Citigroup (C) Q1 2026 Earnings Call Transcript

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DATE

Tuesday, April 14, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Jane Fraser
• Chief Financial Officer — Gonzalo Luchetti
• Head of Investor Relations — Jennifer Landis

TAKEAWAYS

• Net Income & EPS -- $5.8 billion net income and $3.06 EPS reported, with a Return on Tangible Common Equity (ROTCE) of 13.1%.
• Total Revenue -- $24.6 billion, up 14%, with double-digit increases in four of five core businesses and positive operating leverage.
• Operating Efficiency -- Expenses rose to $14.3 billion, up 7%, including $500 million in severance, yielding an efficiency ratio of 58% and an approximate 400 basis point improvement year over year.
• Share Repurchases -- $6.3 billion in buybacks executed this quarter, approaching completion of the $20 billion repurchase plan.
• CET1 Ratio -- 12.7%, with a 110 basis point buffer above the 11.6% regulatory capital requirement.
• Services Segment -- 17% revenue growth, 40% increase in new client mandates, deposits up 16%, and ROTCE of 27%.
• Markets Segment -- Revenues exceeded $7 billion, up 19% with Equities up 39% (surpassing $2 billion), Fixed Income up 13%, and net income of $2.6 billion; ROTCE was 18.7%.
• Banking Segment -- Revenues increased 15%, with M&A fees up 19%, ECM up 64%, but DCM fees down 6%; delivered net income of $304 million and a 15.8% ROTCE.
• Wealth Segment -- 11% revenue growth, eighth straight quarter of increases, client investment assets up 14%, net income of $432 million, and ROTCE of 10.8%.
• U.S. Consumer Cards -- Revenues rose 4%, general purpose card spend up 6%, average loans increased 4%, ROTCE was 19.2%, and net credit losses declined by 11%.
• Credit Quality & Reserves -- Cost of credit at $2.8 billion; firm-wide reserves of nearly $22 billion, reserve-to-funded-loans ratio of 2.6%, and 85% of U.S. card balances with FICO scores ≥ 660.
• Transformation & Divestitures -- 90% of transformation programs at or near target state; exit from Russia complete, sale of 24% of Banamex agreed, and Polish consumer business to be sold by summer.
• Headcount & Cost Initiatives -- Headcount reduced from 226,000 to 224,000 this quarter, driven by severance and continued expense discipline.
• Updated Guidance -- Full-year 2026 NII ex-Markets expected to grow 5%-6%, targeted efficiency ratio around 60%, and U.S. Cards NCL rate anticipated at 4%-4.5%.
• Capital Deployment -- Management affirmed a 100–110 basis point CET1 buffer target; incremental capital releases from Russia and Banamex divestitures deployed to support client growth and buybacks.
• Organic Growth Focus -- CEO Fraser said, “we are only interested in and focused on organic growth. Period.”
• Basel III & GSIB Reform -- CFO Luchetti stated, “overall there will be a net benefit to Citigroup,” with “a moderate net benefit” from the current proposals.

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RISKS

• CEO Fraser noted, the impact of the Middle East conflict is hitting Asia and Europe harder than countries such as the U.S. and Brazil, which may intensify if prolonged and contribute to increased inflationary risk and more restrictive monetary policies.
• CFO Luchetti reported the firm's reserves now incorporate an eight-quarter weighted average unemployment rate of approximately 5.4%, which continues to include a downside scenario average unemployment rate of nearly 7%, due to increased macroeconomic uncertainty.
• Expense growth of 7% includes $500 million in severance; management is focused on continued reductions but acknowledges a need for ongoing investment and seasonally higher expense ratios, targeting an efficiency ratio of around 60% for 2026.
• DCM fees declined 6% within Banking, with segment revenues partially offset by this weakness.

SUMMARY

Citigroup (NYSE:C) delivered a quarter marked by record-level revenues and broad-based, client-driven growth across its core businesses, supported by a substantial share repurchase program and robust capital ratios. Tangible progress on portfolio simplification included a completed exit from Russia, significant Banamex stake sales, and a targeted summer close for the Polish consumer divestiture. Management emphasized a strict commitment to organic growth, exclusion of acquisition speculation, and disciplined capital deployment as transformation initiatives approach completion. Regulatory developments, including Basel III and GSIB changes, are anticipated by management to deliver a moderate net benefit and investors can expect further strategic detail on technology, AI investment, and capital strategy at the upcoming Investor Day.

• Management attributed the quarter's double-digit revenue growth to a combination of client-driven growth and fees in Services, market share gains in Banking, and momentum in consumer-facing portfolios.
• The firm’s $6.3 billion share buyback, partially enabled by $4 billion of capital released from the Russia exit, signals a continued focus on capital return alongside ongoing structural transformation.
• Transformation program costs have begun to decline, allowing reinvestment in technology and efficiency while a residual 10% of transformation work centers on regulatory data and reporting requirements.
• Segment performance revealed Services and Markets as primary profit engines, while Banking and Wealth were characterized as showing significant operating leverage but also highlighted as areas for future profitability gains.
• CFO Luchetti confirmed that reserve builds reflect elevated downside economic scenarios, and headcount reductions are being accelerated through severance and productivity initiatives, with further details to follow at Investor Day.

INDUSTRY GLOSSARY

• ROTCE: Return on Tangible Common Equity; measures annualized net income available to common shareholders as a percentage of average tangible common equity, excluding goodwill and intangibles.
• CET1 Ratio: Common Equity Tier 1 Capital Ratio; key regulatory capital measure comparing a bank’s core equity capital to its risk-weighted assets.
• ACL: Allowance for Credit Losses; reserve set aside for estimated loan losses across the loan portfolio.
• NII: Net Interest Income; difference between interest earned on assets and interest paid on liabilities.
• NIR: Non-Interest Revenue; income from fees, service charges, and other non-interest sources.
• NCL: Net Credit Losses; charge-offs for defaulted loans, net of recoveries.
• Efficiency Ratio: Ratio of non-interest expense to total revenue, used to assess operational efficiency.
• Banamex: Banco Nacional de México S.A., Citigroup’s Mexican consumer banking subsidiary undergoing staged divestiture.
• TTS: Treasury and Trade Solutions; Citigroup’s business segment providing cash management and trade finance for institutional clients.
• DCM: Debt Capital Markets; segment handling new bond issuance and related services.
• ECM: Equity Capital Markets; service line for underwriting and distributing new equity issues.
• M&A: Mergers & Acquisitions; business advising firms on corporate restructuring transactions.
• GSIB: Global Systemically Important Bank; regulatory designation for banks whose failure would pose systemic risk to the global financial system.
• FICC: Fixed Income, Currencies, and Commodities; markets segment covering bond, currency, and commodity trading.
• LCR: Liquidity Coverage Ratio; regulatory metric reflecting a bank’s ability to withstand short-term liquidity stress scenarios.
• CTA: Cumulative Translation Adjustment; accounting entry capturing gains or losses from currency translation in the financial statements of multinational corporations.
• PPA: Purchase Price Adjustment; accounting measure reflecting fair value changes in acquisitions or asset sales.

