Citi and all five of its businesses achieved positive operating leverage for the fifth and fourth consecutive quarters, respectively. This was driven by an 8% revenue growth outpacing a 2% increase in expenses, indicating effective execution of growth initiatives relative to cost control.

Citi continued to advance its strategic refresh by entering an agreement to sell its consumer banking business in Poland (expected to close by mid-2026) and progressing the planned initial public offering (IPO) of Banamex. This reflects ongoing efforts to streamline operations and exit non-core markets.

Growth was driven by strong demand in TTS for export and agency finance, asset-backed financing and commercial warehouse lending in Markets, and higher card spend volume in USPB Branded Cards, with average loans increasing 5% year-over-year to $712 billion.

Management reported significant progress in its multiyear transformation, including key investments to consolidate and modernize infrastructure, retiring 211 legacy applications in H1 2025, and improving risk and controls, such as enhancing compliance risk management.

Operating expenses increased by a modest 2% to $13.6 billion, significantly less than the 8% revenue growth. This disciplined approach, despite higher compensation and $400 million in severance costs related to technology workforce realignment, contributed to positive operating leverage.

Citi continued to wind down consumer operations in Korea and Russia, and completed the wind-down of its consumer loan portfolio in Russia during Q2 2025. These actions, while incurring divestiture-related impacts of $(177) million in revenue, reflect management's commitment to strategic exits.

A net Allowance for Credit Losses (ACL) build of $638 million in Q2 2025 was primarily driven by transfer risk associated with client activity in Russia, particularly impacting Services and All Other segments. This highlights an increasing credit risk exposure in the region.

The net ACL release in U.S. Personal Banking (USPB) was offset by a deterioration in the outlook for the U.S. unemployment rate, contributing to a $1.9 billion cost of credit. This indicates sensitivity to macroeconomic shifts and potential future credit quality challenges.

The FRB issued proposed rulemaking to modify the calculation and effective date of the Stress Capital Buffer (SCB) requirement, potentially reducing Citi's required regulatory CET1 Capital ratio to 11.6% from 12.1% effective October 1, 2025. This introduces uncertainty regarding future capital mandates.

Citigroup's Services segment, particularly Treasury and Trade Solutions (TTS), continued to gain market share. In Banking, Advisory fees increased 52% due to wallet share gains across several sectors and with financial sponsors, indicating a strengthening competitive stance in these areas.

Higher deposit spreads contributed to increased net interest income in Services, Wealth, and U.S. Personal Banking (Retail Banking). Branded Cards also saw net interest margin expansion and interest-earning balance growth, suggesting effective pricing strategies in a competitive environment.

Citi's Markets segment benefits from its international presence, supported by trading floors in nearly 80 countries and a proprietary network in 94 countries and jurisdictions, providing a broad reach for client activity and market monetization.

Citigroup's efficiency ratio improved to 62.7% in Q2 2025 from 66.1% in Q2 2024, indicating that the company is generating more revenue per dollar of expense. This is a direct result of disciplined expense management, with revenue growth significantly outpacing expense growth.

Operating expenses included approximately $400 million in higher severance costs, primarily related to the realignment of Citi’s technology workforce. This short-term cost is part of a broader effort to enhance productivity and modernize operations.

While investments in Citi's transformation and technology increased expenses, these were partially offset by productivity savings and stranded cost reductions. This indicates ongoing efforts to optimize the cost structure while investing for future capabilities.

Citi made key investments to consolidate and modernize its infrastructure, including spending on enterprise-wide technology. This is a core component of its multiyear transformation, aiming to improve overall operational capabilities.

In the first half of 2025, Citi retired or replaced 211 applications, demonstrating tangible progress in simplifying its technology landscape. Additionally, enhanced payment controls were implemented in 85 countries, improving risk management and operational efficiency.

A strategic loan platform was implemented across North America, JANA, Asia South, Europe, and MEA, enabling new institutional corporate loans to be booked. This initiative enhances lending capabilities and streamlines processes across diverse geographies.

Citi returned approximately $3.1 billion to common shareholders in Q2 2025, comprising $2.0 billion in share repurchases under its multiyear $20 billion program and $1.1 billion in dividends. The company is targeting at least $4 billion in repurchases for Q3 2025, reflecting strong capital generation and management confidence.

Citigroup's Common Equity Tier 1 (CET1) Capital ratio under the Basel III Standardized Approach was 13.5% as of June 30, 2025, approximately 140 basis points above its current regulatory requirement, indicating a strong capital position.

Citi paid common dividends of $0.56 per share for Q2 2025 and declared a common dividend of $0.60 per share for Q3 2025, signaling a commitment to consistent shareholder returns, subject to market conditions and Board approval.

Citi continued to advance its transformation, including efforts to improve risk and controls, such as enhancing compliance risk management. This ongoing work is a direct response to the 2020 Consent Orders from the FRB and OCC, demonstrating a commitment to robust governance.

Citi's Board of Directors amended the company's By-laws, effective August 1, 2025, to align with Delaware law and clarify provisions related to director candidates' questionnaires, resignations, and expense advancement. This indicates an ongoing effort to refine governance practices.

The company explicitly highlights the potential impact of climate change as a risk factor, encompassing both physical risks (acute and chronic) and transition risks (regulatory, market, technological, stakeholder, and legal changes). This acknowledges the growing importance of environmental considerations in risk management.

Various macroeconomic, geopolitical, and regulatory factors continue to contribute to economic uncertainties in the U.S. and globally. These include U.S. trade/tariff policies, conflicts in the Middle East and between Russia/Ukraine, and challenges in China's economy, impacting financial markets and Citi's operations.

Under the base macroeconomic forecast as of Q2 2025, U.S. real GDP growth in 2025 is expected to slow from 2024 levels, and the unemployment rate is projected to increase. This outlook directly influences Citi's Allowance for Credit Losses (ACL) estimates.

A hypothetical 5% appreciation of the U.S. dollar could reduce Citi’s tangible common equity by approximately $1.8 billion, primarily driven by depreciation of the euro, Mexican peso, and Indian rupee. This highlights the sensitivity of Citi's capital to currency movements.