The Troubling Trend at Citigroup Inc.

At first glance Citigroup had a solid year in 2013, but there is one trend beneath the surface that is especially troubling when compared to Bank of America, JPMorgan Chase, and Wells Fargo.

Feb 5, 2014 at 10:35AM

With the earnings calendar behind us and earnings reports from the biggest banks in, there is no denying the one persistent trend Citigroup (NYSE:C) cannot seem to shake.


Altogether, Citigroup had a solid fourth quarter as its adjusted net income -- which factors out accounting adjustments and charges to give a clearer picture of performance -- rose from $2.2 billion in the fourth quarter of 2012 to $2.6 in the fourth quarter of 2013, an impressive gain of 21%.

For the full year of 2013, growth was also strong, with adjusted net income coming in at $13.8 billion, a gain of 15% over 2012 levels.

There is no denying revenues were up and expenses were down, and the bank seemed to be in an altogether much better place. However, there was one trend from its biggest business line that should raise a flag of caution for investors.

Biggest business still struggles
Citigroup has three main business lines: Global Consumer Banking, Securities and Banking, and Transaction Services, which cater to different individuals or institutions based on what customers needs and who they are. And while Citigroup isn't always thought of as a consumer-oriented bank, it turns out its consumer banking operations are indeed its biggest source of income:

Source: Company earnings reports.

And while it is its biggest business line, Citigroup actually saw the net income of its Global Consumer Banking operations take a turn for the worse, falling 11% year over year from $8.0 billion in 2012 to $7.1 billion in 2013. In fact, the numbers it saw from its consumer operations even stood below where they were in 2011:

Source: Company earnings reports.

And while it's easy to think this may have been the case across all banks, it turns out, this same trend was not evident among Citigroup's biggest peers -- Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC).


2012 Net Income

2013 Net Income


Citigroup Global Consumer Banking




Bank of America Consumer & Business Banking




JPMorgan Chase Consumer & Community Banking




Wells Fargo Community Banking




Source: Company earnings reports.

On their most recent conference call, the executives at Citigroup continued to cite a drop in refinancing activity in the U.S. and a changing regulatory environment in Asia among reasons for the decline. Those two things together truly demonstrate its global footprint.

However, the reality is that reductions in refinancing activity would have been seen across all the major banks. In fact, Wells Fargo saw its mortgage banking income drop 25% from $11.7 billion in 2012 to $8.8 billion in 2013, and it still managed to have its Community Banking net income rise by 21%. It seems that a changing mortgage environment couldn't be to blame for the precipitous drop in income for Citigroup.

Certainly Citigroup has a number of compelling things going for it, but the unique decline in income from its biggest business is troubling. While CEO Michael Corbat said on the conference call that although "we didn't finish 2013 as strongly as I would have liked, I'm very pleased with the progress we made over the course of the year," one has to wonder if "progress," is the right way to describe an 11% dip in income from one's biggest business.

The coming change in banking
Do you hate your bank? If you're like most Americans, chances are good you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and it's poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.

Patrick Morris owns shares of Bank of America. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers