The US bank has seen its sales of structured products in the US increase significantly over the last quarter.

Citi as an issuer group has boosted its structured product sales by over US$1 billion in the second quarter of 2021 with US$3 billion, compared with US$1.9 billion accounting for 667 products in Q2 20.

According to the SRP US database, the majority of the 865 products issued by Citi featured worst of option (588/US$2.1 billion), reverse convertible (530/US$2.2 billion), callable (321/US$1.1 billion), and knock out (294/US$1.2 billion) payoff types in Q2 21.

The US investment bank’s proprietary underlying Citi Dynamic Asset Selector 5 ER has been a driver of sales after racking up US$58m during the second quarter of 2021, compared with US$45m in the previous quarter, and US$32m in the same period of 2020, SRP data shows.

The most recently issued structured product tied to the index is a market-linked note issued by Citigroup Global Markets. The growth note features a strike date of 30 June 2021 and will reach maturity in July 2026. The product sold for US$3m and has an enhanced tracker payoff structure.

The Dynamic Asset Selector 5 ER’s risk control features and rise in popularity in the US market hint to an increased desire for diverse index options among structured product investors. Besides this index increasing in popularity, a large volume of structured products issued by Citi and tied to underlyings such as Invesco QQQ Trust Series 1, Financial Select Selector SPDR ETF, and Energy Select Selector SPDR Fund have also entered the limelight in the second quarter.

Europe

In Europe, Citi has issued a total of 33 not flow products during the second quarter of 2021, mainly via the bank’s Citigroup Global Markets Funding Luxembourg issuance entity.

The products are listed across five markets including the UK, Germany, Italy, Belgium, and Austria with a total sales volume of US$48.2m.

A recently added product issued the Global Markets Funding Luxembourg vehicle is the Autocall Phoenix Memory Coupon - Eurostoxx Banks, an income structure featuring a worst of option, snowball, reverse convertible, and knock out payoff types linked to the Eurostoxx banks index which struck on 18 June 2021 and will reach maturity in 2024 . If the level of the underlying is at or above 65% of the initial level on the observation date, the product will offer 1.413% coupon. The certificate also uses a ‘memory effect’.

Citi has also issued a high volume of leverage products in Europe during Q2 21, with larger concentrations besides Germany (68,532 products) in France (12,342 products) and the Netherlands (1,886 products).

The products fall under a wide range of asset classes that include equities (single index, single share, and share basket), FX Rates, and commodities while popular underlyings include Brent Crude Oil, EUR/USD, S&P 500, and Gold.

Earnings

The bank led by Jane Fraser (pictured) has reported net income of US$6.2 billion for the second quarter of 2021, or US$2.85 per diluted share, on revenues of US$17.5 billion. This can be compared with a net income of US$1.1 billion, or US$0.38 per diluted share, on revenues of US$19.8 billion for the second quarter 2020.

The net income of US$6.2 billion increased by 22% from the prior-year period driven by the lower cost of credit while revenues decreased 12% from the same period.

This was driven by a normalization in market activity in fixed income markets within the institutional clients group (ICG), along with lower average card loans in global consumer banking (GCB), as well as the impact of lower interest rates.

Citigroup operating expenses increased by 7% on a reported basis to US$11.2 billion in the second quarter, while allowance for credit losses on loans stand at US$19.2 billion at quarter end.

Risk-weighted assets (RWAs) stand at US$1.3 trillion in comparison to US$1.2 trillion in the same quarter of 2020.

Click here to view the bank’s earnings release.