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    C
    Earnings call· Mar 2026(Q1 FY26)

    CITIGROUP Q1 FY26 earnings call C

    Apr 14, 2026 Source

    Executive summary

    Citigroup Q1 FY26 — Broad-based momentum with four of five businesses growing revenue double digits

    Citi enters 2026 with broad-based, diversified momentum as the transformation pivots from safety-and-soundness spend toward AI and organic growth, and management leaned hard on an organic-only, no-M&A stance ahead of a May Investor Day. The forward returns stance is deliberately conservative versus the Q1 print, framing seasonal capital-markets strength and an uncertain macro as reasons for restraint while it keeps investing.

    Highlights

    5

    • Net income of $5.8B, EPS of $3.06 and ROTCE of 13.1% on $24.6B of revenues (+14% YoY), with positive operating leverage firm-wide

    • Services revenue up 17% (best Q1 in a decade) at 27% ROTCE, with new client mandates up 40% and deposits up 16%

    • Markets crossed $7B of revenue for the first time in a decade (+19%), with equities up ~39% and prime balances up more than 50%

    • Banking revenue up 15% with a record first quarter in M&A (+19%) and ECM up 64%; advised on the 3 largest deals of the year (Paramount, McCormick, EQT/AES)

    • $6.3B of buybacks (highest quarterly level, near completion of the $20B plan), CET1 of 12.7%, TBV/share up 8% YoY, and efficiency ratio improved ~400bps to 58%

    Concerns

    5

    • Full-year ROTCE guidance of 10-11% sits well below the 13.1% Q1 print, with management citing Q1 seasonal strength and macro uncertainty

    • Cost of credit of $2.8B including a firm-wide net ACL build of $597M on a downside-skewed macro scenario (8-quarter weighted unemployment ~5.4%, downside ~7%)

    • Wealth ROTCE still only 10.8% and DCM fees down 6% amid lower non-investment-grade activity

    • ~$500M of severance taken and Middle East conflict/inflation flagged as risks to growth and potential deal deferrals in H2

    • Transformation still ~10% incomplete (data used in regulatory reporting) with the consent order outstanding and regulators controlling the closure timeline

    Guidance & targets

    14
    CategoryTargetConfidence
    Full-year NII (ex-markets)
    up approximately 5% to 6%
    high materiality
    High
    Full-year efficiency ratio
    around 60%
    high materiality
    High
    Full-year ROTCE
    10% to 11%
    high materiality
    High
    Total U.S. credit card net credit loss (NCL) rate
    between 4% and 4.5%
    high materiality
    High
    Loan growth (ex-markets)
    around mid-single-digit growth
    medium materiality
    Medium
    Deposit growth (ex-markets)
    around mid-single-digit growth
    medium materiality
    Medium
    CET1 ratio target
    around 12.6% (~110 bps above the 11.6% requirement, incl. 100 bps management buffer)
    high materiality
    High
    Disallowed DTA reduction
    reduce this year in excess of $800M
    medium materiality
    Medium
    NIR (ex-markets) growth
    growth driven by momentum in services, banking and wealth
    low materiality
    Medium
    New capital regime impact (Basel III Endgame / G-SIB reproposal)
    overall net benefit to Citi; moderate net benefit on what has been published, with additional benefit from the stress capital buffer
    medium materiality
    Low
    Banamex divestiture — remaining 24% sell-down
    close in the coming months (reaching 49% divested)
    medium materiality
    Medium
    Banamex deconsolidation and IPO timing
    no additional stake sales in 2026; deconsolidation in early 2027, IPO after when conditions permit
    medium materiality
    Medium
    Poland consumer business divestiture
    on track to close the sale this summer
    low materiality
    Medium
    Share repurchases outlook
    well positioned to return capital; detail on future repurchase expectations to be provided at Investor Day
    high materiality
    Medium

