Citi executives are saying the firm's wealth division hit a "turning point" in 2024 after reporting a 167% surge in its new investment assets in the fourth quarter.
Citi reported $16 billion in net new investment assets for the last quarter of 2024. That figure — a way of measuring wealth managers' performance regardless of what investment markets are doing — helped bolster revenue in megabank's wealth unit by 20% to $2 billion (excluding interest expenses).
Citi started reporting net new investment assets this quarter as a part of a "strategic priority of the Wealth business of accelerating growth in Client Investment Assets and the associated investment revenue," according to a footnote in its quarterly earnings presentation. The figure includes dividends and interest payments and excludes market gains, as well as fees and commissions.
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For the year as a whole, Citi reported its net new investment assets rose by 40% to $42 billion. The firm ended the year with $587 billion in client investments assets, including assets under management and trust and custody assets.
"At the beginning of 2024, we set Net New Investment Assets (NNIA) as our North Star, and we delivered," Citi Head of Wealth Andy Sieg wrote in a message to employees. He noted that Citi's North American private bank, which works mostly with wealthy clients, was the biggest contributor to the net asset haul.
"Our revenue results for 2024 were the best since Citi Wealth was brought together as a single business — and gave us momentum as we enter 2025," he wrote.
'Global leader in wealth management'
Citi embarked two years ago on a massive overhaul of its internal structure, reorganizing itself along five lines of business: trading, banking, services, wealth management and U.S. consumer offerings. It brought on Sieg, formerly president of Merrill Wealth Management, that same year.
In a call with analysts Wednesday, Citi CEO Jane Fraser deemed 2024 the "turning point" for the firm's wealth unit. She called particular attention to the wealth unit's new chief investment officer, Kate Moore, hired from BlackRock last year, and new head of lending, Anne McCosker, hired from Goldman Sachs.
In response to a question from Ebrahim Poonawala of Bank of America Securities, Fraser said her goal is for Citi to become a "global leader in wealth management." She said the firm's clients have $5.3 trillion sitting in bank accounts around the world, $3 trillion of which is in the U.S. Those holdings present myriad opportunities to Citi wealth managers.
"There are not many firms that have the globality of Citi," Fraser said. "We have all the assets, especially the client relationships all around the world, which we just have not tapped for investments in the past."
She credited Sieg for the "surgical approach that he's taking to the expense base and driving productivity."
Net income up, operating costs down
Citi's wealth unit showed other signs of improvement in the earnings report Wednesday. Its $2 billion in revenue yielded $334 million in net income. That was a nearly 16-fold surge over the figure reported for the same period last year.
Also helping that bottom-line figure was a 3% reduction in operating costs, "driven by the continued benefit of headcount reductions as we right-size the workforce and expense base," Citi Chief Financial Officer Mark Mason said in the earnings call.
Mason said the wealth unit had an operating margin before taxes of 21% — meaning the ratio of its expenses to its revenues. Citi executives have said they eventually want to have that figure in the 25% to 30% range.
Much of the firm's revenue increase came from its Citigold unit, which works with clients with $200,000 or more in assets. Citi last year announced a recruiting policy aimed at bringing in advisors generating between $1 million and $2 million in annual revenue by offering them between 100% and 250% of that production in the form of upfront and deferred loans.
Citigold, Wealth at Work and the private bank
Citigold reported a 27% year-over-year increase in its revenue, which rose to nearly $1.16 billion in the fourth quarter. A strong performance was also reported for the firm's Wealth at Work unit, which provides services to law firms and professionals of various stripes. Its revenue rose by 21% year over year to $256 million in the fourth quarter. And the firm's private bank, serving primarily wealthy clients, saw its revenue increase by 9% year over year to $590 million.
Citi reported making $612 million of its wealth unit's total revenue from commissions and other fees, a figure up 21% year over year. It also reported nearly $1.25 billion in net interest income, up 20%.
For all of 2024, Citi's wealth unit saw its revenue rise by 7% to just over $7.5 billion. Its net income rose by 139% to top $1 billion.
"These last few quarters, you've just seen us on that march," Fraser told analysts Wednesday. "And the number I'm most excited by — net new investment asset inflow of $42 billion, up 40% year over year. The strategy is working."
