CITIGROUP INC (C)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

Overview

As described further throughout this Executive Summary, during the second quarter of 2026:

•Citi and four of its five businesses achieved positive operating leverage. Citi’s positive operating leverage was driven by revenue growth of 14% and disciplined expense management, with expenses up 5%.

•Citi returned $5.0 billion to common shareholders in the form of share repurchases ($4.0 billion) under its 2026 $30 billion common stock repurchase program and dividends ($1.0 billion). For additional information, see “Unregistered Sales of Equity Securities, Repurchases of Equity Securities and Dividends” below.

•Citi’s Common Equity Tier 1 (CET1) Capital ratio under the Basel III Standardized Approach was 12.8% as of June 30, 2026, approximately 120 basis points above the regulatory requirement.

•Citi announced its plans to increase its quarterly common dividend from $0.60 to $0.67 per share, subject to quarterly approval by Citi’s Board of Directors. A quarterly dividend of $0.67 per share was declared on July 21, 2026.

•Citi completed the acquisition of the additional American Airlines co-branded card portfolio.

•Citi continued to make progress on its remaining divestitures, including (i) completing the sale of the Poland consumer banking business and (ii) closing an additional Banamex equity sale. For additional information, see “All Other—Managed Basis—Legacy Franchises (Managed Basis)” below and Note 2.

Second Quarter of 2026 Results Summary

The below comparisons are to the second quarter of 2025:

Citigroup

Citigroup reported net income of $5.8 billion, or $3.15 per share. This compared to net income of $4.0 billion, or $1.96 per share in the prior-year period.

Net income increased 45% versus the prior-year period, driven by higher revenues and a lower provision for credit losses, partially offset by higher expenses.

Citigroup revenues of $24.8 billion increased 14%, driven by growth in each of Citi’s five interconnected businesses and Legacy Franchises (managed basis) in All Other, including the impact of FX translation, partially offset by a decline in Corporate/Other, also in All Other.

Net interest income (NII) of $17.1 billion increased 13% versus the prior-year period. The increase in NII was driven by increases in Markets, Services, Wealth, USCC, Banking and Legacy Franchises (managed basis), partially offset by a decline in Corporate/Other. Non-Markets NII increased 6%, driven by growth in Services, Wealth, USCC, Banking and Legacy Franchises (managed basis), partially offset by a decline in Corporate/Other. Markets NII of $4.0 billion in the

second quarter of 2026 compared to $2.9 billion in the prior-year period.

Non-interest revenue (NIR) of $7.6 billion increased 18% versus the prior-year period. The increase in NIR was driven by increases in All Other (managed basis), Banking, Services and Wealth, partially offset by declines in USCC and Markets. Non-Markets NIR increased 39% from the second quarter of 2025, driven by growth in All Other (managed basis), Banking, Services and Wealth, partially offset by a decline in USCC. Markets NIR of $3.0 billion in the second quarter of 2026 compared to $3.2 billion in the prior-year period.

Citigroup’s average loans were $785 billion, up 10% versus the prior-year period, largely driven by loan growth in Markets, Services, Wealth and USCC. For additional information about Citi’s average loans by business, including drivers and loan trends, see each business’s results of operations and “Managing Global Risk—Credit Risk—Average Loans” below.

Citigroup’s average deposits were approximately $1.5 trillion, up 12% versus the prior-year period, driven by an increase in Services. For additional information about Citi’s average deposits by business, including drivers and deposit trends, see each business’s results of operations and “Liquidity Risk—Deposits” below.

Expenses

Citigroup’s operating expenses of $14.2 billion increased 5% from the prior-year period, including the impact of FX translation, driven by:

•higher compensation and benefits,

•higher transactional and product servicing expenses, and

•higher deposit insurance costs,

•partially offset by lower professional services expenses.

The increase in compensation and benefits expenses was driven by higher performance-related and other compensation and benefits expenses, and higher compensation associated with investments in the businesses, largely offset by productivity savings and lower transformation expenses.

The increase in transactional and product servicing expenses was driven by higher volumes in Markets, particularly in Equity Markets, and higher customer engagement costs in USCC.

The higher deposit insurance costs were driven by the absence of a benefit in the prior-year period and higher deposit volume.

The decrease in professional services expenses was driven by lower transformation spend.

Provisions

Citi’s total provisions for credit losses and for benefits and claims were $2.5 billion, reflecting net credit losses of $2.4 billion and a net allowance for credit losses (ACL) build of $118 million.

