Citigroup Q3 2026 earnings call: transcript, summary & key numbers

Hello and welcome to Citi's third quarter 2026 earnings call. Today's call will be hosted by Margo Pilic, head of Citi Strategy, M &A, and Investor Relations. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Ms. Pillich, you may begin.

Thank you, Operator. Good morning, and thank you all for joining our third quarter 2026 earnings call. I am joined today by our Chair and Chief Executive Officer, Jane Fraser, and our Chief Financial Officer, Gonzalo Luchetti. I'd like to remind you that today's presentation, which is available for download on our website, citygroup .com, may contain forward-looking statements, which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these statements due to a variety of factors, including those described in our earnings materials as well as in our SEC filings.

And with that, I'll turn it over to Jane.

Thank you, Margo, and good morning to everyone. This morning, we reported net income of $5.2 billion for the third quarter, with an EPS of $2.85 and an ROTC of 11.5%. Our returns improved meaningfully in services, banking, wealth and US consumer cards. The firm's ROTC grew by 180 basis points over last year and our net income was up 17%. With revenues up 8 % year over year, we delivered our best third quarter revenue in a decade and we saw revenue growth in four out of our five businesses.

As previously shared, we pulled some of our planned investments and severance into this quarter. We remain very intentional around our expenses and our investments in talent and technology. Even with this pull forward, we delivered positive operating leverage, holding expense growth to 3%, excluding last year's notable item. Our overall performance continues to demonstrate the disciplined and consistent execution of our strategy. Now let's go through our five businesses. This was another standout quarter in services, with revenues up 15%.

Growth was broad-based across every driver, from deposits to commercial card spend. and we saw continued momentum in trade loans and cross-border activity across the network. We continue to lead through innovation, bringing new real-time capabilities to our clients with the launch of Citi Token Services in the UAE and Japan and the introduction of Custody Plus. Assets under custody and administration grew by 16 % and we are laser focused on winning and onboarding further new mandates.

In markets, revenues were up 6%. Equity's revenues were up 14%, driven by our performance in Prime and in Asia, where we have been investing to gain share. FIC was up 4%. Rates was pressured by the trading environment, but we saw good growth in FX and spread products, both stable revenue streams. In banking, revenues were up 6%. We performed particularly well in ECM, where we played meaningful roles in the six largest transactions of the quarter, including leading SK Hynix, the largest ever IPO of an Asian-based issuer.

And in leverage finance, we led SoftBank's $11 billion high-yield offering, the largest ever of its kind. I am proud of these wins and how our client relationships and bankers, including the new talent we have attracted, allowed us to land these mandates. As you've seen this quarter, we are continuing to invest responsibly in high-quality talent to build on our strengths and fill identified gaps in our franchise. Wealth's performance continues to steadily improve with growth across all three businesses.

ROTCE was over 14%, significantly higher than last year. We brought in $38 billion in net new investment assets this quarter, up over 100 % from a year ago. We continue to launch new offerings such as premium boost to deepen client relationships and are seeing strong uptake of our wealth offering by our retail bank clients. In US consumer cards, revenues were flat as a result of higher partner payments. At the same time, our general purpose portfolio drove 6 % growth in total average loans.

We're increasing investment in this business, both through our deep relationships with key partners and differentiated rewards for our customers, as you saw with the acquisition of card. With returns of over 21 % in the quarter, this is already a very attractive business and the benefits of our investments will continue to scale over time. In legacy franchises, we closed on the sale of a 1.4 % equity stake of Banamex, bringing the total amount divested so far to 49%.

We're now busy preparing for Banamex's deconsolidation from Citi next year. The IPO would happen after that, when market conditions allow, and when the usual regulatory requirements are met. At that point, our international consumer divestitures will be nearly complete. Turning to capital. We returned over $4 billion to our shareholders this quarter, including $3 billion in share buybacks. We have also utilized about $900 million of our disallowed DTAs so far this year. slightly above the path we discussed at Investor Day in May.

Our tangible book value per share rose 6 % to $101.59. And our CET1 ratio stood at 12.8 % and remains about 120 basis points above our current regulatory minimum. Now, I know that the opportunities and risks that AI presents are on everyone's mind. Our transformation has modernized our core technology platform, giving us the foundation we need to implement AI firm-wide. As I've said before, we're approaching AI through four lenses. How it can help us grow, how we can deploy it to operate more efficiently, how we can teach our people to use these new capabilities, and how we can strengthen our defenses given the enhanced threat environment we and our clients face.

I've talked frequently in the past about what we're doing on the first three, and we're excited about the top-line benefits and the efficiencies we are delivering, and the many opportunities to do more for our clients. But let me spend a minute on the fourth lens. Our cyber-defense strategy is about being on the front foot, about moving fast and retaining trust. We don't wait for risks to happen. We're constantly preparing and improving our defenses. We're in the business of managing risk every day, and this is no different.

We've been hardening our systems and running challenging and disruptive scenarios to stress test our defenses and our responses. We then modify our playbooks based on what we've learned so we're ready before an event occurs, not after. We're focused on our resilience and working with our peers and regulators on reducing systemic risk, even as we deploy AI to improve the performance of our firm. Finally, on the macro environment, conditions did soften a bit during the third quarter.

And while various headwinds, most recently higher energy prices and tighter monetary policies have been challenging, the global economy has held up remarkably well. In the US, whilst much has been made of the AI boom, the consumer is still driving much of the growth, the labor market is stable, and companies remain active. Our near-term economic outlook remains positive. China is seeing similar benefits from AI but without the consumer spend needed for balanced growth, and so their economy leans heavily on exports.

And Europe remains structurally challenged. That backdrop is exactly why clients are leaning on our network. They're engaged and they are healthy, as you will see from our credit numbers. They're open to strategic opportunities whilst being keenly aware that there could be more disruptions ahead. Our focus is on delivering our network and providing the intellectual firepower to help them compete more effectively, raise capital or manage their supply chains. They know we will be at their side no matter what environment they face.

This quarter was another proof point of our consistent execution and delivery in the face of a dynamic environment. In terms of the journey ahead, as you know, we expect to exceed this year's ROTCE target of 10 to 11%, even as we pull forward the investments to support our near-term target of 11 to 13% but these are simply the next way points on our path to reach 14 to 15% in a sustainable manner which we will do with that let me turn it to gonzalo and then we would both be delighted to take your questions

thank you jane and good morning everyone i'm going to start with the firm-wide financial results focusing on year-over-year

comparisons unless I indicate otherwise, and then review the performance of our businesses in greater detail. On slide four, we show financial results for the full firm, which demonstrate the progress we've made and the momentum of our strategy. This quarter, we reported net income of $5.2 billion, EPS of $2.85, cents, an ROTCE of 11.5 % on $23.8 billion of revenues, generating positive operating leverage. Total revenues were up 8 % driven by growth in services, wealth, markets, and banking, partially offset by a decline in all other.

