The MoatNarrow moat

Citigroup (C) — moat facet

Citi owns one wide moat, its Services network, inside a bank that has earned its cost of equity in only three of the last eleven years.

Citi's moat is narrow as a whole and wide in one place. Services earned a 24.6% return on tangible common equity in 20251; the firm earned 7.7%2. For a bank the test of a moat is the return on tangible equity against the cost of equity, which this app assumes at about 10%, the same hurdle used for JPMorgan, Bank of America and Goldman Sachs. Citi cleared it in only three of the eleven years from 2015 to 2025: 11.0% in 2018, 12.1% in 2019 and 13.4% in 202134.

Return on tangible common equity by segment, 2025 (%)Services24.6%U.S. Consumer Cards16.8%Markets11.6%Banking10.2%Wealth7.6%Citigroup7.7%Citigroup historical supplement, 3 April 2026; Form 10-K FY2025
Services earns three times the firm.

The businesses sort themselves by return. In 2025 Services returned 24.6%, cards 16.8%, Markets 11.6%, Banking 10.2% and Wealth 7.6%5. The All Other segment, which holds the consumer banks Citi is selling and the corporate centre, lost $4,454 million on $39.2 billion of allocated capital6. That loss is the main reason the firm's return is a third of Services'.

The Services moat is real: a payments and custody network in about 90 countries, clients wired into it for fifteen years, and a return that has risen from 15.8% to 24.6% in four years7. The cards business is a large, efficient lender that earns well when losses are low. Markets and Banking hold good positions and earn a little over their cost. Wealth is still earning its way up.

The latest quarter shows what the firm could be without the drag. Return on tangible equity was 13.0% in the second quarter of 2026 and 13.1% in the first8.

Some of the 2025 shortfall was one-off. Citi booked a pre-tax loss of about $1.2 billion on the sale of its Russian bank in the fourth quarter9, and its Investor Day put the 2025 return at 8.8% excluding notable items, against 7.7% reported10. Even on that basis the firm stayed below the 10% hurdle.

Citi's own targets rank the businesses the same way. Its Investor Day set near-term returns in the mid-20s through the cycle for Services, the low 20s for cards and 11.5% to 13% for Markets11. The moat is widest where the target is highest.

The verdict is a narrow moat with a wide one inside it. The number that would change it is the firm's return for a full year: above 12% with All Other shrinking would mean the Services moat finally shows through; below 10% would say the rest of the bank still absorbs it.

Moat trajectory: Widening

RoTCE 4.9% (2023), 7.7% (2025), 13.0% (Q2 2026).

The number that tests this moat
Reported
RoTCE vs cost of equity
7.7% (2025) vs ~10% hurdle; 13.0% latest quarter (Q2 2026)

The firm's return over its cost of equity; a full year back below 10% would mean the legacy drag still outweighs the Services moat.

