Customers are borrowing more and the lender is reaping the gains, Bloomberg reported Friday (July 14).
The jump in revenue for the world’s second-largest credit card issuer was due to higher interest rates and larger card balances, according to the report. Those gains outweighed a 78% increase in consumer loan write-offs.
“Amid a challenging macroeconomic backdrop, we continued to see the benefits of our diversified business model,” Citigroup CEO Jane Fraser said in a press release. She added that the bank’s “cards businesses had double-digit growth due to strong engagement.”
Additionally, the firm’s credit costs soared 43% to $1.8 billion, fueled by write-offs as some cardholders fell behind, according to the report.
The bank’s expenses also jumped 9% to $13.6 billion in the quarter, boosted by severance costs for eliminating about 1,600 jobs, including investment bankers and traders, the report said.
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In addition, the firm’s treasury and trade solutions division saw revenue jump 15% to $3.5 billion, per the report.
Interest income and fees from handling corporations’ cash pushed the results higher, according to the report. Balances on Citi’s U.S. credit cards swelled to $149 billion from a year earlier.
Citigroup, like other banks, endured a slump in investment banking in the quarter, per the report. Revenue from those operations shrank 24% to $612 million.
These second-quarter results follow a first quarter in which Citi’s credit card spend volumes surged by 9% to $116 billion on branded cards and the net credit loss as a percentage of those branded cards stood at 2.2%, up from 1.5% a year earlier.
As PYMNTS reported Wednesday (July 12), consumers continue to wield their cards in full force and do so over digital channels.
PYMNTS research has found that only 45% of consumers pay their credit card balances in full, month after month, which in turn means that the majority of consumers still carry a balance.
The average balance is more than $4,500, according to “New Reality Check: The Paycheck-to-Paycheck Report: The Generational Deep Dive Edition,” a PYMNTS and LendingClub collaboration.
The report also found that, among the different generations of survey respondents, boomers and seniors carry the highest average balances, at more than $5,100.
