- The passing of the GENIUS Act establishes a clear regulatory framework for stablecoins, allowing banks like Citi to issue their own stablecoins;
- Citi Token Services lets Citi position itself as the "killer app" for institutional cross-border payments, absorbing complexities and offering instant, cost-effective solutions;
- Core business is firing on all cylinders, with record performances in Markets and Wealth, significant share gains in Investment Banking (especially M&A, LevFin, and sponsors), and robust growth in Services and U.S. Personal Banking, all contributing to strong revenue momentum;
- Highly capital efficient returning $3 billion in capital during the quarter, including $2 billion in share repurchases, part of our $20 billion repurchase plan with a goal of 11% Return on tangible equity (ROTE or ROTCE).
✨ Chat with this narrative: https://notebooklm.google.com/notebook/aa2a6c92-6bd1-495e-beb5-d8d4e6525410 (believe a Google account is required)
Background
Citigroup Inc. is a preeminent banking partner globally, renowned for its work with institutions that have cross-border needs, its leadership in wealth management, and its trusted personal banking services in the United States. With a physical presence in 94 markets and serving clients in over 180 countries and jurisdictions, Citi connects the dots in ways few others can, moving approximately $5 trillion in financial flows daily. Its mission is clear: "to serve as a trusted partner to our clients by responsibly providing financial services that enable growth and economic progress".

The Unseen Revolution: Digital Assets
The most electrifying aspect of Citi's future lies in its audacious plunge into digital assets, particularly stablecoins. CEO Jane Fraser asserts, "digital assets are the next evolution in the broader digitization of payments, financing and liquidity". This isn't just about playing catch-up; it's about leading a fundamental shift in how money moves across the globe.

Fraser highlights that clients demand "multi-asset, multi-bank cross-border always-on solutions provided in a safe and sound manner". This is precisely what Citi Token Services, their leading digital asset solution, delivers. Forget the complexities and prohibitive transaction costs often associated with moving between cash and stablecoins – Citi's offering allows clients to "move from physical fiat to the digital and back again without incurring that transaction cost". This means businesses can move cash instantaneously, 24/7, across their global hubs, from New York to Hong Kong or the U.K., with Citi absorbing all the intricate "complexities of compliance, reporting, accounting, AML". With "billions of dollars of transactions" already processed and a presence in "4 major markets with more to come", Citi is building what Fraser confidently calls "the killer app" in this space. This proactive stance, bolstered by a regulatory environment increasingly "willing to allow banks to participate in the digital asset space more easily", positions Citi to capture significant market share in a rapidly expanding frontier.
A Foundation of Strength: Core Businesses Thriving