For a bank, return on tangible common equity replaces ROIC; the 10% cost of equity is an assumption, the same used for JPMorgan, Bank of America and Goldman Sachs.
Source: Citigroup Form 10-K FY2025, selected financial data and capital ↗
Aspects of the moat
DIG DEEPER 01
The Services Network
Services is the business that makes Citi worth owning: a payments and custody network earning about a quarter on its capital.
DIG DEEPER 02
The Card Lender
Citi's card business is a large, efficient lender that rents other companies' customers and earns well only when losses stay low.
DIG DEEPER 03
Markets and Banking
Citi's trading and lending businesses are big and well placed, but they earn only a little more than their cost of capital.
DIG DEEPER 04
The Wealth Franchise
Citi's wealth business keeps its clients for a decade and has only just started earning its cost of capital.
References
  1. ReportedServices earned a 24.6% return on tangible common equity in 2025; the firm earned 7.7%.
    Citigroup Historical Quarterly Financial Data Supplement 2021-2025 recast to the first-quarter 2026 segments - Services: revenue by line and type, geography, deposits, loans, cross-border transaction value, clearing volume, custody assets and returns. — FY2021-FY2025 · publ. 3 April 2026 · source ↗
  2. ReportedServices earned a 24.6% return on tangible common equity in 2025; the firm earned 7.7%.
    Citigroup Form 10-K for fiscal 2025 - selected financial data: revenue, net income, EPS, RoTCE, efficiency ratio, deposits, capital ratios and requirements, repurchases and capital returned. — FY2021-FY2025 · publ. 20 February 2026 · source ↗
  3. ReportedCiti cleared it in only three of the eleven years from 2015 to 2025: 11.0% in 2018, 12.1% in 2019 and 13.4% in 2021.
    Citigroup Form 10-K for fiscal 2019 - RoTCE, net income and EPS for 2015-2019, including the 2017 Tax Reform charge. — FY2019 · publ. February 2020 · source ↗
  4. ReportedCiti cleared it in only three of the eleven years from 2015 to 2025: 11.0% in 2018, 12.1% in 2019 and 13.4% in 2021.
    Citigroup Form 10-K for fiscal 2022 - RoTCE and common equity for 2018-2022, and the Australia consumer sale. — FY2022 · publ. February 2023 · source ↗
  5. ReportedIn 2025 Services returned 24.6%, cards 16.8%, Markets 11.6%, Banking 10.2% and Wealth 7.6%.
    Citigroup Historical Quarterly Financial Data Supplement 2021-2025 recast to the first-quarter 2026 segments, Form 8-K exhibit 99.1 - segment revenue, income, capital and returns, All Other and share counts. — FY2021-FY2025 · publ. 3 April 2026 · source ↗
  6. ReportedThe All Other segment, which holds the consumer banks Citi is selling and the corporate centre, lost $4,454 million on $39.2 billion of allocated capital.
    Citigroup Historical Quarterly Financial Data Supplement 2021-2025 recast to the first-quarter 2026 segments, Form 8-K exhibit 99.1 - segment revenue, income, capital and returns, All Other and share counts. — FY2021-FY2025 · publ. 3 April 2026 · source ↗
  7. ReportedThe Services moat is real: a payments and custody network in about 90 countries, clients wired into it for fifteen years, and a return that has risen from 15.8% to 24.6% in four years.
    Citigroup Historical Quarterly Financial Data Supplement 2021-2025 recast to the first-quarter 2026 segments - Services: revenue by line and type, geography, deposits, loans, cross-border transaction value, clearing volume, custody assets and returns. — FY2021-FY2025 · publ. 3 April 2026 · source ↗
  8. ReportedReturn on tangible equity was 13.0% in the second quarter of 2026 and 13.1% in the first.
    Citigroup second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - firm results, returns, efficiency, capital returned, tangible book value and All Other. — Q2 2026 · publ. 14 July 2026 · source ↗
  9. ReportedCiti booked a pre-tax loss of about $1.2 billion on the sale of its Russian bank in the fourth quarter, and its Investor Day put the 2025 return at 8.8% excluding notable items, against 7.7% reported.
    Citigroup Form 8-K of 29 December 2025 - plan to sell AO Citibank, with a pre-tax loss of approximately $1.2 billion. — December 2025 · publ. 29 December 2025 · source ↗
  10. ReportedCiti booked a pre-tax loss of about $1.2 billion on the sale of its Russian bank in the fourth quarter, and its Investor Day put the 2025 return at 8.8% excluding notable items, against 7.7% reported.
    Citigroup 2026 Investor Day financial overview presentation - RoTCE targets, business targets for Services, Cards and Markets, efficiency ratio, transformation, liquidity and capital. — May 2026 · publ. May 2026 · source ↗
  11. ReportedIts Investor Day set near-term returns in the mid-20s through the cycle for Services, the low 20s for cards and 11.5% to 13% for Markets.
    Citigroup 2026 Investor Day financial overview presentation - RoTCE targets, business targets for Services, Cards and Markets, efficiency ratio, transformation, liquidity and capital. — May 2026 · publ. May 2026 · source ↗
Sources
Generated September 28, 2026