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Services (TTS + Security Services)
    Growth driven by deepening with existing clients, new client acquisition and product innovation across e-commerce and fintech; BlackRock ~$4T Security Services win cited; leadership in tokenization and real-time payments.
    Net interest income: +18% YoYNoninterest revenue: +15% YoYNew client mandates: +40%Cross-border transaction value: +12% YoYAssets under custody and administration: +21% YoYAverage deposits: +16% YoYAverage loans: +14% YoYExpenses: +14% YoYFees as % of revenue: over 30%
    		up 17% YoY (best Q1 in a decade)+17%—Net income $2.2B; ROTCE 27%; positive operating leverage
    Markets (Fixed Income + Equities)
    Best quarter in over a decade; strong momentum across corporates, asset managers, hedge funds and banks; equities driven by derivatives, prime services and cash.
    Fixed income revenue: +13% YoYRates and currencies: +6% YoYSpread products and other fixed income: +27% YoY (commodities strength)Equity revenue: +39% YoYPrime balances: +50%Average loans: +27% YoYExpenses: +11% YoY
    		over $7B (first time in a decade); revenue up 19% YoY+19%—Net income $2.6B; ROTCE 18.7%; positive operating leverage
    Banking (Investment Banking + Corporate Lending)
    Record first quarter in M&A with strong sponsor performance; advised on the three largest deals of the year (Paramount, McCormick, EQT/AES); DCM down on lower non-investment-grade activity but share maintained vs year-end 2025.
    Investment banking fees: +12% YoYM&A: +19% YoY (strongest Q1 in a decade)ECM: +64% YoYDCM: -6% YoYCorporate lending revenue ex loan-hedge marks: -3% YoYExpenses: +20% YoY
    		up 15% YoY+15%—Net income $304M; ROTCE 15.8%; cost of credit $132M (net ACL build $126M)
    Wealth (Citigold/Retail Banking, Private Bank, Wealth at Work)
    Now includes U.S. retail banking; growth partly offset by decline in Wealth at Work and sale of the trust business; deposits shifting toward higher-yielding investments including on Citi's platform.
    Net interest income: +14% YoYNoninterest revenue: +5% YoYInvestment fee revenue: +11% YoYNet new investment asset flows: ~$15B in quarter (~$43B LTM, ~7% organic growth)Client investment assets: +14% YoYCitigold and Retail Banking revenue: +13% YoYAverage loans: +6% YoYAverage deposits: +4% YoYExpenses: +1% YoY
    		up 11% YoY (8th straight quarter of growth)+11%—Net income $432M; ROTCE 10.8%; pretax margin 18%; positive operating leverage
    U.S. Consumer Cards (General Purpose + Private Label)
    Newly split into general-purpose vs private-label reporting to align with strategy; general-purpose growth offset by private-label declines; ACL build reflects seasonal mix, the Barclays/American Airlines forward purchase commitment and macro uncertainty.
    Net interest income: +3% YoYNoninterest revenue: +14% YoY (lower partner payment accruals, higher annual fees)General purpose card acquisitions: +12%Spend volume: +5-6%Average loans: +4% YoYNet credit losses: $1.7B (-11% YoY)Net ACL build: $350MExpenses: +1% YoY
    		up 4% YoY+4%—Net income $732M; ROTCE 19.2%; cost of credit $2.1B; positive operating leverage
    All Other (managed basis: Corporate/Other + legacy franchises)
    Legacy-franchise growth (Mexico consumer) offset by wind-down markets and Corporate/Other NII decline from actions to reduce Citi's asset sensitivity in a lower-rate environment.
    Mexico consumer: growth incl. Mexican peso appreciation and a gain on sale of an investmentCorporate/Other: NII decline from reduced asset sensitivity, partially offset by higher NIRExpenses: -4% YoY
    		up 15% YoY+15%—Cost of credit $400M (net credit losses $371M, driven by Mexico loans)

    Operational metrics

    12
    Tangible book value per share
    +8%+8% YoY
    Q1 FY26

    Grew 8% from a year ago; buybacks executed at a level management views as accretive to TBV.

    Severance charge
    nearly $500Melevated vs prior quarters (guided higher)
    Q1 FY26

    Excluding severance, expense growth was 4% (vs 7% reported).

    Liquidity coverage ratio (LCR)
    114%
    Q1 FY26 average

    Maintains over $1T of available liquidity resources on a $2.8T balance sheet.

