Citi Wealth Inflows Double as Profit Target Nears

Citi’s wealth management division more than doubled net new assets in the third quarter, while its return on tangible common equity rose to 14.3%, bringing the unit closer to its 15%-20% near-term target.

Net new assets increased 105% from a year earlier to $38 billion, according to results released Tuesday. The measure covers money from new and existing clients and excludes gains from increases in the value of assets already invested.

Chief Financial Officer Gonzalo Luchetti told analysts that the stronger inflows helped improve the division’s profitability. Return on tangible common equity, or ROTCE, measures net income against common equity held by shareholders. The figure was 7.8% in the same quarter a year earlier.

“That gives us confidence that soon we’ll be able to get into the 15% to 20% near-term target window that we spoke about at Investor Day,” Luchetti said, referring to Citi’s May event for shareholders.

The wealth division’s client balances, including investments, deposits and loans, rose 9% year over year to $1.39 trillion. Revenue increased 15% to $3.3 billion, while net income climbed 93% to $585 million. Operating expenses rose 3% to $2.4 billion.

Citigold and retail banking generated nearly $2.3 billion in revenue, up 16% from a year earlier. The private bank reported a 17% increase in revenue to $766 million, while Wealth at Work, which serves professionals including lawyers, posted a 7% increase to $228 million.

Chief Executive Jane Fraser has made wealth management a central part of Citi’s plan to improve its performance against larger global banks. The firm moved its U.S. retail banking business into the wealth division last year to bring more banking clients into its wealth services. Citi estimates those clients hold about $3 trillion at other institutions.

At the May investor event, Wealth Head Andy Sieg said Citi planned to hire 400 advisers and personal bankers for its U.S. branches and Citigold business. Sieg has called net new assets the division’s “North Star” because the figure reflects client contributions and transfers rather than market appreciation.

On Oct. 26, Citi plans to offer higher savings-deposit yields to customers in its Citi Priority, Citigold and Citigold Private Client relationship models who maintain both checking and savings accounts. Customers will need to complete at least one required activity each month to receive the higher “Premium Boost” rate.

Citi Priority customers, who generally maintain balances of $30,000 to $200,000, will need to deposit at least $5,000 into their checking accounts each month.

Citi is developing artificial-intelligence tools for its wealth business. Sieg introduced Citi Sky at the May investor event as an assistant that can provide investment-related prompts and answers. Fraser said Tuesday that it was too early to determine how much revenue the technology was generating, adding that AI was helping the company earn money and reduce costs.