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    C
    Earnings call· Jun 2026(Q2 FY26)

    CITIGROUP Q2 FY26 earnings call C

    Jul 14, 2026 Source

    Executive summary

    Citigroup Inc. Q2 FY26 — Strong Revenue Growth and Improved Returns

    Citigroup delivered a strong second quarter, achieving its best quarterly revenue in a decade with significant RoTCE improvements across all businesses, driven by strategic investments and client focus. The firm is leveraging its global network and AI adoption to accelerate growth and productivity, while proactively investing in key areas like U.S. Consumer Cards and technology. Management is committed to its medium-term return targets, prioritizing long-term value creation and accelerating investments if market conditions remain constructive.

    Highlights

    5

    • Reported net income of $5.8 billion with an EPS of $3.15 and an RoTCE of 13% for the quarter.

    • Achieved Citi's best quarterly revenue in a decade, up 14% year-over-year to $24.8 billion, with positive operating leverage over 9%.

    • Services business delivered its highest ever quarterly revenue, with a 13% increase in cross-border transactions and 19% increase in deposits.

    • Markets revenues were up 17% to over $7 billion, driven by 45% growth in Equities and 7% in Fixed Income.

    • Wealth revenues increased for the ninth consecutive quarter, up 13%, with client investment assets up 14% and net new investment assets reaching $30 billion year-to-date.

    Concerns

    3

    • U.S. Consumer Cards experienced expense growth outpacing revenue growth due to investments, with NIR down 47% driven by higher partner payments and acquisition costs.

    • Anticipate a potential decline in Markets revenues greater than the historical 20% between the first and second half of the year due to strong year-to-date performance.

    • Full-year efficiency ratio expected to be around 60%, implying a higher ratio in the second half due to ramped-up investments and additional severance.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year RoTCE
    10% to 11%
    high materiality
    High
    Full-year NII ex-markets growth
    approximately 5% to 6%
    high materiality
    High
    Full-year NIR ex-markets growth
    continued growth
    medium materiality
    Medium
    U.S. Consumer Cards NIR
    remain in line with the second quarter's absolute level
    medium materiality
    High
    Markets revenue decline H2 vs H1
    could be greater
    high materiality
    Medium
    Full-year efficiency ratio
    around 60%
    high materiality
    High
    Full-year U.S. credit card NCL rate
    between 4% and 4.5%
    high materiality
    High
    Quarterly common stock dividend increase
    12%
    high materiality
    High
    Share repurchase program
    $30 billion
    high materiality
    High
    CET1 ratio target
    around 12.6%
    high materiality
    High
    DTA burn down
    $800 million
    medium materiality
    High
    Banamex deconsolidation
    early '27
    high materiality
    High
    Banamex IPO
    as and when market conditions allow
    medium materiality
    Medium

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Firm-wide
    Best quarterly revenue in a decade, generating positive operating leverage over 9%. Year-to-date RoTCE of 13.1%.
    		$24.8 billion14%—RoTCE of 13%
    Services
    Driven by growth across both TTS and Securities Services, reflecting continued investments. NII increased 18%, NIR increased 16%. Year-to-date RoTCE of 29%.
    Cross-border transactions: up 13%Deposits: up 19%Assets under custody and administration: up 22%Average loans: up 10%Average deposits: up 19%
    		Highest ever quarterly revenue18%—RoTCE of 30.9%
    Markets
    Driven by growth across both equities and fixed income with strong momentum across client segments. Year-to-date RoTCE of 17.8%.
    Equities revenues: up 45%Prime balances: up nearly 60%Fixed income revenues: up 7%Spread Products and other fixed income: up 25%Rates and currencies: up 1%Average loans: up 29%
    		over $7 billion17%—RoTCE of 17%
    Banking
    Driven by growth in investment banking, partially offset by a decline in corporate lending. Year-to-date RoTCE of 16.9%.
    Investment banking revenues: up 44%DCM: up 65%ECM: up 92%M&A: down 4%Corporate lending revenues (excluding mark-to-market on loan hedges): declined 4%Average loans: up 5%
    		—34%—RoTCE of 18%
    Wealth
    Revenues increased for the ninth straight quarter. Pretax margin of 23%. Year-to-date RoTCE of 12.6%. Prior RoTCEs were 7.7% and 10.8%.
    Citigold and retail bank growth: 17%Private bank growth: 5%Wealth and work growth: 3%Client investment assets: up 14%Net new investment asset flows: $15.7 billion (Q2), $56 billion (LTM)Organic growth (NNIA): 9%Average loans: up 5%Average deposits: up 4%
    		—13%—RoTCE of 14.4%
    U.S. Consumer Cards
    Results reflect the impact of the AA Barclays portfolio acquisition. Expect expense growth to outpace revenue growth in the next few quarters due to investments. Year-to-date RoTCE of 20.6%.
    NII: up 5%NIR: down 47%General purpose cards acquisitions: up 135%Spend volume: up 12%Average loans: up 8%
    		—1%—RoTCE of 22%
    All Other (Managed Basis)
    Driven by growth in legacy franchises (Mexico Consumer), offset by a decline in corporate other (lower NII, higher NIR from episodic activity).
    Expenses: down 3%
    		—1%——

