Citigroup CEO Sees ‘Surprisingly Resilient’ Global Consumer Spending

Citigroup’s earnings Tuesday (Oct. 15) echo the sentiment of other banks that have reported in the past few days:

Investment banking and trading revenues were up. And consumers remain resilient — though in the words of CEO Jane Fraser on the conference call with analysts, spending has been “healthy,” but consumers have become “discerning” in what they are buying.

As far as banking had been concerned, Citi’s earnings materials show equity market revenues were up by about a third, and overall banking revenues were up by 16% to about $1.6 billion.

The data indicates that end-of-period card loans were $164 billion, up from $156 billion in the same period last year; net credit losses were 4.4% of that book in the latest period, up from 3.3% a year ago but down from 4.7% seen in the second quarter.

Card Spending Metrics

Credit card spending volume was up 3% year over year, according to company materials on branded cards, to $129 billion. Looking ahead, the company expects to see full year branded card NCLs to be between 3.5% to 4%.

During the call with analysts, Fraser said, “While growth is a notch slower than last year, global economic performance continues to be surprisingly resilient. Whatever you want to call the U.S. landing, the sentiment around it is more optimistic, supported by the recent positive payrolls report. And we see a healthy yet more discerning U.S. consumer,” she said. Signs of “stress,” she said, are “isolated” to lower FICO scoring consumers.

With a nod to cross-border activity, she took note of the fact that Citi is the first global bank to complete the integration of its cross-border services with Mastercard Move.

“This will ultimately enable near-instant secure payments to the vast Mastercard debit network, starting with 14 markets with more to come early next year,” Fraser said.

The company’s transformation proceeds apace, said Fraser, who added that the company recently closed a longstanding consent order tied to its anti-money laundering systems.

“We have increased our investments in areas where we have not made sufficient progress, such as data quality management. I and the management team remain steadfast and determined to get this transformation right and to get this done,” the CEO said.

CFO Mark Mason said on the call that, in terms of technologies and efficiencies, “We’ve continued to simplify our technology infrastructure, retiring over 450 applications year-to-date and now over 1,250 since our 2022 Investor Day. … We’ve upgraded 100% of our over 2,300 ATMs in North America and Asia Pacific to next-gen software for better customer security and monitoring. And we’ve streamlined our cloud onboarding process, reducing time to onboard applications to the public cloud from over seven weeks to two weeks”

In reference to credit, he said that 85% of Citi’s consumer loans are to consumers with FICO scores of 660 or higher.

“Spend and payment rates continue to normalize, and underlying credit performance remains broadly in line with our expectations,” Mason said.

Citi shares slipped 5% through Tuesday’s trading but were up slightly in after-market activity.