Net interest income, excluding markets, which you can see on the bottom left side of the slide, was up 7 % driven by growth in services, wealth, and U .S. consumer cards, partially offset by declines in all other and banking. Non-interest revenues, excluding markets, were up 12%, driven by growth in all other, services, banking, and wealth, partially offset by a decline in U .S. consumer cards. And total markets revenues were up 6%. Expenses of $14 billion were down 2 % on a reported basis, with an efficiency ratio of 58.5%.

Excluding the impact of the $726 million Banamex Goodwill Impairment notable item from the third quarter of last year, expenses were up 3%. And cost of credit was $2.6 billion, which included a firm-wide net reserve bill of $369 million. Looking at the firm on a year-to-date basis, we generated positive operating leverage and an ROTCE of 12.6%. On slide 5, we showed the expense and efficiency trend over the past five quarters. As I just mentioned, excluding the impact of the notable item last year, expenses were up 3%, primarily driven by higher transactional and product servicing, deposit insurance costs, and compensation and benefits, partially offset by lower professional services expenses.

On a year-to-date basis, we have recognized over $1 billion of severance, largely across functions, technology, and operations as we continue to drive structural efficiencies and bring down transformation expenses and stranded costs to create capacity for business growth. On slide six, we show U .S. cards and corporate credit metrics. At the end of the quarter, we had over $22 billion in total reserves with a reserve-to-funding low ratio of 2.5%. Our reserves incorporate an eight-quarter weighted average unemployment rate of 5.3%, which includes a downside scenario average unemployment rate of nearly 7%.

We maintained a high-quality credit card portfolio with approximately 86 % of balances extended to consumers with FICO scores of 660 or higher, and a reserve-to-funded loan ratio in our U .S. cards portfolio of 7.7%. And we continue to see strong consumer credit performance, as both net credit loss and delinquency rates in our overall cards portfolio declined year-over-year. Looking at the right-hand side of the slide, you can see that our corporate exposure is 79 % investment grade, and in the quarter, corporate non-accrual loans as well as corporate net credit losses remained low.

We are confident in the high-quality nature of our portfolios, which reflect our robust risk appetite framework and rigorous client selection. Turning to capital, liquidity, and the balance sheet on slide 7, where I will speak to sequential variances. Our total assets of $2.9 1 trillion increased 2 % driven by growth in trading-related assets and loans. Net end-of-period loans increased 3 % driven by growth in markets and banking. Our $1.5 1 trillion deposit base remains well diversified and increased 1 % primarily driven by growth in services.

We reported a 114 % average LCR and over $1 1 trillion of available liquidity resources. In the third quarter, we continued to deploy capital to support accretive client activity, while at the same time prioritizing the return of capital to common shareholders, as evidenced by the $3 billion in buybacks and the 12 % increase in our quarterly common stock dividend. We ended the quarter at 12.8 % CET1 ratio under the binding standardized approach, approximately 120 basis points above the 11.6 % regulatory capital requirement.

Turning to the businesses on slide 8, we showed the results for services in the third quarter. Revenues were up 15 % during my growth across both TTS and security services, reflecting the benefits of our continued investments in the business. NII increased 17%, driven by higher average deposit balances and deposit spreads. NIR increased 12%, driven by growth in fees as we continue to see strong activity and engagement with both corporate and commercial clients, driving momentum across underlying KPIs.

Expenses increased 10%, primarily driven by higher severance as well as volume and revenue-related expenses. Average loans increased 14%, largely driven by working capital loans and export agency finance. Average deposits increased 16%, primarily driven by growth in the U .S. Services generated positive operating leverage, net income of $2.6 billion, and an ROTCE of 31.2 % in the quarter, and 29.7 % year-to-date. Turning to markets on slide 9, revenues were up 6%, driven by growth across both equities and fixed income.

Fixed income revenues were up 4%, with spread products and other fixed income up 13%, driven by an increase in spread products financing revenues. And rates and currencies was flat, with growth in currencies on higher volumes, offset by lower revenues in rates. Equities revenues were up 14 % driven by continued momentum in prime services as balances grew by over 40%, partially offset by a decline in derivatives revenues Expenses increased 7 % driven by higher transactional expenses and compensation Average loans increased 30%, primarily driven by spread products as we execute against our investor day strategy to drive more stable financing revenues Markets deliver net income of $1.7 billion, an ROTCE of 12.3 % in the quarter and 15.9 %

year-to-date. Turning to banking on slide 10, revenues were up 6 % driven by growth in investment banking and gains on loan hedges, partially offset by a decline in corporate lending. Investment banking revenues increased 9 % driven by 77 % growth in ECM, partially offset by declines of 4 % and 3 % in advisory and DCM, respectively. Corporate lending revenues, excluding gains on loan hedges, declined 16%, driven by lower loan spreads, partially offset by higher average loan balances and commitments.

Expenses increased 8%, driven by higher compensation and continued investments in the business. Cost of credit was $23 million, consisting of $43 $1 million in net credit losses and a net reserve release of $20 million banking delivered net income of $378 million an rotc of 19.2 percent in the quarter and 17.7 percent year to date turning to wealth on slide 11 revenues were up 15% driven by growth across all businesses nii which you can see on the bottom left side of the slide increased 20%, driven by higher deposit spreads and average deposit balances, partially offset by lower mortgage spreads.

NIR was up 5%, largely driven by higher investment fee revenue. Client investment assets were up 15%, primarily driven by net new investment asset flows, which were $38 billion in the quarter, contributing to over $75 billion in the last 12 months, representing 11 % organic growth. Expenses increased 3 % during by higher compensation. Cost of credit was $102 million, consisting of $70 million of net credit losses and a net reserve bill of $32 million. Average loans were up 4 % as we continue to grow securities-based lending and mortgages.

Average deposits were up 3 % during by growth in the private bank, partially upset by a modest decline in Citigold and retail banking. Wealth had a pre-tax margin of 22%, generated positive operating leverage, net income of $585 million, and a narrow TCE of 14.3 % in the quarter and 13.2 % year-to-date. Turning to U .S. consumer cards on slide 12, as a reminder, our year-over-year results continued to reflect the impact from the acquisition of the ADICT American Airlines co-branded car portfolio on board in April.

In the quarter, revenues were flat, with growth in NII offset by a decline in NIR. NII was up 6 % driven by higher interest earning balances. NIR was down 62 % driven by higher accruals from partner payments as well as rewards costs, reflecting our investments for growth, partially offset by higher interchange and annual fees. Consistent with the strategy we laid out at Investor Day, we saw growth in general purpose cards, with spend volume up 13 % and average loans up 9%, both partially offset by declines in private label cards.