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Net credit losses were up 8% from the prior-year period, driven by increases in Banking and Legacy Franchises (managed basis).

The net ACL build was driven by portfolio growth and changes to certain macroeconomic variables, offset by net improvements in portfolio quality, including seasonal changes in USCC.

Citi’s total provisions for credit losses and for benefits and claims in the prior-year period were $2.9 billion, reflecting net credit losses of $2.2 billion and a net ACL build of $638 million, driven by transfer risk, portfolio growth and changes to certain macroeconomic variables, partially offset by changes in credit quality.

For additional information on Citi’s ACL and Citi’s net credit losses, see each segment’s and All Other’s results of operations, “Credit Risk” and “Significant Accounting Policies and Significant Estimates—Allowance for Credit Losses” below.

Capital

Citigroup’s Common Equity Tier 1 (CET1) Capital ratio was 12.8% as of June 30, 2026, compared to 13.5% as of June 30, 2025, based on the Basel III Standardized Approach for determining risk-weighted assets (RWA). The decrease was driven by common share repurchases, the payment of common and preferred dividends and an increase in RWA, largely offset by net income and net beneficial movements in Accumulated other comprehensive income (AOCI).

For additional information on Citi’s capital metrics and capital actions, see “Capital Resources” and “Unregistered Sales of Equity Securities, Repurchases of Equity Securities and Dividends” below.

For information on the results of operations for the second quarter of 2026 for each segment and All Other, see “Services,” “Markets,” “Banking,” “Wealth,” “U.S. Consumer Cards (USCC)” and “All Other—Managed Basis” below.

Macroeconomic and Other Risks and Uncertainties Various macroeconomic, geopolitical and regulatory factors continue to contribute to challenges and uncertainties in the U.S. and globally, including, but not limited to, elevated inflation; conflicts in the Middle East; changes in U.S. laws or policies; and changes in interest rates and monetary policies. These factors could result in volatility and disruptions in financial markets, as well as adversely affect economic growth and unemployment in the U.S. and other countries and jurisdictions. Such risks and uncertainties could also adversely impact Citi’s clients, customers, businesses, funding costs, provisions and overall results of operations and financial condition during the remainder of 2026.

For a further discussion of trends, uncertainties and risks that will or could impact Citi’s segments and All Other, results of operations, capital and other financial condition during the remainder of 2026, see each segment’s and All Other’s results of operations, “Managing Global Risk” and “Forward-Looking Statements” below and “Citi’s Multiyear Transformation” and “Risk Factors” in Citi’s 2025 Form 10-K.

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CITI’S MULTIYEAR TRANSFORMATION

As previously disclosed, Citi’s transformation, including remediating its 2020 Consent Orders with the Board of Governors of the Federal Reserve System (FRB) and Office of the Comptroller of the Currency (OCC), is a multiyear endeavor that has not been linear. For additional information on Citi’s transformation, including remaining focus areas and status, consent order compliance and governance, see “Citi’s Multiyear Transformation” in Citi’s First Quarter of 2026 Form 10-Q, Citi’s 2025 Form 10-K and Citi’s 2026 Proxy Statement for its Annual Meeting of Stockholders.

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RESULTS OF OPERATIONS

SUMMARY OF SELECTED FINANCIAL DATA

Citigroup Inc. and Consolidated Subsidiaries

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SUMMARY OF SELECTED FINANCIAL DATA

(Continued)

Citigroup Inc. and Consolidated Subsidiaries

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

As described further throughout this Executive Summary, Citi demonstrated improved business performance and made significant progress on its strategic priorities in 2025 and early 2026:

•Citi and its five businesses each achieved positive operating leverage for 2025 for the second consecutive year. Citi’s positive operating leverage in 2025 was driven by revenue growth of 6% and disciplined expense management, with expenses up 3%.

•Citi returned $17.6 billion to common shareholders in the form of share repurchases ($13.3 billion) under its multiyear $20 billion common stock repurchase program and dividends ($4.3 billion). Citi will continue to assess the level of common share repurchases on a quarter-by-quarter basis.

•Citi continued to advance its transformation, with over 80% of transformation programs now at or nearly at Citi’s target state. Additionally, in December 2025, the OCC terminated its July 2024 amendment to Citibank’s 2020 Consent Order (see “Citi’s Multiyear Transformation” below).