Full Conference Call Transcript

Jane Fraser: Thank you, Jen, and good morning to everyone. We picked up right where we left off last year, with an exceptionally strong start to 2026. This morning, we reported net income of $5.8 billion for the first quarter with EPS of $3.06 and ROTCE of 13.1%. Four of the five core businesses saw revenue up double digits. Revenues were up sharply at 14% and we had another quarter of very healthy positive operating leverage. We continued strong performance across our lines of business, showing the benefit of a diversified model which continues to drive consistent, predictable revenue growth. Services, our crown jewel, had an exceptional first quarter.

New mandates were up 40%, while the combination of client-driven growth and fees underpinned a 17% increase in revenues. Cross-border transactions were up 12%. Deposits grew by 16%, and assets under custody and administration were up over 20%. Markets crossed $7 billion in revenues for the first time in a decade. Equities was up nearly 40%, surpassing the $2 billion revenue mark driven by derivatives, prime services, and cash. And FICC, up 13%, saw notable performance in commodities and FX. Banking continued to build momentum, with fees up 12% amidst a record first quarter for us in M&A. ECM was up over 60%, while we continued to gain share with sponsors.

We advised on the three largest deals so far this year—Paramount, McCormick, and EQT/AES—demonstrating how we are far better penetrating the C-suite. Supported by continued investment in talent, clients are increasingly looking to Citigroup Inc. for our advice in addition to our execution capabilities. With revenues up 11%, Wealth saw its eighth straight quarter of growth, and its returns continue to improve. As you know, its results now include U.S. retail banking. Citi Gold and retail banking were up 13% as we leverage our branch footprint to capture assets that our clients have with other firms. Investment revenue grew 11% with client investment assets up a pleasing 14%. U.S.

Consumer Cards saw 4% revenue growth, with spend up 5%, and delivered a 19% ROTCE, as American consumers remained resilient. With our portfolio heavily weighted to prime, delinquencies and credit losses declined and are well in line with expectations. You can now see how we have lined up the reporting of this business with our strategy, as we focused on growing our general purpose portfolio and optimizing our private label portfolio. In the quarter, we demonstrated our continued commitment to returning excess capital to our investors with the repurchase of $6.3 billion of shares, and we are close to completing our $20 billion share buyback plan.

We ended the quarter with a CET1 ratio of 12.7%, which is 110 basis points above our regulatory capital requirement, and our tangible book value grew by 8% from a year ago. As we look towards a new capital regime, whilst the latest NPR is an improvement upon the 2023 version, it is not yet where it should be, and we will be active in advocating for necessary changes in the comment period. These quarterly results reflect the execution of some of the most consequential changes in our firm’s history: our business investments, the transformation, the simplification, divestitures, delayering, and modernization. That said, and I know I have said this many times, we have not yet reached our destination.

We will continue to be solely focused on executing our vision and relentlessly driving our business into the final phase of our divestitures, and we continue to drive down our stranded costs. In February, we completed our exit from Russia. We have entered into agreements with several prominent investors to sell 24% of Banamex in transactions that are expected to close in the coming months. And we are on track to close the sale of our consumer business in Poland this summer. The momentum we have established in our businesses can also be seen in our transformation, which remains our other top priority for the year.

Ninety percent of our programs are now at or near our target state, and our firm is materially safer and sounder as a result of this work. We have started to reduce the spend on our transformation programs, resulting in an improvement in our operating efficiency this year and beyond. We are methodically deploying AI at scale across the firm and strengthening our defensive capabilities, and you will be hearing much more about this on Investor Day. Switching gears, the global macro economy today has weathered shock after shock. However, the impact of the Middle East conflict is hitting Asia and Europe harder than countries such as the U.S. and Brazil, which are more insulated from energy shocks.

Clearly, the longer this goes on, the more pronounced the second- or third-order impacts are going to be around the world. And inflation is now a greater risk to growth and will likely cause central banks to lean towards more restrictive monetary policies. Consistent with our position throughout the last decade, we continue to be a source of trust and financial strength for our clients during turmoil. We intentionally designed a very resilient strategy that performs in different environments, and the last few years have borne that out. You can see it in deposit and loan growth, in our high-quality loan portfolios, and in our robust balance sheet, built on the foundation of disciplined risk management.

And we have the capital we need to continue to grow as we support our clients. So with a very strong first quarter behind us, we remain well on track to deliver the 10% to 11% ROTCE for the year. At our Investor Day next month, we will lay out a clear vision for how we will continue to grow each of our five businesses organically and deliver sustainably higher returns over time. This is an exciting time for our firm. We have momentum behind us, and we are looking forward to sharing the path ahead with you next month. I will turn it over to Gonzalo, and then we would be happy to take your questions.

Gonzalo Luchetti: Thank you, Jane, and good morning, everyone. Before I begin, I would like to start by thanking Jane and Mark for their support and providing a very smooth transition to my role as CFO. I am excited to build on the momentum they have created as we focus on delivering higher sustainable returns and value for our shareholders. As I step into the role, three elements stood out to me quite distinctively. First, we have a formidable foundation, underscored by a robust balance sheet, rigorous risk management, and a well-diversified business model. That gives me confidence in our ability to produce durable results. We are a source of resilience and strength for our clients in a range of environments.

Second, I am excited about the opportunity to help deliver significant return improvement over time by driving client-led growth, continuously pursuing productivity improvement, and deploying capital to accretive return opportunities. Finally, I am highly energized by our relentless focus on execution. I see how each of our businesses and teams operate with urgency, focused on driving performance every single day, and my role will be to ensure we are strategically purposeful, tactically disciplined in resource allocation, and firmly in execution mode. I feel it is time to continue to elevate Citigroup Inc. and leave an indelible mark on a 200-year-plus iconic firm.

With that, let me remind you that on April 3, we published a recasted historical financial supplement for our reportable business segments to facilitate comparability with the results this quarter and going forward. Additionally, results for the segments this quarter reflect the TCE allocations for this year, and we have included additional details on this in the appendix of the earnings presentation. Now turning to the quarter, I will start with the firm-wide financial results focusing on year-on-year comparisons unless I indicate otherwise, then review the performance of our businesses in greater detail. On slide six, we show financial results for the full firm, which demonstrate the progress we have made and the momentum of our strategy.

This quarter, we reported net income of $5.8 billion, EPS of $3.06, and ROTCE of 13.1% on $24.6 billion of revenues, generating positive operating leverage for the firm and the majority of our five businesses. Total revenues were up 14% with growth driven by each of our businesses and legacy franchises, as well as the impact of FX translation, partially offset by a decline in Corporate/Other. Net interest income, excluding Markets, was up 7%, driven by growth across all businesses and legacy franchises, partially offset by a decline in Corporate/Other. Non-interest revenues excluding Markets were up 29%, driven by growth across all businesses and Other. Total Markets revenues were up 19%.

