Corporate Lending, Moved Between SegmentsThin moat

Citigroup (C) — moat facet

Citi's corporate loans earn little themselves; they buy the Services and Markets business that follows.

Citi lends to large companies to win their other business, and in 2026 it changed how it books the reward. The recast moved corporate-lending revenue share and capital between Services, Markets and Banking; Citi said the change "increased the revenues of Services and Markets and decreased the revenues of Banking"1.

Banking 2025 on two bases ($M)8,215Revenue, old basis6,384Revenue, new basis2,324Income, old basis935Income, new basisCitigroup Form 10-K FY2025; historical supplement, 3 April 2026
Same year, different books.

The effect on Banking's 2025 figures is large. On the old basis Banking earned revenue of $8,215 million and income from continuing operations of $2,324 million2. On the new basis the same year shows $6,384 million and $935 million3. Nothing changed in the loans; the credit for them moved to the segments that sell cash management and trading to the same clients.

That is itself evidence about the moat. Corporate loans, $344 billion at the end of 20254, are a door-opener that earns little on its own. The revenue follows in Services and Markets.

The loans and their revenue have shrunk. Banking's average loans were $102 billion in 2021 and $82 billion in 20255, and corporate-lending revenue excluding hedges fell from $1,883 million to $1,721 million6. In the second quarter of 2026 corporate-lending revenue fell 4% to $406 million, on lower loan spreads and balances, while Banking's average loans rose 5% on lending tied to investment banking deals7.

Reserves on the loans have risen. The allowance on Banking loans was 1.47% of loans in the first quarter of 2024 and 2.04% at the end of 20258, while net credit losses were 0.10% of loans in 20259. Citi is setting aside more against a book that has lost little, which is what a lender does when it expects the cycle to turn.

In the second quarter of 2026 Corporate Lending revenue was $406 million, down 4% on lower loan spreads and balances10.

Banking's return on tangible equity on the new basis was 10.2% in 202511. A return that stayed near the cost of equity while Services and Markets kept rising would confirm that corporate loans are a cost of the network, not a business.

Moat trajectory: Holding steady

Banking 2025 income $2.3bn old basis, $0.9bn new basis.

The number that tests this moat
Reported
Banking RoTCE, latest quarter
18.0% (Q2 2026) vs 10.2% for 2025

The return of the lending and advisory segment after the reallocation; near the cost of equity would confirm loans are a cost of the network.

Source: Citigroup Q2 2026 earnings release, institutional businesses ↗
⚠ Threats to the moat
⚠ THREAT 01
Loan Hedges and a 70% Efficiency Ratio
Citi's Banking segment spends 70 cents of each dollar it earns and lost money in 2022 and 2023.
References
  1. ReportedThe recast moved corporate-lending revenue share and capital between Services, Markets and Banking; Citi said the change "increased the revenues of Services and Markets and decreased the revenues of Banking".
    Citigroup Form 8-K of 3 April 2026 describing the first-quarter 2026 segment recast: Retail Banking moved to Wealth, U.S. Consumer Cards created, corporate-lending revenue reallocated. — April 2026 · publ. 3 April 2026 · source ↗
  2. ReportedOn the old basis Banking earned revenue of $8,215 million and income from continuing operations of $2,324 million.
    Citigroup Form 10-K for fiscal 2025 - business description, segments, history, footprint, employees and executives. — FY2025 · publ. 20 February 2026 · source ↗
  3. ReportedOn the new basis the same year shows $6,384 million and $935 million.
    Citigroup Historical Quarterly Financial Data Supplement 2021-2025 recast to the first-quarter 2026 segments - Markets and Banking: revenue by product and region, investment banking fees, income, capital and returns. — FY2021-FY2025 · publ. 3 April 2026 · source ↗
  4. ReportedCorporate loans, $344 billion at the end of 2025, are a door-opener that earns little on its own.
    Citigroup Form 10-K for fiscal 2025 - business description, segments, history, footprint, employees and executives. — FY2025 · publ. 20 February 2026 · source ↗
  5. ReportedBanking's average loans were $102 billion in 2021 and $82 billion in 2025, and corporate-lending revenue excluding hedges fell from $1,883 million to $1,721 million.
    Citigroup Historical Quarterly Financial Data Supplement 2021-2025 recast to the first-quarter 2026 segments - Markets and Banking: revenue by product and region, investment banking fees, income, capital and returns. — FY2021-FY2025 · publ. 3 April 2026 · source ↗
  6. ReportedBanking's average loans were $102 billion in 2021 and $82 billion in 2025, and corporate-lending revenue excluding hedges fell from $1,883 million to $1,721 million.
    Citigroup Historical Quarterly Financial Data Supplement 2021-2025 recast to the first-quarter 2026 segments - Markets and Banking: revenue by product and region, investment banking fees, income, capital and returns. — FY2021-FY2025 · publ. 3 April 2026 · source ↗
  7. ReportedIn the second quarter of 2026 corporate-lending revenue fell 4% to $406 million, on lower loan spreads and balances, while Banking's average loans rose 5% on lending tied to investment banking deals.
    Citigroup second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - Services, Markets and Banking results and key metrics. — Q2 2026 · publ. 14 July 2026 · source ↗
  8. ReportedThe allowance on Banking loans was 1.47% of loans in the first quarter of 2024 and 2.04% at the end of 2025, while net credit losses were 0.10% of loans in 2025.
    Citigroup Historical Quarterly Financial Data Supplement 2021-2025 recast to the first-quarter 2026 segments - Markets and Banking: revenue by product and region, investment banking fees, income, capital and returns. — FY2021-FY2025 · publ. 3 April 2026 · source ↗
  9. ReportedThe allowance on Banking loans was 1.47% of loans in the first quarter of 2024 and 2.04% at the end of 2025, while net credit losses were 0.10% of loans in 2025.
    Citigroup Historical Quarterly Financial Data Supplement 2021-2025 recast to the first-quarter 2026 segments - Markets and Banking: revenue by product and region, investment banking fees, income, capital and returns. — FY2021-FY2025 · publ. 3 April 2026 · source ↗
  10. ReportedIn the second quarter of 2026 Corporate Lending revenue was $406 million, down 4% on lower loan spreads and balances.
    Citigroup second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - Services, Markets and Banking results and key metrics. — Q2 2026 · publ. 14 July 2026 · source ↗
  11. ReportedBanking's return on tangible equity on the new basis was 10.2% in 2025.
    Citigroup Historical Quarterly Financial Data Supplement 2021-2025 recast to the first-quarter 2026 segments - Markets and Banking: revenue by product and region, investment banking fees, income, capital and returns. — FY2021-FY2025 · publ. 3 April 2026 · source ↗
Sources
Generated September 28, 2026