Expenses increased 2%, driven by higher transactional expenses, as well as advertising and marketing, as we invest to drive future acquisitions and continued customer engagement, largely offset by lower compensation. Cost of credit was $1.9 billion, consisting of $1.7 billion of net credit losses and the net reserve bill of $208 million, primarily driven by changes in the macroeconomic outlook. U .S. consumer cards delivered net income of $851 million, dollars and rotc of 21.8 percent in the quarter and 21 year to date as i mentioned last quarter while we expect rotc to remain around our through the cycle target for the business in certain quarters we do expect expense growth to outpace revenue growth as we invest in the business

to drive engagement and acquisitions with some of these investments reflected as as contract revenues and others as expenses. Turning to slide 13, we show results for all other on a managed basis, which includes corporate other and legacy franchises and excludes divestiture related impacts. Notably the $726 million Banamex Goodwill impairment in the third quarter last year. Revenues were down 3 % driven by declines in legacy franchises and corporate other. Expenses were down 14 % driven by lower transformation expenses in corporate other, as well as lower expenses from our exits and wind downs, which declined to a run rate of approximately $100 million in the quarter, partially upset by the impact of Mexican peso appreciation.

Cost of credit was $532 million, consisting of net credit losses of $433 million during by consumer loans in Mexico and a net reserve bill of $99 million. And we've reduced the total firm-wide DTAs deducted from CET1 capital by approximately $900 million year-to-date, as U .S. profitability continues to improve. Additionally, in the appendix of the presentation on slide 20, we have provided an overview of financial impacts related to the Banamex divestiture. There are three points that I would like to highlight.

First, upon our full exit from Banamex, we expect the cumulative net capital impact to reflect the release of CET1 capital associated with the Banamex RWA, removal of certain CET1 deductions, and the cumulative gains or losses over the divestiture horizon. Second, as we have shared previously, as part of the deconsolidation process, we expect to recognize an approximate $9 billion CTA-related loss through the P &L in early 2027. And third, we expect the impacts related to the deconsolidation process to be slightly accretive to our CET1 capital ratio.

To close, we've included our full year 2026 outlook on slide 14. We expect to deliver an ROTCE above 11 % for the full year, supported by NIIX markets growth in the mid to high 6 % range and continued NIRX markets growth driven by fee momentum in services, banking and wealth, partially offset by USCC. And in markets, we expect a typical seasonal decline in the fourth quarter around the same magnitude as last year, which was 20%, or possibly a bit more given the strong performance so far this year.

Given this outlook for revenue combined with our continued focus on expense discipline, we expect our full-year efficiency ratio to be below 60%. As it relates to credit, based on the strong performance we have seen so far this year and our expectations for the fourth quarter, we now expect a full-year total U .S. credit cards NCL rate of around 4%, the low end of the range we provided previously, while the ACL will continue to be a function of the macroeconomic environment and business volumes.

And we will continue to provide the businesses with capital to pursue accretive growth opportunities while returning capital to shareholders. We remain confident in the strategy we laid out at Investor Day and in our ability to deliver on all of our commitments. As we take a step back, the results in the third quarter and year-to-date this year represent significant progress towards our goal of improved firm-wide and business performance. Our strategy is working, and we have a clear path to delivering higher, sustainable returns.

With that, Jen and I would be glad to take your questions.

At this time, we will open the floor for questions. For today's session, we'll be utilizing the raise hand feature. If you'd like to ask a question, simply click on the raise hand button at the bottom of your screen. If you have joined by phone, please press star 9 to raise your hand. Once you've been called on, please unmute your audio and begin to ask your question.

If you've dialed in, you can unmute by pressing star 6. Please limit to one question. Thank you. We'll now pause a moment to assemble the queue. Our first question comes from the line of John McDonald with Truist. You may now dial star six to unmute and ask your question.

Hi, good morning. I was hoping to kick off you could put your strong year-to-date results on ROTCE into context. Obviously, you've got the 12.6 ROTCE for the year and 11.5 this quarter.

it implies a little bit of deceleration in the fourth quarter, you know, if you do something ending up at 11 to 12 for the year. So understanding there's lots of factors around seasonality and how much spending you pull forward, could you speak a little bit to the near-term expectations and trajectory for ROTCE, you know, for the fourth quarter and then as you look out for the next two years?

All right. Good morning, John. Thanks very much for the question.

It's a great question. And I think maybe a couple of thoughts to step in there. The first is our number one priority is driving sustainable return improvement. That's very clear. The second piece that you can see from our results throughout this year is that our strategy is working. You're seeing the compounding effect of client intensity and execution milestone after execution milestone in a constructive backdrop but that execution is clearly there the next piece i would mention is we have lifted our guidance now again from the high end of the 10 to 11 or a bit a bit better than 11 to above 11.

so that hopefully gives you a sense of the confidence that we have and the discipline that we have going into the end of the year now to your point and i think you alluded to this on your question already. There is a natural seasonality. I just mentioned that in my remarks as it relates to markets. There are other elements beyond markets too. And so when you think about the market component alone, that's about, last year was about 20 % decline quarter on quarter between Q3 and Q4.

This year, as I mentioned a few minutes ago, could be a bit worse on the basis of, you know, of the basis of how strong the year has been so far and kind of the dynamism in the market right now. So when you flow the math, similar for ROTC, even if you look historically over the last couple of years and you adjust for the typical notable items that may be there from time to time, you do land at a high single digits rate.

And so that more or less sets you up for the above 11 that we're looking at. But you can see kind of the confidence coming through in how we've been raising the estimates over the last 30 days a couple of times over. As you look forward into 2027, I think undeniably we have business momentum. You can see that on our revenue growth, right? 7 % a year ago, X notable items. First half of the year, about 14%.

This quarter, about 8%. You look at the drivers, you can see the client momentum driving that revenue growth. So we feel very good about that. We haven't moved an inch from our investor day commitments. The near-term targets for returns, just as a reminder for everyone, are 11 to 13% into the 27 and 28 time period. So we're comfortable with that. And we also tested those for a range of environments, right? So we're not expecting the sun always to be shining, the wind in our backs, and us walking downhill.

We have tested that for a range of outcomes.

Thanks, Gonzalo. Appreciate that. And maybe just as a follow-up, a question on capital. How are you thinking about the glide path to the capital target you laid out in investor day and how do rates factor into that in terms of rates and what it means for buybacks?

Thank you for the follow-up. Maybe just to baseline everyone again, today we're at our CAT1 of 12.8%, which is about 120 basis points above our regulatory minimum.

As per Investor Day, the regulatory minimum that we talked about, and you were alluding on your question to the glide path, we have talked about how we are now at 11.6 % as a regulatory minimum, and our assumption is that we go into 12.1 % as a regulatory minimum started in January of 2028. At Investor Day, we gave a directional target of 13.1%. So that gives you a sense of the direction of travel.

We continue to be comfortable with that direction of travel. So that I think is the key piece. The second piece is, and going into the buybacks component of your question too, I would say a couple of things. First, maybe restating our framework, right? Our framework is we hold capital for resilience and flexibility, and we deploy it for returns and to distribute it to shareholders. And that's kind of the staircase that we talked about on Investor Day.

