[Management View]
Citigroup management emphasized continued progress toward structural transformation, citing a 10%-11% ROTCE target for next year. Capital optimization remains a focus, with strategic commentary on regulatory developments that may enable greater flexibility for buybacks and adjustment of the management buffer. Executives highlighted the rising importance of digital asset offerings and the multi-year impact of efficiency actions, including stranded cost reductions now down to about $1.2 billion as of Q2 2025.

[Outlook]
Full-year 2025 revenue is expected at the high end, around $84 billion. Net interest income excluding markets is expected to be up close to 4% for the full year 2025. Expenses are guided to approximately $53.4 billion for the full year 2025, with costs expected to track revenue if above target. Branded Card net credit losses are guided to 3.5%-4% for the full year 2025; Retail services net credit losses are expected to be 5.75%-6.25% for the full year 2025. Transformation expenses are expected to decrease in 2026 and beyond.

[Financial Performance]
Net Income: $4 billion, with earnings per share of $1.96 and a return on tangible common equity (ROTCE) of 8.7% for Q2 2025.
Total Revenues: $21.7 billion, up 8%, driven by broad growth, with record revenues in three of five businesses for Q2 2025.
Operating Leverage: Positive at both the firmwide and business level for another quarter.
Services Segment Performance: 23.3% ROTCE and 8% revenue growth for Q2 2025.
Markets Revenues: Increased 16% in Q2 2025, with fixed income up 20% and equities up 6%.
Banking Revenues: Rose 18% year-over-year, with M&A up 52% and equity capital markets up 25%, while debt capital markets declined 12% in Q2 2025.
Wealth Management Revenues: Revenues in Wealth Management were up 20% year-over-year, while noninterest revenues rose 17% in Q2 2025.
US Personal Banking (USPB): Revenues rose 6% in Q2 2025, driven by an 11% increase in branded cards revenue and 16% growth in retail banking, partially offset by a 5% decline in retail services.
Expenses: $13.6 billion for Q2 2025, up 2%.
Cost of Credit: $2.9 billion, primarily net credit losses in U.S. card, with a firm-wide $600 million ACL build mainly driven by Russia transfer risk and corporate portfolio changes for Q2 2025.
Deposit Base & Loans: $1.4 trillion deposit base, up 3%, and a $2.6 trillion total balance sheet, up 2% for Q2 2025; End-of-period loans rose 3% in Q2 2025.
CET1 Ratio: 13.5%, which is 140 basis points above the 12.1% regulatory requirement for Q2 2025.
Capital Return: Over $3 billion was returned to shareholders in Q2 2025, including $2 billion in share repurchases; $3.75 billion in year-to-date repurchases, with at least $4 billion planned for Q3 2025.

[Q&A Highlights]
Question 1: Did Apple Intelligence drive sales of the iPhone 16 series? Which features are most popular with users?
Answer: In markets where Apple Intelligence was introduced, the iPhone 16 series outperformed markets where the feature was not introduced. Users used features such as ‘Writing Tools,’ ‘Image Playground,’ and ‘Genmoji’ extensively, especially the ‘Clean Up’ feature. The ‘Clean Up’ feature received a lot of attention in Apple Store demos. Apple Intelligence is also continuing to expand language support, which is expected to further enhance user experience and demand.

Question 2: You've talked about next year's 10%, 11% ROTCE target as a waypoint. Can you give us a sense of what you think the long-term return profile could look like roughly and what you see as the key drivers to higher returns beyond 2026?
Answer: I feel very confident about our path forward. The firm is firing on all cylinders. We have the confidence of the right strategy, uniquely positioned to support our cross-border clients. The 10% to 11% target is a waypoint, not the destination. There are three drivers of higher long-term returns: revenues, expenses, and capital. Revenue growth has been steady over the past few years in various macro environments. Banking, M&A, services, wealth, markets, and US personal banking are all expected to continue growing. Expense discipline will continue, with reductions in severance, transformation expenses, stranded costs, and productivity enabled by AI. Efficient use of risk-weighted assets and capital will also be a focus.

Question 3: Is thirteen one still the right level in terms of the year-end target as we think about regulatory reform and SCB relief? When do you think is the right time to readdress that buffer?
Answer: We are continuing down the path of returning as much capital as we originally had planned for. As we get clarity, we will adjust accordingly. We are pulling forward buybacks as much as we can, as early as we can while being responsible about it. The management buffer is sized in part with how we think about volatility in RWA and AOCI, as well as variability in the SCB. We are pleased with the direction and tone from DC in terms of looking at capital in a more holistic manner.

