Citigroup Inc. (C) Q2 FY2026 10-K and 10-Q Summary: Business, Risk Factors, MD&A

Sources: Citigroup's Annual Report on Form 10-K for the year ended December 31, 2025 (filed February 20, 2026, SEC accession 0000831001-26-000011) and Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (filed August 6, 2026, SEC accession 0000831001-26-000045).

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Business

From the FY2025 Form 10-K, accession 0000831001-26-000011.

Citigroup's history dates to the founding of the City Bank of New York in 1812. It is a global diversified financial services holding company providing consumers, corporations, governments and institutions with consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services, and wealth management. Citi does business in nearly 160 countries and jurisdictions. Its stated vision is to be the preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in the U.S.

At December 31, 2025 Citi had approximately 226,000 full-time employees (229,000 a year earlier) in over 90 countries, roughly 31% of them in the U.S. Direct staff was 219,000 at June 30, 2026, down 5% year over year.

Segment structure

Through 2025 Citi was managed in five reportable segments, Services, Markets, Banking, Wealth and U.S. Personal Banking (USPB), with unassigned activities in All Other.

Effective as of the first quarter of 2026, Citi reorganized its consumer businesses: Retail Banking was transferred from USPB into Wealth, and the remaining USPB businesses (Branded Cards and Retail Services) were integrated into a new U.S. Consumer Cards (USCC) segment. Prior periods have been recast. Two further changes took effect January 1, 2026: Citi eliminated the corporate lending revenue-share arrangement by updating its tangible-common-equity methodology across Services, Markets and Banking to better align capital usage with the shared economics of corporate lending; and certain interest-rate risk-management activities within Markets were moved to All Other, Corporate/Other or between Markets businesses.

The five segments as currently constituted:

• Services, Treasury and Trade Solutions (TTS: cash management, payments, trade and working capital for multinationals, financial institutions and public sector clients) and Securities Services (custody, post-trade technology, data solutions). Revenue comes primarily from deposit spreads, loan interest, transaction/clearing fees and fees on assets under custody and administration. Product offerings in over 90 countries.
• Markets, Fixed Income Markets (Rates and Currencies; Spread Products and Other Fixed Income) and Equity Markets (equity derivatives, equity cash, prime services). Full-service sales and trading, market-making, risk management solutions, financing and prime brokerage; trading floors in nearly 80 countries. Performance is assessed on a total-revenue basis because inventory is hedged with derivatives, creating offsetting gains and losses across revenue lines.
• Banking, Investment Banking (Debt Capital Markets, Equity Capital Markets, Advisory) and Corporate Lending (corporate and commercial banking). Earns investment banking fees plus net interest spread on corporate loans; bankers cover over 90 countries.
• Wealth, Citigold and Retail Banking, the Private Bank, and Wealth at Work, serving ultra-high-net-worth, high-net-worth and affluent clients with banking, investment, lending, insurance and custody products in approximately 20 countries. Branches concentrated in six U.S. metropolitan areas (New York, Los Angeles, San Francisco, Chicago, Miami, Washington, D.C.) plus four offshore wealth management centers: Singapore, Hong Kong SAR, London and the UAE.
• U.S. Consumer Cards (USCC), unsecured consumer lending: General Purpose Credit Cards (Citi-branded Value, Rewards and Cash products, plus co-brands including Costco, American Airlines, and GPCC products with Best Buy and Macy's); Private Label Credit Cards (closed-loop retail cards including The Home Depot and PLCC products with Best Buy and Macy's); and Installment Lending. Revenue is mostly net interest income, with fee revenue from interchange and card fees, net of rewards costs and partner payments.

All Other contains Legacy Franchises, Mexico Consumer/Small Business and Middle Market (SBMM), operated principally through Grupo Financiero Banamex (Banamex); Asia Consumer (the Korea wind-down, and Poland before its second-quarter 2026 sale); and Legacy Holdings Assets, together with Corporate/Other (Corporate Treasury activities, unallocated global operations and technology, unallocated staff-function costs including certain transformation spend, other corporate expenses and discontinued operations). At June 30, 2026 Legacy Franchises (managed basis), substantially all in Mexico Consumer/SBMM, comprised 1,288 retail branches, $47 billion of deposits, $17 billion of retail banking loans, $10 billion of credit card balances and $8 billion of corporate loans.

Geographically, Citi reports North America and International; within International it is organized into six clusters, United Kingdom; Japan, Asia North and Australia (JANA); LATAM (which includes Mexico); Asia South; Europe; and Middle East, Africa and Russia (MEA).