    Russia exit capital release
    ~$4B
    Q1 FY26

    Event-driven capital release; management framed earnings as the primary CET1 driver over time with event-driven components layered on.

    Disallowed deferred tax asset (DTA)
    +~$200M QoQincrease QoQ (higher U.S. income offset by carryback seasonality)
    Q1 FY26

    Utilization has been slow historically (~$1B over five years); multiyear burn-down path to be detailed at Investor Day.

    Headcount
    ~224,000down from ~226,000 QoQ
    Q1 FY26

    Prior multiyear plan implied a move from ~240,000 toward ~220,000; AI/automation now a larger lever than when the target was set.

    Noninterest revenue growth (ex-markets)
    +29%+29% YoY
    Q1 FY26

    Reported alongside NII ex-markets +7% and total markets revenue +19%.

    Corporate exposure investment-grade share
    78%
    Q1 FY26

    Disclosed on the U.S. cards and corporate credit metrics slide as evidence of portfolio quality.

    U.S. cards prime FICO share
    ~85%
    Q1 FY26

    Supports declining delinquencies and credit losses; portfolio heavily weighted to prime.

    Banamex deconsolidation CTA adjustment
    ~8.5%capital neutral in aggregate
    at deconsolidation (early 2027)

    Temporary capital benefit on the 24% sell-down reverses via a ~8.5% CTA adjustment flowing through the P&L at deconsolidation, net capital neutral.

    U.S. cards portfolio disclosure
    changed
    Q1 FY26

    Also recasted historical segment supplement published April 3 to facilitate comparability with new reportable segments.

    U.S. retail bank + wealth deposit base
    ~$284B
    Q1 FY26

    Retail bank franchise revenue was up 21% last year; positioned as a client source for the investment franchise, growth to be organic.

    Industry KPIs

    12
    MetricValueDetails
    Loansnet end-of-period loans +1% QoQ%
    Deposits$1.4 trillionUSD
    Rotce ROE13.1%%
    Cet1 ratio12.7%%
    Capital returns$6.3B of buybacksUSD
    Fee income linesInvestment banking fees +12%; markets revenue +19%; services fees +14%%
    Allowance reserves~$22B total reservesUSD
    Net interest incomeup 7% (ex-markets)%
    Net charge offs nplsU.S. cards net credit losses $1.7B (-11% YoY)USD
    Provision for credit lossescost of credit $2.8B; firm-wide net ACL build $597MUSD
    Private credit nbfi exposure$22B corporate private creditUSD
    Efficiency ratio operating leverage58%%

    Product announcements

    2
    ProductTypeDetails
    Citi Token Servicesmilestone
    Firm-wide AI-at-scale strategy (agentic AI)roadmap

    Deals & partnerships

    6
    BlackRockcustomer contract (Security Services / middle-office + ETF servicing)~$4 trillion (assets serviced, per analyst)

    Described by management as the most notable Security Services win but 'far from the only'; the $4T figure was cited by the analyst and not independently re-quantified by management.

    Russia operations (buyer not named)divestiturereleased ~$4B of capital

    Citi completed its exit from Russia in February 2026, mid-quarter.

    Banamex (several prominent investors)divestiture (additional 24% sell-down)

    Follows a 25% sell-down in Q4 2025; no further stake sales anticipated in 2026 ahead of deconsolidation in early 2027; IPO to follow when conditions and regulatory requirements permit.

    Poland consumer business (buyer not named)divestiture

    Management on track to close the sale of the consumer business in Poland this summer.

    Barclays (American Airlines co-branded card portfolio)customer contract (forward purchase commitment)

    Forward purchase commitment for the Barclays American Airlines co-branded card portfolio coming in the second quarter.

    Trust business (buyer not named)divestiture

    Sale of the Wealth trust business referenced as a drag on NIR and client investment assets in the quarter.