•Citi continued to make progress on its remaining divestitures, including completing the sale of a 25% equity stake in Banamex in 2025 and signing and closing the sale of AO Citibank in Russia to Renaissance Capital (RenCap) on February 18, 2026. For additional information about the sale of AO Citibank and its impacts, see “Recent Developments” and “Managing Global Risk—Other Risks—Country Risk—Russia” below.

2025 Results Summary

Citigroup

Citigroup reported net income of $14.3 billion, or $6.99 per share. This compared to net income of $12.7 billion, or $5.94 per share in the prior year. Results in 2025 included two notable items:

•Russia-related notable item: revenues included a $1.2 billion ($1.1 billion after-tax) loss on sale related to the held-for-sale accounting treatment related to Citi’s plan to sell AO Citibank in Russia (which was sold on February 18, 2026)

•Banamex-related notable item: expenses included a goodwill impairment of $726 million ($714 million after-tax) related to Citi’s agreement to sell a 25% equity stake in Grupo Financiero Banamex, S.A. de C.V. (Banamex)

Excluding the Russia-related notable item and the Banamex-related notable item, net income was $16.1 billion, or $7.97 per share.

Net income increased 13% versus the prior year, driven by higher revenues, partially offset by higher expenses, a higher effective tax rate and higher provisions for credit losses. Citigroup’s effective tax rate was 27% in 2025 versus 25% in the prior year, driven by the limited tax benefit of the Russia-related and Banamex-related notable items.

Citigroup revenues of $85.2 billion in 2025 increased 6% on a reported basis, driven by an increase in net interest income, up 11%, partially offset by lower non-interest revenue, down 4%. The increase in net interest income reflected higher net interest income in Markets, Services, USPB and Wealth, partially offset by lower net interest income in All Other (managed basis) and Banking. The decrease in non-interest revenue was driven by declines in All Other (managed basis), Markets and USPB, largely offset by Banking, Wealth and Services. Excluding the Russia-related notable item, revenues were $86.4 billion.

Citigroup’s average loans in 2025 were $716 billion, up 5% versus the prior year, largely driven by loan growth in Markets, USPB and Services. For additional information about Citi’s average loans by business, including drivers and loan trends, see each business’s results of operations and “Loans Outstanding” below.

Citigroup’s average deposits in 2025 were approximately $1.4 trillion, up 4% versus the prior year, primarily driven by an increase in Services. For additional information about Citi’s average deposits by business, including drivers and deposit trends, see each respective business’s results of operations and “Liquidity Risk—Deposits” below.

Expenses

Citigroup’s operating expenses of $55.1 billion increased 3% from the prior year, driven by higher compensation and benefits, the Banamex-related notable item, higher technology and communications and higher transactional and product servicing expenses, partially offset by lower deposit insurance expenses and restructuring charges. The increase in compensation and benefits was driven by performance-related compensation and higher severance. The increase in technology and communication was driven by continued investments in transformation and businesses. The increase in transactional and product servicing was driven by higher volumes in USPB, Markets and Wealth, partially offset by All Other. Excluding the Banamex-related notable item, expenses were $54.4 billion. For additional information on Citi’s transformation investments, see “Citi’s Multiyear Transformation” below.

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Provisions

Citi’s total provisions for credit losses and for benefits and claims were $10.3 billion, reflecting net credit losses of $9.1 billion and a net allowance for credit losses (ACL) build of $1.2 billion.

Net credit losses were up 1% from the prior year, driven by increases in Legacy Franchises in All Other, largely offset by decreases in USPB. The net ACL build was driven by changes in the macroeconomic outlook and transfer risk.

Citi’s total provisions for credit losses and for benefits and claims in the prior year were $10.1 billion, reflecting net credit losses of $9.0 billion and a net ACL build of $1.1 billion, driven by changes in credit quality, higher net lending activity and transfer risk, partially offset by changes in the macroeconomic outlook.

For additional information on Citi’s ACL, see “Significant Accounting Policies and Significant Estimates—Citi’s Allowance for Credit Losses (ACL)” below.

For additional information on Citi’s consumer and corporate provisions, see each respective segment’s and All Other’s results of operations and “Credit Risk” below.

Capital

Citigroup’s Common Equity Tier 1 (CET1) Capital ratio was 13.2% as of December 31, 2025, compared to 13.6% as of December 31, 2024, based on the Basel III Standardized Approach for determining risk weighted assets (RWA). The decrease was primarily driven by common share repurchases, an increase in RWA and the payment of common and preferred dividends, partially offset by net income and net beneficial movements in Accumulated other comprehensive income (AOCI).

