Second Quarter 2022 Results and Key Metrics

Second Quarter Financial Results

Citigroup revenues of $19.6 billion in the second quarter 2022 increased 11%, driven by increased rates, client activity in Markets and continued momentum in the U.S. cards businesses, partially offset by a slowdown in Investment Banking activity as well as investment fee headwinds in Global Wealth Management.

Citigroup operating expenses of $12.4 billion in the second quarter 2022 increased 8%, driven by continued investments in Citi’s transformation, higher business-led investments and volume-related expenses, partially offset by productivity savings.

Citigroup cost of credit of $1.3 billion in the second quarter 2022 compared to $(1.1) billion in the prior-year period, reflecting a net build in the allowance for credit losses (ACL) of $0.4 billion, compared to a net ACL release of $2.4 billion in the prior-year period, partially offset by lower net credit losses.

Citigroup net income of $4.5 billion in the second quarter 2022 decreased 27% from the prior-year period, driven by the higher cost of credit and the higher expenses, partially offset by the increase in revenues. Citigroup’s effective tax rate was 19.8% in the current quarter versus 15.7% in the second quarter 2021. The higher tax rate for the current quarter reflected lower tax benefits related to certain non-U.S. operations.

Citigroup’s total allowance for credit losses on loans was approximately $16.0 billion at quarter end, with a reserve-to-funded loans ratio of 2.44%, compared to $19.2 billion, or 2.88% of funded loans, at the end of the prior-year period. Total non-accrual loans decreased 31% from the prior-year period to $3.0 billion. Consumer non-accrual loans decreased 35% to $1.4 billion, while corporate non-accrual loans of $1.7 billion decreased 26% from the prior-year period.

Citigroup’s end-of-period loans were $657 billion as of quarter end, down 3% versus the prior-year period.

Citigroup’s end-of-period deposits were $1.3 trillion as of quarter end, up 1% versus the prior-year period.

Citigroup’s book value per share of $92.95 and tangible book value per share of $80.25 increased 2% and 3%, respectively, largely driven by net income and lower shares outstanding, partially offset by adverse movements in the accumulated other comprehensive income component of equity and common dividends. At quarter end, Citigroup’s CET1 Capital ratio was 11.9% versus 11.4% in the prior quarter. Citigroup’s SLR for the second quarter 2022 was 5.6%, unchanged from the prior quarter. During the quarter, Citigroup returned a total of $1.3 billion to common shareholders in the form of dividends and repurchases.

ICG revenues of $11.4 billion increased 20% (including gain/(loss) on loan hedges⁽⁶⁾), driven by Services and Markets, partially offset by a decrease in Investment Banking revenues.

Services revenues of $4.0 billion increased 28% versus the prior year. Treasury and Trade Solutions revenues of $3.0 billion increased 33%, driven by 42% growth in net interest income, as well as 17% growth in non-interest revenue, reflecting strong growth with both mid and large corporate clients. Securities Services revenues of $994 million increased 16%, as net interest income grew 41%, driven by higher interest rates across currencies, and non-interest revenue grew 8%, reflecting elevated levels of corporate settlement activity in Issuer Services.

Markets revenues of $5.3 billion were up 25% versus the prior year, driven by higher volatility leading to elevated client engagement. Fixed Income Markets revenues of $4.1 billion increased 31%, primarily reflecting strong client engagement in the rates, currencies and commodities businesses. Equity Markets revenues of $1.2 billion were up 8%, driven by strong equity derivatives performance, partially offset by less client activity in cash, and a net decrease in prime balances, as lower asset valuations more than offset new client balances.

Banking revenues of $2.1 billion decreased 4% versus the prior-year period (including gain/(loss) on loan hedges). Excluding the gain/(loss) on loan hedges, Banking revenues of $1.6 billion decreased 28% versus the prior year. Investment Banking revenues of $805 million declined 46%, as heightened geopolitical uncertainty and the overall macroeconomic backdrop reduced capital markets activity and M&A. The decline in Investment Banking revenues were partially offset by higher revenues in Corporate Lending.

ICG operating expenses of $6.4 billion increased 10%, driven by continued investments in Citi’s transformation, higher business-led investments and volume-related expenses, partially offset by productivity savings.

ICG cost of credit of $(202) million compared to $(694) million in the prior-year period, with a net ACL release of $245 million and net credit losses of $18 million. The release was largely driven by a reduction in Russia-related risk in the quarter, partially offset by a build due to increased macroeconomic uncertainty.

ICG net income of $4.0 billion increased 16% from the prior year, driven by the higher revenues, partially offset by the higher expenses and the higher cost of credit.

PBWM revenues of $6.0 billion increased 6%, as net interest income growth was partially offset by a decline in non-interest revenue, largely driven by partner payments in Retail Services.

US Personal Banking revenues of $4.1 billion increased 9%. Branded Cards revenues of $2.2 billion increased 10%, driven by higher interest on higher loan balances. New accounts and card spend volumes increased 18%, while average loans increased 11%. Retail Services revenues of $1.3 billion increased 7%, driven by higher interest on higher loan balances, partially offset by higher partner payments. Retail Banking revenues of $656 million increased 6%, largely driven by higher deposit spreads and volumes.

Global Wealth Management revenues of $1.9 billion were flat, as investment fee headwinds, particularly in Asia, were offset by growth in average deposits and loans.

PBWM operating expenses of $4.0 billion increased 12%, driven by continued investments in Citi’s transformation, higher business-led investments and volume-driven expenses, partially offset by productivity savings.

PBWM cost of credit of $1.4 billion compared to $(170) million in the prior-year period, largely driven by a net ACL build of $651 million in the current quarter, compared to a net ACL release of $1.0 billion in the prior-year period, reflecting increased macroeconomic uncertainty. Net credit losses declined 19%, reflecting continued strong credit performance across portfolios.

PBWM net income of $553 million decreased 69%, largely driven by the higher expenses and the ACL build, partially offset by the higher revenues.

Legacy Franchises revenues of $1.9 billion decreased 15% versus the prior year, largely driven by the impacts related to the Australia consumer banking sale and Korea wind-down, as well as lower investment activity in Asia Consumer.

Legacy Franchises expenses of $1.8 billion increased 1%.

Legacy Franchises cost of credit of $121 million compared to $(204) million in the prior-year period, primarily driven by a lower net ACL release, partially offset by lower net credit losses.

Legacy Franchises net income of $(17) million compared to net income of $494 million in the prior-year period, reflecting the lower revenues, the higher expenses and the higher cost of credit.