In the second quarter of 2025, Citi Group achieved strong performance, with net income reaching $4 billion, earnings per share of $1.96, and ROTC at 8.7%. Revenue increased by 8%, with three business segments setting revenue records in the second quarter. The service sector performed exceptionally well, with a quarterly ROTC of 23%, considered the "crown jewel" of the group.

The bank's second-quarter performance was impressive, with a revenue increase of 8% and strong growth in both loans and deposits. Factors such as cross-border activities and USD clearing fees performed well, with assets under management exceeding $28 trillion. Market income grew by 16%, marking the best second quarter since 2020, especially in the fixed income sector. Banking business income increased by 18%, playing a core role in major transactions, including providing advisory services to Boeing and Nippon Steel. Additionally, the bank continues to gain market share in mergers and acquisitions, leveraged finance, and equity capital markets.

Citibank reported its quarterly performance, showing a 29% pre-tax profit margin, with all business lines achieving significant growth, especially in non-interest income. Despite a slowdown in investment asset inflow in the face of market uncertainty, the bank expects market recovery to bring improvement. The USB-B business achieved revenue growth through product innovation, digital capability enhancement, and improved customer experience. Retail services were impacted by reduced partner sales activities, but the bank remains confident in its asset quality and portfolio. Retail banking performed well, benefiting from improved deposit spreads. This quarter, Citibank returned over $3 billion in capital to common stock shareholders and has repurchased $3.75 billion in stock since the beginning of the year. The capital adequacy ratio remains stable at 13.5%, exceeding regulatory requirements. The bank successfully reduced risk through business model adjustments and the divestment of international consumer business. Significant progress has been made in improving risk and control environments, with a plan to reduce transformation expenses next year. Additionally, the bank continues to invest in enhancing business competitiveness, such as innovation in stablecoins and digital assets, as well as technological improvements in payments, clearing, and settlement. Moreover, the bank continuously optimizes its credit card product mix through the introduction of new products and strengthening relationships with partners, while attracting and empowering high-quality talents to drive overall business development.

Despite the uncertainty in the environment leading to rising commodity prices and temporary pauses in customer capital expenditures and hiring activities, the U.S. economy has outperformed expectations driven by entrepreneurial spirit and healthy consumer spending. The company is confident in its business trajectory, emphasizing the excellent performance of employees in unpredictable macro environments, and plans to continue serving customers through its "One City" strategy. At the same time, the company's wealth business is benefiting from retail banking and global networks, increasing market share and customer loyalty by deepening relationships with asset management and private market clients. The company emphasizes focus on execution and has set a target return rate of 10% to 11% for next year, seeing it as the foundation for long-term success and creating value for shareholders.

The financial institution reported its annual financial performance, showing a net income of $4 billion, earnings per share of $1.96, and an asset return rate of 8.7%, with total revenue of $21.7 billion. All business sectors showed a growth trend, partially offset by a decrease in net interest income. Total revenue increased by 8% compared to the previous year, driven primarily by growth in the areas of services, private banking, and wealth management. However, there was a slight decrease in credit card and other non-interest income from businesses. Additionally, the report also provided a detailed analysis of consumer and corporate credit indicators, highlighting the high quality of the loan portfolio and risk control strategies.

The bank's financial performance in the second quarter showed a 2% increase in the $2.6 trillion balance sheet, primarily driven by growth in cash and loans, partially offset by a decrease in trading-related assets. Loans grew by 3%, primarily driven by market and USB-B factors. Deposit base remained stable with an average liquidity coverage ratio of 115% and maintaining over $1 trillion in liquid assets. The bank's CET1 capital ratio is above regulatory requirements, and it is expected that regulatory capital requirements will be reduced under the current capital buffer framework. Additionally, the bank announced an increase in quarterly dividends to a specific amount and emphasized efficient use of capital in light of improved results in the DFAS test and a decrease in SCB for the second consecutive year. On the business side, service sector revenue increased, NII increased by 13%, mainly driven by growth in deposit and loan balances, and an increase in deposit interest spread.

