Citigroup Inc Q3 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : So I think you said you're at least two-thirds done with a lot of the transformation, and I assume that relates to the consent order. So can you just give us an update on your actions with the consent order as it relates to risk, compliance, controls and reg data? And if you can elaborate on the reg data part because in this current regulatory environment, I don't know why so much effort needs to go to something that's more process-oriented, which they're trying to get away from as opposed to just financial strength.

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : And a short follow-up, the transformation expense for 2025, maybe this is for you, Mark, you said it was going to be more than $3 billion. So it was like $3.5 billion, $4 billion, $5 billion? Any kind of range for that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 14, 2025 / 3:00PM, C.N - Q3 2025 Citigroup Inc Earnings Call

Question: Betsy Graseck - Morgan Stanley - Analyst : I did just -- Jane, I did just want to understand how you're thinking about the Banamex transaction. I heard all the prepared remarks and we understand that you prefer to go with IPO route in ultimate value for shareholders. And I guess I wanted to understand how you're thinking about the timing between the offers that you've received versus the IPO timing that you are planning on executing? And is there a time frame in mind for ultimate value determination?

Question: Betsy Graseck - Morgan Stanley - Analyst : Okay. And the 9- to 12 months approval timing, when does that commence? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 14, 2025 / 3:00PM, C.N - Q3 2025 Citigroup Inc Earnings Call

Question: John McDonald - Truist Securities - Analyst : I wanted to ask about the efficiency path for next year. It seems like you have some potential tailwinds to drive expenses lower next year, potentially lower severance, transformation spend and stranded costs. So Mark, I wanted to ask, is that fair that you see a path for directionally down expenses next year even if revenues are strong and do you still see the potential to exit next year at an efficiency ratio of below 60?

Question: John McDonald - Truist Securities - Analyst : Great. That's really helpful. And then just a quick follow-up. Thinking a little bit longer term, what's the ultimate end state for the $3.5 billion or so in transformation spend? Does it go away? Does it morph into kind of a regular BAU investment spend at some point? And how does that evolve over time?

Question: Jim Mitchell - Seaport Global Securities LLC - Analyst : Mark, maybe just a question on NII. I think based on the guidance for this year, seems like you're flat to up in the fourth quarter. As you guys have pointed out in your Qs, you have limited sensitivity to US dollars. So how do -- is 4Q a decent jumping off point for REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 14, 2025 / 3:00PM, C.N - Q3 2025 Citigroup Inc Earnings Call next year? Can you grow from that level? How should we think about the puts and takes around asset repricing and balance sheet growth and headwinds from rates?

Question: Jim Mitchell - Seaport Global Securities LLC - Analyst : No, that's very helpful. And maybe just on the capital target of 12.8% and the stepped-up buybacks this quarter, is this a pace we should expect until you get to 12.8%? Just sort of curious on your thoughts on how quickly you get to 12.8%.

Question: Erika Najarian - UBS AG - Analyst : My first question, Mark, just wanted to make sure I understand all of the technical nuances that you laid out on slide 16. So the CTA impact is essentially neutral at deconsolidation. And in addition, we should get the capital release from the RWA reduction, I think it was $27 billion from the Mexican financial statements, and any gains and losses on sales. So the CTA is separately capital neutral, but the ultimate capital benefit will be determined by that capital release and the ultimate valuation of Banamex. And if that -- if I'm understanding that correctly, had to slip it in there, what is the allocated TCE to Banamex?

Question: Erika Najarian - UBS AG - Analyst : Perfect. And my second question is for Jane. Jane, your award for all the improvement that you've shown is a higher bar right, I think, is what you're seeing, and we're all looking forward to this May Investor Day. And I guess this is a two-part question. As you approach the 10% to 11% return on tangible common equity goal for next year, and you think about being two-thirds of the way done with the transformation, is May the right time to address maybe more end-state capital targets the way JPMorgan has addressed and Wells also gave us an update today? And if we get more regulatory certainty, you've obviously gotten a lot of volatility in the past from stress test results. And especially as we think about deconsolidating and fully exiting Banamex and the regulatory momentum, is a 100-basis-point still the right buffer for this company as we look forward?

