SKN | Citi Services Delivers Record Year as AI and Payments Modernization Drive Growth

Key Takeaways

• Citigroup Services posted record 2025 revenue of $21.3 billion, up 8% year over year, with a 28.6% ROTCE.

• Net interest income rose ~12%, fees grew ~6%, and AUC/A increased 24%, reflecting wallet share gains and institutional inflows.

• Citi is investing aggressively in AI, payments modernization, and blockchain interoperability to support a hybrid future of traditional and tokenized rails.

At a recent financial services conference, Citigroup’s Head of Services, Shahmir Khaliq, outlined how the bank’s Services division has emerged as one of its highest-returning businesses, combining scale in Treasury and Trade Solutions with Securities Services capabilities.

The message was disciplined growth anchored in technology investment and client integration.

Record Performance Anchored in Scale

Citi Services delivered full-year 2025 revenue of $21.3 billion, rising 8% year over year, alongside a return on tangible common equity of 28.6%. That return profile places the division among the most profitable segments within large-cap global banking.

Operating drivers were broad-based. Deposits increased approximately 7%, loans grew about 9%, cross-border volumes expanded 10%, and clearing volumes rose 5%. Assets under custody and administration climbed 24%, outpacing broader market benchmarks and reflecting net inflows rather than passive asset appreciation alone.

Net interest income growth of roughly 12% and fee growth of 6% illustrate balanced revenue composition.

Wallet Share Expansion Across Client Segments

Citi has targeted deeper penetration among large multinational corporations, banks, asset managers, public sector clients, and fintech firms. Management highlighted more than 200 basis points of wallet share gains in key institutional segments and a doubling of wallet share within its Commercial Bank franchise.

The strategy focuses less on acquiring new categories of clients and more on expanding product usage within existing global relationships.

For a transaction-driven business, wallet share translates directly into recurring flows and operating leverage.

AI and Process Modernization

Technology investment remains central to Citi’s execution plan. AI applications are being deployed across operations, servicing, and client engagement. One example cited was automated document review for account opening, reducing processing time from hours to minutes under supervised oversight.

The principle articulated by management is integration over experimentation. Innovation must embed directly into live client workflows rather than remain siloed pilots.

This philosophy underpins initiatives such as Single Event Custody Processing, designed to reduce operational friction between custodians and asset managers.

Payments and 24/7 Infrastructure

Citi Payment Express is now live in roughly 22 markets, handling approximately 40% of payment flows. In parallel, the bank’s 24/7 clearing infrastructure is being utilized by around 300 banks.

Such modernization enhances cross-border efficiency and supports clients operating across multiple jurisdictions.

Digital asset initiatives are also advancing, with internal blockchain capabilities already facilitating significant client money movement. Management framed tokenization not as a disruption threat but as an evolution requiring interoperability between traditional and blockchain-based systems.

Tokenization and Revenue Durability

Concerns that tokenization could erode traditional revenue streams were addressed directly. Citi’s view is that conventional and digital rails will coexist. Borders, capital controls, and regulatory differences ensure that modernization will not be uniform globally.

By investing in both conventional infrastructure and blockchain connectivity, Citi positions itself as a facilitator regardless of settlement architecture.

Integration, not replacement, defines the strategic outlook.

Strategic Interpretation

Citi Services has become a high-return, fee-and-flow-driven anchor within the broader franchise. Its 28.6% ROTCE underscores the earnings power of transaction banking when scale, deposits, and cross-border networks align.

Future growth depends on continued wallet share gains, technology-enabled efficiency, and effective navigation of geopolitical complexity.

The Services division demonstrates that modernization and profitability are not mutually exclusive.

For confidential discussions regarding transaction banking exposure, AI-driven operational leverage in global banks, and strategic positioning within custody and payments franchises, our senior advisory team is available for discreet consultation tailored to institutional and cross-border investment mandates.