And that's, hopefully you're seeing this apply that every single one of the quarters this year right when you look at this quarter as one example i feel good about how we were able to deploy our balance sheet to fuel the revenue growth that you're seeing the improving returns year and year that you're seeing and at the same time return $4 billion of capital to shareholders three of which in buybacks while still holding an appropriate cushion above the reg requirements to be able to navigate the environment so being and by the way along the way absorbing some oci shifts that happen due to rates in the quarter so i feel good about that ability to balance that equation we did

that in the preceding quarters as well maybe with a bit less oci action but that hopefully hopefully gives you a sense of business has momentum we do have a balanced framework in place and we try to find the appropriate balance there always starting with you know being a source of resilience thank you

Thank you. For today's call, we invite a limit of one question plus one follow-up. Our next question will come from Mike Mayo with Valsuargo.

You may now unmute and ask your question.

Hey, Gonzalo. On the second quarter earnings call, you talked about pulling forward investment spending, the $5 billion over three years, to now, I guess, $500 million this year. How much of that has been spent in the third quarter? Why did you pull it forward? What are you spending it on? And does that mean after this year, it's $4.5 billion of investment spending, or will you increase the total?

Thank you.

Good morning, Mike. Thanks very much for the question. Maybe let me spend a second on how we think about expenses, how we think about efficiency. Again, returns, number one, sustainable return improvement. But when we think about how we approach expenses, hopefully you can see a very sharp expense discipline. That's not an initiative. That's how we operate the business every day and for every dollar. And we talked about Investor Day, that in order to unlock the client-driven growth that we are aspiring to, we needed to deploy incremental investments over three years of about $5 billion, which you just alluded to.

And we also said that we're going to fund these investments the hard way, be a relentless structural efficiency focus. right we talk about stranded costs about transformation costs and about the structural efficiency so that hopefully gives you a sense for how we think about expense management so the pull forward that we talked about maybe to answer one piece of the question you know quickly is um it's 100% inside the $5 billion right the $500 million of so that i spoke recently about being part of that pull forward in the second half of the year that's fully embedded inside the $5 billion.

We have not moved anything related to our investor day expectations. And then to your other sub-question around how much of that landed into this quarter, you can think of it as about half of it landed in this quarter. You can see about $200 million of severance in the quarter. So that's a good portion of it. And then there's a few investments extra around technology, around marketing, around client experience that we also supported. And again, that severance is directly linked to one of those three, the biggest of the three legs of our self-funding investments, which are the structural efficiency focus with the processes that Jane has alluded to in the past, the 100 plus end-to-end processes that

we have looked at. We review those every week. And those are part of the unlocking through automation and AI, the efficiencies that we're looking to deploy.

Thank you. And then one follow up. Like you said, you're not always planning for the sun to always be shining and the wind at your back. But the return for the fourth quarter, if you back into it, looks really lousy for you to get to 11%. When you say the sun might not always be shining, the wind's not at your back.

You did say markets won't be as strong. I get it. but are you assuming something might go terribly wrong in the fourth quarter? Are you just giving the usual caution and caveat?

Let me go with the latter on that. Thank you, Mike. Yeah, so we're guiding to above 11%, which is, again, an improvement from the EBITDA over 11 that we talked about 30 days ago. And of course, there's a range. We could do better, but it's hard to predict early in the quarter, especially how some of the activity will play out in the market mostly.

And so it's really anchored on that. And yes, abundance of caution. Thank you.

Our next question will come from the line of Erica Najarian with UBS. Feel free to unmute and ask your question.

Hi. Sorry about that delay in unmuting. Thank you for taking my question. Just wanted to double click on John's question on capital. So I guess this is a bit of a compound question for my first question, and I apologize. The way you responded to John's question is that you can continue to deploy capital into growth as well as keep up this pace of buybacks.

And I just wanted to make sure we heard that correctly because, you know, AOCI aside, I think a lot of your investors, the buyback pacing is important. And so I guess just wanted to confirm that you can continue this pace of buyback at around these levels, even with higher rates. And in terms of the glide path to a CT1 minimum of 12.1 % by January 1st, 2028, is your understanding that Basel III endgame revisions and G-CIP revisions would be mostly prospective and you won't get any you know sort of retrospective or retroactive adjustments that could help you in terms of you know forward G-SIP surcharge increases.

Maybe if I jump in just in terms of the big picture here you've heard us talking about a lot of upside potential we've got a lot of different opportunities which are high returning to be investing in so as Gonzalo said once we're comfortable around the resiliency of our capital base, which we feel very good about, we see a lot of opportunities to deploy capital into high returning opportunities that will drive the growth and scale that underpins the presentation we gave at Investor Day and laid out that in a lot of detail.

We know buybacks are important. We know return of capital is important to our shareholders. and we make that judgment as to what the right balance is. But I think all of our investors will want us to make sure that we are investing behind these long-term, high-return growth opportunities that will drive the performance and competitiveness of the bank. Gonzalo, over to you for the nitty-gritty.

Thank you, Jane, and thank you, Erika. Good morning. Thank you for the question.

So I think, you know, maybe a couple of thoughts on, maybe to start on buybacks and then pull back up into the path on capital. Just as a reminder, what we said for this year, let me start in the here and now and then maybe without giving you the decimal precision going forward, I can describe the shape of how we think about it. In the here and now, we just completed with this quarter of about $3 billion of repurchases is year-to-date 13.3.

Last year was 13 billion, and we had said earlier that we expected this year to do more than last year, which we just achieved in the third quarter. So we are, in that sense, doing what we said we're going to do. When you think about the framework going forward, I think you highlighted what I was talking about a little bit earlier, that we plotted that investor day, that glide path for capital for us, and let me talk in maybe regulatory minimum terms going from 11.6 to 12.1 that's on the back of course of having enabled the business the balance sheet uh and to support the high levels of activity that we've seen over the last couple of years

and have you seen us grow you know various businesses not only the markets business but also banking and services and some of our you know franchises and so that is directly linked to that it was expected that's why we discussed it at investor day to your point It's a bit unknown exactly how all the rules, right, when we're done, which we should see, you know, more of those over the next, you know, several months. And then we will have, you know, full visibility with models and market shock scenarios and so on.

Really, we will know probably around next year the full impact that that may have on that glide path. So as of now, we're operating on the basis of what we know, which are current rules. and on the basis of those current rules, that glide path goes from 11.6 to 12.1, which obviously means we will need to build that capital trajectory, again, absent some changes from the rules. And then what you'll see in the future is what you have seen year to date.

We managed that very balanced framework of holding capital for resilience and flexibility first and then deploying it, as you've seen us do this quarter and even in the prior quarters, supporting very strong activity for you know pursuing returns that are creative and supporting our clients as well as distributing to shareholders you can see how much of a priority it is on the basis of the progress we've made even in the last couple of quarters against our 30 billion dollar program that we announced at invest today thank you

thank you and just as a quick follow-up here on the markets commentary so just to put a framework around it you know you mentioned that you continue to deploy balance sheet

and high returning opportunities. One of your peers that is typically quite conservative had talked about deploying capital and not having that much seasonality in the fourth quarter because of all the activity levels. In terms of your comment of markets down 20% quarter over quarter, and that underpin the implied high single digits, ROTC. Is that conservatism in terms of the typical seasonality or is that more of a comment on mix in terms of you guys are still building out the equities business to a more optimized size?