Non-GAAP measures Citi emphasizes

Citi presents results excluding two 2025 notable items (the Russia-related loss on sale and the Banamex-related goodwill impairment); All Other on a "managed basis" excluding divestiture-related impacts; Banking and Corporate Lending revenue excluding gain/loss on loan hedges; tangible common equity, return on tangible common equity (RoTCE) and tangible book value per share (TBVPS); and non-Markets net interest income.

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Risk factors

Condensed from the FY2025 Form 10-K, accession 0000831001-26-000011.

Market-related

• Macroeconomic, geopolitical and other challenges. Rising unemployment, recession or slowing growth in the U.S., Europe and elsewhere; deteriorating consumer and corporate confidence; elevated inflation; market volatility and disruption; and government fiscal or monetary actions. Citi specifically flags the substantial new import tariffs and the significant increase in the U.S. effective tariff rate that occurred in 2025, with potential for further changes in trade policy driving volatility, inflation, supply-chain and trade-flow disruption, and credit losses. Other named uncertainties: the Russia–Ukraine war, conflicts in the Middle East, China (weak growth, real estate and credit stress, trade restrictions, China–Taiwan and China–U.S. tensions), high and rising government debt levels, sanctions, natural disasters and pandemics.
• Interest rates. Asset and liability rates move at different speeds; falling benchmark rates generally compress net interest income, while rising rates hurt the fair value of AFS and HTM securities (and therefore capital and regulatory liquidity) and can slow the economy. Yield-curve flattening or inversion is a specific hazard because Citi pays deposit rates off the short end and earns loan rates off the long end. Rate moves also change depositor behavior.

Strategic

• Capital return depends on regulatory capital requirements. Buybacks and dividends hinge on the GSIB surcharge, the Stress Capital Buffer set by the annual CCAR process, proposed revisions to the U.S. Basel III, GSIB and supervisory stress test rules, divestiture-related capital impacts, the effectiveness of Citi's capital planning framework, and deferred tax asset utilization. Adverse regulatory findings could add capital buffers or limit distributions.
• Regulatory and legislative uncertainty. Examples cited include possible U.S. credit card legislation such as a cap on interest rates, changes across the U.S. regulatory capital framework, and fiscal/monetary/tax/sanctions changes. Divergent and sometimes conflicting requirements across jurisdictions raise cost and make long-term balance sheet and strategic planning difficult.
• Execution risk on simplification, transformation and business performance. Simplification (including completing the Banamex divestiture) may take longer, cost more, deliver smaller savings, or generate currency-translation and other losses, litigation and regulatory scrutiny. Conversely, under-investing in technology would leave Citi uncompetitive and exposed to operational error.
• Climate change. Physical risks (wildfire, cyclone, heat, flood, drought) can damage owned and collateral property, disrupt operations and supply chains, and raise insurance costs, with direct credit consequences in mortgage and commercial real estate lending. Transition risks arise from regulation and shifting market preferences. Divergent climate disclosure regimes, poor data quality and scrutiny of Citi's own climate commitments add compliance, litigation and reputational risk.
• Deferred tax assets. At December 31, 2025, net DTAs were $29.5 billion net of a $5.0 billion valuation allowance, of which $13.1 billion was deducted from CET1 Capital ($10.8 billion relating to net operating loss, foreign tax credit and general business credit carry-forwards; $3.1 billion to temporary differences above the 10%/15% limits; reduced by $0.8 billion of deferred tax liabilities). Realization depends on generating U.S. taxable income.
• Tax law complexity across the U.S. and numerous non-U.S. jurisdictions, with litigation and examination risk.
• Co-branding and private label card relationships. The five largest relationships across Branded Cards and Retail Services were approximately 12% of Citi's 2025 revenues. These agreements are fixed-term, competed for aggressively, and vulnerable to partner bankruptcy, liquidation, store closures, strategy changes or early termination, with potential loss of revenue, higher credit cost and impairment of purchased credit card relationships and contract intangibles.
• U.S. resolution planning. Under Citi's single-point-of-entry strategy, only the parent holding company would enter bankruptcy and losses fall first on equity holders and then unsecured creditors, including long-term debt holders. The FRB and FDIC identified a shortcoming in Citi's 2021 plan (data integrity and data quality management) and a shortcoming in the 2023 plan (derivatives unwind capabilities); Citi submitted a targeted plan on July 1, 2025. Unremedied deficiencies could bring more stringent capital, leverage or liquidity requirements, growth restrictions, and ultimately forced divestitures.
• Talent. Competition for employees is intense, and banking-specific compensation regulation (deferral and clawback requirements) makes competing against unregulated employers such as technology firms harder.
• Competition and emerging technologies. Competitors include less-regulated private credit, fintech and digital asset firms; consolidation among regional banks, card issuers, networks and acquirers intensifies competition. AI, digital assets (tokenized deposits, cryptocurrencies, stablecoins) and instant/24-7 payments could render products less competitive; instant payments also complicate liquidity forecasting. Citi notes the GENIUS Act and a more favorable U.S. posture toward digital assets while calling the legal landscape highly uncertain.
• AI. Citi has begun broadly deploying Generative AI and expects deeper integration including autonomous agents. Risks include inaccurate or biased output, data exfiltration, IP infringement, opacity of model behavior versus explainability/auditability requirements, reliance on third-party models, amplification of failures across interconnected AI systems, and malicious use of AI for fraud, identity theft, verification bypass, cyberattack, disinformation and market manipulation.

