Citigroup's Branded Cards Portfolio Sends Mixed Signals on Consumer Health

Citigroup Inc.'s credit card division reported divergent performance trends in October 2025, presenting a complex picture of near-term stability masking deeper consumer headwinds. While year-over-year improvements in delinquencies and charge-offs suggest breathing room in the near term, the underlying dynamics paint a more sobering narrative about household financial resilience.

The Numbers Tell a Nuanced Story

Citibank N.A.'s Credit Card Master Trust posted a delinquency rate of 1.42% in October 2025, up from 1.38% in September but down 10 basis points from the prior year’s 1.52%. The improvement year-over-year appears encouraging at first glance. However, the month-over-month deterioration reveals the vulnerability beneath the surface.

More encouraging is the charge-off trajectory. The Credit Card Issuance Trustnet’s net charge-off rate fell to 1.95% from 2.50% in September and 2.36% in October 2024—a meaningful 41-basis-point decline annually. When measured against the 2019 benchmark of 2.61%, the improvement spans nearly 70 basis points across a five-year period.

Yet these positive metrics obscure a critical concern: principal receivables contracted to $20.2 billion from $20.3 billion sequentially and declined 6.9% year-over-year. This pullback suggests consumers are either paying down balances more aggressively or—more likely—reducing credit card usage amid persistent inflation and elevated borrowing costs.

The Profitability Challenge Ahead

Net credit losses tell the longer-term story. Citigroup’s NCL expanded at a 4.3% compounded annual growth rate over the four years through 2024, with another 2.2% year-over-year increase through the first nine months of 2025. More alarming is the 38.9% CAGR in loan-loss provisions from 2022 to 2024, a trajectory that continued its upward march in 2025’s first three quarters.

Looking ahead, management has guided for 2025 Branded Cards net credit losses between 3.50% and 4.00%—slightly elevated from 2024’s 3.64%—while Retail Services NCL is projected between 5.75% and 6.25%, up from 6.27% in the prior year. These midpoint estimates suggest deteriorating asset quality will continue pressuring profitability unless economic conditions strengthen materially.

How the Competitive Landscape Stacks Up

Bank of America and JPMorgan Chase & Co. offer useful benchmarks. Bank of America’s BA Master Credit Card Trust II reported a 1.38% delinquency rate in October, mirroring Citigroup’s monthly level but down from 1.52% annually. Bank of America’s net charge-off rate of 2.11% sits above Citigroup’s 1.95%, suggesting stronger underlying payment performance at Citi.

JPMorgan paints the strongest picture. Its Issuance Trust delinquency rate of 0.88% represents the industry’s tighter credit standards or superior customer quality. JPMorgan’s net charge-off rate of 1.44% reinforces this positioning—the lowest among the three—though it did inch up modestly from 1.62% a year prior.

Stock Valuation Amid Earnings Growth Expectations

Citigroup shares have appreciated 36% over the past six months, outpacing the financial services industry’s 18.8% gain. Yet the valuation remains compressed: C trades at a forward P/E of 10.35X versus the sector average of 14.06X, suggesting either market skepticism about near-term earnings durability or an undervalued entry point depending on your outlook.

Analyst consensus expects significant earnings momentum, with 2025 and 2026 earnings forecasted to rally 27.4% and 31.2%, respectively, with recent estimate revisions trending upward. This optimism contrasts sharply with the asset quality concerns evident in the credit card metrics, indicating the market may be pricing in either a near-term economic stabilization or management’s ability to offset credit losses through operational efficiency.

Currently trading on a Zacks Rank #3 (Hold), Citigroup presents a bifurcated risk-reward profile: compelling valuation and growth expectations are tempered by mounting credit loss provisions and the structural headwinds facing consumer lending in a high-rate environment.