In 2025, Citi repurchased $13.3 billion of common shares and paid $4.3 billion of common dividends (see “Unregistered Sales of Equity Securities, Repurchases of Equity Securities and Dividends” below).

Citigroup’s Supplementary Leverage ratio as of December 31, 2025 was 5.5%, compared to 5.8% as of December 31, 2024. The decrease was driven by an increase in Total Leverage Exposure, partially offset by an increase in Tier 1 Capital. For additional information on Citi’s capital ratios and related components, see “Capital Resources” below. For additional information on capital-related risks, trends and uncertainties, see “Capital Resources—Regulatory Capital Standards and Developments” and “Risk Factors—Strategic Risks,” “—Operational Risks” and “—Compliance Risks” below.

For information on the results of operations for 2025 for each of Citi’s segments and All Other, see “Services,” “Markets,” “Banking,” “Wealth,” “USPB” and “All Other—Managed Basis” below.

Macroeconomic and Other Risks and Uncertainties

Various macroeconomic, geopolitical and regulatory factors have contributed to economic uncertainties in the U.S. and globally, including, but not limited to, those related to various geopolitical challenges, tensions and conflicts; changes in U.S. laws or policies, including those related to trade and tariffs; and lower interest rates. These factors could adversely affect economic growth, unemployment and inflation in the U.S. and other countries and result in volatility and disruptions in financial markets. Such risks and uncertainties could adversely impact Citi’s clients, customers, businesses, funding costs, provisions and overall results of operations and financial condition during 2026.

For a further discussion of trends, uncertainties and risks that will or could impact Citi’s segments and All Other, results of operations, capital and other financial condition during 2026, see each respective segment’s and All Other’s results of operations, “Risk Factors” and “Managing Global Risk,” including “Managing Global Risk—Other Risks—Country Risk—Argentina” below.

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CITI’S MULTIYEAR TRANSFORMATION

As previously disclosed, Citi’s transformation, including the remediation of its consent orders with the FRB and OCC, is a multiyear endeavor that is not linear. Citi is modernizing and simplifying the Company in order to lead in a dynamic, competitive and digital world. Citi’s transformation goes beyond remedying regulatory concerns to intentionally transform how the organization operates, and makes investments that not only support current needs, but also benefit the Company over the long term.

Citi’s transformation target outcomes remain focused on changing its business and operating models such that they simultaneously:

•further strengthen controls, enhance data quality and governance, reduce risk and continue to improve Citi’s regulatory compliance and its culture

•enhance Citi’s value to customers, clients and shareholders

Transformation efforts of this scale involve significant complexities and uncertainties, including ongoing regulatory challenges and risks. Citi may continue to experience significant challenges in progressing the transformation and satisfying the regulators’ expectations in both sufficiency and timing, particularly with regard to data quality management related to governance and regulatory reporting. The regulators may also identify additional risk and control issues that could result in further regulatory actions. For additional information about these regulatory risks, see “Risk Factors—Compliance Risks” below.

For additional information on Citi’s transformation progress, investments and governance over the last several years, see “Citi’s Multiyear Transformation” in Citi’s 2024 Annual Report on Form 10-K.

2025 Transformation Progress

Citi continued to make progress on its transformation in 2025. As of December 31, 2025, over 80% of Citi’s transformation programs were at or nearly at the Company’s target state. Progress through 2025 included the following:

•enhanced and implemented automated controls to further mitigate risk of large erroneous payments in over 90 countries

•completed migration of committed corporate loans to Citi’s strategic loans processing platform for North America

•applied technology solutions leveraging AI to support governance of data reported in key regulatory reports

•completed onboarding of wholesale and retail contractual data to two strategic data platforms with built-in controls for accuracy, completeness and timeliness

•continued to optimize, modernize and simplify Citi by retiring or replacing 548 applications during 2025 (representing 9% of all applications)

In 2025, Citi’s transformation-related expenses increased 14% from the prior year to approximately $3.3 billion, largely driven by increased spending on data, as well as on controls. While Citi’s transformation investments will remain significant in 2026 and beyond, Citi expects them to decline over time.

FRB and OCC Consent Orders Compliance

Citi’s transformation efforts include implementation of the October 7, 2020 FRB and OCC Consent Orders issued to Citigroup and Citibank, respectively. The 2020 Consent Orders require Citigroup and Citibank to implement extensive targeted action plans and submit quarterly progress reports on a timely and sufficient basis, detailing the results and status of improvements relating principally to various aspects of:

•enterprise-wide risk management;

•compliance risk man

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