Operational

• Process and system failure. Citi's global operations depend on accurate, timely, secure processing of enormous transaction and data volumes. Named sources of loss: third-party and cloud provider failures (aggravated by industry-wide vendor concentration), control deficiencies, weak data governance, cyber incidents, human error, explicitly including erroneous payments to lenders and manual trader errors that have caused system and market disruption and significant past losses, fraud, limited straight-through processing between legacy or bespoke systems, and infrastructure or telecom outages. Given Citi's scale, errors can be repeated or compounded before discovery.
• Cybersecurity. Ongoing attempted attacks (phishing, malware, ransomware, zero-day exploitation) from cyber criminals, terrorists, hacktivists, nation-state actors and insiders. Citi cites its size, high-profile brand, global footprint and systemic role, cloud and remote-working adoption, and operations in geopolitically unstable jurisdictions as aggravating factors. Citi and third-party partners have suffered denial-of-service attacks, hacking and malicious software installation, data breaches and attacks on client systems; past incidents caused limited losses and higher monitoring spend. Insurance may be insufficient and cannot address reputational harm.
• Accounting assumptions and estimates. The allowance for credit losses, litigation/regulatory/tax reserves, DTA valuation, fair values and goodwill impairment all rest on judgment. CECL requires lifetime expected loss estimates driven by macroeconomic forecasts that are hard to make in volatile periods, producing allowance variability that flows through earnings and capital. Separately, a sale or deconsolidation of a foreign operation reclassifies the related currency translation adjustment out of AOCI into earnings: on deconsolidation of Banamex, Citi would recognize a CTA loss of approximately $(9) billion (as attributable at December 31, 2025), though the cumulative CTA impact is regulatory-capital neutral.
• Accounting and reporting standard changes could materially alter how Citi records and reports results.
• Risk management deficiencies. Models built on historical data cannot anticipate every outcome and may embed correlation assumptions that break under stress. Deficient risk management, data aggregation or models could cause losses, negative examination findings, enforcement actions and adverse capital effects. Basel III regulatory capital models remain subject to ongoing regulatory review that can materially change risk-weighted assets.

Credit

• Citi had end-of-period consumer loans of $409 billion and corporate loans of $344 billion at December 31, 2025. Borrower or counterparty default, downgrades, or collateral value decline drive credit risk, amplified in vulnerable sectors, industries or countries. Citi is a member of central clearing counterparties and can be required to share losses from other clearing members' defaults; it identifies leveraged finance, non-bank financial institutions, private credit and AI as potential sources of systemic credit cost. Concentration and correlation risk, including a high volume of trading, derivative and FX activity with non-U.S. sovereigns and financial-sector counterparties, and indemnification obligations, could produce large losses if a major borrower, sector or country deteriorates rapidly.

Liquidity

• Liquidity management. Funding costs and access depend on market disruption, fiscal and monetary policy, regulation, investor and counterparty perception, deposit outflows or mix shifts, collateral calls and credit ratings. Deposit competition (including from fixed income alternatives) has intensified. In stress, asset sales and wholesale funding may be simultaneously impaired and counterparties may demand more collateral. As a holding company, Citigroup Inc. depends on payments from subsidiaries that are themselves subject to capital adequacy, local regulatory and inter-affiliate restrictions; and as a bank holding company it may be required by the FRB to serve as a source of strength to its subsidiary banks.
• Ratings downgrade. Could follow declines in profitability, lower capitalization, funding or liquidity deterioration, increased risk appetite, delays or missteps in the transformation, public statements by management or regulators, or control failures, raising credit spreads and funding costs, triggering derivative collateral requirements and termination rights, and prompting counterparties to reduce exposure or withdraw deposits.

