Citigroup Watches Spending; Sees Digital Engagement Rising

Citigroup’s latest results took note of continued spending on credit cards but there were some notes of caution in the mix.

The earnings materials detailed that branded card-related volumes were 4% higher year on year in the March period, to just under $121 billion. End of period loans were 11% higher on those branded cards.

The company’s organization revamp is largely complete, CEO Jane Fraser said, who added that “we are intensifying our efforts such as automating certain regulatory processes and the data related to regulatory reporting.”

Treasury and Trade Solutions’ growth is outpacing global GDP growth, the CEO said.

Branded Card Spending Growth

Citi, she said, is seeing “healthy spend growth persists in branded cards, primarily driven by our more affluent customers. Across both portfolios, Increased demand for credit continues to drive strong growth in interest earning balances.”

But “while they’re only a small part of our portfolio, we are keeping an eye on the customers in the lower FICO band,” she said.

There is continued “strong engagement in digital payment offerings,” such as Citi Pay, she said, used as a point-of-sale lending product that is integrated into merchants’ checkout processes. The company’s presentation materials indicated that active mobile users were 10% higher to 19 million and active digital users 6% higher to 25 million. Average installment loans stood at $6 billion, adding 19% year over year in the March quarter.

CFO Mark Mason said on the call that across branded cards and retail services, approximately 85% of the company’s card loans are to consumers with FICO scores of 660 or higher.

Non-conforming loans as a percentage of average loans were 3.7% of branded cards in the first quarter, up from about 2.2% a year ago.

He detailed, too, that in the TTS unit, volumes were up 9% and commercial card spending volume gathered 5%.

Asked about credit metrics, Mason said on the call that “current NCLs are higher than the high end of the full year range that I’ve given. But if you look back, that is not inconsistent with seasonality that we’ve seen in the holiday season and how losses tend to mature or materialize through that process … I’d expect to not only see them be higher than the average range in Q1, but also in Q2 before coming down. And then I still expect that in 2025, you tend to see them further normalizing.”

Investors sent the company’s stock 2% lower during trading on Friday.