Beyond the digital frontier, Citi's traditional businesses are demonstrating remarkable momentum, contributing to positive operating leverage across the firm.
Services, Citi's "crown jewel", reported an impressive 23.3% Return on Tangible Common Equity (RoTCE) for the quarter. Revenues were up 8%, fueled by robust growth in both loans and deposits, and underlying fee drivers such as cross-border activity and U.S. dollar clearing volumes grew nicely.
Markets had its "best second quarter performance since 2020," with revenues up 16%. Notably, Equities achieved its best second quarter ever, driven by "record prime balances up approximately 27%". Jane Fraser foresees continued tailwinds here, stating, "Volatility is going to, I suspect, be a feature, not a bug of the new world order and we will benefit from that".
Banking revenues soared by 18%, with Citi continuing to be "at the center of some of the most significant transactions". Investment Banking fees increased 13%, with strong growth in M&A (up 52%) and Equity Capital Markets (up 25%). Vis Raghavan, Citi's Head of Banking, is spearheading a strategic push to gain share in lucrative areas like "leverage finance and sponsors", aiming for a "top 3" overall Investment Banking ranking by targeting areas where Citi was historically ranked lower. A symbiotic partnership with Apollo in private credit allows Citi to "lean onto this $25 billion of firepower" without extensive RWA commitments, aligning with a focus on efficient capital deployment.
Wealth delivered revenues up 20%, with "solid growth across all three lines of business", reflecting a 17% increase in client investment assets. This segment also achieved an impressive 16.1% RoTCE. U.S. Personal Banking (USPB) revenues increased 6%, driven by "good growth in Branded Cards while Retail Banking benefited from higher deposit spreads". USPB's net income dramatically increased by 436% year-over-year to $649 million.
Leadership and Transformation
Under the resolute leadership of CEO Jane Fraser, Citi is undergoing a comprehensive transformation. Ms. Fraser stated, "I’m particularly pleased that the momentum across our franchise includes the Transformation, as we streamline processes, drive automation and deploy AI". This multi-year effort is aimed at enhancing the bank's risk and control environment and improving operational efficiency, with transformation expenses expected to start decreasing next year. Mark Mason, Citi's CFO, reiterated the commitment to "continued expense discipline" through reduced severance, declining transformation costs, and productivity savings, some enabled by AI.
Citi's leadership is also deeply focused on strategic capital allocation. Ms. Fraser emphatically declares, "next year’s 10-11% ROTCE target is a waypoint, not a destination". This signifies a long-term commitment to driving returns well beyond this initial goal.
Navigating the Complex World: Mitigating Risks
While the outlook is bullish, Citi acknowledges the "uncertainty out there" stemming from "macroeconomic, geopolitical and other challenges" such as "a resurgence of inflation, increases in unemployment rates, increases in interest rates, [and] slowing economic growth or recession". This uncertainty can "freeze market activity".
However, Citi's global footprint acts as a powerful hedge. Clients are seeking guidance on navigating "tariffs, their supply chains and the like". Citi's unparalleled "geographical reach" and deep "local know-how" become invaluable, enabling it to advise on diversifying business models and manage cross-currency flows in an increasingly multipolar world. Mark Mason reassures investors about the credit book's quality, noting that "over 80% or 80% or thereabouts of our corporate exposures are high grade" and the card book "skews prime".
The Decade Ahead: A Vision of Unprecedented Returns
Looking ten years down the road, Citigroup is poised for an era of unprecedented growth and profitability, fundamentally driven by its strategic pivots and technological leadership. While the sources do not provide explicit 10-year forecasts, the executive commentary strongly points to this trajectory.
CEO Jane Fraser has clearly articulated that the 10-11% RoTCE target for next year is merely a "waypoint, not a destination," and that actions taken "have set up Citi to succeed long term, drive returns above that level and continue to create value for shareholders". Mark Mason echoes this, stating the firm is focused on "improving our returns beyond" 2026.
This suggests a compelling roadmap for future financial performance. Citi's multi-faceted growth catalysts, particularly its leadership in digital assets and continued market share gains in core businesses, will fuel its climb.
Forecasts and Key Assumptions
Revenue Growth
The Citi Token Services platform, expanding into more markets and applications like tokenized deposits and crypto custodial solutions, is expected to unlock entirely new, high-margin revenue streams by redefining cross-border payments and liquidity management for its vast institutional client base. Simultaneously, sustained share gains in Investment Banking, propelled by strategic talent investments and a focus on high-growth sectors like tech and healthcare, will add significant fee income. The "crown jewel" Services business will continue its robust expansion driven by new client wins and product innovation, while Wealth will capitalize on its "huge upside" with new wealth creators and existing clients.
Collectively, these drivers could enable Citi to achieve a sustained annual revenue growth rate of mid-to-high single digits (e.g., 5-8%) over the next decade, potentially pushing total annual revenues well over $130 billion.
Earnings Growth
This robust top-line expansion will be amplified by "continued expense discipline". As transformation expenses decline post-2025, stranded costs are fully removed, and AI-driven productivity gains kick in, Citi will realize significant operating leverage. The ingrained "bottom line ROTCE focus" will ensure that capital is deployed for optimal excess returns. As a result, Citi's RoTCE could steadily climb beyond the 11% waypoint towards the high-teens, and potentially into the low-twenties for its highest-performing businesses (e.g., Services 23.3% RoTCE in 2Q'25, USPB targeting mid-to-high teens, Banking aiming for near 15% implicitly from Mark Mason's comment). This sustained improvement in profitability, combined with potential moderate growth in tangible common equity, could see Citi's annual net income more than double, potentially reaching $35-45 billion within a decade.
Key Assumptions for this Forecast:
- Successful execution and widespread adoption of Citi's digital asset strategy, solidifying its position as a dominant player in the tokenized economy and generating substantial new revenue streams.
- Continued momentum and market share capture across all five core businesses, leveraging Citi's unparalleled global network, diverse client base, and strategic investments.
- Realization of significant efficiencies from the ongoing transformation, including a substantial reduction in related expenses and continuous productivity improvements, particularly through AI adoption.
- A relatively stable macroeconomic and geopolitical environment, allowing for consistent capital market activity, healthy client demand for financial services, and manageable credit quality.
- Consistent and prudent capital allocation, allowing for strategic investments while simultaneously returning capital to shareholders through buybacks and dividends, maximizing shareholder value.
Valuation: A Fair Value of $230
Currently the valuation matches that of Banking Peers on a Forward PE and PE basis, there is no premium(yet). For the purpose of this narrative I've used a conservative PE ratio of 14x in 10 years, similar to current levels for the larger US banks.
This gives a Fair Value in todays money of $230.

When looking as discounting cash flows alone (note this uses excess returns model for banks) the company is looking undervalued.

BONUS: Dividend and Buyback yield = 5.9%
As a bonus the company is forecast to pay a dividend of 2.9% in the next few years, along with a excellent track record of buying back shares (2.8%), combined this could mean a Total Shareholder Yield of close to 6%.
The dividend has been consistently increasing every year and is easily affordable at only 30% of cash flows/ earnings.

Main Sources:
https://simplywall.st/en/stocks/us/banks/nyse-c/citigroup
https://www.citigroup.com/rcs/citigpa/storage/public/Earnings/Q22025/transcript.pdf
https://www.citigroup.com/rcs/citigpa/storage/public/2025prqtr2rslt.pdf
https://www.citigroup.com/rcs/citigpa/storage/public/2025psqtr2rslt.pdf
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Disclaimer
ChadWisperer is an employee of Simply Wall St, but has written this narrative in their capacity as an individual investor. ChadWisperer holds no position in NYSE:C. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimate's are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.