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Just a quick question, Mark. You talked about credit reserves and the unemployment rate that you have there. But just talk to us when you think about -- and I think Jane said like some softness in the economy. When we think about the consumer cards book expectations, any kind of red or yellow fat flags that you're seeing there? If you don't mind addressing like I'm looking at sort of the non-accrual loans, a pretty decent jump in sort of corporate non-accruals quarter-over-quarter. Like was that a one-off? Do you expect that as some of the sort of, I guess, banking book seasons? Would love some perspective there.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : That's helpful. And I guess just one, if we could get a mark-to-market on the wealth business, Jane. When I look at sort of the year-over-year operating leverage being meaningful revenue growth versus expense growth, but again, a lot of that driven by NII. Just talk to us in terms of if the low-hanging fruit been picked in terms of what Andy is doing in that business? And what's the outlook from here, both in terms of just how you think operating leverage and RoTCE improving?

Question: Ken Usdin - Autonomous Research - Analyst : Just a quick one on the expense side, Mark. Just you mentioned the sub-64% efficiency ratio for the year. Just looking in the deck, it looks like the year-to-date has been 62%. You typically do have a little bit of a higher exit on that. Just wanted to ask you just what should we be thinking about as far as fourth quarter expenses versus the 13.6% in the third quarter, ex the impairment charge in terms of the seasonality, the expected kind of down drift in trading that you mentioned earlier and any other pieces on the severance and such.

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : Can you share with us -- I think in your second quarter Q, you gave us the interest sensitivity of the balance sheet. And obviously, we'll see it in the third quarter. And if I recall, I think 100 basis points instantaneous change in rates. You guys guided that NII could decline about $1.7 billion. But if we just see the Fed, I'd say the long end of the curve stays anchored around 4% to 4.5%, and the Fed cuts another 60 basis points -- excuse me, 50 basis points over the next three months or so, how does that impact your net interest income for -- over the next six months or so?

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : And then as a follow-up question, there's been a lot of discussion on other calls today and in amongst investors about loans to non-depository financial institutions, especially since -- when you look at the industry, it's more than doubled in about five years, and rapid loan growth is always something we want to pay attention to. Can you -- and you guys have, according to the regulatory filings at the end of the second quarter, about $104 billion here. Can you give us some color or insights into the different lines that you lend into, and how comfortable you are with this credit?

Question: R. Scott Siefers - Piper Jaffray Inc - Analyst : Market. I was hoping you could expand a bit on the strategy in the card portfolio. I think with the Strata card, you kind of left the impression that Citi is becoming a more visible competitor near the upper end. So is there a sort of a conscious change in the complexion of the card portfolio overall that we should expect to see evolve over the next few years? Or is this more just that you're kind of layering on a product that was a bit of a gap previously. What's the best way to think about that?

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Building on Ebrahim's question on slide 4 and operating leverage, you touched on wealth, Jane. That was helpful. Can you speak to the sustainability or perhaps source of improvement in operating leverage by segment as you near the 10% to 11% goal for ROE next year?

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : One more for Jane. How do you balance between celebrating wins and ensuring your team keep the intensity on for all the hard work ahead? I guess I heard a story that people are celebrating when the stock hit $100 a share, which I can understand. You met recent targets, you made progress with the transformation, you have a new team in place. But for those who've been around for a REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 14, 2025 / 3:00PM, C.N - Q3 2025 Citigroup Inc Earnings Call long while, we wouldn't want you to miss the (inaudible) of the trees. The returns are still under 10%, efficiency still over 60%, the stock still has underperformed this decade. So I just thought that sort of celebration may have been premature, but you do want to celebrate the wind. So how are you ensuring that intensity remains at Citi?