion

The third-quarter results strengthen the view of where Citi's growth and return quality come from. Growth is led by Services deposits and fees and is stronger than the company originally expected. Profit conversion relies on revenue growth: excluding last year's goodwill impairment, expenses rose only 3%, but severance and investment spending were not quantified [1][2]. Capital generation is enough to support buybacks of about $3 billion a quarter. Management expects fourth-quarter Markets revenue to fall about 20% seasonally [3]. The next evidence to track is whether Services deposit growth keeps slowing only modestly, whether card interest income can catch up with partner costs, and the timing and capital impact of the Banamex deconsolidation.

Sources

[1] C 8-K filed 2026-10-13 (Q3 2026 earnings release, Exhibit 99.1), 2026-10-13, Citigroup Form 8-K, https://www.sec.gov/Archives/edgar/data/831001/000110465926115323/c-ex99d1.htm

[2] C 8-K filed 2026-10-13 (Q3 2026 Quarterly Financial Data Supplement, Exhibit 99.2), 2026-10-13, Citigroup Form 8-K, https://www.sec.gov/Archives/edgar/data/831001/000110465926115323/c-ex99d2.htm

[3] C Q3 2026 earnings call summary 2026-10-13, 2026-10-13, Drillr earnings call summary, drillr://earning_call_summary/C/2026-10-13

[4] C Q2 2026 earnings call 2026-07-14 · full-year 2026 NII ex-Markets guidance, 2026-07-14, Citigroup earnings call, https://www.citigroup.com/global/investors/quarterly-earnings

[5] C Q2 2026 earnings call 2026-07-14 · second-half 2026 non-interest revenue guidance, 2026-07-14, Citigroup earnings call, https://www.citigroup.com/global/investors/quarterly-earnings

[6] C Q2 2026 earnings call 2026-07-14 · full-year 2026 RoTCE target, 2026-07-14, Citigroup earnings call, https://www.citigroup.com/global/investors/quarterly-earnings