Compliance

• Regulatory expectations and scrutiny. Supervisory expectations cover infrastructure, data and risk management controls, anti-money laundering, increasingly complex sanctions regimes, customer protection, market practices and regulatory reporting. Failure to comply or to remediate can bring additional capital buffers, distribution limits, enforcement proceedings, penalties and fines. Implementation of overlapping and sometimes conflicting requirements across jurisdictions (including data localization and privacy laws that can conflict with AML obligations) raises cost and risk.
• Legal and regulatory proceedings and consent orders. The October 7, 2020 FRB Consent Order (Citigroup) and OCC Consent Order (Citibank) require extensive targeted action plans and quarterly progress reports covering enterprise-wide risk management, compliance risk management, data quality management related to governance, and internal controls; remediation will require continued significant investment during 2026 and beyond. In 2024 the FRB imposed a civil money penalty consent order of approximately $61 million on Citigroup for ongoing data quality management deficiencies, and the OCC imposed a $75 million civil money penalty on Citibank for failing to make sufficient and sustainable progress toward compliance with its 2020 order; the OCC also amended the 2020 order, that amendment was terminated by the OCC on December 18, 2025. There is no restriction on Citi's ability to serve clients, but the 2020 OCC Consent Order requires Citibank to obtain prior approval for any significant new acquisition, including portfolio or business acquisitions, outside the ordinary course. The OCC retains the right to assess further penalties or impose business restrictions, including limits on Citibank dividends and changes to directors or senior officers. Citi notes it is prohibited from disclosing confidential supervisory information and may be unable to disclose potentially material supervisory matters.

Other

• Emerging markets. Emerging markets revenues were approximately 25% of Citi's total revenues in 2025. Risks include unhedgeable foreign investments, currency volatility and devaluation, central bank policy, FX and capital controls that limit conversion or repatriation, sanctions and asset freezes, sovereign debt volatility, commodity price swings, nationalization or license loss, criminal charges, branch or subsidiary closure and asset confiscation, all worse where U.S. relations with the country deteriorate. Currency controls can force additional translation losses and transfer-risk reserves.

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Management's discussion and analysis, full year 2025

From the FY2025 Form 10-K, accession 0000831001-26-000011.

Headline results

Net income of $14.3 billion, or $6.99 per diluted share, versus $12.7 billion and $5.94 in 2024, up 13%, driven by higher revenues, partly offset by higher expenses, a higher effective tax rate (27% vs. 25%) and higher credit provisions. Two notable items:

• Russia-related: a $1.2 billion pretax ($1.1 billion after-tax) loss on sale within revenues from held-for-sale treatment of AO Citibank.
• Banamex-related: a $726 million ($714 million after-tax) goodwill impairment in expenses tied to the agreement to sell a 25% stake in Banamex.

Excluding both, net income was $16.1 billion, or $7.97 per share.

Revenues of $85.2 billion rose 6% ($86.4 billion excluding the Russia item), with net interest income up 11% and non-interest revenue down 4%. Average loans of $716 billion rose 5%; average deposits of approximately $1.4 trillion rose 4%. Operating expenses of $55.1 billion rose 3% ($54.4 billion excluding the Banamex item), driven by compensation and benefits (performance-related pay and higher severance), the goodwill impairment, technology and communications, and transactional and product servicing, partly offset by lower deposit insurance expense and restructuring charges. Citi and each of its five businesses achieved positive operating leverage for the second consecutive year. Efficiency ratio 64.7%; RoTCE 7.7%; book value per share $110.01; tangible book value per share $97.06.

Provisions for credit losses and for benefits and claims totaled $10.3 billion, $9.1 billion of net credit losses (up 1%) and a $1.2 billion net ACL build driven by the macroeconomic outlook and transfer risk. Prior year: $10.1 billion, $9.0 billion and $1.1 billion respectively.

Capital. CET1 Capital ratio 13.2% at December 31, 2025 (13.6% a year earlier) under the Basel III Standardized Approach; the decline reflected buybacks, higher RWA and dividends, partly offset by net income and favorable AOCI. Supplementary Leverage ratio 5.5% (from 5.8%). Citi returned $17.6 billion to common shareholders, $13.3 billion of repurchases under the multiyear $20 billion program and $4.3 billion of dividends.