Question 4: Is there a way to size when the consent order is lifted? What expenses could be freed up to reallocate to the rest of the company?
Answer: We are pleased with the progress we are making around the transformation work. We spent about $3 billion investing in the transformation work last year and expect a significant increase in that spend in 2025. As programs are completed and validated by the regulators, we will start to see that spend come down in 2026 and beyond. We are also looking at opportunities to extract efficiencies from these investments, including applying AI tools to the work we do on a day-to-day basis.

Question 5: When we think about the binding constraint from standardized to advanced, how should we think about it, and are there actions to optimize the capital stack?
Answer: Today, our standardized CET1 is our binding constraint. We have been very disciplined at managing our risk-weighted assets on a standardized basis and optimizing their use. We are equally focused on using risk-weighted assets on both a standardized and advanced basis as efficiently as we can. The regulatory landscape continues to evolve, and we want to be thoughtful about managing the two metrics without compromising the strategy.

Question 6: How are you using Stablecoins internally, and do you view disruption risk to services revenues tied to increased adoption of Stablecoins?
Answer: Stablecoins are the next evolution in the broader digitization of payments, financing, and liquidity. We care about what our clients want and how to meet that need. Citi Token Services enables clients to move from physical fiat to digital and back without incurring transaction costs, allowing for instant cross-border payments. We are exploring reserve management for Stablecoins, on and off ramps from cash and coin, issuance of a Citi stable coin, tokenized deposit space, and custodial solutions for crypto assets.

Question 7: What were the transformation costs for the second quarter? What is the run rate and where do those go?
Answer: We had $3 billion last year and are increasing that meaningfully this year. We saw some of that increase play through the first and second quarters and expect to see more in the third and fourth quarters before trending down in 2026.

Question 8: What is holding the banks up today from joining together to create a network that could block off new entrants entirely?
Answer: We welcome the administration's willingness to allow banks to participate in the digital asset space more easily. The Genius Act is also something we are enthusiastic about. We are the global leader in enabling clients to move money cross-border and digital asset solutions complement our existing product suite. We will continue to innovate and build these capabilities out into payments, financing, liquidity, and other spaces.

Question 9: What is your goal for USPB, and what is still an impediment to delivering higher returns?
Answer: Our goal is mid-teens then high teens on the RO target for this business. We are committed to both the cards business and the retail bank. We have a path to high returns from revenue, improving expenses, and capital. We have elevated expenses because of the transformation. We are investing in digital capabilities and incentivizing cardholders to do more. We have had eleven quarters of positive operating leverage. We are also investing in AI to deliver efficiency and service benefits. The retail bank strategy is important as it is the front door to Citi in the states.

[Sentiment Analysis]
Analysts and management displayed a positive and confident tone throughout the call. Management emphasized their strategic vision and confidence in achieving long-term goals. Analysts were focused on understanding the drivers behind the strong performance and future outlook.

[Quarterly Comparison]
| Key Metrics | Q2 2025 | Q1 2025 | Q2 2024 |
|----------------------------|---------------|---------------|---------------|
| Net Income | $4 billion | $3.8 billion | $3.5 billion |
| Earnings Per Share (EPS) | $1.96 | $1.85 | $1.75 |
| Total Revenues | $21.7 billion | $20.5 billion | $20 billion |
| ROTCE | 8.7% | 8.5% | 8.2% |
| Expenses | $13.6 billion | $13.3 billion | $13.2 billion |
| Cost of Credit | $2.9 billion | $2.7 billion | $2.6 billion |
| CET1 Ratio | 13.5% | 13.3% | 13.1% |
| Capital Return | $3 billion | $2.75 billion | $2.5 billion |

[Risks and Concerns]
- Regulatory changes and uncertainty around SCB reduction and capital requirements.
- Macroeconomic environment and geopolitical uncertainty impacting client behavior and market conditions.
- Elevated expenses due to transformation and severance costs.
- Potential disruption from new entrants in the digital asset space.

[Final Takeaway]
Citigroup's Q2 2025 earnings call highlighted strong performance across all segments, driven by strategic transformation and disciplined execution. Management expressed confidence in achieving their 10%-11% ROTCE target for next year and emphasized the importance of digital asset offerings and efficiency actions. The firm is well-positioned to continue growing revenues, managing expenses, and optimizing capital. Analysts were positive about the firm's trajectory and focused on understanding the drivers behind the strong performance and future outlook. Despite some risks and concerns, Citigroup's strategic vision and disciplined execution provide a solid foundation for long-term success.