    Operational metrics

    54
    RoTCE
    13%430 basis points improvement
    Q2 FY26

    Firm-wide, significant improvement across every single business.

    Operating leverage
    over 9%positive
    Q2 FY26

    Firm-wide, delivered with 14% revenue growth.

    Cross-border transactions
    13%increase
    Q2 FY26

    In Services business, clients leaning on global network.

    Deposits (Services)
    19%increase
    Q2 FY26

    In Services business, deepening existing relationships.

    Assets under custody and administration
    20%up
    Q2 FY26

    In Services business, includes market valuations and new assets onboarded.

    Equities revenue
    45%up
    Q2 FY26

    In Markets business, driven by momentum in derivatives and Prime Services.

    Prime balances
    nearly 60%up
    Q2 FY26

    In Markets business, with growth across both new and existing clients.

    Fixed income revenues
    7%up
    Q2 FY26

    In Markets business, driven by growth in spread products and other fixed income, as well as rates and currencies.

    Investment Banking revenues
    44%increased
    Q2 FY26

    In Banking business, reflecting a strong wallet and gaining share in equity capital markets.

    DCM revenue
    65%up
    Q2 FY26

    In Banking business, resulting in second best quarter ever with growth across leveraged finance and investment grade.

    ECM revenue
    92%up
    Q2 FY26

    In Banking business, amid very strong market conditions with growth across all products led by strength in IPOs and follow-ons.

    M&A revenue
    4%down
    Q2 FY26

    In Banking business, despite a healthy pipeline and meaningful strategic dialogue with clients.

    Client investment assets
    14%up
    Q2 FY26

    In Wealth business, includes the impact of market valuations, partially offset by sale of trust business assets.

    Net new investment asset flows
    $15.7 billion
    Q2 FY26

    In Wealth business, contributing to over $56 billion in the last 12 months.

    Organic growth (NNIA)
    9%
    LTM

    In Wealth business, representing net new investment asset flows.

    Referrals from retail bank to Citigold
    23%up
    Q2 FY26

    Tangible benefits of integrating retail branches into wealth.

    General purpose cards acquisitions
    135%up
    Q2 FY26

    In U.S. Consumer Cards, including AA portfolio acquisition and underlying momentum.

    Spend volume
    12%up
    Q2 FY26

    In U.S. Consumer Cards, including AA portfolio acquisition and underlying momentum.

    Average loans (USCC)
    8%up
    Q2 FY26

    In U.S. Consumer Cards, partially offset by declines in private label cards.

    Headcount
    219,000
    Q2 FY26

    Reduced headcount due to productivity efforts.

    Severance incurred
    $800 million
    YTD

    Incurred year-to-date, contributing to efficiency gains.

    Net ACL build (Firm-wide)
    $118 million
    Q2 FY26

    Part of cost of credit, primarily consisting of net credit losses in U.S. consumer cards.

    Total reserves
    $22 billion
    Q2 FY26

    At the end of the quarter.

    Reserve to funded loans ratio
    2.5%
    Q2 FY26

    Firm-wide.

    8-quarter weighted average unemployment rate (reserves)
    5.3%
    Q2 FY26

    Incorporated into reserves.

    Corporate exposure investment grade
    79%
    Q2 FY26

    Reflects high credit quality of corporate portfolio.

    Total assets
    $2.9 trillionincreased 4%
    Q2 FY26

    Driven by growth in trading-related assets.

    Net end-of-period loans
    4%increased
    Q2 FY26

    Primarily driven by growth in markets and U.S. cards.