Segment results, 2025 vs. 2024

• Services, revenues $21.3 billion, up 8%; net income $7.1 billion, up 9%; efficiency ratio 51%. Net interest income up 12% on a 7% rise in average deposits (largely operating deposits) and better spreads. TTS revenue $15.4 billion (+6%) with cross-border transaction value up 10%, U.S. dollar clearing volume up 5% and commercial card spend up 1%. Securities Services revenue $5.9 billion (+15%) with assets under custody and administration up 24%. Expenses up 2%; provisions $454 million, mainly a transfer-risk-driven ACL build.
• Markets, net income $5.9 billion, up 19%; revenues up 11%. Fixed Income Markets $16.2 billion (+10%): Rates and Currencies +12% on client activity; Spread Products and Other Fixed Income +5% on financing (average loans in spread products +18%), offset by weaker commodities. Equity Markets $5.7 billion (+13%) on volatility and client activity, prime balances up over 50%, against the non-recurrence of prior-year Visa B share exchange gains. Expenses $14.1 billion, up 7%. Provisions $237 million.
• Banking, net income $2.3 billion, up 53%; revenues up 32% (up 31% excluding a $118 million loan-hedge loss versus $180 million prior year). Investment Banking revenue +22% with investment banking fees of $4.6 billion, up 20%: Advisory fees +53%, DCM +5%, ECM +2%. Corporate Lending +47% (+42% ex-hedges) on higher lending revenue share from Services, Markets and Investment Banking. Expenses flat. Provisions $720 million (a $636 million ACL build) against a $224 million benefit in 2024.
• Wealth, net income $1.5 billion, up 49%; revenues up 14%. Net interest income +17% on deposit spreads; non-interest revenue +10% on investment fees and a gain on sale of an alternative investments fund platform, less lost fees from a third-quarter 2025 trust business sale. Client balances +9%, client investment assets +14%, net new investment asset generation $44 billion over 12 months (8% organic growth). Average deposits −1% (including $15 billion of net client transfers from USPB). Expenses +3%. Provisions $140 million, with net credit losses including mortgage write-downs from the California wildfires.
• U.S. Personal Banking (as then constituted), net income $3.1 billion, up 124%; revenues +5%. Branded Cards +8% (average loans +5%); Retail Services −6% on higher partner payment accruals; Retail Banking +21% on deposit spreads (average deposits −2% after $15 billion of transfers to Wealth). Expenses +1%. Provisions $7.2 billion: net credit losses $7.4 billion (down 2%) and a $220 million ACL release.
• All Other (managed basis), net loss $4.5 billion versus $2.4 billion. Revenues $4.4 billion, down 41%. Legacy Franchises revenue $5.5 billion (−19%); Mexico Consumer/SBMM $6.5 billion (+6%); Asia Consumer $(995) million versus $812 million on the Russia item and closed exits. Corporate/Other revenues $(1.1) billion versus $668 million, on lower net interest income from actions to reduce asset sensitivity into falling rates and the absence of prior-year investment gains. Expenses −4%. Provisions $1.5 billion, with net credit losses up 24% on Mexico consumer volume and seasoning.

Transformation and consent orders

Citi describes its transformation, including remediating the 2020 FRB and OCC consent orders, as a multiyear, non-linear effort to modernize and simplify the company beyond regulatory remediation. As of December 31, 2025, over 80% of transformation programs were at or nearly at target state. 2025 progress included automated controls to mitigate large erroneous payments in over 90 countries, migration of committed corporate loans to a strategic North American loan processing platform, AI-supported governance of key regulatory report data, onboarding of wholesale and retail contractual data to two strategic data platforms, and retirement or replacement of 548 applications (9% of all applications). Transformation-related expenses rose 14% to approximately $3.3 billion in 2025, driven by data and controls spending; Citi expects investment to stay significant in 2026 and beyond but to decline over time. Governance runs through a Transformation Steering Committee chaired by the CEO and ad hoc Transformation Oversight Committees of both the Citigroup and Citibank boards.

Simplification and divestitures

Since announcing its intention to exit consumer banking across 14 markets in Asia, Europe, the Middle East and Mexico, Citi had by the 2025 10-K: completed the sale of 25% of Banamex's common shares; signed an agreement to sell the Poland consumer banking business (expected to close by mid-2026); continued the Korea wind-down; substantially completed the China and Russia consumer wind-downs; and exited nine markets.

Banamex. On December 15, 2025 Citi completed the sale of 25% of Banamex's outstanding common shares to a company wholly owned by Fernando Chico Pardo and members of his immediate family. Stockholders' equity rose approximately $1.7 billion, a roughly $2.3 billion CTA loss reclassified from AOCI to noncontrolling interests (a temporary benefit that reverses at deconsolidation) less a roughly $0.6 billion net loss on sale in additional paid-in capital. Approximately $(9) billion of unrealized CTA losses, net of hedges and taxes, was attributed to Banamex at December 31, 2025. Citi deconsolidates when it holds under 50% of voting stock without substantive participating rights; at deconsolidation the CTA loss goes through earnings, hitting EPS and RoTCE, though cumulatively regulatory-capital neutral. Timing and structure of the proposed Banamex IPO and further private sales remain subject to market conditions and regulatory approvals.

