Citi markets revenues driven by strong momentum in EQD

Citigroup has reported net income of US$3.2 billion for the third quarter of 2024 – down nine percent year-on-year (YoY). Revenues increased by one percent from the prior year period to US$20.3 billion.

Our continued strong performance in equities validates both our strategy and execution to grow prime and cash - Jane Fraser, CEO

In the markets business, revenues, at US$4.8 billion, were up slightly on the back of a ‘better than expected September’, according to CEO Jane Fraser (pictured). Despite beating expectations the share price of the US third-largest lender fell five percent on the day of its Q3 earnings announcement.

Markets momentum was driven by significant strength across all products in equities, which was up 32% YoY, amid healthy new issuance activity in derivatives. The performance of spread products and other fixed income, which, at US$1.1 billion, increased by five percent YoY, was primarily driven by higher financing and securitisation volumes and underwriting fees.

‘Our continued strong performance in equities validates both our strategy and execution to grow prime and cash,’ Fraser said during the third quarter 2024 earnings call on 15 October.

Citi: US sales & issuance by quarter

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Citi accumulated an estimated US$7.3 billion from 2,182 structured products issued on the primary market in Q3 2024 – an increase of 44% by sales volumes YoY (Q3 2023: US$5.1 billion from 1,546 products).

Most of its volumes were collected in the US, where it was the number two issuer group in the quarter with a market share of 12.2% – behind J.P. Morgan (15.3%), but ahead of Goldman Sachs (11.6%), Morgan Stanley (9.8%) and Barclays (7.2%), according to SRP data.

Citi gathered US$5.3 billion from 1,378 products in its domestic market – up 35% by sales volume YoY (Q3 2023: US$3.9 billion from 1,202 products). More than 50% of its volumes came from products linked to equity indices, with almost US$2 billion invested in 548 products tied to an index basket and a further US$850m invested in 286 products linked to a single index.

Some 225 structures with combined sales of US$1.2 billion were linked to a single stock, including notes linked to the common stock of Booking Holdings, which, with sales of US$319m, was Citi’s top selling product in the quarter.

Single stock-linked products increased their market share by 11 percentage points YoY: from 12% in Q3 2023 to 23% this quarter. Interest-linked products registered the biggest drop in market share: from 19% in Q3 2023 to 11% in Q3 2024.

Citi in the US: asset class – market share by sales volume

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Europe and beyond

Other jurisdictions where Citi was active in the quarter included 10 markets in Europe, where most of its products were issued via the Citigroup Global Markets Funding Luxembourg vehicle.

The highest activity was seen in France, where 133 products were issued in Q3, mostly structures linked to single equity-indices – often with a decrement feature, including the Morningstar Developed Europe Energy Select 10 Decrement 50 Point GR EUR Index (19 products), iStoxx Single Stock on Stellantis GR Decrement 1.34 Index (17), and iStoxx Single Stock on Credit Agricole GR Decrement 1.05 Price EUR Index (16).

In the UK, Citi issued 19 products, mostly linked to the FTSE 100, that sold US$57m (Q3 2023: US$34m from 24 products) while in Poland it collected US$48m from five capital protection products linked to an equity basket that were distributed via the network of Santander Bank Polska (Q3 2023: US$14m from one product).

Citi also issued products in Austria, Czech Republic, Germany, Finland, Hungary, Ireland, and Sweden in the period.

Outside of Europe, the US bank had a large presence in Taiwan, where it was the manufacturing company behind 613 products that were targeted at private banking clients of local banks and securities houses such as CTBC Bank, Cathay Securities, Bank SinoPac and Yuanta Securities, among others (Q3 2023: 261 products).

In Hong Kong SAR, Citi issued 262 callable bull bear certificates (CBBCs) and 206 warrants in the quarter (Q3 2023: 196 CBBCs and 128 warrants).

Wealth

Wealth revenues of US$2 billion increased by nine percent YoY, driven by a 15% increase in non-interest revenue, reflecting higher investment fee revenues on momentum in client investment assets, as well as a six percent increase in net interest income due to higher deposit volumes and spreads.

Private Bank revenues of US$614 million were largely unchanged from the prior-year period, as higher investment fee revenues and improved deposit spreads were offset by higher mortgage funding costs.

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

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