Citigroup Q2 Results Show Boost In Card Spending


Citigroup posted Q2 results that topped expectations even as Wall Street-related activity was mixed — but consumer-oriented activity rebounded.

In terms of headline numbers, adjusted earnings of $1.83 were 3 pennies better than expected, and revenues, which were $18.76 billion, were $270 million better than expected.

That adjusted earnings per share number excluded a gain on the firm’s Tradeweb investment.

The Street had expected quarterly, and in some cases, year-on-year declines in trading, in investment banking activity and equity markets, that latter falling 9 percent year on year to $790 million. Fixed income was off 4 percent quarter to quarter to $3.3 billion.

Beyond the market volatility, and the fact that the stock was off in intraday trading, Citigroup’s results and commentary underscore a continued focus on spending on technologies to streamline operations. The company has said it sees $600 million in expense savings from such efforts and indeed, second quarter expenses were down 2 percent to $10.5 billion, which was, according to Bloomberg, $100 million less than analysts had expected.

Bright spots were seen in the consumer-focused side of operations, where Citigroup boosted its deposits by $3 billion. And in terms of cards, the company said that revenues from that segment were up 4 percent year over year to $4.9 billion. Average loans were up 3 percent to $162 billion, and net credit losses were down a single basis point as measured quarter over quarter. The number of accounts were up 3 percent year on year, per supplemental materials provided with the earnings data. Citi-branded card spending was up 2 percent in North America.

The company said in its supplemental materials that in North America, the branch count was off by 1 percent, to 668, but average deposits gained 2 percent.

North America represented the largest regional contributor, at $8.6 billion, up 1 percent year on year. That pace lagged growth seen in Latin America, where revenues gained 3 percent to $2.6 billion, and Asia, which was up 4 percent to $4 billion.

Net credit losses were up 9 percent to $1.9 billion, the company said. The firm said that it had reserved $2.1 billion to cover non-performing loans, which the newswire stated was in line with expectations — and which the company said was tied in part to a boost in card spending.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.