Citigroup (NYSE:C) reported a stronger second quarter of 2026, with management pointing to broad-based revenue growth, improved returns and continued capital returns, while cautioning that second-half results could be affected by normal seasonality and a deliberate increase in investment spending.
Chair and Chief Executive Officer Jane Fraser said the quarter “capped a very good first half of the year,” as Citi reported net income of $5.8 billion, earnings per share of $3.15 and return on tangible common equity, or ROTCE, of 13%. Revenue reached $24.8 billion, which Fraser described as Citi’s best quarterly revenue in a decade. She said the firm delivered more than 9% positive operating leverage, with double-digit revenue growth for the company and in four of its five main businesses.
Chief Financial Officer Gonzalo Luchetti said total revenues rose 14% year over year, while expenses increased 5% to $14.2 billion. Citi’s efficiency ratio was below 58% for the quarter. On a year-to-date basis, Luchetti said revenues were up 14%, expenses were up 6% and ROTCE was 13.1%.
Services, Markets and Banking Drive Growth
Fraser said Citi’s Services business delivered its highest quarterly revenue ever and generated a return of more than 30%. Luchetti said Services revenue rose 18%, supported by growth in both Treasury and Trade Solutions and Securities Services. Average deposits in the business increased 19%, while cross-border transaction value rose 13% and assets under custody and administration increased 22%.
Markets revenue rose 17%, crossing $7 billion again during the quarter. Luchetti said fixed income revenue increased 7%, while equities revenue rose 45%, supported by momentum in derivatives and prime services. Prime balances grew nearly 60%, reflecting growth from new and existing clients as well as higher market valuations. The Markets business generated net income of $2.4 billion and an ROTCE of 17%.
Banking revenue increased 34%, led by a 44% rise in investment banking revenue. Luchetti said debt capital markets revenue rose 65%, marking Citi’s second-best quarter ever in that category, while equity capital markets revenue increased 92% amid strong market conditions. M&A revenue declined 4%, though management said the pipeline remained healthy. Fraser said Citi participated in the majority of the top equity and debt issuances during the quarter, including lead roles on IPOs such as SpaceX and Cerebras.
Wealth Improves Returns, Cards Reflect Investment Push
Citi’s Wealth business posted its ninth consecutive quarter of revenue growth, with revenue up 13%. Luchetti said growth was broad-based, including a 17% increase in Citigold and the Retail Bank, 5% growth in the Private Bank and 3% growth in Wealth at Work. Net new investment asset flows totaled $15.7 billion in the quarter and more than $56 billion over the last 12 months. Wealth generated net income of $583 million and an ROTCE of 14.4%.
Fraser said Citi is beginning to see tangible benefits from integrating retail branches into Wealth, noting that referrals from the retail bank to Citigold increased 23%.
In U.S. Consumer Cards, revenue rose 1%, as growth in net interest income was largely offset by lower non-interest revenue. Luchetti said the results reflected Citi’s April acquisition of the additional American Airlines co-branded card portfolio, which added more than $6 billion in loans from more than 2 million accounts. General purpose cards acquisitions rose 135%, spend volume increased 12% and average loans rose 8%, partially offset by declines in private label cards.
Expenses in U.S. Consumer Cards increased 10%, reflecting higher severance, customer engagement costs, legal expenses and marketing. Luchetti said Citi expects expense growth to outpace revenue growth in some coming quarters as the company invests in engagement and acquisitions. The business delivered net income of $852 million and an ROTCE of 22%.
Capital Returns and Balance Sheet
Citi ended the quarter with a common equity tier 1 ratio of 12.8%, about 120 basis points above its current regulatory requirement. Luchetti said the company continued to prioritize returning capital to shareholders while supporting client-driven growth, including $4 billion in common stock repurchases during the quarter.
Fraser said Citi launched its $30 billion common stock repurchase commitment and plans to increase its dividend by 12%. Luchetti said the dividend increase is expected to begin in the third quarter, subject to quarterly board approval.
The company completed the sale of its consumer business in Poland during the quarter. Fraser also said Citi closed the sale of an additional 22.6% equity stake in Banamex and remains on track to close an additional 1.4% this summer, bringing the total sold to 49%. In the question-and-answer session, Fraser said Citi does not expect additional Banamex sales in 2026 and expects to deconsolidate its ownership in early 2027, followed by an IPO “as and when market conditions allow.”
Credit Quality and Outlook
Citi’s cost of credit was $2.5 billion, primarily reflecting net credit losses in U.S. Consumer Cards and a firmwide net allowance for credit losses build of $118 million. Luchetti said Citi had more than $22 billion in total reserves at quarter-end and a reserve-to-funded-loans ratio of 2.5%. He described the corporate portfolio as high quality, with 79% of corporate exposure rated investment grade.
Management maintained its full-year 2026 ROTCE target of 10% to 11%, despite the stronger first-half result. Luchetti said Citi continues to expect net interest income excluding Markets to grow about 5% to 6% for the year and expects its full-year efficiency ratio to be around 60% as it increases investments and incurs additional severance tied to future efficiencies.
Fraser emphasized during the call that the company is focused on longer-term targets rather than maximizing the 2026 “waypoint.” She said that if conditions remain constructive, Citi intends to “lean in” with additional investments and actions designed to create value over the medium term. In response to analyst questions, Fraser said the spending is “100% on the offense” and tied to organic growth opportunities.
Fraser also said Citi continued to make progress on its transformation work, with “a large body of work” passing internal audit validation during the quarter. She said nearly nine out of 10 Citi employees are using the company’s AI tools, which she said are helping improve productivity, client experience and speed to market for products such as Citi Payments Express and Citi Wealth Advisor Insights.
About Citigroup (NYSE:C)
Citigroup Inc is a global financial services company headquartered in New York City with roots tracing back to the City Bank of New York, founded in 1812. The modern Citigroup was created through the 1998 merger of Citicorp and Travelers Group and has since operated as a diversified bank holding company that provides a broad range of banking and financial products and services to consumers, corporations, governments and institutions worldwide.
Citi’s principal businesses include retail and commercial banking, credit card and consumer lending products, wealth management and private banking, and a full suite of institutional services.
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