    Risks & headwinds

    8
    Macro/geopolitical uncertainty — Middle East conflict and inflationOngoing; second/third-order impacts grow the longer the conflict persists

    Explicitly unquantified; management notes Asia and Europe hit harder by energy shocks than the U.S. and Brazil; inflation seen as a greater risk to growth, biasing central banks toward more restrictive policy

    Mitigation: Intentionally resilient, diversified strategy; high-quality loan portfolios; disciplined risk management; greater North American resiliency; active client engagement on supply-chain rerouting, hedging and liquidity

    Credit / macro downside embedded in reservesOngoing; ACL a function of macro environment and business volumes

    Firm-wide net ACL build of $597M; cost of credit $2.8B; reserves skewed to downside using 8-quarter weighted-average unemployment of ~5.4% (downside scenario ~7%); total reserves ~$22B (2.6% of funded loans; 8% in U.S. cards)

    Mitigation: Prime-weighted card portfolio (~85% FICO 660+); U.S. card NCLs down 11%; disciplined risk-appetite framework

    Capital-markets / deal-flow cyclicalitySecond half of FY26

    DCM fees down 6%; risk of M&A deferrals into H2 if conflict is protracted; sponsors more cautious; high-yield DCM and IPO markets more selective

    Mitigation: Strong M&A pipeline anchored by resilient global multinationals; continued talent/C-suite investment; flight-to-quality supporting high-grade activity

    Regulatory / transformation and consent-order overhangMulti-quarter; regulators control the validation and closure timeline

    ~10% of transformation programs incomplete (primarily data used in regulatory reporting); consent order still outstanding

    Mitigation: 90% of programs at/near target state and in BAU; independent audit validation before regulator assessment; declining transformation spend

    Private credit / NBFI exposureOngoing

    $22B corporate private credit, 100% securitized, 98% investment grade; part of broader nonbank-financial-institution lending disclosure; NCLs/NALs low and stable

    Mitigation: Ample subordination, collateral, fraud controls, third-party verification (not reliant on attestations/warranties), rigorous client selection and constant stress-testing

    Capital-regime uncertainty (Basel III Endgame / G-SIB / SCB)Until rules are finalized; active in the comment period

    Latest NPR 'an improvement but not yet where it should be'; management sees a moderate net benefit but did not quantify; G-SIB still 'gold plated' vs Basel standard; material duplication between NPR and current SCB for operational/market/CVA risk; SCB does not reflect Citi's simplified risk profile

    Mitigation: Advocacy in the comment period alongside other bank CEOs; 100 bps management buffer maintained (CET1 12.7%, ~110 bps above the 11.6% requirement)

    Private-label credit card structural pressureMulti-year secular trend (predates BNPL)

    Explicitly unquantified; private-label share of U.S. card loans has declined markedly (was ~33% of U.S. card loans in Q1 2024 on an old basis) as borrowing preferences shift

    Mitigation: Pivot toward general-purpose and co-brand (e.g., Costco); disciplined exit of low-scale portfolios without a path to improved returns

    Corporate/Other NII pressure from reduced asset sensitivityOngoing in a lower-rate environment

    Explicitly unquantified; lower benefit from cash and securities reinvestment drove the Corporate/Other NII decline

    Mitigation: Actions taken to reduce asset sensitivity to a roughly neutral USD position; investment securities reinvesting at higher rates as the portfolio rolls off; structurally asset-sensitive non-USD book diversified across 65+ currencies

    Q&A highlights

    10

    Color on the BlackRock $4T servicing win and what the market may be underappreciating in Services growth, including tokenization as opportunity vs. threat.

    Fraser attributed exceptional Services performance to executing the 2-year-old strategy — deepening with clients, new acquisition and product innovation (mandates +40%, high retention, strong win rates). Citi leads in tokenization and real-time payments and views BlackRock as the most notable but far from only Security Services win; fees remain over 30% of revenue.

    “There is always a flight to quality when there are things going on in the world and we are quality.”

    asked by Glenn Schorr · answered by Jane Fraser

    3 min read7 chapters

    Detailed Narrative

    01

    Firm-wide results and operating leverage

    Citigroup reported Q1 FY26 net income of $5.8B, EPS of $3.06 and ROTCE of 13.1% on $24.6B of revenues, up 14% YoY, generating positive operating leverage for the firm and the majority of its five businesses. NII ex-markets rose 7%, noninterest revenue ex-markets rose 29%, and total markets revenue rose 19%. Expenses of $14.3B increased 7% (4% ex-severance), producing an efficiency ratio of 58% — a ~400bps improvement. Four of the five core businesses grew revenue double digits.