Expenses of $14.3 billion were up 7%, with an efficiency ratio of 58%, which I will provide details on shortly. Cost of credit was $2.8 billion, primarily consisting of net credit losses in U.S. Cards as well as a firm-wide net ACL build of $597 million. On slide seven, we show the expense and efficiency trend over the past five quarters. As I just mentioned, expenses increased 7%, and you can see on the bottom of the slide we incurred nearly $500 million of severance as we target efficiencies across our expense base and bring down headcount.

Excluding severance, the increase in expenses was 4%, primarily driven by FX as well as volume- and revenue-related expenses, including compensation and transactional and product servicing expenses, partially offset by lower legal expense. As you can see on the bottom right side of the slide, in addition to severance, growth in compensation and benefits included investments we have made to support growth in the businesses as well as performance-related expenses, partially offset by productivity saves, stranded cost reduction, and lower transformation expenses in Corporate/Other. It is worth noting that this expense increase was against 14% revenue growth, resulting in an improvement in our efficiency ratio of approximately 400 basis points. On slide eight, we show U.S.

Cards and Corporate credit metrics. As I mentioned, the firm’s cost of credit was $2.8 billion, primarily consisting of net credit losses in U.S. Cards as well as a firm-wide net ACL build. Embedded in the firm-wide net ACL build is a farther skew to the downside scenario, reflecting the increased uncertainty in the macroeconomic outlook. Our reserves now incorporate an eight-quarter weighted average unemployment rate of approximately 5.4%, which continues to include a downside scenario average unemployment rate of nearly 7%. At the end of the quarter, we had nearly $22 billion in total reserves with a reserve-to-funded-loans ratio of 2.6%.

We continue to maintain a high credit quality card portfolio, with approximately 85% of balances extended to consumers with FICO scores of 660 or higher, and a reserve-to-funded-loan ratio in our U.S. Cards portfolio of 8%. Looking at the right-hand side of the slide, you can see that our corporate exposure is 78% investment grade, and in the quarter corporate nonaccrual loans as well as corporate net credit losses remained low. We are confident in the high-quality nature of our portfolios, which reflect our robust risk appetite framework, rigorous client selection, and our focus on using the balance sheet in the context of the overall client relationship.

This quarter, we included a slide in the appendix of the presentation that shows Citibank’s loan to non-bank financial institutions, including $22 billion of corporate private credit, which is 100% securitized, 98% investment grade, and not a significant component of our overall exposure. Turning to capital and the balance sheet on slide nine, I will speak to sequential variances. Our total assets of $2.8 trillion increased 5%, driven by growth in trading-related assets, cash, and loans. Net end-of-period loans increased 1%, with client-driven growth in Banking and Markets partially offset by a seasonal decline in U.S. Cards.

Our $1.4 trillion deposit base remains well diversified and increased 3%, driven by growth in Services as we continue to deepen with clients with a focus on high-quality operating deposits. We reported a 114% average LCR and maintained over $1 trillion of available liquidity resources. In the first quarter, we continued to deploy capital to support client-driven growth while at the same time prioritizing the return of capital to common shareholders, as evidenced by the $6.3 billion in buybacks executed, which includes the benefit from the sale of the remaining operations in Russia.

We ended the quarter at a 12.7% CET1 ratio under the binding standardized approach, approximately 110 basis points above the 11.6% regulatory capital requirement, including a 100 basis points management buffer. Turning to the businesses on slide 10, we show the results for Services in the first quarter. Revenues were up 17%, the best first quarter in a decade, driven by growth across both TTS and Securities Services. NII increased 18%, driven by higher average deposit balances and deposit spreads.

NIR increased 15% as we continue to see strong activity and engagement with both corporate and commercial clients and across key high-growth segments, including e-commerce and fintech, driving momentum across underlying fee drivers with cross-border transaction value up 12% and assets under custody and administration up 21%, which includes the impact of market valuations as well as new assets onboarded. Expenses increased 14%, primarily driven by higher volume- and revenue-related expenses, higher compensation, as well as higher technology costs. Average loans increased 14%, largely driven by export agency finance and working capital loans.

Average deposits increased 16% with growth across both North America and international, largely driven by an increase in operating deposits as we continue to deepen relationships with existing clients and onboard new clients. Services generated positive operating leverage and delivered net income of $2.2 billion with an ROTCE of 27%. Turning to Markets on slide 11. Markets had its best quarter in over a decade with revenues up 19%, driven by growth in both Fixed Income and Equities, with strong momentum across client segments, including corporates, asset managers, hedge funds, and banks. Fixed Income revenues were up 13% with growth across spread products and other fixed income as well as Rates and Currencies.

Rates and Currencies was up 6%, driven by FX on higher volumes and optimization of the balance sheet, largely offset by Rates. Spread products and other fixed income were up 27%, primarily driven by strong growth in commodities. Equities revenues were up 39%, driven by continued momentum across derivatives, prime services, and cash. We grew prime balances by more than 50% with growth across both new and existing clients as well as higher market valuations. Expenses increased 11%, primarily driven by higher performance-related compensation as well as higher volume-related and legal expenses. Average loans increased 27%, primarily driven by financing activity in spread products.

Markets generated positive operating leverage and delivered net income of $2.6 billion with an ROTCE of 18.7%. Turning to Banking on slide 12. Revenues were up 15%, driven by Investment Banking and Corporate Lending. Investment Banking fees increased 12%, driven by growth in M&A and ECM, partially offset by a decline in DCM. M&A was up 19% and represented our strongest first quarter in a decade, with continued growth in sell-side fees and strong performance with sponsors. ECM was up 64%, reflecting growth in follow-ons and convertibles against the backdrop of an active market. While DCM fees were down 6% amid lower non-investment-grade activity, we maintained our overall market share versus year-end 2025.

Corporate Lending revenues, excluding mark-to-market on loan hedges, declined 3%. Expenses increased 20%, primarily driven by higher compensation and benefits reflecting performance and investments, and higher volume-related transaction expenses. Cost of credit was $132 million, consisting of a net ACL build of $126 million reflecting the increased uncertainty in the macroeconomic outlook and exposure growth, largely offset by refinements to loss assumptions. We continue to feel good about the high-quality nature of our Corporate Lending portfolio, with nonaccrual loans and net credit losses remaining low. Banking delivered net income of $304 million with an ROTCE of 15.8%. Turning to Wealth on slide 13.

Revenues were up 11%, driven by growth in Citi Gold and Retail Banking as well as the Private Bank, partially offset by a decline in Wealth at Work. NII increased 14%, driven by higher deposit spreads and average balances, partially offset by lower mortgage spreads. NIR increased 5%, driven by 11% higher investment fee revenues, partially offset by the sale of the trust business. Net new investment asset flows were approximately $15 billion in the quarter, contributing to approximately $43 billion in the last twelve months, representing approximately 7% organic growth. This contributed to client investment assets being up 14%, which also includes the impact of market valuations and was partially offset by the sale of the trust business asset.