Russia. On February 18, 2026 Citi signed and closed the sale of AO Citibank, its remaining Russian subsidiary, to Renaissance Capital (RenCap), completing Citi's full exit from Russian operations and covering all remaining businesses and approximately 800 employees. AO Citibank's results had been reported within Services, Markets and Banking as well as All Other. The June 2026 Form 10-Q supplies the balance-sheet detail: at the time of sale the business held approximately $13.5 billion of assets (including $11.4 billion of other assets and $2.0 billion of cash and deposits with banks) against $13.7 billion of liabilities, primarily deposits, among them $1.7 billion of intercompany deposits now owed to Citi by RenCap. The $1.2 billion pretax ($1.1 billion after-tax) loss on sale noted above was recorded in Other revenue and primarily reflected in the fourth quarter of 2025. Citi expected an estimated ~$4 billion CET1 capital benefit in the first quarter of 2026 from deconsolidated RWA, lower disallowed DTAs and CTA release; the $1.6 billion CTA loss released on the sale is cumulatively regulatory-capital neutral. Excluding the loss on sale, AO Citibank contributed income before taxes of $24 million in the first half of 2026 against a $314 million loss a year earlier.

Management's stated 2026 uncertainties

Geopolitical challenges, tensions and conflicts; changes in U.S. law or policy including trade and tariffs; and lower interest rates, each capable of hurting growth, unemployment, inflation and market stability, and thereby Citi's clients, funding costs, provisions and results.

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Current quarter, second quarter of 2026

From the Form 10-Q for the quarter ended June 30, 2026, accession 0000831001-26-000045.

Results

Net income $5.8 billion, or $3.15 per diluted share, versus $4.0 billion and $1.96 a year earlier, up 45% on higher revenues and lower provisions, partly offset by higher expenses. Six-month net income was $11.6 billion, up 44%.

Revenues $24.8 billion, up 14% (six months: $49.4 billion, up 14%), with growth in all five businesses and in Legacy Franchises (managed basis), partly offset by Corporate/Other. Net interest income $17.1 billion, up 13%; non-Markets NII up 6%; Markets NII $4.0 billion versus $2.9 billion. Non-interest revenue $7.6 billion, up 18%; non-Markets NIR up 39%; Markets NIR $3.0 billion versus $3.2 billion.

Operating expenses $14.2 billion, up 5%, on higher compensation and benefits (performance-related pay and investment in the businesses, largely offset by productivity savings and lower transformation expense), higher transactional and product servicing (Equity Markets volumes and USCC customer engagement) and higher deposit insurance costs (absence of a prior-year benefit plus deposit growth), partly offset by lower professional services expense from reduced transformation spend.

Provisions $2.5 billion, net credit losses $2.4 billion (up 8%, driven by Banking and Legacy Franchises) and a $118 million net ACL build from portfolio growth and macroeconomic variable changes, offset by portfolio quality improvement including USCC seasonality. Prior-year quarter: $2.9 billion, comprising $2.2 billion of net credit losses and a $638 million build.

Ratios. Efficiency ratio 57.4% (from 62.7%); operating leverage 960 bps, with Citi and four of its five businesses achieving positive operating leverage; RoTCE 13.0% (from 8.7%); return on average common equity 11.4%; return on average assets 0.80%. Book value per common share $114.74 (+7%); tangible book value per share $100.89 (+7%). Dividend payout ratio 19%; total payout ratio 92%.

