Citi’s markets revenues best in recent memory

Citigroup has reported a net income of US$2.5 billion for the fourth quarter of 2022 – down 22% compared to the prior year quarter (Q4 2021: US$3.2 billion). Revenues, at US$18 billion, increased by six percent year-on-year (YoY).

For the full year 2022, Citigroup reported net income of US$14.8 billion on revenues of US$75.3 billion, compared to net income of US$22 billion on revenues of US$71.9 billion for FY2021.

Equity derivatives, for example, is a real strength, this was an equity derivatives year - Jane Fraser, Citi

In the institutional clients’ group, markets had the best fourth quarter in recent memory with revenues up 18% YoY, largely due to growth in fixed income markets (+31%), which were boosted by strength in rates and currencies.

Equity markets revenues of US$789 million were down 14%, primarily reflecting reduced client activity in equity derivatives, partially offset by growth in prime services.

For full year 2022, markets revenues grew by seven percent YoY, mainly driven by strength in rates and FX. Equity markets revenues fell by nine percent YoY.

The global macro environment played out largely as Citi anticipated during the second half of last year, according to Jane Fraser (pictured), chief executive officer, Citi. “As we enter 2023, the environment is a tad better than we all expected, for the time being at least, despite the aggressive tightening by central banks,” said Fraser, speaking during the company’s earnings results presentation webcast on 13 January.

Fraser has seen some depression in areas of strength in the markets business. “Equity derivatives, for example, is a real strength, this was an equity derivatives year.

“So, there's some […] and the corporate world with the volatility that's out there from a macro geopolitical environment is another real strength of ours. And for better or for worse, we're expecting that strength to continue, certainly so far,” Fraser said.

Citi issued 1,318 structured products worth an estimated US$4.2 billion on the primary market in Q4 2022 – slightly up by issuance but down by sales volumes from the equivalent quarter last year (Q4 2021: US$4.8 billion from 1,356 products).

Most of its volumes were collected in the US, where it was the number one issuer group in the quarter with a market share of 16% - ahead of Goldman (15.5%) and J.P. Morgan (13%), according to SRP data.

Citi collected US$3.3 billion from 1,155 products in its domestic market – up 7.4% by sales volume YoY (Q4 2021: US$3.1 billion from 925 products). Some 94% of its volumes came from products tied to equities, with equity indices the preferred underlying of the US investor: US$1.6 billion was collected from 472 products linked to a single index with a further US$1.3 billion gathered from 486 products tied to an index basket.

Citi’s best-selling US product in Q4 was a growth autocall on the Nasdaq 100, which sold US$65m.

Other jurisdictions were the bank actively issued structured products on the primary market included, among others, France, Germany, Italy, the UK, China and Taiwan.

On the secondary market, Citi issued some 81,640 turbos in Q4 2022, down from more than 100,500 in the prior year quarter. More than 85% of the leverage products issued between 1 October and 31 December 2022 were targeted at investors in Germany (69,501), followed by those in France (10,277) and the Netherlands (1,108).

Personal banking and wealth management revenues of US$6.1 billion increased 15% YoY while global wealth management revenues of US$1.7 billion decreased six percent YoY, driven by lower investment product revenues and despite net interest income growth from the higher interest rates particularly in Asia.

Legacy Franchises revenues of US$2.1 billion decreased six percent, mainly due to the reduction in revenues from the closing of five exit markets and the impact of the Korea consumer and Russia consumer wind-downs, partially offset by the Thailand consumer business gain on sale.

Click the link to read the Citi fourth quarter and full year 2022 results, presentation and supplement.