Expenses increased 1%, driven by investments in technology and higher volume-related expenses, partially offset by lower compensation and benefits, including the impact of the sale of the trust business. Average loans were up 6%, as we continue to grow securities-based lending and deploy balance sheet to support clients and drive client investment asset growth. Average deposits were up 4%, largely in the Private Bank, as net new deposits were partially offset by outflows and a shift from deposits to higher-yielding investments, including on Citigroup Inc.’s platform. Wealth had a pre-tax margin of 18%, generated positive operating leverage, and delivered net income of $432 million with an ROTCE of 10.8%.

We remain confident in the path to higher returns from here, as we continue integrating our retail banking business within Wealth and building on its improved performance this quarter. Turning to U.S. Consumer Cards on slide 14. As we have said in the past, customer preferences have continued to shift toward general purpose cards and as such, we have provided disclosures for this segment to show metrics split between our general purpose and private label portfolios. This quarter, revenues were up 4%, driven by growth across both NII and NIR. NII was up 3%, driven by higher interest-earning balances and spreads. NIR was up 14%, driven by lower partner payment accruals and higher annual fees.

We saw momentum in underlying drivers supported by growth in general purpose cards, with acquisitions up 12%, spend volume up 6%, and average loans up 4%, partially offset by declines in private label cards. Expenses increased 1%. Cost of credit was $2.1 billion, consisting of $1.7 billion of net credit losses, which declined 11%, as well as a net ACL build of $350 million reflecting seasonal portfolio mix changes, the forward purchase commitment of the Barclays American Airlines co-branded card portfolio, as well as increased uncertainty in the macroeconomic environment. This was largely offset by lower seasonal volumes and refinements to loss assumptions. U.S.

Cards generated positive operating leverage and delivered net income of $732 million with an ROTCE of 19.2%. Turning to slide 15, we show results for All Other on a managed basis, which includes Corporate/Other and Legacy Franchises and excludes related items. Revenues were up 15%, driven by growth in Legacy Franchises, largely offset by a decline in Corporate/Other. Growth in Legacy Franchises was driven by Mexico Consumer, which included the impact of Mexican peso appreciation, momentum in underlying business drivers, and a gain on the sale of an investment, partially offset by the impact of continued reduction from our closed exit and wind-down markets.

The decline in Corporate/Other was driven by lower NII, which included a lower benefit from cash and securities reinvestment resulting from actions taken to reduce Citigroup Inc.’s asset sensitivity in a lower interest rate environment, partially offset by higher NIR. Expenses were down 4%, driven by lower legal and transformation expenses as well as expenses related to closed exits and wind-downs and professional services expenses. This was primarily offset by higher severance and the impact of FX translation. Cost of credit was $400 million, primarily consisting of net credit losses of $371 million driven by loans in Mexico. To close, we have included our full year 2026 outlook on slide 16.

While there remains a lot of uncertainty at this point, our overall expectations are unchanged. Subject to macro and market conditions, we expect NII ex Markets up approximately 5% to 6%; NIR ex Markets growth driven by momentum in Services, Banking, and Wealth; and an efficiency ratio of around 60%. In terms of credit, we expect a total U.S. Cards NCL rate of between 4% and 4.5%, which is lower than the aggregate of the expectations that we provided previously for Branded Cards and Retail Services, reflecting the delinquency trends and loss performance we have seen year to date. The ACL will continue to be a function of the macroeconomic environment and business volumes.

Additionally, we remain well positioned to return capital to shareholders and plan to provide more detail on our expectations for share repurchases going forward at our Investor Day in May. As we take a step back, the results in the first quarter represent significant progress towards our goal of improved firm-wide and business performance. We remain steadfast and focused on executing our transformation and confident in delivering our ROTCE target of 10% to 11% this year, and we look forward to laying out the path to delivering higher returns beyond that at Investor Day. With that, Jane and I would be glad to take your questions.

Operator: At this time, we will open the floor for questions. If you would like to ask a question, please press 5 on your telephone keypad. You may remove yourself at any time by pressing 5 again. Please note, you will be allowed one question and one follow-up question. Again, that is 5 to ask a question. We will pause for just a moment. Our first question will come from Glenn Schorr with Evercore ISI. Your line is now open. Please go ahead.

Glenn Schorr: Hi. Thanks very much. I think we get the great Trading and Banking results. I want to talk about Services if we could. One is if you could give any color on the $4 trillion win on the BlackRock middle office servicing ETF platform or portfolio. And then, two, maybe bigger picture, talk about what you think maybe I and the rest of us could be underappreciating in terms of the growth outlook in Services—tokenization as a good thing as opposed to maybe the threat that people might think it is? Thanks.

Jane Fraser: Hey, Glenn, good to hear from you. Look, Services’ exceptional performance this quarter comes from successfully executing the strategy that Shamir and his team precisely outlined at our Investor Day two years ago—and then going beyond it. We have told everyone this is a through-the-cycle business which consistently delivers strong returns in a range of environments, and this quarter the team did just that. Revenues up 17%, deposits up 16%, fees up 14%, returns at 27%. This is firing on all cylinders. To your question, why is this business growing so much? The growth is coming from deepening with existing clients, new client acquisition, and new product innovations.

Our investments over the last few years, I think, are best demonstrated by the 40% growth in new client mandates. We have a very high retention of existing client business, and we have what can only be described as exceptional win rates. We are the leading franchise not only in share but in innovation. You are seeing momentum across the board. For example, as you point out in digital assets, we are leading in tokenization. We have been investing in this for many years. I have talked about it on many of the recent calls. This is a benefit for us in driving and meeting more of our client needs in an always-on, real-time world.

You are seeing us in real-time payments, where we are doing a lot of business with the global e-commerce juggernaut. And as you say, in Securities Services, we laid out a strategy of growing share with North American asset managers, ETF, and in other spaces. Frankly, BlackRock is the most recent win we have had; it is far from the only one. We are also benefiting from our focus on fee generation, which continues to make over 30% of our revenues across different macro environments. There is a reason we call Services our crown jewel. It is incredibly durable. Our offerings are deeply embedded in our clients’ operations; that creates lasting relationships and stable deposits.

There is always a flight to quality when there are things going on in the world, and we are quality.

Glenn Schorr: Maybe we could just follow up—there is a lot going on in the world. There was some conversation about linking you to some interest in being a bigger retail bank in the United States. Watching you fold the business into Wealth and tweaking the strategy, I know that lack of low-cost deposits has been a thing in limiting your profitability in the past, but you seem to be getting by now without that. I wonder if you could just comment in terms of just aspirations or not on that front. Thanks.

Jane Fraser: Let me kick off. I want to be crystal clear: we are only interested in and focused on organic growth. Period. End of story for the whole firm. We have achieved a lot in the last five years; we have a lot more to do. There is a large organic growth opportunity ahead of us across all five of our businesses. That is what we are focused on, and we are excited about it. I would say, Glenn, and for everyone listening on the call, if you walk away from this call thinking of nothing else, let it be this: Citigroup Inc. has a lot of momentum, and we are not going to be distracted from it.