    02

    Services — the 'crown jewel' quarter

    Services delivered its best first quarter in a decade with revenue up 17%, NII up 18% and NIR up 15%, driving $2.2B of net income at a 27% ROTCE. New client mandates were up 40%, cross-border transaction value up 12%, and assets under custody and administration up 21% (including a BlackRock ~$4T middle-office/ETF servicing win). Average deposits rose 16% and average loans 14% (export agency finance, working capital). Management cited digital-asset/tokenization leadership and real-time payments with global e-commerce clients as durable growth drivers, with fees consistently over 30% of revenue.

    03

    Markets — best quarter in over a decade

    Markets revenue rose 19% to cross $7B for the first time in a decade, producing $2.6B net income at an 18.7% ROTCE. Fixed income was up 13% (rates & currencies +6% on FX/volumes; spread products & other fixed income +27% on commodities strength) and equities up 39% on derivatives, prime services and cash, with prime balances up more than 50%. Average loans rose 27% on spread-product financing. Expenses rose 11% on performance-related comp, volume and legal.

    04

    Banking — record Q1 M&A

    Banking revenue rose 15% on investment banking and corporate lending, with $304M net income at a 15.8% ROTCE. IB fees rose 12%: M&A up 19% (strongest first quarter in a decade, strong sponsor performance), ECM up 64% on follow-ons and convertibles, offset by DCM down 6% on lower non-investment-grade activity. Citi advised on the three largest deals of the year (Paramount, McCormick, EQT/AES). Corporate lending revenue ex loan-hedge marks fell 3%; expenses rose 20% on performance comp and investments. The M&A pipeline remains strong though sponsors are more cautious and high-yield/IPO activity is selective toward quality.

    05

    Wealth and U.S. Consumer Cards

    Wealth revenue rose 11% (eighth straight quarter of growth) with $432M net income, a 10.8% ROTCE and an 18% pretax margin; NII rose 14%, investment fee revenue 11%, and net new investment asset flows were ~$15B (~$43B LTM, ~7% organic), lifting client investment assets 14%. Citigold and Retail Banking (now within Wealth) rose 13%. U.S. Consumer Cards revenue rose 4% (NII +3%, NIR +14%) for $732M net income and a 19.2% ROTCE; general-purpose card acquisitions rose 12% and spend 6%, with the segment newly split into general-purpose vs. private-label reporting. Card NCLs of $1.7B fell 11%.

    06

    Capital, credit reserves and balance sheet

    Citi ended Q1 with a 12.7% CET1 ratio, ~110bps above its 11.6% requirement (including a 100bps management buffer), total assets of $2.8T (+5% QoQ), a $1.4T deposit base (+3%), a 114% average LCR and over $1T of available liquidity; TBV/share grew 8% YoY. Cost of credit was $2.8B, including a firm-wide net ACL build of $597M on a downside-skewed scenario using an 8-quarter weighted-average unemployment rate of ~5.4% (downside ~7%). Total reserves were ~$22B (2.6% of funded loans; 8% in U.S. cards). Corporate exposure is 78% investment grade, and disclosed corporate private credit of $22B is 100% securitized and 98% investment grade.

    07

    Transformation, AI and strategy

    Management reported 90% of transformation programs at or near target state, with remaining work primarily in data used for regulatory reporting; completed work moves to independent audit and then regulators, who control the closure timeline (consent order still outstanding). Transformation spend is coming down, funding AI and business investment. Citi is deploying AI at scale across four buckets — business strategy/revenue, productivity/process, defensive capabilities (cyber/fraud/AML), and workforce — with detail promised at the May Investor Day. Management was emphatic the firm is pursuing organic growth only and is not pursuing any acquisition.

    AI-generated summary of the company’s earnings call. Not investment advice.