Segment results, 2Q26 vs. 2Q25

• Services, revenues $6.4 billion (+18%), net income $2.6 billion (+51%). Average deposits +19%, largely operating deposits. TTS +18% (cross-border transaction value +13%, U.S. dollar clearing volume +5%, and a smaller Argentina devaluation drag). Securities Services +16% with assets under custody and administration +22%. Expenses +5%; provisions $58 million versus $353 million.
• Markets, revenues $7.0 billion (+17%), net income $2.4 billion (+32%). Fixed Income $4.7 billion (+7%): Rates and Currencies +1% (FX volumes up, rates down); Spread Products and Other Fixed Income +25% on financing, credit trading and commodities, with Markets average loans up 29%. Equity Markets $2.3 billion, up 45%, on equity derivatives and prime services, prime balances up nearly 60%. Expenses +8%; provisions $109 million.
• Banking, revenues $1.9 billion (+34%; +31% ex loan hedges), net income $351 million (+286%). Investment Banking revenues +44%: DCM +65%, ECM +92%, Advisory −4%. Corporate Lending +4% (−4% ex-hedges) on lower spreads and balances; Banking average loans +5%. Expenses +7%; provisions $242 million, with net credit losses of $138 million driven by previously reserved loan sales.
• Wealth, revenues $3.2 billion (+13%), net income $583 million (+51%). NII +18% on deposit spreads and balances; NIR +4% against the absence of an approximately $80 million prior-year gain on sale of an alternative investments fund platform and lost fees from the 2025 trust business sale. Client balances +9%, client investment assets +14%, net new investment asset generation approximately $16 billion in the quarter and over $56 billion in 12 months (9% organic growth). Citigold and Retail Banking +17%, Private Bank +5%, Wealth at Work +3%. Expenses +3%; provisions $59 million.
• USCC, revenues $4.5 billion (+1%), net income $852 million (+12%). NII +5% on higher interest-earning balances; NIR −47% on higher partner payment accruals and new-account acquisition costs, partly offset by annual fees and net interchange. Expenses +10% on severance, customer engagement, legal and marketing. Provisions $1.6 billion: net credit losses $1.9 billion (roughly flat) and a $232 million ACL release on portfolio quality and seasonality. In April 2026 Citi completed the acquisition of the additional American Airlines co-branded card portfolio, approximately $6.6 billion of loans across more than 2 million accounts; Citi is American Airlines' exclusive credit card issuing partner. The second-quarter USCC net credit loss rate rose sequentially on losses tied to a Citi-branded product launched in 2025 but fell year over year; 90+ day delinquency fell both sequentially (seasonality) and year over year.
• All Other (managed basis), net loss $923 million versus $552 million. Revenues $1.7 billion (+1%). Legacy Franchises $2.1 billion (+21%); Mexico Consumer/SBMM $2.0 billion, +30% on peso appreciation, retail banking and card loan growth, deposits, insurance/retirement/card fees and episodic items; Asia Consumer $77 million versus $155 million. Corporate/Other revenues $(316) million versus $25 million, on lower NII from actions to reduce asset sensitivity. Expenses −3%. Provisions $438 million, with net credit losses up 43% on Mexico consumer volume and seasoning.

Balance sheet at June 30, 2026 (vs. December 31, 2025)

Total assets $2.895 trillion, up $237 billion (9%). Trading account assets $634 billion (+18%) on client demand in Markets; securities borrowed and reverse repos $405 billion (+14%); investments $463 billion (+4%, with AFS up 16% on Treasury, MBS and foreign government purchases and HTM down 12% on maturities and paydowns); loans net of allowance $774 billion (+6%) on Markets financing, Services trade loans, the American Airlines card portfolio in USCC and Wealth securities-based lending and mortgages; cash and deposits with banks $366 billion (+5%).

Total deposits $1.493 trillion, up $89 billion (6%), driven by operational deposits in Services. Securities loaned and repos $411 billion (+18%); short-term borrowings $69 billion (+33%) on commercial paper and FHLB advances; long-term debt $334 billion (+6%) on FHLB advances, non-bank customer-related and bank benchmark debt.

Preferred stock $19.6 billion, down $0.5 billion, reflecting $2.3 billion of redemptions against $1.8 billion of issuances (Series X was redeemed in its entirety on February 18, 2026). Common equity $192.5 billion, essentially flat: $11.6 billion of net income, a $1.5 billion increase from the April 2026 Banamex equity sale and $0.2 billion of lower AOCI losses, against $10.3 billion of buybacks and $2.7 billion of dividends ($2.1 billion common, $0.6 billion preferred). Noncontrolling interests rose $904 million (59%) on the Banamex sale.

Capital, liquidity and regulation

CET1 Capital ratio 12.78% (13.48% a year earlier), approximately 120 basis points above the regulatory requirement, Tier 1 14.68%, Total Capital 15.67%, Supplementary Leverage ratio 5.15%. Citigroup and Citibank were above all regulatory requirements and "well capitalized." Citi returned $5.0 billion to common shareholders in the quarter: $4.0 billion of repurchases under the 2026 $30 billion common stock repurchase program announced May 7, 2026, and $1.0 billion of dividends. GSIB surcharge 3.5%; the FRB confirmed on June 24, 2026 that Citi's Stress Capital Buffer will remain at 3.6% until October 1, 2027.

Citi early adopted the revised enhanced supplementary leverage ratio standards for GSIBs on January 1, 2026: at June 30, 2026 the eSLR buffer was 1.0% (50% of the 2.0% method 1 GSIB surcharge), giving a minimum SLR requirement of 4.0% for both Citigroup and Citibank, versus 5.0% and 6.0% previously.

On March 19, 2026 the U.S. banking agencies issued a notice of proposed rulemaking (the Basel III proposal) that would replace the Standardized and Advanced Approaches with a single expanded risk-based approach (ERBA) for the largest banks, with capital requirements consisting of a prescribed minimum, the SCB, the GSIB surcharge and any applicable countercyclical buffer; the FRB separately proposed changes to the GSIB surcharge rule. Comment periods have closed and both proposals remain under consideration.

