Shares of Citigroup Inc. (C), one of the largest U.S. banks by assets, slid 3.79% to $126.93 in Tuesday's intraday trading, a decline of $4.99, despite reporting substantially stronger third-quarter results. For the third quarter of 2026, the bank posted net income of $5.2 billion, up 40% year over year, while revenue rose 8% to $23.8 billion on growth across several major business divisions.

Citigroup Reports 40% Profit Growth in the Third Quarter

Citigroup reported earnings of $2.85 per diluted share for the third quarter, which ended September 30, compared with $1.86 in the year-ago period. According to the bank, the increase reflected higher revenue, lower reported operating expenses, and a smaller number of outstanding shares following repurchases. Higher credit loss provisions, however, partially offset the earnings growth.

Operating expenses declined 2% to $14 billion, compared with $14.3 billion during the third quarter of 2025. The prior-year figure included a $726 million goodwill impairment linked to Citigroup's agreement to sell part of Banamex, its Mexican consumer banking business. Excluding that charge, operating expenses increased 3%, reflecting higher compensation, deposit insurance costs, and transaction-related spending.

The bank recorded $2.6 billion in credit loss provisions, a 6% increase from the previous year. The total included $2.2 billion in net credit losses and a $369 million reserve build, which Citigroup attributed to changes in its economic outlook and continued portfolio growth.

Citigroup Services Revenue Climbs 15% as Banking Operations Expand

The Services segment, which houses both Treasury and Trade Solutions and Securities Services, generated $6.6 billion in revenue for the quarter, a 15% increase from the previous year and equivalent to more than a quarter of the bank's total quarterly revenue. Treasury and Trade Solutions contributed $4.9 billion to the quarterly total, supported by stronger deposits, higher fees, and improved transaction activity. Cross-border transaction values rose 10%, while commercial card spending also climbed 10%.

Securities Services revenue increased 13% to $1.7 billion, lifted by higher fees and stronger interest income. Assets under custody and administration within the unit grew 16%, reflecting new client assets and changes in market valuations. As a result, Services net income climbed 27% to $2.6 billion, despite higher compensation and operating costs.

On the balance sheet, total loans stood at $820 billion at the end of the quarter, representing 12% annual growth across several business divisions. Deposits increased 9% to approximately $1.5 trillion, supported by expansion within the Services business. The bank also reported $3.3 billion in non-accrual loans, representing a 12% decline from the previous year. With the reserve build tied by the bank to its economic outlook and portfolio growth, credit costs are rising alongside the larger balance sheet.

Citigroup Returns $4.1 Billion to Shareholders Despite Stock Decline

Citigroup returned $4.1 billion to common shareholders during the quarter through dividends and share repurchases, even as its shares traded lower. Book value per share rose 7% to $115.61, while tangible book value per share climbed 6%, reflecting continued capital generation as the bank expanded its lending.

In capital metrics, the bank reported a Common Equity Tier 1 ratio of 12.8%, unchanged from the previous quarter. Its supplementary leverage ratio, however, declined to 5.0% from 5.2% during the same period. Citigroup also posted an 11.5% return on average tangible common equity, compared with 8.0% one year earlier.

Despite the stronger year-over-year performance, Citigroup recorded a 10% decline in net income from the second quarter of 2026. Revenue fell 4% sequentially, while credit loss provisions increased 3% over the same period. Tuesday's stock decline stood in contrast to the bank's annual profit growth and its continued expansion across core businesses. The bank's upcoming quarterly reports will show how credit costs track against a loan book up 12% annually, how capital ratios move as lending expands, and how the agreement to sell part of Banamex progresses.