Just trying to unpack the market commentary for the fourth quarter.

Erica, I think you're reading too much into it. This is just the normal seasonality that we have seen over many many years between a strong third quarter and the typical fourth quarter it's no more than that don't read too much into it

our next question comes from the line of glenn shore with evercore isi you may now unmute and ask your question glenn i see i have you in with two connections both are enabled you're free to dial star six if you prefer to use your phone

thank you sorry about that so follow up on the equity side you know your your prime back is up over 40 %

your revenues were up 14 still a pretty good gap versus the biggest peers so maybe let's talk about where you're investing and what your aspirations are for the equities business because there is a pretty big upside if you continue to to strengthen the franchise there thanks

Yeah, look, as Andy said at Investor Day, we were late to invest in equities. And what we are systematically doing is scaling our equities business, primarily by committing the resources to grow the prime balances, making the necessary investments in technology.

And we see a lot of room to gain share ahead in prime. We're doing so with very diligent client selection and risk management. But the client appetite for Citi is clearly there. Clients, I meet with them all over the world, they keep telling me they want an alternative in this market and they want that to be Citi because they know and trust us, particularly from the fixed income side over history. And that gives us an easier path for expansion and our growth in equities and continued momentum there.

So you'll see us steadily investing in execution and I think we feel confident in our ability to continue growing there.

Okay and maybe a similar but different follow-up on the wealth side. You had some very strong net new money flows. You had good 15 % investment asset growth but I think that the wealth fees were only up 5% i don't know if that's a mix get them in the door mix them up provide more advice but just curious if you can provide a little uh color behind those trends thanks

let me maybe ask i'll answer your question directly and uh as asked and then i'll give you maybe the broader perspective on wealth but very quickly that's the

only the result uh of um a couple of you know strategic decisions that we took a year ago that were laughing so that's what's dampening that growth rate on the 5%. When that gets lapped, you're going to see a closer matching between some of the drivers and the revenue. That's kind of the simplest version, I think. Thank you for the question. And I think the brother piece there, we're pleased with what we're seeing in terms of momentum from our wealth business, right?

Revenue growing 15 % with good expense discipline at 3%. We're accumulating several quarters of very positive operating leverage, and that's what improved what's driving the improvement on returns, right? returns for the business were about 7.6 percent a year ago then 10.8 percent in the first quarter and now this quarter and last quarter they were a bit above 14 so that gives us confidence that soon we'll be able to get into the 15 to 20% near-term target window that we spoke about at investor day but yes the business has good momentum good good nia quarter and and overall we're seeing good traction thank you

for our next question we'll go to manan Manan Gosalia with Morgan Stanley.

Please use star six to unmute. I see your line is open, Manan. We're not hearing you. You may need to unmute locally.

Hi, can you hear me now? We can. Oh, yes. Perfect. Sorry about that. So I just want to clarify the comment on the capital side. so the 13.1 capital target for next year um that excludes finalization of the capital rules once we get finalization and you know maybe as you go through the stress test and you see the results of that uh revisiting that 13-1 is still on the table

thank you manan good morning and thank you for the question uh uh first to the first part of your question yes the 13-1 which anchors

to a minimum requirement of 12-1 into January of 2028 anchors to current rules. So it does not include anything related to any of the rules that are in play, some of which have been released and others haven't. But obviously we need to see, to your point, we need to see what the run or the first run of the new set of SCV happens, and then as well as the BASO3 and the GCP components as well.

So that's that build up between, you know, the 11, six minimum now to the 12 one that I was just describing incorporates exactly and only the current rules. I mean, the second thing I'll mention as you relates to capital, which is also not not baked in and is the part that number one, we control number two, I feel better about. And you can kind of see that even though it's still with all models in the release results from this year.

right you can see our scv from the peak of 4.3 coming down over a few years into 3.6 which is the current level and then the one the latest run which obviously doesn't count at 3.3 but directionally he gives you hopefully the reaffirmation of the signal of what I was talking at the very beginning of the call which is that the strategy is working and the strategy working means we have simplified the bank quite a bit right we have increased the level of accountability You can see the progress on returns and the proof points quarter after quarter.

And as you think about that, the PPNR increases, stabilizes, and the loss absorption capacity improves. And all of that is a lot more within our control. And that's what we expect over time to also flow through. But again, not considered in.

Okay, perfect. Perfect. And then just pivoting over to rates and rate sensitivity, with short end rates moving higher in both the US and internationally, how should we think about the rate sensitivity of the business? And given the strong services business that you guys have and the strong deposit growth there, I'm sure that drives a lot of the rate sensitivity, if you can just talk about that and how we should think about it over the next year or so.

Yeah, thank you. Very, very good question. So I think maybe a couple of thoughts. The first one let me talk for a second about the here and now and then the going forward in the here now you just saw us upgrade our guidance again of going on niix markets to um to meet to high sixes uh versus the original beginning of the year 5.6% five to 6% sorry and what we said you know a few weeks ago that we were going to be you know high end of that spectrum and that gives you a sense for you know again the confidence that we have the second piece is as a reminder the vast majority of the

bus for us is driven by client volumes so it really is up to us having success in deepening relationships um and and also attracting new clients across you know the the range of our franchise and you saw the nix markets at about you know 7% this quarter you're seeing deposit growth of 11 and loans ex-market growth of 7% so good momentum really across the franchise there and when you think about you know hire for longer environment that should be for us net positive given aggregate asset sensitivity positioning that we have even if of course you have to in the short term absorb the ocis we just did when you think about that as a sensitivity maybe to

give you a bit more color there and hopefully not a lot more than what you bargained for is overall that asset sensitivity you can see in our disclosures is non-usd from the structural position that we have across the world from our services franchise and so we feel we're very well positioned there to take advantage of uh you know the global rate hacks many of which have already happened between february and now you know across the world and then you will see also we're relatively neutral on a usd basis at least within 12 months because given the short duration of our portfolio we actually do turn asset sensitive in in year two and relatively quickly as we you know those

reinvestments coming so net net all of that uh should put us in you know in something that is constructive as it relates to you know higher for longer rates of course some businesses and you alluded to this services would be a large beneficiary in this particular you know picture and the reason for that even if there are as always some puts and takes right you have to think about the volumes right and how those will play out there will be competition for deposits money supply may tighten and so far what we have seen is the betas are performing in line with our expectations the team in services this is true also in our team in wealth very focused on quality

and not you know and not on giving away pricing and so that discipline pricing and discipline quality focus even if I look at Q3 as you know a proof point for me is our deposit growth in services was faster for operating deposits than it was for the overall deposits. So that gives you a sense of how much focus Shamir and the team have on the quality of what we are engaging with with clients.