This report provides a detailed analysis of the recent financial situation of financial institutions, pointing out that although overall expenses have decreased, some costs have increased due to compensation and benefits, technology costs, especially increased investment in platforms and products to attract new customers and deepen existing customer relationships. The report also emphasizes the trends of loan growth in Russia, increasing global trade loan demand, and growing deposits. Additionally, it mentions the growth of fixed income and equity income, as well as positive performance in market activities, derivatives trading, and investment banking services. Finally, the report notes that despite some cost pressures, positive operating leverage has been achieved for multiple quarters, with excellent performance in net profit and asset return ratio.

Several departments of the bank, including urban targets, private banking, wealth management, and US personal banking operations, have all achieved revenue growth in the recent period. Growth has been mainly driven by net interest income, investment asset growth, and some non-recurring income, while also facing challenges such as a decrease in deposit balances and an increase in credit losses. Nevertheless, these departments have achieved positive operating leverage for multiple quarters in a row, increasing net profit and asset return rate. Additionally, through strategic adjustments and cost control measures, the bank has optimized its cost structure while supporting investment asset growth.

The company reported a decrease in revenue in multiple business areas, particularly due to a reduction in asset sensitivity measures taken in a declining interest rate environment leading to a decrease in net interest income for the enterprise and other departments, as well as the impact of the depreciation of the Mexican peso on legacy businesses. However, it is expected that annual revenue will be in the higher range, around $84 billion, excluding net interest income. Meanwhile, the company plans to continue executing its stock buyback program, expecting to repurchase a certain amount of shares each quarter, and remains optimistic about future performance and financial goals, aiming to improve its business performance and return on investment.

The company's management team elaborated on the long-term growth strategy, emphasizing confidence in the future and satisfaction with the current business model. They pointed out that the company is experiencing steady growth in multiple business areas, including banking, market services, wealth management, and personal banking. They also highlighted ongoing cost control and capital efficiency, as well as investments in new technologies such as AI, to drive long-term returns and better serve customers. Additionally, management mentioned efficient capital management and an increased stock repurchase plan, demonstrating a focus on shareholder value.

The conversation discussed the strong performance of the market in the first half of the year and the possibility of a seasonal pullback in the second half of the year. It mentioned uncertainty and volatility management, as well as support for clients. Additionally, it analyzed the impact of loan growth, operational deposit growth, and interest rate environment on market performance. It is expected that the market performance in the second half of the year will follow historical trends, but also take into account possible additional fluctuations and investor repositioning.

The discussion focused on the bank's capital management strategy, including capital repurchase targets, regulatory reform impacts, and volatility management of the minimum capital requirements. The recent downward trend of the capital adequacy ratio (CAR) was mentioned, along with the uncertainty surrounding future capital repurchase targets, emphasizing the need for adjustments based on regulatory clarity. Additionally, the rationality of repurchasing capital ahead of book value in the current situation was discussed, as well as the assessment and adjustment criteria for internal management buffers within the bank, including the volatility of risk-weighted assets (RWA), other comprehensive income (AOCI), and the variability of the capital adequacy ratio (CAR).

The discussion focused on the progress of lifting the 2020 OCC consent order and its impact on company costs and transformation efforts. The spokesperson mentioned that despite investing around $30 billion in transformation efforts last year, future expenditures are expected to decrease as projects are completed and regulatory agencies validate them. At the same time, the company is using AI tools to improve efficiency and reduce costs related to daily operations, executing transformation, and addressing consent order issues. Additionally, it was emphasized that cost reductions can be seen not only after the complete lifting of the consent order, but also as the work is completed and reaches a sustainable state.

The discussion revolves around the capital management strategies of banks under the constraints of standardization and advanced approaches. The discussion points out that currently the Common Equity Tier 1 (CET1) ratio is the main constraint, and banks have demonstrated strict management of Risk-Weighted Assets (RWA) in the past few years, especially in market operations, to achieve optimal returns. With the narrowing gap between standardization and advanced approaches, banks are striving to improve the efficiency of both capital usages, while considering the different treatment of consumer credit and wholesale credit under different frameworks. Additionally, the discussion also emphasizes the importance of staying vigilant to the constantly changing regulatory environment and possible future adjustments to the advanced approaches.

