Citigroup's Five Businesses All Grow Loans as Services Hits Record 30.9% RoTCE
Citigroup's net interest income rose 13% year over year in the second quarter as loan growth accelerated across every business line and Services delivered a record $6.4 billion in revenue.
Citigroup (C) posted net interest income growth of 13% year over year in the second quarter, with gains spread across all five of its businesses, even as the pace moderated slightly from the 12% growth reported in the first quarter. Average loans climbed 10% year over year to $785 billion, up 4% from the first quarter's $755 billion, with Markets, Wealth, U.S. consumer credit card (USCC) and Services all contributing to the acceleration from 9% growth a quarter earlier. Average deposits grew 12% year over year to $1.504 trillion, extending a trend that has now built for three straight quarters, from 8% growth in the fourth quarter of 2024 to 11% in the first quarter of 2025.
Services was the standout, with record quarterly revenue of $6.4 billion, up 18% year over year, and return on tangible common equity of 30.9%, the segment's first time above 30% in the panel and up 390 basis points from 27.0% in the first quarter. Wealth extended its own streak, with revenue rising 13% year over year to $3.177 billion for a ninth consecutive quarter of growth, while its RoTCE jumped 360 basis points quarter over quarter to 14.4% from 10.8%, building on steady gains from 10.9% in the fourth quarter of 2024 and 12.1% in the third. Banking net income surged 276% year over year to $350 million on RoTCE of 18.0%, up 1,390 basis points, continuing a multi-quarter turnaround that followed 36% net income growth in the first quarter and 168% in the third quarter of 2024.
Investment banking fees jumped 44% year over year to $1.548 billion, accelerating sharply from 12% growth in the first quarter, driven by ECM revenue up 92% and DCM up 65%. Advisory revenue declined 4% year over year, a reversal from the first quarter when advisory led IB growth at 19% and DCM lagged. Markets revenue rose 17% year over year to $7.0 billion but slipped 3% from the first quarter's $7.246 billion, the first time the segment had crossed $7 billion. Within Markets, equity revenue accelerated to 45% year-over-year growth from 39% in the first quarter, while fixed-income growth decelerated to 7% from 13%.
The CET1 ratio rose to 12.8% in the second quarter from 12.7% in the first, helped by net income, the Banamex stake sale impact and lower deferred tax assets, partly offset by buybacks and dividends. The ratio remains down from 13.5% a year earlier, part of a decline that ran from 13.2% in the fourth quarter of 2024 through 12.7% in the first quarter of 2025. Citigroup launched a new $30 billion buyback program and raised its planned dividend 12%, returning about $5.0 billion to shareholders in the quarter, a step down from roughly $7.4 billion in the first quarter and $6.1 billion in the third quarter of 2024, though paired with a larger multi-year buyback authorization.
Credit quality improved on several fronts. Provision for credit losses fell to $2.5 billion, down 10% from the first quarter and 12% from a year earlier, while the net allowance for credit losses build shrank to $102 million from $581 million in the first quarter, an 82% drop that signals reserve-building is decelerating. Total non-accrual loans fell 4% year over year to $3.2 billion, reversing the 25% year-over-year increase reported in the first quarter, even as the reserve-to-funded-loans ratio continued a steady slide to 2.5% from 2.6% in the first quarter and 2.7% a year earlier. USCC's net allowance swung to a $232 million release from a $348 million build in the first quarter on improved portfolio quality and seasonality, and USCC net income rose 16% quarter over quarter to $852 million despite a 5% drop in segment revenue.
Expense discipline reinforced the operating story. Total operating expenses fell 1% quarter over quarter to $14.215 billion, still up 5% year over year, but breaking a streak of three consecutive quarters of sequential expense growth that included a 3% increase in the first quarter and a 5% jump in the third quarter of 2024 tied partly to the Banamex goodwill impairment. The efficiency ratio improved 530 basis points year over year to 57.4%, also down 70 basis points from the first quarter.
Net income rose 45% year over year to $5.8 billion, or $3.15 a share, versus $4.0 billion and $1.96 a share a year earlier, though the result was essentially flat quarter over quarter against $5.79 billion in the first quarter. The quarter's headline growth traces to the combination of broad-based NII expansion, a credit-quality reversal in non-accruals, and a Services franchise now generating returns above 30%, evidence that the operating engine, not one-off items, drove the improvement.
Citigroup's capital return pace slowed even as authorization expanded, leaving the pattern for coming quarters tied to how quickly the CET1 ratio stabilizes above the multi-quarter trough set earlier in 2025.