Now, on the retail bank and what we are looking at there: the retail branch network is 650 branches. The deposit base that we have across Wealth and the retail bank in the U.S. is about $284 billion. The footprint is a targeted one. It is in six of the markets with an affluent client base, covers a third of the nation’s high net worth and affluent households, and 40% of the ultra-high net worth households. So it is highly aligned with the Wealth business. It is an important source of clients for our investment franchise.

We saw a lot of top-line momentum from the franchise—last year, it was up 21% in the retail bank—and we look forward to continuing to improve its profitability and performance and realizing the synergies between it and Wealth. Organically.

Operator: Our next question comes from Mike Mayo with Wells Fargo. Please go ahead.

Mike Mayo: I just want you to be even more clear than you were already. So you are only pursuing organic growth. Does that mean that Citigroup Inc. is not pursuing a deal or an acquisition? There have been so many articles about Citigroup Inc. pursuing an acquisition. So are you saying Citigroup Inc. is not pursuing a deal, you are not thinking about Citigroup Inc. pursuing a deal, and that is a thousand percent off the table?

Jane Fraser: I am always transparent. I am always straightforward with you. I want to be crystal clear: we are not interested in anything other than organic growth.

Mike Mayo: Okay. And then a separate question, as it relates to the transformation. You are now up to 90% done. Since you are done with the safety and soundness part of the transformation, I have a tough time reconciling why the consent order is still on when regulators are focused on safety and soundness, but I am sure you put your best foot forward in that argument. What you can answer is the last 10%. Is there a last-mile problem with the last 10% of the transformation, or is this continuing to move forward? What is that last 10%? What is left?

Jane Fraser: There are no challenges for us ahead that are inconsistent with our plan. 2025 was a real turning point for us on the transformation, and we just continued the strong execution into 2026. We have finished the vast majority of the work. As I have said earlier, 90% of the transformation programs are now at or mostly at Citigroup Inc.’s target state, and they are operating in BAU mode. What does that mean? For each major body of work, we defined our target state and the work that needs to be done to achieve that target state.

We are at or nearly at those Citigroup Inc.-defined target states for all the bodies of work except our data programs, and the remaining work of that 10% is primarily related to data used in our regulatory reporting. Mike, I am pleased with our progress on this. We are executing well. However, once we are operating well at our target state, what happens next? We pass that work over to our independent audit team for validation. Once it is validated, each major body of work is then handed over to our regulators; they go through their assessment and move to their closure process when they are satisfied with the work.

This takes time, and let us be very clear: they control the timeline. So completing the work is just the beginning of the end. From an investor point of view, you can see the transformation expenses have started to come down as we complete the different bodies of work. This is helping create capacity for investments in AI and other strategic business priorities. At Investor Day, Mike, I will detail the many benefits that we have been gaining from the transformation.

Operator: Our next question comes from John McDonald with Truist Securities. Please go ahead.

John McDonald: Hi, good morning. Gonzalo, I was wondering if you could give a little bit of a take on the new Basel and GSIB proposals and what they mean for Citigroup Inc. Any initial estimates on the impact if they were approved as proposed?

Gonzalo Luchetti: Thank you, John, and good morning to everyone. As we look into the rules, our expectation is that overall there will be a net benefit to Citigroup Inc. You have seen that in the estimates from the regulatory agencies as it relates to the Category 1 and 2 banks, and we see a moderate net benefit on what has been published. Of course, when you look at the full stack with the stress capital buffer, we expect an additional benefit there. Some puts and takes, of course.

When you think about RWA and those pieces related to Basel III, you have components of retail and corporate credit providing a benefit, mitigated by operational risk, CVA, and market risk, as you probably would expect. On the other side, on GSIB, even if we probably have feedback for regulators there, at the same time you can see in this case that there is benefit from the reversion to the 2019 methodology as we have been advocating for.

John McDonald: So does that result in a net benefit to Citigroup Inc. at this point, Gonzalo, in terms of the RWA presumably up a little bit and the GSIB down a little bit? Is there a net benefit that you see on the initial proposal?

Gonzalo Luchetti: Moderate net benefit, yes. Thank you.

John McDonald: Then just a question for you also on the efficiency ratio. You started off very strong at 58% even with the big severance in the quarter. Could you give some context to the target for 60% for the full year? What are the puts and takes if you are starting at 58%? I assume there is some seasonality from the first quarter, but just walk through the 60% target versus starting so strong at 58%?

Gonzalo Luchetti: Thank you very much, John, and I am glad you kind of answered your own question there given how much you know about us. Maybe before I get into the specifics, it is worth grounding in how we think about expenses. Our approach is to maintain very strong cost discipline on a tactical basis and, in addition, to be driving structural efficiencies over time so that we can enable and allow ourselves to make the targeted investments that we think are necessary in order to drive our returns consistently to a higher place. That is really our mantra and what we are focused on.

When you break down those expenses for the quarter and you have that 7% growth—obviously anchored by the 14% revenue growth, which drives that 400 basis point improvement in operating efficiency—you have the effect of the severance that you mentioned. You can see FX playing a role, revenue-driven transactional costs, and some compensation pieces. We are also making targeted investments. We have done it in Services; we are doing it in Banking; we are doing it in Wealth. For us, it is important to balance. As we look through the year, we are comfortable with around 60% for operating efficiency.

It is primarily on the basis of, yes, seasonality—Markets usually has the strongest quarter in the first—and we also think it is important to balance that seasonality as well as recognize that we are making targeted investments so that we can get our returns to be higher. Our objective is very simple: we are focused on driving sustainably improving returns over time, not just short-term upside.

Operator: Our next question comes from Ebrahim Poonawala with Bank of America. Please go ahead.

Ebrahim Poonawala: Good morning. Following up on that, Gonzalo and Jane, appreciate the seasonality in the business. But when putting together the momentum you have, the way you are talking about just across businesses, we look at the 13% return on tangible equity that you earned this quarter. I have a hard time thinking why it should go down to the 10% to 11% range, even adjusting for some of that seasonality on expenses and Markets revenue. Maybe frame it—are there areas where Citigroup Inc. may be over-earning in any given quarter that is boosting the 13%, and if that logic is missing something?

Jane Fraser: Let me jump in with one point, and I am going to go British on you. One good first quarter does not a full year make. The first quarter is always the strongest, and we do have an unclear macro environment ahead. We want to continue investing. I think what you are hearing from us clearly is we have confidence in being able to deliver the 10% to 11%. We want to keep investing in the business, as Gonzalo was just talking about. Revenue growth is important. We will be talking through the investments we want to make to continue the pretty impressive revenue growth we have had the last few years and intend to continue having.

I would just make it as simple as that.