The dialogue delved into the potential applications of stablecoins in the financial markets, including their roles in international liquidity management, payments, financing, and global trade. The spokesperson emphasized the complementary role of stablecoins in existing financial services, as well as their potential contribution to new revenue streams and customer acquisition. Additionally, exploration was mentioned in four main areas including stablecoin reserve management, cash and stablecoin exchange mechanisms, stablecoin issuance, and custodial solutions for crypto assets. The entire discussion highlighted the strategies and opportunities for financial institutions to adapt to the emerging trend of digital assets.

The conversation discussed that the company's transformation costs last year amounted to one billion dollars. This year, these costs are significantly increasing, as seen in the first and second quarters, with expectations that they will continue to rise in the third and fourth quarters but will begin to decrease in 2026. Additionally, other related expenses were mentioned, such as costs for closing or signing markets, as well as potential impacts following the signing of the Mexican transaction.

The discussion focused on how financial institutions can demonstrate to regulatory bodies that they have met the standards required to have the corrective action consent decree lifted, including achievements in areas such as organizational simplification, business exits, modernization progress, and management structure restructuring. Additionally, the importance of resource review plans and progress in risk management and compliance were mentioned. Furthermore, early challenges and recent progress in data governance, as well as the use of automation and AI technology for data remediation, were discussed. Finally, the current status of the Van Amax project was mentioned, with updates expected.

The team is preparing for the IPO of iPod according to plan, with a focus on completing the audit financial statements in the later part of this quarter and handling related regulatory documents. The specific timing of the IPO will depend on market conditions and regulatory approvals, with the goal of completing it by the end of the year. Meanwhile, the team is also working on improving the performance of Bantam X, with consumer business achieving double-digit growth and increasing market share, showing an overall positive trend. Regarding asset management, the focus will be on maximizing shareholder value and choosing the right timing for actions.

The conversation discussed the improvement in credit quality of credit card businesses in the second quarter, including lower delinquency rates and loss rates, and whether these changes were driven by macroeconomic factors or the maturity of the portfolio. In addition, trends in consumer behavior were mentioned, such as increased consumption mainly among wealthier customers, as well as monitoring of macroeconomic factors such as tariffs, interest rate paths, consumer spending, and the labor market.

The company has set its financial goal for 2026 to achieve billion-level cost control from script to script, while also seeing this goal as a stepping stone to further optimize costs. While emphasizing cost control, the company is also committed to investing in and enhancing its core business to ensure sustainable revenue growth, especially in the areas of talent acquisition and banking. By using funds saved through productivity efficiency to finance these investments, the company aims to drive sustainable growth and revenue improvement, even continuing to optimize returns after economic recovery.

The discussion focused on the significant growth in investment banking and market departments, particularly mentioning progress in prime broker services, leveraged finance investments, and the converts field. The questioner inquired whether these growths are accompanied by key recruitments and undisclosed client victories, as well as if there are opportunities to increase returns by further effectively utilizing risk-weighted assets (RWA). Additionally, it was explored whether, after a contraction in the past few years due to necessity, there are now opportunities to drive market share growth through modestly expanding business operations.

Bank executives discussed the opportunity to increase capital allocation in multiple areas, emphasizing strict management of the balance sheet, and seeking opportunities for high returns in different business areas such as corporate loans, private equity, mortgages, and proprietary auto business. At the same time, they also mentioned expectations for loan yields in the current environment of ample capital but limited demand, pointing out that despite the compression of loan spreads, banks can still improve NIM (Net Interest Margin) through selective investments and asset reallocation.