For our next question, we'll go to Ibrahim Poonawalla with Bank of America.

You may now unmute your line and ask your question.

Hey, good morning. Can you hear me? Yes, we can. Okay. Hey, Jane. I guess the first question, just like, And apologies if I missed something on the capital, on the back and forth. I think, Gonzalo, you mentioned if nothing changes on capital, the requirements obviously go up by 50 basis points. Is the point there that if the Fed finalizes rules before the end of the year, then you have better flexibility than if they don't?

Like that's how we should think about it?

Hi, good morning, Ibrahim. Not exactly. the way I think about it is the glide path anchors to current rules that's on the back of our decisions also to support business growth and that's what we're looking at of course the the piece on capital to your point around the rules it's an unknown at this point right so we have to see the totality of the rules come through some of which have been published others have not yet and even post publishing I think we will need to see how you know the models are running to the first run because remember it's going to be a brand new set of you know components there

not only new models but also how market shocks are managed and handled and the scenario piece we have to see that come through and probably by i think towards the middle of the year we're going to have you know perfect clarity of exactly what the glide path will look like and obviously we'll keep you updated along the way but you know i wasn't implying that we'll have perfect you know clear vision by the end of the year because i don't think that we will right i think we'll have some more information.

But I do think that there's going to be some unknowns still, especially on the numerical front, which ultimately is what you and us want to have. Thank you.

Understood. All right. So I guess and then somewhere in there for us, the takeaways, there might be some volatility or tempering in the pace of buybacks. Understood. And then next, just the other question on services, we're tracking about whatever, 29, 30 % ROTC. Jen, you talked about the strength in the business.

I'm just trying to understand what brings that business from close to 30 % to the mid-20s target that you'll add. Is it just that the incremental growth will be so dilutive? Assuming rates don't do anything, like why should that go from 30 to, let's say, 25?

That's the target we have is a through the cycle target. But I think we feel very good about our services business because we see, think of it as a cumulative business with really four pillars of further growth at high returns, deepening with existing clients, acquiring new clients, commercial banking and the like, capturing share in some of these high growth verticals, particularly the fintech space, as well as investing in next generation platforms and

solutions and that is giving us a model that is pretty almost impossible to replicate it as a true moat between the unrivaled global footprint comprehensive market leading solutions the extensive client base with ever-growing global needs and then the indisputable scale which is enabling us to invest significantly in the platforms in the innovation agenda. It's about $2 billion of investments a year. And then you add on AI into this, which is driving further process improvements, which is developing innovative solutions for us and also improving the client experience.

So all these different elements are really translating into our ability to win new mandates up about 40 % year over year in our win rate. with minimal client attrition, sustainable revenue growth, high profitability through the cycle. So to my mind, this is a wonderful business in which we are the indisputed leader in, and it will continue to go from strength to strength because we're on the front foot in it.

Next, we'll go to Ken Houston with Autonomous.

Ken, feel free to unmute and ask your question.

Hi, good morning. Just one follow-up on the services side. Gonzalo, in a higher rate environment, the deposit growth has continued to be really strong, even sequentially. Do you anticipate any changes to how your clients use the balance sheet, given all the points that have already been made about just ongoing strength and development of the platform. And within that, how much more room do you have in terms of the securities repricing?

And can NII continue to outgrow deposit growth as it has been because you still have some more room there? How much more room do you still have there?

Thank you very much, Ken, for the question. let me maybe let me start first maybe on the nii x markets deposit equation we are our nii x markets this quarter was about you know 7% uh year on year uh vis-a -vis uh deposits growing at 11 and loans growing at 7% so we're not seeing that effect of nii outgrowing the drivers at the aggregate level for the firm that's also true in our services business if you We look at the NII for the business.

Well, the NII for the business is more or less in sync, actually, I guess, for services in particular. But that also depends on some of the interplay across the firm with services. What I would say to your question, which I think is a great question on the sustainability of growth, and we spoke about this at Investor Day, and since then, one time or two is we do expect over time for the level of growth that you're seeing, that 16 % year-on-year deposit growth, you know to normalize a bit right we're not saying that we are going to be able to grow into eternity at four times you know money supply levels at the same time what you just

heard from Jane right it's uh we're very confident in the mode that we have how embedded we are with clients we are deploying you know $2 billion per year of technology investments on both propelling the core capabilities and investing in the core but also innovating you probably if you look back the last 90 days we would have made you know four or five different announcements that give you a sense that there's a lot of tech investment and capability there and to jane's point the client momentum and so we feel good about that you know nii trajectory recognizing that remember this is through the cycle business right and we spoke about this at investor day too the business for the

nine years between 2016 and 2025 and remember those years had zero rates they had medium rates and they had high rates and all different flavors right and even within that we were able to grow the business at about 8% kgar in revenue terms at about 6% kr in deposit terms so that that kind of tells you that we we pressure tested this business through different environment and weather patterns and so that's why even though you may see moderation on the level of growth on deposits and have those normalized as we said before we are confident in the trajectory that we have there

thank you Got it.

And one just follow up on the earlier cost point. So if you're 500 million in the second half, it's kind of pretty level between 3Q and 4Q, including the severance that you spent in the 3Q and maybe some more in the fourth. What do we need to think about in terms of jump off points? I know we're not going to get into 27 guidance now, but I think there's an important debate about like does that run rate, do we still have the benefits of transformation and stranded coming down?

Can you kind of maybe just try to put that in a box for us about like how we exit this year and how we start next? Thanks.

I think you should feel good about how we exit this year. I think we're demonstrating a lot of discipline in the expense side we're doing we're taking down the stranded costs you see the run rate now at the 700 million a quarter level um you see the benefits of the transformation costs coming down um and you see us investing in the structural efficiencies particularly leveraging ai and automation uh in a very in a material um tangible way and to uh to continue to drive improvements in the operating efficiency going forward.

We're making investments both to grow the top line as well as to drive efficiency in the firm going forward. So I would say you should feel good about the jump off point and the discipline that we're continuing to demonstrate.

Our next question comes from the line of Scott Seifers with TD Cowan. You may now unmute and ask your question.

Morning, I guess after everyone. Thank you for taking the question. I wanted to ask another rate rate based question this time just on the effect on customers um you know it's uh it feels like everyone's customers yours included been just kind of remarkably resilient in the face of rising rates maybe just sort of some updated thoughts on at what point

you would see higher rates affecting customer customer behavior more visibly

thank you scott for the question so maybe let me go perhaps around our businesses a bit on the you know the rate impact on customers that you're pointing to maybe starting with consumer again this you know so far have been you know moderate increases right but but i guess to your point you're probably looking forward and thinking what about the accumulation of you know higher rates if the curve plays out as currently predicted with that's right right okay yeah no that makes sense that's a fair question i think you know as you see cumulative effects over time, you may start to see on the marginal segment.

