NEW YORK, Sept 9 (Askume) – Citigroup (CN) expects investment banking fees in the third quarter to rise 20% compared with the same period last year, Chief Financial Officer Mark Mason told investors at a conference in New York on Monday.
Mason said the profit was driven by good activity in the debt capital markets and mergers and acquisitions.
At the same time, he said the market expects revenue to decline by around 4% as 2024 will not be able to repeat last year’s 10% growth.
The bank estimates that if the Federal Reserve cuts interest rates as expected this year, the US economy will achieve a so-called soft landing.
Clients are also considering the impact of November’s US presidential election and the likely economic policies of both candidates.
“There’s been a lot of discussion about different policy approaches in different sectors like energy, health care, consumer, and how the election results will affect those sectors,” Mason said.
In Citi’s consumer credit card business, payment rates have begun to decline among customers, particularly those with lower credit scores, Mason said.
He said credit card defaults have increased, but are now reaching their peak.
“If you say there’s a dichotomy between customers with high FICO scores and customers with low FICO scores,” wealthier customers will increase their spending, while customers with lower credit scores will prioritize core items over optional items.
Consent Order
Citigroup was fined $136 million by regulators in July for insufficient progress in resolving data management issues arising from regulatory penalties that began in 2020.
Regulators also require lenders to demonstrate that they are devoting adequate resources to these efforts.
In response to a question about compliance efforts, Mason said the bank is paying particular attention to data, adding: “We have received feedback that suggests we are not moving fast enough in this area.”
He said the city is working to improve the quality, speed and standardization of data collection.
The bank is implementing plans required by regulators to ensure it has the necessary number of people to get the job done.
“We have reviewed the progress of all these initiatives that are behind schedule,” he said. The bank will analyse whether more staff is needed in areas where work has been delayed.
Citigroup’s second-quarter profit topped Wall Street forecasts, driven by investment banking, markets and services revenue. Shareholder returns for the period were 7.2%, below the medium-term target of 11% to 12%.
Citigroup shares were unchanged Monday afternoon. Bank stocks have gained about 15% so far this year, while the broader S&P 500 index has gained 19%.
