Citi reports slight increase in wealth management results

Citi welcomes Sieg with bump in advisory business

October 13, 2023 4:06 PM

As Citigroup welcomes Andy Sieg to the top of its advisory unit and otherwise reshuffles its executive ranks, it saw a slight bump in its wealth management business.

The global bank reported $1.9 billion in net revenue from global wealth management in the third quarter. That figure was up by 2% from the same period last year. The increase came about in part as a result of Citi's ongoing work to move customers over to its wealth management division from its retail banking unit.

Citi CEO Jane Fraser said in an earnings call on Friday that Citi saw its client numbers for its private bank, which works mostly with high net worth investors, increase by 30% in the quarter. And its Wealth at Work unit, meant for lawyers and other professionals, saw its client count grow by 60%.

"Overall, we are pleased with the progress we're making across these businesses," Fraser said of Citi's Personal Banking and Wealth Management unit as a whole.

Citi's strong third quarter — its total profits rose by 2% year over year to $3.55 billion — will help give Sieg a secure starting position as he looks to guide the firm toward fulfilling its wealth management ambitions. Sieg left Merrill Lynch in March after spending 13 years helping the Bank of America subsidiary build a stable of 15,000 advisors.

Sieg also arrives amid an overhaul of Citi's internal organization. Fraser announced plans Friday to eliminate five of the financial service giant's layers of management, leaving it with eight.

Fraser made it clear she and colleagues expect a lot from Sieg.

"There is going to be massive global wealth creation," she said. "I can't tell you how excited Andy Sieg is now that he's in the building and knows the way to his desk and all the floors that the people are on. He's about to hit the road globally."

Revenue by unit

The biggest boost for Citi's Personal Banking and Wealth Management division came from its Wealth at Work unit. It saw a whopping 29% year-over-year increase to bring its revenue to $234 million. Citi said that result was "driven by strong lending results, primarily in mortgages."

Citi's private bank meanwhile saw a 1% decrease in its revenue, which fell to $640 million. And its Citigold business, meant for clients who can keep an average of $200,000 a month in various deposits, retirement and investment accounts, also reported a 1% decrease in its revenue of just over $1 billion.

Advisor headcount and AUM

Citi reported having 2,814 advisors on staff in the third quarter, a 1% year-over-year decrease. Citi's "advisor" designation applies to bankers, financial client advisors, relationship managers and investment counselors. All told, they managed roughly $756 billion in client assets, also down 1% year over year.

Citi announced plans in August 2022 to hire 500 advisors for its Wealth at Work unit. Citi reported that roughly 80% of its Citigold deposits are from clients who have been with the firm for more than 10 years and that 60% of its private bank deposits are from ultra high net worth clients also with the firm for more than 10 years.

Remark

Fraser made no attempt to hide her feeling that she thinks Citi's wealth management business could be doing better.

"As you can see, we've not been happy with our performance the last couple of years, but this is going to be a very important driver for us," she said during the earnings call.

Once again, all eyes are on Sieg.

"This is a time of massive global wealth creation, and our franchise is uniquely positioned for it," Fraser said. "Andy will ensure we're at the forefront of what's happening around the world."