    Deposit base
    $1.5 trillionincreased 3%
    Q2 FY26

    Well diversified, driven by growth in services.

    Average LCR
    114%
    Q2 FY26

    Maintained.

    Available liquidity resources
    over $1 trillion
    Q2 FY26

    Maintained.

    LCV
    3.6%
    Q2 FY26

    Remains at 3.6%.

    Implied SUV
    3.3%reduction
    Q2 FY26

    Marks a reduction for the third consecutive year, down from 4.3% to 3.6% to 3.3%.

    Stranded costs
    $200 milliondown from $1.3 billion a year ago
    Q2 FY26 annualized run rate

    Part of structural efficiency efforts.

    DTA disallowed portion
    $13.4 billionconsumed about $500 million year-to-date
    Q2 FY26

    Progress towards full year target of $800 million burn down.

    Cost of interest-bearing deposits
    2.71%stable
    Q2 FY26

    In the context of strong deposit growth.

    Institutional market share gain (Services)
    120up
    YoY

    Reflects strong performance in Services.

    Client wins (Services)
    36%up
    YoY

    Reflects strong performance in Services.

    Asset managers share (Services)
    50%up
    N/A

    Focus on increasing share with asset managers.

    Fintechs growth (Services)
    20%
    N/A

    Focus on increasing share with fintechs.

    Debt tender
    $1.2 billion
    Q2 FY26

    Actions to improve funding profile over the long run.

    USCC NII
    5%up
    Q2 FY26

    Driven by higher interest-earning balances.

    USCC NIR
    47%down
    Q2 FY26

    Driven by higher accruals for partner payments and new account acquisition costs.

    USCC Reserve to funding loan ratio
    7.6%
    Q2 FY26

    Maintained in U.S. cards portfolio.

    Corporate lending revenues (ex-mark-to-market on loan hedges)
    4%declined
    Q2 FY26

    In Banking business.

    Net credit losses (Banking)
    $138 million
    Q2 FY26

    Driven by loan sales, which were previously reserved for.

    Net ACL build (Banking)
    $104 million
    Q2 FY26

    Driven by exposure growth largely offset by reserve releases covering losses on loan sales.

    Investment fee revenues (Wealth)
    20%up
    Q2 FY26

    Primarily offset by absence of gain on sale of alternatives fund platform and loss of fee revenue from trust business sale.

    Net credit losses (USCC)
    $1.9 billion
    Q2 FY26

    Part of cost of credit.

    Net ACL release (USCC)
    $232 million
    Q2 FY26

    Driven by improved portfolio quality, including seasonal changes, largely offset by higher volume and changes in macroeconomic variables.

    Net credit losses (All Other)
    $366 million
    Q2 FY26

    Primarily consisting of loans in Mexico.

    DTAs deducted from CET1 capital (Corporate Other)
    over $500 millionreduced
    YTD

    Reduced year-to-date.

    Banamex RWA
    almost $40 billion
    N/A

    A little bit over $40 billion of RWA tied up there.

    Banamex capital freed up
    around $5 billion
    N/A

    Expected capital to be freed up upon deconsolidation.

    Industry KPIs

    11
    MetricValueDetails
    Loansup 4%%
    Depositsup 3%%
    Rotce ROE13%%
    Cet1 ratio12.8%%
    Capital returns$4 billionUSD
    Fee income linesup 39%%
    Allowance reserves$22 billionUSD
    Net interest incomeup 6%%
    Net charge offs nplsbetween 4% and 4.5%%
    Provision for credit losses$2.5 billionUSD
    Efficiency ratio operating leveragebelow 58%%

    Product announcements

    2
    ProductTypeDetails
    Payment Expresslaunch
    Citi Wealth Advisor Insights platformlaunch

    Deals & partnerships

    3
    Barclays (American Airlines co-branded card portfolio)acquisitionover $6 billion in loans for more than 2 million accounts

    Acquisition of the additional American Airlines co-branded card portfolio, onboarding in April.

    N/Adivestiture

    Completed the sale of our consumer business in Poland.

    N/Adivestitureadditional 22.6% equity stake

    Closed on the sale of an additional 22.6% equity stake of Banamex, with 1.4% remaining to bring total to 49%.