In the conversation, the bank's provision for credit losses and costs for the quarter were discussed, emphasizing the $2.37 billion reserve level and $290 million total credit costs. It was mentioned that non-cash losses on card loan portfolios were the largest component, and the additional $6 million provision was mainly due to risk transfer in Russia and changes in the corporate loan portfolio. Furthermore, the discussion touched on the bank's confidence in the quality of consumer and corporate loans, as well as satisfaction with the current reserve levels.

Despite facing macro and geopolitical uncertainties globally, the Cross-Border Transaction Services (TTS) business achieved strong growth in the current quarter, with cross-border transaction value increasing by 9% year-on-year and USD clearing volume increasing by 6%. The commercial card business performed flat due to reduced government spending and macro uncertainties. In terms of fee income, there was strong demand for trade loans, with nearly 2,000 new suppliers added this quarter and a significant increase in new contracts as businesses increased inventory to prevent supply chain disruptions. Additionally, the company is actively positioning itself in digital asset innovation. Overall, with increased cash holdings by customers and growth in operational deposits, average deposits increased by 7% year-on-year, demonstrating comprehensive growth in financial services in the current environment. Non-interest income included fee income growth related to TTS, reflecting strong performance in the TTS business.

In the discussion, the executives expressed satisfaction with the company's quarterly and semi-annual performance and, based on this confidence, discussed a stock buyback plan of at least 4 billion. They mentioned that the company's strong performance and positive changes in the regulatory environment are important factors driving this plan, while also emphasizing the previously announced plan for a 10 billion stock buyback.

In the discussion, the participants emphasized their expectations for future return on equity (ROE) and the positive effects brought about by capital allocation optimization and market business improvement. They mentioned the organic growth of wealth management business and the impact of market conditions on client activities. At the same time, they explained the reasons for reducing capital allocation in specific business segments, mainly due to improved business performance and optimization of capital efficiency.

In the discussion, the company's expectations for annual finances were mentioned, especially regarding the downward trend in costs in the second half of the year. The focus was on the higher severance costs in this quarter, as well as the expected reduction of these costs in the coming months. Additionally, the discussion also involved the decrease in compensation costs related to employee departures, as well as the impact of cost productivity improvements and other cost-saving measures on the annual financial goals. Looking ahead to the next year, although there are currently no adjustments to financial expectations, the company remains optimistic about cost control and the financial path.

The discussion is centered around how Citi Token Services can leverage its advantages in cross-border payments to address challenges from stablecoin companies such as Circle. Citi Token Services offers a solution that does not incur high transaction costs, allowing customers to seamlessly convert between physical fiat currency and digital currency, while addressing complex issues related to stablecoins, such as accounting and anti-money laundering (AML). Despite stablecoin transactions primarily being used for cryptocurrency trading, Citi Token Services has successfully handled a significant amount of transaction volume, demonstrating its value and innovation capabilities among corporate clients. However, customer readiness has become a current limiting factor, and Citi Token Services is committed to continuous innovation to expand its services in areas such as payments, financing, and liquidity, while maintaining security and trust.

Banking giants such as Bank of America and JPMorgan Chase are considering collaborating to build a network that is almost impervious to penetration by new competitors, in order to protect their ecosystem from the impact of new entrants. This strategy is supported by regulatory policies, particularly the Genius Act, which provides a more level playing field for banks to participate in digital assets. The discussion emphasizes the need for customers for multi-asset, cross-border, round-the-clock payment, financing, and liquidity solutions, and points out that banks can meet these needs in a secure and reliable manner through their global leadership positions and technology, without relying on other banks.

The City Bank Group discussed the good development momentum of its USPP business. Although the current return on senior capital (ROSC) of 11% is relatively low, they expressed confidence in achieving ROSC goals in the mid to high teens. They emphasized their commitment to the credit card business and retail banking business, aiming to achieve higher returns through revenue growth, cost control, and optimizing capital paths. In addition, they mentioned utilizing AI technology to improve efficiency and service quality, as well as the important role of retail banking as an entry point for wealth management business.

This meeting is the city revenue conference call for the second quarter of 2025. The meeting has ended and participants are invited to raise any follow-up questions after the meeting.