Citigroup delivered an outstanding performance in the second quarter of 2026, marking its most successful revenue period in a decade. The financial giant announced a net income of $5.8 billion, representing a significant 45% increase compared to the previous year, with Non-GAAP earnings per share (EPS) rising to $3.15. This robust growth was driven by strong contributions from all five core business units, with total revenue climbing 14% year-over-year to $24.8 billion. The company's strategic focus on enhanced operating leverage and targeted investments is clearly yielding positive results, positioning it for sustained future growth.
The second quarter saw several key financial metrics reach impressive highs. Services revenue, for instance, achieved a record $6.4 billion, demonstrating an 18% increase year-over-year, accompanied by a remarkable Return on Average Tangible Common Equity (ROTCE) of 30.9%. Markets revenue also surged by 17% to $7.0 billion, fueled by a 45% jump in Equities revenues and a 60% expansion in prime balances. Banking revenue rose by 34%, predominantly due to a 44% increase in Investment Banking revenues, where Citigroup successfully captured greater market share in equity capital markets. Wealth revenue grew by 13% to $3.2 billion, with client investment assets reaching $727 billion, showcasing consistent growth over nine consecutive quarters.
Despite these gains, the U.S. Consumer Cards segment experienced a modest 1% revenue increase, as higher interest-earning balances were largely offset by a 47% decline in non-interest revenue due to partner payment accruals. Operating expenses increased by 5% to $14.2 billion, attributed to higher compensation, front-office investments, and volume-related costs. However, the efficiency ratio improved to 57.4%, a 530 basis point enhancement from the prior year. The company's CET1 Capital Ratio stood strong at 12.8%, comfortably above the 11.6% regulatory requirement. Citigroup also announced a $4 billion common stock repurchase as part of a larger $30 billion commitment and a planned 12% dividend increase, subject to board approval and Federal Reserve stress test results.
During the earnings call, executives Jane Fraser, Chair and CEO, and Gonzalo Lucchetti, CFO, emphasized the firm's ongoing transformation and strategic investments. Fraser highlighted the widespread adoption of AI tools by nearly 90% of employees, driving productivity and accelerating product launches like Payment Express. The integration of retail branches into the Wealth segment proved beneficial, with referrals to Citigold increasing by 23%. Lucchetti acknowledged potential expense growth outpacing revenue growth in some upcoming quarters due to continued investments in the U.S. Consumer Cards segment, but underscored the long-term vision behind these strategic outlays. The company is also on track with its remediation efforts, with a significant portion of consent order work passing internal audit validation, although the final timing for their removal rests with regulators.
The discussion also touched upon macroeconomic factors. Fraser noted that geopolitical tensions, particularly in the Middle East, have somewhat impacted global growth while giving inflation a "second wind." However, she pointed to the resilience of corporate clients with strong balance sheets and diversified revenue streams, enabling them to navigate complex environments effectively. The extraordinary investments in AI and supporting infrastructure, such as semiconductors and data centers, are providing a significant tailwind for the U.S. and parts of Asia. Lucchetti elaborated on the healthy credit environment, with stable U.S. consumer behavior and declining delinquencies and net credit losses across portfolios, reaffirming the high quality of Citigroup's credit assets.
Looking ahead, Citigroup maintains its full-year 2026 Return on Average Tangible Common Equity (ROTCE) target of 10% to 11%. This projection accounts for potential second-half seasonality in markets and planned increases in investments and severance. The company expects Net Interest Income (NII) growth excluding markets to be between 5% and 6%, alongside continued non-interest revenue (NIR) growth from services, banking, and wealth. The strategic decision to front-load investments and potentially incur higher severance costs reflects a commitment to enhancing structural efficiencies and driving sustainable, higher returns for shareholders over the medium term, rather than solely focusing on short-term quarterly figures. The leadership team remains confident in their strategy and its ability to close the gap with peers, building on the strong momentum observed in the first half of the year.