Citi Sees Growth Ahead From ‘High-End’ Consumers

Citigroup’s fourth-quarter earnings results were part of a trend in banking reports Wednesday (Jan. 15), where consumer spending continued to drive momentum on cards, the macro backdrop was resilient, and, for Citi, there was particular growth in the movement toward digital payments and banking.

The company’s branded credit card spending volumes were up 5% to $135 billion, according to a Wednesday earnings presentation. Average loans in the segment were $113 billion, adding 6% year on year. The 90-day delinquency rate on those cards stood at 1.18%, up 0.11% from last year. The net credit loss rate was 3.6%, adding 0.4% from the fourth quarter of last year.

The 20 million active mobile user base was up 8%.

Installment loans in Q4 came to $7 billion, adding 12% from the year-ago period.

Citi CEO Jane Fraser said on a conference call with analysts that there has been “good momentum across all our businesses. From the global macro perspective, economies have done a good job, tolerating hikes from central banks, and inflation has clearly been receding.”

In the United States, she said, “growth is not only being driven by the higher-end consumer but also by a strong and innovative corporate sector.”

Fraser also said during the call that the bank grew market shares in its Treasury and Trade Solutions (TTS) and security services segments.

Restructuring Is on Track

In reference to the firm’s restructuring, Fraser said during the call that through the past three years, “we have materially simplified our firm … we exited consumer businesses in nine countries and near completion of wind downs in three and are on track to exit the final two.” She also said that “we went through a significant simplification of our organization, removing management layers and the regional construct. This has accelerated decision-making and made us a better partner to our clients.”

The company has gone live with Citi Payments Express, its online bill payment offering, in 18 countries and has converted 4 million retail banking customers to its banking platform in the U.S.

“We accelerated our use of AI, arming 30,000 developers with tools to write code, launched two AI platforms to make our 143,000 colleagues more efficient,” Fraser said during the call.

Investors sent the shares 6% higher Wednesday.

Chief Financial Officer Mark Mason said on the conference call that consumer “payment rates continue to normalize, and we continue to see spending growth.”

Elsewhere, he said the company is, “in security services, continuing to gain share through investments in our digital and data capabilities while deepening with asset managers and asset owners.”

During a question-and-answer session with analysts, Mason said net credit losses in the card segment are forecast to be in the range of 3.5% to 4% for the year; that tally now stands at 3.6%.

Within retail banking, Fraser said, “we’re driving primary checking growth. We put in simplified banking, so we get a much more streamlined customer proposition that’s driving more of a relationship-based banking approach as opposed to a transactional one. Importantly as well, the retail banks have been feeding our wealth business.”