Citigroup Increases Loan Loss Provisions Due to ‘Macro Environment’

Citigroup is reportedly preparing for a possible decline in consumer financial health by putting aside more provisions for potential losses on loans.

“Given the macro environment, etc., cost of credit compared to last quarter, we expect to be up a few hundred million,” Citigroup Head of Banking Vis Raghavan said Tuesday (June 10) at a conference hosted by Morgan Stanley, according to a Bloomberg report. Raghavan added that the bank’s credit reserve build changes frequently based on its outlook.

This move was not expected by analysts and reflects a cautious approach, according to the report. Among analysts surveyed by Bloomberg, the consensus was that Citi’s provisions for credit losses would decline from $2.72 billion in the first quarter to $2.69 billion in the second quarter.

According to the report, Raghavan said at the conference that he remains reassured by Citi’s broader credit exposure. The report said Citi’s retail banking business tends to serve consumers with higher credit scores.

“We still have a few more weeks to go in this quarter, but on the credit overall, I’m incredibly reassured of the quality,” Raghavan said.

PYMNTS reported in April that major credit card companies had growing concern regarding the economy, with delinquencies on the rise and reaching levels similar to those before the pandemic.

In response, these companies were taking proactive measures to prepare for a downturn, including tightening lending practices and setting aside funds to cover potential losses.

It was reported in March that automotive repossessions jumped in 2024 to the highest level in 15 years, signaling that Americans were having trouble staying on top of their monthly bills due to steep interest rates and higher car prices.

Car repossession numbers plunged during the pandemic due to relief efforts for borrowers, but began to climb when those measures ended and inflation jumped, leaving borrowers struggling to repay auto loans.

During earnings reports delivered in April, three of the nation’s largest financial institutions — Citigroup, PNC and Bank of America — reported that, at least for now, the U.S. consumer remains on strong footing.

Citigroup CEO Jane Fraser said at the time that card portfolios showed “elevated” but still manageable levels of credit losses, aligned with an environment in which rising interest rates and inflation had begun to pinch certain segments of consumers.