    Risks & headwinds

    5
    Middle East conflict

    weighed a bit on global growth, whilst giving inflation a second wind

    Markets revenue seasonalitySecond half 2026

    historically have seen revenues decline approximately 20% between the first and second half of the year. And given the strong performance year-to-date, the magnitude of that decline could be greater this year.

    Mitigation: Management plans to use strong performance to accelerate investments for long-term value.

    Expense growth outpacing revenue growth in U.S. Consumer Cardsnext few quarters

    expect expense growth to outpace revenue growth as we invest in the business to drive engagement and acquisitions

    Mitigation: Investments are deliberate for future growth and high returns, maintaining RoTCE around its through-the-cycle target.

    Regulatory uncertainty (Basel III Endgame, G-SIB, SUV)Rules expected to take hold October '27

    finalization of the rules as it relates to Basel III to G-SIB and in particular, the SUV

    Mitigation: Citi's early analysis suggests a moderate net positive position from Basel III/G-SIB; strategy improving DFAST results; waiting for final rules to evaluate capital buffer.

    Geopolitical uncertainty

    quite a lot of uncertainty in certainly the geopolitical and other environment

    Mitigation: Maintaining 100 basis points CET1 buffer above regulatory minimum.

    Q&A highlights

    7

    Given 13% RoTCE in H1 and 10-11% full-year guidance, is the implied lower H2 due to conservatism, existing investments, or future investments? Is H2 possibly single-digit with no additional investment?

    Management is focused on near-term and medium-term targets, not just the waypoint. They will take advantage of constructive market conditions to accelerate investments and structural changes for long-term growth and improved returns, accounting for seasonality and uncertainty. They are not expecting a 'worse' second half but are prioritizing future durability.

    “What we're saying is we're focused on the near-term and the medium-term targets, not on the way point. I think that I can't imagine this investor that doesn't want us to make sure that we are taking full advantage of the market conditions, particularly if they're good in the second half to be able to make the investments and take actions that will drive growth for the next number of years.”

    asked by Glenn Schorr · answered by Jane Fraser

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Momentum and Returns Improvement

    Citi continued its strong momentum, capping a very good first half of 2026 with net income of $5.8 billion and an RoTCE of 13%. This quarter marked the best revenue performance in a decade, with double-digit growth firm-wide and in four out of five businesses, demonstrating significant improvement in returns across all segments. The firm attributes this to disciplined execution, client focus, and strategic investments.

    02

    Investment in Growth and Efficiency

    The company is actively investing in its businesses, including technology and AI, to drive future growth and productivity. Nearly 9 out of 10 employees are utilizing AI tools, leading to faster product development and enhanced client experiences. These investments are funded by taking down transformation and stranded costs, with headcount reduced to 219,000 and $800 million in severance incurred year-to-date.

    03

    Capital Management and Stress Test Performance

    Citi successfully completed the Fed stress test, showing improved PPNR and lower stress losses, leading to a planned 12% increase in its quarterly dividend starting in Q3. The firm also initiated a $30 billion common stock repurchase commitment, buying back $4 billion during the quarter, while maintaining a CET1 ratio of 12.8%, 120 basis points above its current regulatory minimum.

    04

    Remediation Progress and Future Outlook

    Significant progress has been made on the transformation efforts, with a large body of consent order work passing internal audit validation and ready for regulatory review. While the timing of📎 consent order removal is at the regulators' discretion, Citi is already reducing remediation expenses, creating capacity for further business investments. The firm remains focused on its 2026 return target and clear path to higher sustainable returns, with a willingness to accelerate investments if conditions remain constructive.

    05

    U.S. Consumer Cards Strategy

    The U.S. Consumer Cards business is undergoing strategic investments, including the acquisition of the AA Barclays portfolio, to drive future growth in its general purpose portfolio. While these investments are impacting operating leverage in the short term, they are expected to drive future acquisitions and customer engagement, maintaining the business's RoTCE around its through-the-cycle target of low 20s. The portfolio remains high quality, with 86% of balances extended to consumers with FICO scores of 660 or higher.

    06

    Global Macroeconomic Environment

    The global macro environment presents a nuanced picture, with the Middle East conflict weighing on global growth and giving inflation a second wind. The U.S. economy shows resiliency, particularly among corporate clients with strong balance sheets, benefiting from AI investments. Europe faces competitive headwinds, while Asia benefits from the AI-driven electronics upcycle, highlighting the diversified nature of Citi's client base.

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