European Banks Daily

Research evidence excerpt

European Banks Daily

edit costs. However, net

interest income is lagging, up about 5% yoy while assets are up about 15% yoy (about $300 bil)

due to sharp decline in net interest margin. Majority of its asset growth has been driven by growth

in trading assets and Wells continues to build out the Corporate and Investment Bank. In addition,

Wells has reversed course and gone back into non-prime auto which is driving higher auto loan

yields and continues to grow credit card loans very rapidly along with securities-based margin

loans and investment securities. It has grown prime financing business very rapidly in equities

trading, following likely rapid growth in private credit trading later in 2025. Core efficiency ratio

was 62.0% excluding equity investment gains above 8 quarter average.

Citigroup Inc.:2Q Led By Services, IB Trading; Strong Mkts-Related Revenue Outlook In

2H But Higher Expenses

Vivek Juneja (1-212) 622-6465

Citi posted 2Q EPS of $3.15. 2Q was marked by strong markets-related revenues in several areas,

notably strong growth in Investment Banking and Trading revenues plus Securities Services. US

Cards results were solid but reported earnings muddied by the acquisition of a credit card

portfolio. Wealth segment remains a work in progress - operating efficiency ratio improved but

non-interest income needs to grow a lot further. Citi’s RoTCE was 13% in 2Q26 but management

expects full year 2026 RoTCE to be in 10-11% range - this implies a sharp decline in RoTCE in

2H26 likely due to increased investments and additional severance. Management believes it has

largely completed all that it needs to do as regards regulatory consent orders and is now awaiting

approval/sign-off by the regulators. Citi is likely to sell additional stake in Banamex and then