Average Liquidity Coverage Ratio 113% (114% at March 31, 2026; 115% a year earlier), the sequential decline reflecting Markets trading and client growth partly offset by wholesale funding. End-of-period high-quality liquid assets of $648 billion. Citigroup Global Markets Limited held $27 billion of total regulatory capital, above PRA requirements.

Citi states that under a 100 bps upward rate shock the approximately $3 billion initial negative AOCI impact could potentially be offset in shareholders' equity through forecast interest income and investment portfolio paydowns over roughly 17 months.

Divestitures and disposals during the period

• Poland consumer banking business, sale completed June 12, 2026. The business held approximately $5.9 billion of assets ($1.2 billion cash and due from banks, $2.2 billion deposits with banks, $1.6 billion of loans net of a $24 million allowance, $0.8 billion trading account assets) and $5.7 billion of liabilities, mostly deposits. Cumulative pretax loss on sale since 2025 of approximately $160 million ($125 million after-tax) in Other revenue. Income before taxes (excluding the loss on sale) was $11 million in the quarter and $32 million for six months.
• Banamex, 22.6% stake sold April 29, 2026. Sold to several institutional investors and family offices as part of a committed 24% stake (approximately 470 million shares) at a fixed purchase price of approximately MXN 43 billion, subject to adjustment. Cash consideration of approximately $2.3 billion; total stockholders' equity rose approximately $1.5 billion (a roughly $2.0 billion CTA reclassification from AOCI to noncontrolling interests, less a roughly $0.5 billion net loss on sale in additional paid-in capital). At June 30, 2026 approximately $9 billion of unrealized CTA losses (net of hedges and taxes, inclusive of amounts already reclassified to NCI from the 47.6% of stake sales) remained attributable to Banamex; these will be recognized in earnings when Banamex meets held-for-sale criteria, with deconsolidation when Citi holds under 50% of voting stock without substantive participating rights. Citi currently expects to recognize the CTA losses in earnings and deconsolidate Banamex in early 2027, timing subject to change. Cumulatively the CTA recognition is regulatory-capital neutral. The timing and structure of any further sales and of the proposed Banamex IPO depend on financial considerations, market conditions and regulatory approvals.

The third 2026 disposal, the sale of the Russian subsidiary AO Citibank, closed in the first quarter and is described under "Simplification and divestitures" above.

Citi states that with the exception of Banamex it has largely completed its exits from the 14 international consumer markets in its strategic refresh: of the 13 exits, 10 consumer banking businesses were disposed of by sale, two markets exited via wind-down and loan portfolio disposition, and the Korea consumer wind-down is largely complete.

Litigation

At June 30, 2026 Citi estimated the aggregate reasonably possible unaccrued loss for disclosed contingency matters at up to approximately $1.2 billion. Developments in the quarter: a further Greek pension claim (Giannopoulou & Others v. Citibank Europe Public Limited) was filed June 9, 2026 by former Citi employees, with a hearing scheduled for December 11, 2026; and in the interchange fee litigation the court granted preliminary approval of the injunctive relief class settlement on June 9, 2026, with a final fairness hearing scheduled for November 16, 2026, while the Target Corp. et al. v. Visa Inc. et al. and 7-Eleven, Inc. et al. v. Visa Inc. et al. cases were settled and dismissed with prejudice after remand for trial. Payments under those settlements have been made or are covered by existing accruals.

Management's stated uncertainties for the rest of 2026

Elevated inflation; conflicts in the Middle East; changes in U.S. laws or policies; and changes in interest rates and monetary policies, which could produce market volatility and disruption, weaken growth and employment, and adversely affect Citi's clients, funding costs, provisions and results for the remainder of 2026.

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Subsequent events

The Form 10-Q for the quarter ended June 30, 2026 (accession 0000831001-26-000045) does not include a separate subsequent-events note; the following post-period items are disclosed within it.

• Dividend increase declared. On July 21, 2026, Citi's Board declared a quarterly common stock dividend of $0.67 per share for the third quarter of 2026, up from the $0.60 per share paid for the second quarter, together with preferred stock dividends of approximately $353 million.
• Preferred stock redemption. Citi will redeem its Series T preferred stock in its entirety on August 15, 2026. Series T carries a 6.250% dividend rate with a $1.5 billion carrying value (1,500,000 shares at $1,000 redemption price per depositary-share basis), issued April 25, 2016 and previously paying semiannually at a fixed rate until, but excluding, August 15, 2026.
• Remaining Banamex stake sale. The final 1.4% of the committed 24% Banamex stake described above is expected to close in the third quarter of 2026, subject to customary closing conditions.
• Buyback capacity carried into the third quarter. Approximately $26.0 billion remained available at June 30, 2026 under the $30 billion common stock repurchase program.