Citibank North America branded credit card revenues declined 6.4% and income sank 32.1% year-on-year (YOY) in the first quarter (1Q/16). Citi indicated the higher cost of credit and rewards funding as a factor.
Compared to its peer group, the Citi card portfolio was stable with outstandings (OUT) up slightly and purchase dollar volume (PDV) up substantially YOY. Other metrics were solid except for slight uptick in 90+ day delinquency (DEL) and charge-offs (CO).
North America Citi-branded card
revenue declined 6.4% YOY to $1880 million, compared to $1937 million in the prior quarter and $2009 million for the year ago quarter. For 2015, Citi averaged $1952 million per quarter.
North America (N.A.) Citi-branded card income collapsed -32.1% YOY to $366 million, compared to $515 million in the prior quarter and $539 million for the year ago quarter. For 2015, Citi averaged $519 million per quarter.
End-of-Period (EOP) N.A. credit card outstandings edged up by 2.2% YOY, compared to flat YOY growth for 4Q/15. At the end of 1Q/16 Citi had $64.9 billion in U.S. EOP credit card outstandings, compared to $67.2 billion at the end of the prior quarter and $63.5 billion at the end of the year ago quarter.
Average N.A. credit card outstandings edged up by 0.9% YOY, compared to flat YOY growth for 4Q/15. During the first quarter Citi had $64.7 billion in U.S. average credit card OUT, compared to $64.5 billion for 4Q/15 and $64.1 billion for 1Q/15.
Citi N.A. credit card PDV increased 12.2% YOY to $45.9 billion, compared to $49.0 billion for 4Q/15 and $40.9 billion for 1Q/15.
Citi N.A.’s EOP gross accounts (GAC) increased 0.4% YOY to a 23.8 million. For the previous quarter Citi reported 23.5 million GAC and 23.7 million one-year ago.
Early-stage and late-stage delinquency remained down from year ago levels, but late-stage delinquency edged up in 1Q/16.
Citi N.A.’s consumer credit card early-stage (30-89 day) delinquency decreased 2 basis points (bps) YOY and 2 bps Quarter-To-Quarter (QTQ) for 1Q/16. The issuer reported a 30-89 day delinquency ratio of 0.76%, compared to 0.78% for 4Q/15 and 0.78% for 1Q/15.
Citi N.A.’s consumer credit card late-stage (90+ day) delinquency declined 8 bps YOY but up 2 bps QTQ for 1Q/16. The issuer reported at 90+ day delinquency ratio of 0.82%, compared to 0.80% for 4Q/15 and 0.90% for 1Q/15.
Citi N.A. consumer credit card charge-off (CO) ratio was down 28 bps YOY but slipped up by 4 bps QTQ for 1Q/16. The issuer reported at charge-offs ratio of 2.83% for 1Q/16, compared to 2.79% for 4Q/15 and 3.11% for 1Q/15.
Citi N.A. credit card average yield (YLD) was up 7 bps QTQ, but down 10 bps YOY. For 1Q/16 the yield was 10.38%, compared to 10.31% for 4Q/15 and 10.48% for 1Q/15.
Citi N.A. credit card net interest revenue (NIR) was down 1 bps QTQ and down 15 bps YOY. For 1Q/16 the NIR was 10.02%, compared to 10.03% for 4Q/15 and 10.17% for 1Q/15.
NORTH AMERICA CITI-BRANDED
1Q/15: $2009 million
2Q/15: $1933 million
3Q/15: $1930 million
4Q/15: $1937 million
1Q/16: $1880 million
1Q/15: $539 million
2Q/15: $499 million
3Q/15: $522 million
4Q/15: $515 million
1Q/16: $366 million
CARD EOP OUT
1Q/15: $63.5 billion
2Q/15: $64.5 billion
3Q/15: $64.8 billion
4Q/15: $67.2 billion
1Q/16: $64.9 billion
CARD AVG OUT
1Q/15: $64.1 billion
2Q/15: $63.2 billion
3Q/15: $63.9 billion
4Q/15: $64.5 billion
1Q/16: $64.7 billion
1Q/15: $40.9 billion
2Q/15: $46.1 billion
3Q/15: $46.6 billion
4Q/15: $49.0 billion
1Q/16: $45.9 billion
1Q/15: 23.7 million
2Q/15: 23.2 million
3Q/15: 23.3 million
4Q/15: 23.5 million
1Q/16: 23.8 million
CARD 30-89 DEL
CARD 90+ DEL
CARD AVG YLD
1. Average loans, EOP loans and the related consumer delinquency amounts and ratios include interest and fees receivables balances.
2. Average yield is calculated as gross interest revenue earned divided by average loans.
3. Net interest revenue includes certain fees that are recorded as interest revenue.
4. Net credit margin represents total revenues, net of interest expense, less net credit losses and policy benefits and claims.
Regarding the Global Consumer Banking (GCB) unit, Citibank stated:
GCB revenues of $7.8 billion decreased 6%. In constant dollars, revenues decreased 3%, driven by a 4% decrease in North America and a 2% decrease in international GCB.
GCB net income decreased 28% to $1.2 billion, driven by the lower revenues, higher operating expenses and a higher cost of credit. Operating expenses increased 2% to $4.4 billion, and increased 6% in constant dollars, reflecting higher repositioning expenses and increased investment spending, partially offset by ongoing efficiency savings.
North America GCB revenues of $4.9 billion decreased 4%, with lower revenues in Citi-branded cards and retail banking, partially offset by higher revenues in Citi retail services. Citi-branded cards revenues of $1.9 billion decreased 6%, reflecting continued increased acquisition and rewards costs, partially offset by the impact of growth in average loans and purchase sales. Citi retail services revenues of $1.7 billion increased 3%, primarily driven by gains on the sale of two small portfolios. Retail banking revenues declined 8% to $1.3 billion. Excluding a $110 million gain on the sale of branches in Texas in the prior year period, retail banking revenues were approximately unchanged, as continued growth in loans and checking deposits as well as improved deposit spreads were offset by lower mortgage gain on sale revenues.
North America GCB net income was $860 million, down 25%, driven by the decrease in revenues, higher operating expenses and a higher cost of credit. Operating expenses increased 7% to $2.5 billion, primarily driven by higher repositioning expenses and continued investments in branded cards, partially offset by ongoing efficiency savings.
North America GCB cost of credit increased 17% to $1.0 billion. The net loan loss reserve build in the first quarter 2016 was $80 million, compared to a net loan loss reserve release of $98 million in the prior year period, reflecting the deterioration of energy-related commercial loans and continued stabilization of consumer credit. Net credit losses of $932 million decreased 3%, driven by an 8% decrease in Citi-branded cards to $455 million, partially offset by a 5% increase in Citi retail services to $453 million.
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