The US investment bank’s markets business encountered its third best quarter in a decade, despite reduced client activity in equity derivatives.

Citigroup has reported net income of US$4.6 billion for the first quarter of 2023 – up seven percent compared to the prior year quarter. Revenues, at US$21.4 billion increased by 12% year-on-year (YoY).

In the institutional client’s group, equity markets revenues of US$1.1 billion, decreased by 25% YoY, primarily reflecting reduced client activity in cash and equity derivatives relative to a very strong quarter last year. Fixed income markets revenues were up four percent, driven by strength in rates and currencies, partially offset by lower revenues in spread products/other fixed income.

The first quarter of 2022 was no slouch, as you may recall, but this quarter was our third best in a decade - Jane Fraser, CEO

‘Within markets, we benefited from excellent performance in rates and continued engagement from our corporate clients,’ said CEO Jane Fraser (pictured) during the Q1 2023 earnings call on 14 April.

‘The first quarter of 2022 was no slouch, as you may recall, but this quarter was our third best in a decade […] equities was much weaker, however, down markedly in both derivatives and cash although both still had revenues north of $1 billion,’ she added.

Citi collected an estimated US$4.4 billion from 1,343 structured products issued on the primary market in Q1 2023 – an increase of 16% by sales volumes YoY (Q1 2022: US$3.8 billion from 1,121 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 15.4% - ahead of J.P. Morgan (13.4%), Barclays and Morgan Stanley (11.3% each), according to SRP data.

Citi gathered US$4.1 billion from 1,241 products in its domestic market – up 2.8% by sales volume YoY (Q1 2022: US$3.9 billion from 1,186 products). Some 75% of its volumes came from products tied to equity indices, with almost US$2billion tied in products on the S&P 500 while structures linked to its proprietary Citi Dynamic Asset Selector 5 ER Index sold a combined US$30m.

Structures linked to ETFs accumulated more than US$550m and a further US$450m was collected from interest-linked products. The latter category included Callable Fixed Rate Notes (17290ALC2), which, with sales of US$113m, was Citi’s top selling product in the quarter.

Other jurisdictions were Citi actively issued structured products on the primary market included, among others, Belgium, France, Germany, Italy, the UK, and Taiwan. Of these, the highest activity were seen in the French market where the bank collected an estimated US$280m from 29 products that were mainly linked to single decrement indices (Q1 2022: US$256m from 52 products).

On the secondary market, Citi issued some 91,842 turbos in Q1 2023, making it the seventh biggest provider of leverage products in the quarter, behind J.P. Morgan (166,699 products), Société Générale (162,733), BNP Paribas (151,093), Goldman Sachs (128,925), Vontobel (101,500) and Morgan Stanley (95,250).

More than 90% of the leverage products issued between 1 January and 31 March 2023 were targeted at investors in Germany (84,030), followed by those in France (6,696), the Netherlands (592), Portugal (192) and Finland (150). Outside of Europe, the bank issued 102 warrants and 80 callable bull bear certificates targeted at investors in Hong Kong SAR.

Wealth management

Personal banking and wealth management revenues of US$6.4 billion increased nine percent YoY, boosted by strong loan growth across US personal banking. At the same time, global wealth management revenues, at US$1.8 billion, decreased by nine percent, driven by investment product revenue headwinds and higher interest rates paid on deposits, particularly in the private bank.

Citi announced the appointment of Andy Sieg, who will join the bank as its new head of global wealth management in Q3 2023, reporting directly to Fraser. Previously, Sieg was president of Merrill Lynch Wealth Management, a position he has held for six years.

Casper von Koskull (right), the former president and CEO of Nordea Bank, was elected to the Citigroup board.

Click the link to read the full Citi first quarter 2023 results, presentation and supplement.