Now, as a reminder for us, on the consumer end, as an example, 86 % of our portfolio is prime plus. And in addition, our strategy, because we are, as we talked about at Investor Day, we're shifting as our clients and the market is taking us there to general purpose cards, right? And you're seeing that in the drivers. That already tells you that that mix will also be driving towards improvement in the NCL. So what you're seeing in our NCLs is both the combination of the resilience playing through, but also a risk appetite framework and our strategy working.

So you're right. I think that at some stage, probably not with a single rate hike, but if you accumulate something that is over several quarters and something that moves quite a bit higher, some of the marginal segments probably below the FICO band, they're going to feel a bit of pressure in terms of the debt payments. And maybe on the corporate end, Jane?

Yeah, look, on the corporate side, I think we're starting to see some of the impact.

So while spreads are remaining tight in investment grade, refinancing activity should stay elevated. But I think what we're seeing is the higher rate environment may impact the tenor, however. But where the change may be felt more in some of the customer behavior is you've got an upcoming three-year maturity role. And that is going to occur in a much different rate spread and liquidity environment. It could bring more high yield issuers to the market, but it could also indicate some areas of potential stress.

So the behavior shift we've seen this quarter is syndicated debt and loan insurance moderated in favor of loans and revolvers, the flexibility that they provide as rates move. And then, of course, you turn to the AI, the broad AI ecosystem. And I don't think that higher rates is going to trump the imperative to invest there. We're not seeing a slowdown investment in the broader AI ecosystem, your behavior there. There's simply not enough compute. Energy remains a bottleneck, requiring more investment.

That's globally, not just in the US. So obviously we keep an eye on sentiment and the other dynamics that are happening there, but we're not anticipating a lot of shift in behaviour. I would say though, we do have the luxury at Citi, that we have a very investment grade heavy client base on the institutional and a prime heavy on the consumer front. So we don't tend to see, you know, we have a high quality client base.

Let's leave it at that.

Perfect. Thank you very much. I appreciate all that color.

Our next question comes from the line of Chris McGrady with KBW. You may now unmute and ask a question.

Oh, great. Thanks for that, Mia. If we think about capital allocation into the lending business into 27, given the rate discussion, there's already change in where you see the best returns either by product or geography um

hi chris good afternoon i suppose now um i think probably a bit early to say as you think about 2027 right because we as everybody else we have to go through our you know planning cycles and look at you know stare at what also was this quarter and the level

of activity the market is pretty dynamic and Jane was just alluding to a few of the elements there right with what's happening with rates what are the reverberations right will it impact and some of the questions around the maturity world that Jane was talking about and any supply competition right does it does it impact for some projects especially maybe outside of the AI and tech you know uh um turbo boost uh what does what if what if any impact does it have in other industries on some of the marginal projects so I think we have to see a bit how the fourth quarter plays out and how the rate environment also lands to have a clear picture as to into

2027.

Yeah, but I also just remind everyone is when we're looking at capital allocation to lending, we don't think of it just as a product. There's tremendous cross-sell off our platform. And so this is one of the disciplines that Viz has really driven into the business and the team is, you know, how do we think of it within that lens? What I would say is we are very attentive at the moment, you know, given it is quite a dynamic environment, underwriting with a lot of discipline.

We have a very diversified, not a concentrated portfolio. We've got rigorous limits that we're putting in place. We stress tests, So if the cycles disappoint, we're in a good position around it and we lend to companies with durable cash flows and collateral. And so I think we feel very good about where we're sitting right now and our ability to support clients in the growth cycle, but also to be that port in a storm if things do turn in a different direction at some point.

Thank you very much.

Our next question comes from Matt O 'Connor with Deutsche Bank. You may now dial star six and ask your question.

Hi. I wanted to ask on credit card. You've obviously been leaning in on the general purpose and seeing good spend volume growth, good growth in loans, and then the cost of that is kind of contra revenue. How far along are you in kind of the drag of those initiatives as we think about the revenues?

Thank you.

Thanks very much, Matt, for the question. I think maybe just to anchor for, let me start with the technical and then I'll give you the broader piece. You're correct. I think we talked about how in the NIR front, there will be especially some of the contract revenue plays through in this particular quarter you can see the rewards piece playing through as well as remember we have you know in place some profit sharing agreements with some of our partners so the fact that losses are performing quite well that some of that gets shared still accrued for us because we don't share 100 but but uh but that is what has a little bit of an impact on the revenue

but to your point when you look at the drivers and what we said about our strategy which is the pivot towards you know purpose card and you're seeing those drivers you know healthy and And if you look back the last two or three years, those same drivers we've been growing. If you think about a cars business, always the three engines that one thinks about is spend, borrow and acquire. And on all three, we've been growing at about a five to 6 % annual rate for the last three years compounded.

And so that's what's driving the NII. That's what gives us confidence. What I also like about it is this is a scale franchise and we are operating at around or through the cycle targets. So whilst we're investing and to Jane's earlier point, we're not losing the discipline on returns and on expenses as we go along. Thank you.

Okay. And then on the private label side, it's obviously a lot smaller, a much smaller piece of the overall business, and that's kind of been grinding down.

Just remind us that there's opportunities to move from those balances to the general purpose portfolio over time, or if there's other kind of strategic options with that business over time. Thank you.

Yeah, I think what we've been seeing is this shift to more of the co-brand proposition. And so a fair number of the partners we've been in or are in discussions about pivoting to more of a co-brand, which is in line with much of the consumer behavior.

So that is one of our areas of focus there. You're right.

for our next question we'll go to the line of david cavarini with jeffries you may now unmute and ask your question

hi thanks for taking the question um i wanted to ask about the investment banking uh pipeline how should we think about the pipeline for the fourth quarter

look um if i i think you should feel pretty good about the pipeline um it's a it's a solid pipeline to say the least.

The US is the center of the action for both advisory and capital markets. We're seeing a bit of pickup in some Europe and Asia, but a lot of this is about the US. In terms of the pipeline equity markets is more follow-on driven. The IPO market continues to be a bit more selective, so certainly an option for issuers with durable earnings. The DCM pipeline is strong but it's supported by clients acting before rates move higher and stay there for longer.

I mentioned that we're expecting refinancing activity to stay elevated particularly in investment grade because the rates the spreads are pretty tight there and as we look further out you've got this three-year maturity wall occurring and the overall sentiment for deal making is constructive. We're seeing continued capex, elevated strategic dialogues. So I would say we expect to see an above average wallet even if it pulls a bit back from the 26 near record levels for the rest of the year.

And the bit that's quieter has been sponsors. They've continued to sit on aged assets that are just slower to monetize. But we see continued engagement with them for M &A and ipos so as long as macro is stable we don't see that changing

thanks for that and then i also wanted to ask about the ai infrastructure build out in what ways is city participating in or not in the financing of this build out and talk about the appetite city has for it

yes um we the tech and uh the the tech and the related ai activity has been very busy for us.

