Key Metrics
- Net Interest Income (Reported): $13,362 million (decreased 3% yoy)
- Noninterest Revenue: $6,953 million (increased 10% yoy)
- Services Revenue: $5,028 million
- Markets Revenue: $4,817 million
- Fixed Income Markets: $3,578 million
- Equity Markets: $1,239 million
- Banking Revenue: $1,597 million
- Investment Banking Fees: $999 million
- Advisory: $394 million
- Equity Underwriting: $129 million
- Debt Underwriting: $476 million
- US Personal Banking Revenue: $5,045 million
- Wealth Revenue: $2,002 million
- Other Revenue: $1,825 million
- Provision for Credit Losses: $2,675 million (increased 45% yoy)
- Noninterest Expense: $13,250 million
- Net Interest Margin: 2.33%
- Net Credit Losses: $2,172 million (increased 33% yoy)
- Ending Loans: $689 billion (increased 3% yoy)
- Ending Deposits: $1.3 trillion (increased 3% yoy)
- Book Value per Share: $101.91 (increased 3% yoy)
- Tangible Book Value per Share: $89.67 (increased 3% yoy)
Forward guidance
- Full-Year Revenue Guidance: Citi expects to achieve $80 billion to $81 billion in total revenues for FY2024.
- Expense Guidance: For FY2024, Citi anticipates expenses to be at the higher end of the range of $53.5 billion to $53.8 billion, excluding FDIC special assessments and civil money penalties.
- Net Interest Income (NII) Guidance: NII excluding markets is expected to be slightly down for the full year, with Q4 guidance indicating it will be roughly flat sequentially.
- Return on Tangible Common Equity (RoTCE) Target: Citi aims for a medium-term RoTCE target of 11% to 12%.
- Wealth Management Targets: The medium-term target for the Wealth segment is set at a RoTCE of 15% to 20% and an operating margin of 25% to 30%.
- Branded Cards Losses: For FY2024, branded cards are expected to have net credit losses (NCL) in the range of 3.5% to 4%.
- Banamex IPO Timeline: Citi plans to be ready for the Banamex IPO by the end of 2025, contingent on market conditions.
Key takeaways
- Positives:
- Jane Fraser noted, "We saw revenue growth and positive operating leverage for the firm and across all five businesses," indicating broad-based performance improvement.
- Fee-based revenues increased significantly, with Fraser stating, "We saw a double-digit increase in fee-based revenues, reflecting the growing diversity of our earnings mix."
- The banking segment reported a 44% increase in investment banking fees, driven by strong corporate sentiment and strategic transactions, as highlighted by Fraser's mention of the $36 billion Mars acquisition.
- Mark Mason emphasized, "We will continue to repurchase stock as we evaluate the right level on a quarterly basis," indicating a commitment to returning capital to shareholders.
- The Wealth segment showed a 24% growth in client investment assets, with Fraser expressing optimism about the segment's potential, stating, "I continue to be excited by the opportunities and the sheer potential of our franchise."
- Negatives:
- Mark Mason acknowledged, "Lower discretionary spending is impacting our retail services portfolio," suggesting challenges in consumer behavior.
- The US Personal Banking segment faces credit cost normalization, with Mason indicating, "We expect branded cards to be in the 3.5% to 4% NCL range for the full year," which could pressure profitability.
- Regulatory challenges persist, with Mason stating, "We will continue to increase our investments to address data governance and data quality related to regulatory reporting," highlighting ongoing compliance issues.
- Fraser mentioned, "We are not yet where we want to be," indicating that despite progress, there are still significant hurdles to overcome in the transformation process.
- The macroeconomic environment remains mixed, with Fraser noting, "Manufacturing weakness is restraining a modest rebound in Europe," which could impact global operations.
Peer Summary
- Net Interest Income (NII) Trends: JPMorgan Chase anticipates a decline in NII, with Barnum stating, "We do see a pretty clear picture of sequential declines at NII ex-markets," while Wells Fargo expects a 9% decline in full-year NII compared to 2023, indicating sector-wide pressures on traditional banking income.
- Consumer Behavior: Bank of America noted, "Line of credit usage rates remain lower than pre-pandemic levels," reflecting cautious consumer borrowing, echoed by Wells Fargo's observation of "economic uncertainty" leading to client prudence in borrowing.
- Investment Banking Activity: Goldman Sachs highlighted a potential recovery in M&A volumes, stating, "We see significant pent-up demand from our clients," while Morgan Stanley noted that advisory and equity underwriting markets remain below historical averages, suggesting mixed sentiment in investment banking.
- Credit Costs: JPMorgan reported increased credit costs, with Barnum describing them as a "headwind," and Wells Fargo acknowledged weak commercial loan demand, indicating rising credit risk concerns across the sector.