Ebrahim Poonawala: Got it. Maybe just quickly on the capital front. It is good to see buybacks ramp up this quarter. As we look forward, do you think we stay in a holding pattern in terms of the CET1 ratio where it ended this quarter? How do we think about incremental capital leverage at Citigroup Inc. beyond just optimizing how capital is deployed?

Gonzalo Luchetti: Thank you, Ebrahim. Good morning, and good to hear you. We have guided in the past that our objective through this year was to be at around 12.6%, and we are basically there as it relates to Q1. Let me walk you through what has been driving that. First, you can see us this quarter reducing the excess that we had above our regulatory capital and the management buffer that we have carried for some time. That gives you a signal that we are at or around where we want to be. We came at this from a couple of angles. First, the earnings power you saw in the quarter, which was very strong.

In addition, we closed the sale of our Russia entity in the middle of the quarter; that released about $4 billion of capital. We have been very thoughtful and active in deploying that capital. You can see it in the results—the RWA deployment is to anchor the activities that we are driving with our clients and the intense engagement that we have with them. It is not a surprise that Markets also had a very strong quarter on the back of the support that we gave.

So as you see us, a part of that goes to support accretive growth opportunities for our businesses, and another piece goes into the buybacks that we executed in the quarter, which are a high watermark at $6.3 billion. There will be more to come as we go into Investor Day.

Jane Fraser: I would jump in with just three observations as well. First, GSIB is still gold-plated relative to the Basel standard. The economy has grown significantly since the original framework was created, but the current proposal does not fully account for that growth. We will be very active in advocating for that, as you have been hearing from some of the other bank CEOs. Secondly, there is still material duplication between the NPR and the current stress capital buffer—operational risk, market risk, and CVA—and that needs to be eliminated in the revised Fed SCB models.

Third, our SCB still does not fully reflect our strategy, the divestitures we have made, and the risk profile the bank has today, which is so different from what it was in the past. Those three elements are things that we will be active on and, I hope, will help us going forward.

Operator: Our next question comes from Jim Mitchell with Seaport Global. Please go ahead.

Jim Mitchell: Hey, good morning. I think we all appreciate the breakout of the card business on its own, and we can see some solid profitability there. But it does also highlight the low profitability of the consumer branch banking segment. I know we will hear more of this at Investor Day, but can you just discuss what the issues are there and what you see as the opportunities to improve efficiency and returns in that segment?

Gonzalo Luchetti: Thank you, Jim, and good morning. On the retail bank and how we think about the return profile: if you look at our ROTCE for the quarter at 10.8%, it is not where we want it to be, and we have more work to do. But if you think about it going back a year, it has almost doubled. We have made progress both in our retail bank franchise as well as in our Wealth franchise in terms of driving revenue growth and positive operating leverage, and that will take us home.

The simplest version is: last year the Wealth business in aggregate with this new recast element was growing at 15%–16% revenue and 1% expenses—that is 15 points of operating leverage. This quarter you can see the 11% and the 1%, so another quarter of very strong operating leverage. That comes on the back of good momentum on deposit volumes, mix management, and pricing management, which give us confidence there is sustainability, as well as good levels of activity and focus on NIR and driving client investment assets so that we can, over time, balance the business between investments and deposits.

The more quarters we can put together with solid revenue growth and discipline on expenses—while still investing for growth—the closer we will be to the ranges that you and we expect. I have good confidence; you can see the momentum. We know we have to show it still, but we have made progress and I have confidence in the immediate future. Thank you.

Jim Mitchell: Great. And maybe just as a follow-up and pivoting to private credit. Any thoughts and detail on your exposures and how you are thinking about the credit risk there would be helpful.

Gonzalo Luchetti: Sure. Thank you. A couple of thoughts. First, I feel very good about our position. We wanted to provide additional transparency and disclosure; you can see that on page 23. What gives me comfort: we have a very strong risk appetite framework. We are rigorous on customer selection. We do business with global multinational companies, sponsors, and asset managers—folks that have strong balance sheets and the ability to withstand different environments. Secondly, we are not one-product relationships; we are, in most cases, multi-country, multi-product, multi-year relationships. We have strong protections and look at concentrations—single name, country, geography, sector, industry—and correlations to make sure we are not missing things.

You have seen great performance with NCLs and NAOs, both low and stable. You have seen us be very prudent in terms of reserves, and we feel we are adequately reserved. We are constantly stress-testing our portfolios, in private credit and elsewhere, to ensure that under a range of macroeconomic environments and event-driven aspects, we are passing our own tests. On the specifics: it is not a significant exposure for us—about $22 billion of loans; 98% investment grade because we have ample subordination in terms of position and protections. We have additional protections in terms of collateral; we have fraud controls; we utilize third parties where appropriate so that we do not rely solely on attestations and warranties.

We feel very comfortable that we can navigate a range of environments with the portfolio, anchored in the strength of our risk appetite that we have built over time.

Operator: Our next question comes from Analyst with Morgan Stanley. Please go ahead.

Analyst: Hi, good morning. Gonzalo, I just wanted to clarify, as you have some of these business exits, I know you get a temporary benefit from CTA. Are you saying that gives you the opportunity to be more nimble on your capital deployment strategy, whether it is in buybacks or in the Markets business, as you get that benefit between the announcement and the actual deconsolidation?

Gonzalo Luchetti: Thank you for the question. What I would say is, we always look for opportunities to deploy that capital constructively in accretive ways to support our businesses and our clients. Q1 gives a very good example of our behavior so you can see it in real life. On the back of the Russia event, with about $4 billion of relief, you have seen us both support our businesses—anchoring some of the results that you saw in Markets and a couple of other businesses—and at the same time execute the highest level of buybacks we have done in any quarter at $6.3 billion.

As it relates to Banamex, as we have alluded in the past, there is a temporary capital benefit that happens both on the 25% sell-down that we executed during the fourth quarter last year as well as one to come when we complete the closing of the second tranche of the 24% that we announced recently, which will happen over the next few months. That is temporary in nature. Clearly, upon deconsolidation, you can expect the CTA to come back. We have been clear in the past that will attract about an eight-and-a-half percent PPA adjustment that will flow through P&L, but in aggregate it is capital neutral.

Analyst: Got it. Okay, great. And then maybe just pivoting over on the expense side. You have been pretty clear that as part of the transformation projects, Citigroup Inc. is not just delivering on the asks from the regulators, but also taking the opportunity to invest in modernizing. Beyond the transformation, how do you view your current tech stack versus where you want it to be, and how are you thinking about tech spend going forward?

Jane Fraser: We will go into a lot of detail about this at Investor Day, including AI and the structured, strategic approach we are taking firm-wide. In three weeks, you are going to get a lot around all of this. We feel good about the modernization we have done, as we have moved our tech stack from a multiplicity of different platforms into singular platforms, and at the same time made sure that we have good, simple, singular processes end-to-end that we have been simplifying and automating over the last few years.

