Citigroup's (C) better-than-expected Q2 results, with the bank delivering its best quarterly revenue in a decade, underscore the success of its turnaround, RBC Capital Markets said.
The investment firm said that all five business segments contributed to growth and highlighted that total revenue rose 14% year over year to $24.8 billion. Return on tangible common equity expanded 430 basis points to 13%. The efficiency ratio improved by 530 basis points to 57.4%.
RBC said the improvement reflects the cumulative benefit of Citigroup's multi-year transformation program.
Return on tangible common equity for Citigroup's banking segment saw the largest improvement among the segments, increasing 1,390 basis points in Q2. RBC said the performance reflects Citigroup's growing wallet share in global capital markets.
Services revenue rose 18% to a record $6.4 billion backed by Treasury and Trade Solutions and Securities Services. Return on tangible common equity for the segment expanded to 30.9%, the highest among all business segments. RBC said this "underscores the structural competitive advantage of Citi's global franchise."
RBC raised its 2026 EPS estimate to $11.10 from $11.00 and its 2027 estimate to $12.75 from $12.65.
The firm has an outperform rating and a $150 price target on the stock.
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