Citigroup Releases Second Quarter 2022 Results
Citigroup Incorporated has reported net income for the second quarter of 2022 of $4.5 billion, or $2.19 per diluted share, on revenues of $19.6 billion. This is compared to a net income of $6.2 billion, or $2.85 per diluted share, on revenues of $17.8 billion for the second quarter 2021.
Revenues increased 11% from the prior-year period, with growth in both net interest income as well as non-interest revenue. Higher net interest income was primarily driven by the benefits of higher rates as well as strong volumes across Institutional Clients Group (ICG) and Personal Banking and Wealth Management (PBWM). Non-interest revenue also increased, driven by Fixed Income Markets and Services in ICG, which more than offset lower non-interest revenue in Investment Banking in ICG and PBWM.
Net income of $4.5 billion decreased 27% from the prior-year period, as higher cost of credit and an 8% increase in expenses more than offset the 11% increase in revenues.
Earnings per share of $2.19 decreased 23% from the prior-year period, reflecting the lower net income, partly offset by an approximate 4% decline in shares outstanding.
Citi CEO Jane Fraser said, “While the world has changed since our Investor Day in March, our strategy has not and we are executing it with discipline and urgency. Treasury and Trade Solutions fired on all cylinders as clients took advantage of our global network, leading to the best quarter this business has had in a decade. Trading volatility continued to create strong corporate client activity for us, driving revenue growth of 25% in Markets. While economic sentiment clearly impacted Investment Banking and Wealth Management, we continue to invest in these businesses and we like where they are headed. In U.S. Personal Banking, the positive drivers we saw in our two credit cards businesses over the last few quarters converted into solid revenue growth this quarter, most notably a 10% growth in Branded Cards.
“In a challenging macro and geopolitical environment, our team delivered solid results and we are in a strong position to weather uncertain times, given our liquidity, credit quality and reserve levels. I am particularly pleased with our capital strength. We ended the quarter with a Common Equity Tier 1 ratio of 11.9%, having built capital due to a higher regulatory requirement. We intend to generate significant capital for our investors, given our earnings power and the upcoming divestitures,” Ms. Fraser concluded.
Percentage comparisons throughout this press release are calculated for the second quarter 2022 versus the second quarter 2021, unless otherwise specified.
The Citigroup’s 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.
