Citigroup's wealth management division captured a record $38 billion in net new investment assets during the third quarter, helping the New York-based bank beat analyst profit forecasts even as it continues to work through regulatory orders that have been in place since 2020.
The bank reported third-quarter net income of $5.25 billion, or $2.85 per share, up from $3.8 billion, or $1.86 per share, a year earlier. Analysts had expected earnings of $2.66 per share, according to LSEG data cited by Reuters. Total revenue rose 8% to $23.8 billion, with gains across services, wealth, markets, and banking.
Despite the earnings beat, Citi shares fell 3.2% by midday Tuesday after giving up early gains. The stock remains up 9% year-to-date and has outperformed the broader bank-stock index.
Wealth unit's growth streak continues
In a memo to staff, Andy Sieg, head of Citi Wealth, highlighted that wealth revenue rose 15% year-over-year, marking the 10th consecutive quarter of revenue growth for the business. The unit's net income jumped 93% to $585 million, while expenses grew only 3%, resulting in operating leverage of 12%.
“Most notably, net new investment assets were $38 billion this quarter – a record for Citi Wealth,” Sieg said in the memo, which was viewed by InvestmentNews. The record was driven by strong performances from Citi Private Bank's Latin America, EMEA, and North America teams, as well as Citigold, the bank's North American service for affluent clients. Most of the growth came from existing clients consolidating more assets with the bank.
The composition of client balances is also shifting. Investment assets now represent 55% of total client balances, up from 42% in 2022. “Three quarters in, and the momentum this year is real,” Sieg wrote.
This month, Citi is launching Citi Premium Boost, which Sieg described as “one of the most important initiatives we have undertaken to strengthen our value proposition and deepen engagement with affluent clients.” The bank also made two internal promotions during the quarter: Kris Bitterly was named head of Citi Private Bank Latin America, while Anne McCosker took on a new role as head of Wealth Lending and Deposits. These moves follow a broader run of senior wealth hires, including the August additions of JPMorgan veteran Adam Clark to lead wealth planning and Alex Kokolis from MSCI as head of investments platform experience.
Wealth still lags other businesses
Despite the progress, the wealth unit still trails Citi's other core businesses. According to Reuters, the unit posted the lowest return among Citi's five core businesses in the first half of the year, at 12.6%, compared to its long-term goal of 20%. Bank of America analyst Ebrahim Poonawala noted in a research report that the wealth division “shows the greatest room for improvement” among the five, needing faster growth in investment assets and a larger share of revenue from fees rather than interest spreads.
Two people familiar with the matter told Reuters that both wealth and retail banking could benefit from more scale, with strategic alternatives including opening more branches or acquiring a wealth manager. The bank's efforts to expand its wealth business come as retirement assets hit a record $51.2 trillion, though advisors are increasingly focusing on spending strategies.
Regulatory overhang persists
Citi is also working to shed regulatory consent orders tied to an October 2020 incident in which the bank mistakenly sent about $900 million to Revlon creditors. The Federal Reserve and the Office of the Comptroller of the Currency (OCC) demanded fixes to risk management and data governance, and the OCC fined Citi $400 million. In 2024, regulators added roughly $136 million in penalties after finding the bank had not moved fast enough on data-quality management. The OCC lifted its 2024 amendment in December last year, but the original order remains in force.
As reported by Reuters, Citi had hoped to achieve a clean slate by the end of this year. As recently as the summer, the bank aimed to submit its paperwork to regulators by year-end or in the first quarter, but progress slowed when an internal audit rejected work on data tracing. CEO Jane Fraser has said the required work is about 90% complete. Both the Fed and the OCC must approve lifting the orders.
Citi spent $3.3 billion on its transformation program last year. Fraser said Tuesday that the bank is reducing those costs and using artificial intelligence and automation to improve efficiency. Tim Long, a former deputy comptroller at the OCC, said the bank has reason to move quickly. “It makes sense for the bank to try to get the orders finalized in this [Trump] administration and avoid potential change of regulators and a different approach,” he said.