If you look at it, we were in equity capital markets, involved in the lead roles on SK Hynix and Intel in equity capital markets this quarter. Same in DCM, we're on 17 of the top 25 investment grade deals, including the lead left in the largest ever high yield bond issue that was for SoftBank. So we have been very active in the AI space, really across the board, financing, advisory, and helping advise clients on how they can be growing.

Yep.

Our next question comes from Kunpeng Ma with China Securities. Please go ahead.

Hi, good afternoon, Jane and Gonzalo. This is Kumbong China Security. Hi, nice to meet you. Yeah, I have a question about the services business. You know, it's a very good time for global transaction banking. But I'm wondering if we could have some color from the client side. I mean, what kind of client activities and client demands supporting this kind of very good, strong performance?

And also, how about the sustainability of that kind of typical client demands?

Well, if you think about what do our clients need, they're looking at liquidity, payment, custody, solutions across the board and across the world. They're looking for increasingly always on, real time, interoperable, efficient and secure solutions for their cash management for their custody and all of their liquidity and payment needs so it's a little bit if they want to have their cake eat it without putting on the calories and we we're we're in a position to provide that comprehensive market leading set of solutions to those clients holistic needs we're seeing the client base growing um a lot as we get new high growth verticals coming in particularly in

the fintech space and some of the digital asset players but also we've seen it in e-commerce um as the world gets more fragmented ironically um we're seeing a lot more activity clients moving money differently around the world we've seen clients connecting the middle east to asia in a way that didn't happen five years ago or latin america to asia that had not been a major corridor that's been growing in addition to all the usual ones that we see so um that the client base is uh is really ripe for a platform like cities and that's where we're seeing very little client attrition we're seeing a lot of growth and deepening with existing clients but we're also excited to see

a lot of new client acquisition coming through as well

thank you jim very helpful May I have a quick follow-up on the digital assets you just mentioned about, you know, those guys are very active, like stable coins, like RWA's and other kind of digital assets. I'm wondering if you can share some color with us about the contribution of such kind of digitalization or, you know, or paying of such kind of activities.

Yeah. Yep. So I think the area that we've been seeing, it goes back to what does the client need?

Ideally, they want an efficient, secure way to move their money around as much in an instant and always on mode. And that really does look at a connection between the fiat world and the stable coin. that's the interoperability point being important and the choice that we give our clients our idea is let's give the clients a choice between all the different platforms and capabilities and then they can choose which is the best for their particular need there's not a one size fits fits all here as I've said before the city token services and the tokenization and deposits is probably the area we'd be most excited about because it's so easy for a client to move money from one account within

Citi to another, taking advantage of our blockchain. This is a capability now operating in seven markets around the world. And it also connects into our 24-7 clearing capabilities. So that means it's not only instant, always on between Citi accounts, but connects into 300 banks. of our peers around the world. So that's a fabulous proposition for a client. What I, we'd see less on Stablecoin, honestly, I think that's the nature of our client base. They fight Stablecoin is, it is a bit more clunky.

There's more complexity and compliance accounting and tax for moving money around the world with it. Whereas tokenization provides them the least hassle and easiest way to do it. so that's why we've been seeing more growth there. Obviously in custody, with digital asset custody and our platform going live later this year, this will be an area that we will be a one-stop shop in custody and that will include for coin.

For our next question, we'll return to the line of Mike Mayo with Wells Fargo.

Hi, I'd like to return back to the implication of AI on Citigroup. I mean, is Citi an AI victim or beneficiary? And the victim is the AI scare trade that your deposit will flow out of Citigroup due to more advanced cash sorting. Maybe you can address that part of the question with how much you spend on cybersecurity, what you spend to protect customers privacy and identity. And on the other side of that is how you can deploy AI for additional efficiencies.

And I saw you move to the top 10, moved up a lot of places in the most recent AI survey. And if you could just describe what you've done on an enterprise level or how you're getting benefits out of AI. Thank you.

Okay. Well, we are, I was offended that we were merely in the top 10. I think you've grossly understated where we should be, Mike, but I'm sure we'll talk about that later. We're deploying AI at scale with measurable results.

So let me talk about the benefits first, then I'll talk a bit about the cybersecurity side. I think we've talked about one, we're supporting our clients on the build out and the transformation of their businesses. So we're capturing a significant share of the activity of our clients as that ecosystem is mobilizing capital at pace. The second is our own adoption of AI, and that is both earning and saving us money. We're tangibly improving productivity and efficiency through the bank.

Let me give you a couple of examples. AI is accelerating our product development lifecycle. So we are launching new products at lower cost and at faster speed. And we're typically seeing about 30 to 40 % increase in the speed with which we are launching products. Another example, 14 ,000 of our engineers use our main agentic coding tool, Devon. That makes it much more efficient for us to do the work in-house. So we've been insourcing work.

We've reduced our tech vendor spend by 30 % year over year as a consequence, and that's still got a long way to run. Then probably the big one, around 100 of our most manual processes have or are being re-engineered end to end, leveraging AI and automation. This is a firm-wide systematic program. It's a very important pillar of the structural efficiencies that will further improve our operating efficiency in the near term. This year alone, we're seeing the financial benefits from AI and automation significantly outweigh the investments we've made year to date.

And that will only accelerate in coming years because having made the investment, the benefits just will recur year after year and we'll keep improving on them. And then we're also using AI to generate revenue and improve the client experience. clients. Earlier days still on the revenue generation, but like in services, our AI tools for our client service agents are live in 82 countries. Response times have improved for our clients by 21%. Client satisfaction scores are better.

You've heard us talk about City Sky in Pilot now in our wealth franchise. So AI is happening all across our firm and it's helping it's helping us earn and it's helping us save money. In terms of making us safer, we continue to invest in leading-edge capabilities to bolster our cyber defenses and we're deploying AI responsibly. So on the cyber front, what we're... So, well, look, AI is tremendously exciting, but AI does put powerful tools in the hands of bad actors.

If we're going to innovate at speed, we have to manage risk at speed and retain trust. So I'm very happy with how we're deploying the frontier models securely through a structured harness across our entire perimeter. So we're identifying and addressing vulnerabilities at speed and scale and working closely with our peers and the leaders of major industries to make sure that defenses cross industries too, because unfortunately AI's arriving in a world that's deeply interconnected. I am not worried about the deposit flight risk in services.

The benefit that we have of just this, it's so hard to replicate the network we've got, the multiple dimensions of it, but you can see we demonstrate constantly we're at the forefront and the cutting edge of applying those innovations and the new capabilities to disrupt ourselves, to advance our proposition to clients, And that's why we just have this very high win rate and continue bringing in new clients and new business onto the platform with very little attrition.

So I am, you're always worried. We always, my job is to worry, but my job is also to make sure that we do something about that. And we're doing that in a very constructive and a way that retains trust.

And there are no further questions. I will turn the call over to Margo Pilic for closing remarks.

Thank you, operator. Senator, thank you all for joining us today. We look forward to speaking with you and addressing any follow-up questions you have.

This concludes the city third quarter 2026 earnings call. You may now disconnect.