We feel good about those investments, and about leading-edge innovations like Citi Token Services and Payment Express in Services; I could give you a long list in Wealth, in Markets, etc., but we will leave that for the 7th. Above everything, we also feel good about the investments we have made in our data and architecture, where we are on a single repository for all of our data for Institutional and a single one for Consumer—enormously beneficial in the world of AI that we are living in. Thank you.

Operator: Our next question comes from Ken Usdin with Autonomous Research. Please go ahead.

Ken Usdin: Thank you. Just a follow-up on the NII side. First, seeing the very strong end-of-period and average loan growth, and I know looking at the supplement there is a little help from FX translation in there. But upper single-digit growth—just wondering how sustainable that is, especially on the deposit side, and if you saw any environment-related benefits that possibly might not continue.

Gonzalo Luchetti: Thanks very much, Ken, and good to hear you. On NII, what we guided for the year—on the deck—is 5% to 6% NII ex Markets growth, anchored by mid-single-digit growth for both loans and deposits. We are pleased that Q1 is a good showing against that. As you highlighted, there is a bit of FX playing a role for the 7% that we delivered, but we are comfortable with that guidance. The part I like the most is that most of that growth is anchored on client-driven activity—our commercial intensity, winning in the market with our customers.

In Services and in Wealth, both are driving deposits—Services up 16% deposits, Wealth up 4%—all of that blends to the 11% that I think you were marking. In terms of loans, ex Markets, we are growing at about 5%, which is in line with our guidance. You can see that coming through in Wealth, in U.S. Cards, and also in Services with export financing and working capital. Most of the growth is driven by client activity. Pricing discipline helps—betas are quite stable for us, a proof that our value proposition is performing and how embedded we are with clients, our global network on Services, and the quality of our advice and engagement on the Wealth business.

Our investment securities portfolio, as it rolls off through the year, can be reinvested at higher rates than before. Those also help, but it is really client activity that drives the bus here. Thank you.

Ken Usdin: Great, thank you for that. As a follow-up, the first quarter also started above the range—7% ex Markets year-over-year. I know you are being conservative with the 5% to 6%. Can I assume that the American Airlines card is in the guidance? Why would you not continue at 7% if the volume side you just went through is pretty sustainable?

Gonzalo Luchetti: Thanks very much, Ken. I give you points for a sneaky and smart way of asking if I want to update the guidance, and the answer is no at this stage. We are comfortable with the guidance. The American Airlines Barclays portfolio that is coming in the second quarter is, of course, fully factored in. We feel confident in the client activity we are seeing, and at the same time, as Jane said earlier, for all those models out there, do not just do one times four. We have to manage through uncertainty in inflation, growth, and other pieces.

Operator: Our next question comes from Analyst with Wolfe Research. Please go ahead.

Analyst: Hi, good morning, and thanks for taking my questions. Jane, you have been crystal clear—using your words—on the commitment to focusing on organic growth. One factor which has contributed to below-peer returns is the large DTA or unallocated capital base. It remains stubbornly high. The pace of DTA utilization remains pretty tepid—about $1 billion or so over the last five years. I was hoping you could speak to drivers that would potentially support some acceleration in that DTA consumption, especially given your aversion to solving for it with higher North America earnings inorganically.

Jane Fraser: I feel very good about our organic growth opportunities in North America. You are right, it is very simple: the driver of accelerating the DTA consumption is driving North American earnings. We are very focused on it. Every single one of our businesses is focused on it. It is also where we have been investing to support that growth. This will come the good old-fashioned way, and I feel confident that we are going to make very good progress. We will talk a bit about that in a couple of weeks’ time.

Analyst: I anticipate a similar response in terms of additional color at Investor Day, but if you will indulge me, on the headcount reduction targets which you had spoken about a few years ago. Post the consent order, headcount increased from about 200,000 to 240,000; you had indicated that you would look to drive that closer to 220,000 or so employees. You are two-thirds of the way there. We are in a very different environment where AI-driven efficiency gains are much more tangible than they were a few years ago. Could you speak to your approach or philosophy to headcount management and resourcing in light of this new AI regime?

Gonzalo Luchetti: Thank you. First, you saw this quarter a severance of about $500 million. That will enable us to take earlier actions in the year to contribute to our productivity and efficiency journey. On headcount, you can see it coming down quarter-on-quarter from about 226,000 down to about 224,000. Through the year, you would expect us to be coming down on headcount. As I said earlier, not only do we expect to drive expense discipline day-to-day, but in addition we are focused on structural efficiencies over time—benefiting from the investments we have already made in our transformation, where we modernized platforms; and continuing to drive automation with technology, as well as leveraging AI to further turbocharge self-funded investments.

Operator: Our next question comes from Erika Najarian with UBS. Please go ahead.

Erika Najarian: Hi, thank you. Just one follow-up for me because I appreciate that we are going to have quite a day in a few weeks. Jane, you talked about your stress capital buffer not reflecting your true risk profile. Obviously, we are not going to hear more on that until next year. You have also talked about Basel III endgame reform and GSIB reform being fine but not going quite far enough. I am wondering about that green bar on slide nine that represents your 110 basis point management buffer. Even after adjusting for seasonality and Wealth not hitting the marks quite yet and All Other, it implies a much higher return profile, even with this 12.7% CET1.

I am wondering, as we think about the denominator and we get more clarity on reg reform, does that make a management buffer redundant?

Jane Fraser: No. I am pretty clear, and I think Gonzalo has been as well, that what we are looking at for CET1 for the rest of the year is about 100 to 110 basis points above the regulatory minimum. That is the 100 basis points of management buffer. I think that is a good number for us at the moment, and I do not have plans to change it in the immediate future.

Erika Najarian: Got it. Thank you.

Operator: Our next question comes from Analyst with Jefferies. Please go ahead.

Analyst: Hi, thanks for taking the question. I wanted to start with capital markets. Can you talk about the pipeline looking out to the second quarter and the rest of the year following a very strong first quarter?

Gonzalo Luchetti: Thank you. Let me clarify—are you thinking more of Banking (M&A, ECM, DCM) or the Markets business?

Analyst: The former rather than the latter.

Gonzalo Luchetti: Thank you. The engagement with clients in the first quarter has been very robust. Jane alluded to this—we were advisors in the top three deals on the street, and we are pleased with the progress we made. We know we have more to go; that is why we are making the investments we are making. The M&A pipeline continues to be quite strong. We engage with global multinational corporations with resilient balance sheets; we are seeing good levels of engagement and activity. If the conflict were protracted and deeper over a longer period of time, that may introduce some risk of deferrals into the second half.

In the sponsor space, it is a little less active and more cautious than on the corporate side. You see selectivity—good quality deals getting done in IPOs and in debt capital markets. There is a bit of flight to quality in an environment like this—more momentum and activity in M&A and in high-grade debt, more caution and moderation in high yield and IPOs, where quality is still happening but there is some risk-off.

