Overview of Performance: Citigroup reported solid Q3 2024 earnings, with net income of $3.2 billion and earnings per share (EPS) of $1.51. The Return on Tangible Common Equity (RoTCE) stood at 7%, reflecting improved performance amid global economic resilience and internal restructuring efforts. Revenue growth, excluding divestitures, reached 3%, underpinned by strong results across all five of the company’s core business segments.
Key Highlights:
Revenue and Expense Performance:
Citigroup demonstrated positive operating leverage, with overall revenue up and a 2% reduction in expenses, even as the company continued making significant investments in its transformation initiatives.
Services delivered record revenues, up 8%, driven by a double-digit increase in fee-based revenues and notable growth in loan and deposit volumes. Treasury and Trade Solutions (TTS) revenue increased by 4%, and Securities Services jumped 24%, benefiting from new mandates and asset growth.
Citigroup was the first global bank to integrate cross-border services with MasterCard Move, enabling near-instant payments across 14 markets.
Markets and Banking:
Equities saw a 32% revenue surge, driven by strong performances across all product areas, including prime and cash trading.
Fixed income fell 6%, reflecting a slowdown in rates and currencies trading compared to last year’s standout performance.
Investment banking fees were up 44%, primarily due to increased debt issuance ahead of the upcoming US elections. Notable transactions included Citigroup’s role as sole advisor and lead financier in Mars’ $36 billion acquisition of Kellanova.
Citigroup announced a $25 billion private credit partnership with Apollo, allowing it to source new transactions without using its own balance sheet.
Wealth Management:
The wealth management business reported a 9% increase in revenues, with client investment assets rising by 24%, particularly in Asia and through the Citigold platform.
Citigroup signed an agreement to exit trust administration and fiduciary services, streamlining its wealth management focus.
Personal Banking:
US Personal Banking revenues increased 3%, with branded cards showing 8% growth in revenues, driven by higher account acquisitions and interest-earning balances.
Retail services were impacted by lower discretionary spending, though strong credit discipline ensured the portfolios remained in line with expectations.
Capital and Shareholder Returns:
Citigroup maintained a strong capital position, with a CET1 ratio of 13.7%.
The company returned $2.1 billion to shareholders during the quarter, including $1 billion in stock repurchases, with plans for continued stock buybacks subject to quarterly evaluations.
Macro and Outlook:
Citigroup’s outlook on the global economy remained cautiously optimistic. While US economic performance was resilient, manufacturing weakness hampered Europe’s recovery, and China’s property market posed concerns.
Bright spots included India, ASEAN, Japan, the Middle East, Mexico, and Brazil, all of which demonstrated strong economic momentum.
Strategic Priorities and Transformation:
Citigroup’s transformation remains a top priority, with a focus on simplification and improving data quality management.
The firm closed a long-standing consent order related to anti-money laundering systems and continues to invest in key areas to ensure operational excellence.
Jane Fraser emphasized that while the bank has made meaningful progress, more work remains to achieve its medium-term targets for margins and returns.
Conclusion:
Overall, Citigroup's Q3 2024 results showcase a firm that is benefiting from a clear strategic direction, disciplined cost management, and a diverse revenue base. The positive operating leverage, combined with strong performances in key segments like services, wealth management, and banking, supports the bank’s long-term growth trajectory. The management team remains committed to executing its transformation plan while delivering value to shareholders through robust capital management and disciplined investments.
Key Highlights:
Revenue and Expense Performance:
Citigroup demonstrated positive operating leverage, with overall revenue up and a 2% reduction in expenses, even as the company continued making significant investments in its transformation initiatives.
Services delivered record revenues, up 8%, driven by a double-digit increase in fee-based revenues and notable growth in loan and deposit volumes. Treasury and Trade Solutions (TTS) revenue increased by 4%, and Securities Services jumped 24%, benefiting from new mandates and asset growth.
Citigroup was the first global bank to integrate cross-border services with MasterCard Move, enabling near-instant payments across 14 markets.
Markets and Banking:
Equities saw a 32% revenue surge, driven by strong performances across all product areas, including prime and cash trading.
Fixed income fell 6%, reflecting a slowdown in rates and currencies trading compared to last year’s standout performance.
Investment banking fees were up 44%, primarily due to increased debt issuance ahead of the upcoming US elections. Notable transactions included Citigroup’s role as sole advisor and lead financier in Mars’ $36 billion acquisition of Kellanova.
Citigroup announced a $25 billion private credit partnership with Apollo, allowing it to source new transactions without using its own balance sheet.
Wealth Management:
The wealth management business reported a 9% increase in revenues, with client investment assets rising by 24%, particularly in Asia and through the Citigold platform.
Citigroup signed an agreement to exit trust administration and fiduciary services, streamlining its wealth management focus.
Personal Banking:
US Personal Banking revenues increased 3%, with branded cards showing 8% growth in revenues, driven by higher account acquisitions and interest-earning balances.
Retail services were impacted by lower discretionary spending, though strong credit discipline ensured the portfolios remained in line with expectations.
Capital and Shareholder Returns:
Citigroup maintained a strong capital position, with a CET1 ratio of 13.7%.
The company returned $2.1 billion to shareholders during the quarter, including $1 billion in stock repurchases, with plans for continued stock buybacks subject to quarterly evaluations.
Macro and Outlook:
Citigroup’s outlook on the global economy remained cautiously optimistic. While US economic performance was resilient, manufacturing weakness hampered Europe’s recovery, and China’s property market posed concerns.
Bright spots included India, ASEAN, Japan, the Middle East, Mexico, and Brazil, all of which demonstrated strong economic momentum.
Strategic Priorities and Transformation:
Citigroup’s transformation remains a top priority, with a focus on simplification and improving data quality management.
The firm closed a long-standing consent order related to anti-money laundering systems and continues to invest in key areas to ensure operational excellence.
Jane Fraser emphasized that while the bank has made meaningful progress, more work remains to achieve its medium-term targets for margins and returns.
Conclusion:
Overall, Citigroup's Q3 2024 results showcase a firm that is benefiting from a clear strategic direction, disciplined cost management, and a diverse revenue base. The positive operating leverage, combined with strong performances in key segments like services, wealth management, and banking, supports the bank’s long-term growth trajectory. The management team remains committed to executing its transformation plan while delivering value to shareholders through robust capital management and disciplined investments.