Citigroup Expects 20% Surge in Q3 Investment Banking Fees

Citigroup’s investment banking fees are projected to rise 20% in the third quarter compared to last year, driven by increased activity in debt capital markets and mergers and acquisitions, Chief Financial Officer Mark Mason said at a New York investor conference on Monday.

However, the bank expects a 4% decline in market revenue, following a 10% surge in 2023 that has not continued into 2024. Despite this, Citigroup maintains a positive outlook on the U.S. economy, forecasting a soft landing if the Federal Reserve cuts interest rates as anticipated.

Mason also noted that clients are evaluating the potential impact of the upcoming U.S. presidential election on sectors such as energy, healthcare, and consumer goods.

In Citi’s consumer credit card division, payment rates are declining among lower-credit-score customers, while higher-FICO-score clients continue to increase spending. Credit card delinquencies, although rising, appear to be stabilising.

Regarding regulatory compliance, Citi is addressing issues flagged by regulators, particularly in data management. The bank was fined $136 million in July for slow progress on fixing data-related problems. Mason assured investors that the bank is working to improve data quality, speed, and standardisation, and is assessing whether additional resources are required to meet regulatory deadlines.

Citi’s second-quarter profit exceeded Wall Street expectations, with investment banking, markets, and services driving revenue. However, its 7.2% shareholder return fell short of its medium-term target of 11% to 12%.