Jane Fraser: I would just add that most corporates have watched for and are not passive. We have been very actively engaged with clients—rerouting supply chains, hedging programs, liquidity. The pipeline goes well beyond capital markets. We benefit in North America from greater resiliency than other parts of the world face given the macro environment and the conflict in the Middle East.

Analyst: Great, thanks for that. My follow-up is more housekeeping: can you provide us with an update on the expected timing of the Banamex IPO?

Jane Fraser: We have made significant progress on the divestiture. First step is closing the latest tranche in the coming months, which will mean we have successfully divested 49%. That substantially advances our ultimate full exit. Given the accelerated pace of the sell-down we have just done, we do not anticipate any additional stake sales in 2026 ahead of deconsolidation in early 2027. The IPO most likely would be after that, when market conditions are favorable and when the regulatory requirements are met. As always, we will ensure that we exercise the ultimate full exit of Banamex in a way that optimizes value for all stakeholders, as we have done so far successfully.

Operator: Our next question comes from Gerard Cassidy with RBC. Please go ahead.

Gerard Cassidy: Hi, Jane. Hi, Gonzalo. Can you share just a follow-up on your advisory business and your talk about pipelines? As we all know, the regulators changed their leveraged loan restrictions back in November, giving banks more opportunities to finance higher leverage deals. Can you share your color—have you been able to use that yet? Will you use it? What opportunities does that provide to help you in the advisory business?

Jane Fraser: The Fed has not changed their guidance on this, so we are still bound by that. Gonzalo?

Gonzalo Luchetti: Not related to regulatory guidance, as Jane alluded to, but in that space we have been deliberate and very disciplined in our risk management. You have seen us expand our momentum there a bit—we were not very active a couple of years ago—and we have done it with a lot of care. We are seeing very good loss trajectory there. It comes in two parts: the left-hand bit in terms of distribution, where it is functioning well and operating normally; and on the hold book, where we see minimal NPLs, really performing well, and we are being very thoughtful and disciplined.

Gerard Cassidy: Thank you. And, Jane, have you heard any word from the Fed whether they are going to follow suit with the OCC and the FDIC on these changes?

Jane Fraser: I have not.

Gerard Cassidy: Thank you. Then moving to consumer cards, Gonzalo, you pointed out how you break out the general purpose versus the private label card. Going back to earlier years, retail services were 33% of U.S. card loans—now they are much lower. With the advent of buy now, pay later and AI, is the retail private label credit card business a business that is going to have challenges in reaching profitability levels that they need to reach because of this competition?

Gonzalo Luchetti: Thank you, Gerard. What we are seeing in the private label space—I would attach it more to changing customer behavior as it relates to borrowing preferences than to BNPL per se. That change has been underway for a number of years. That is why our investments are really in the general purpose card space—because that is where our clients are taking us. Over time, many retailers themselves are pivoting into co-brand relationships, and some of the more successful ones like Costco—which we have—and many others have made those pivots because they are following customer behavior. On discipline, you have seen us be very disciplined in terms of exits. Scale relationships work very well as it relates to returns.

But where relationships have low scale, Jane has been the first to impress upon me that we are not in the business of hobbies. We have been very disciplined about exiting smaller portfolios where we did not see a path to improved returns, and we will keep that discipline.

Operator: Our next question comes from Vivek Juneja with JPMorgan. Please go ahead.

Vivek Juneja: Hi, thanks. A couple of clarifications. One is, what do you mean by “moderate” capital benefit, Gonzalo? Are you talking about 3%–5%? Any range in terms of under the current proposal for capital benefit?

Gonzalo Luchetti: Vivek, thank you. The modeler in me appreciates the question, but we are not giving specifics at this time.

Jane Fraser: We will be able to do that when we get the final proposal.

Vivek Juneja: Okay. DTA—Jane, since you talked about it, any sense of the pace over the next couple of years? The pace has been very slow.

Jane Fraser: I will give the CEO answer—which is “better”—and then pass it over to Gonzalo.

Gonzalo Luchetti: Vivek, in the first quarter, the disallowed DTA increased by about $200 million quarter-over-quarter. That is attributable to higher U.S. income offset by seasonality of the carryback support—this usually happens. As you see us go through the year, and we have been clear on trying to increase U.S. earnings over time, we would expect that the disallowed DTA would reduce this year in the range of about $800 million. We are very focused on the multi-year path to accelerate that trajectory and really burn down that disallowed DTA. We will share more at Investor Day.

Vivek Juneja: Okay. We will look forward to hearing more at Investor Day. Thanks, Gonzalo.

Operator: The final question comes from Christopher McGrady with KBW. Please go ahead.

Christopher McGrady: Great, thanks for squeezing me in. Going back to the tech/AI conversation for a moment, I am interested in how today’s outlays could ultimately yield ROE benefits and how you are thinking about that when putting together this Investor Day over the next few weeks. How does that influence the medium-term ROE outlook?

Jane Fraser: You are going to hear a lot more about AI at Investor Day and how we are approaching it. With the rapid advances of the models and generative AI, we have established a more strategic, structured firm-wide approach that looks at four different buckets, which will ultimately yield ROE benefits. One is business strategies—covering revenue generation, client experience improvements, and potential changes to our business model—many with a direct driver to either revenue growth or ROTCE. The second—one I talk about often—is productivity and end-to-end process improvement. That work is simplifying our most complex and manually intensive processes leveraging both AI and automation. That is a direct operating efficiency benefit, with investments needed to get there, which we are making.

A third area is defensive capabilities—covering cyber, fraud, AML, and general risk management—issue avoidance. We are also looking at longer-term talent and workforce implications. Our approach is structured and deliberate. It is not just about tech; it is about people, processes, and our business model. That is the framework we will run through in three weeks and how that translates into growth, ROTCE benefits, wallet capture, etc.

Christopher McGrady: That is helpful, thank you. Follow-up: global rates are moving in various directions at any moment. Interested in the broader rate sensitivity—domestic, international—and how we should think about the whole Citigroup Inc. entity. Thank you.

Gonzalo Luchetti: Thanks very much. We provide disclosures on IRR—which, even though it is a static measure, gives you a sense from a risk management perspective. On NII ex Markets—the vast majority of the growth we have baked in for the year is driven by client engagement and momentum reflected in deposit and loan volume growth. On interest rate sensitivity, you have two pieces. One is U.S. dollar sensitivity. You have seen us actively manage our balance sheet, bringing down our asset sensitivity over time to be more or less relatively neutral today as it relates to U.S. rates. We like that position given what is going on out there. On non-USD rates, we are structurally more asset sensitive.

That has to do with our strategy. It is well-diversified sensitivity across 65-plus currencies, very much anchored by our Services and Wealth businesses around the world. Thank you.

Operator: There are no further questions. I will turn the call over to Jennifer Landis for closing remarks.

Jennifer Landis: Thank you all for joining the call. We look forward to talking to you this afternoon with any follow-up questions. Thank you.

Operator: This concludes the Citigroup Inc. first quarter 2026 earnings call. You may now disconnect.

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