Citigroup 3Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Mindful of macro headwinds

“As we finished out 2014 we’re very mindful of the challenging macroenvironment, geopolitical tensions, uneven growth and concerns over the timing of interest rate increases have increased volatility while the economy in the U.S. seems to be slowly gaining strength. The Eurozone is not yet in growth mode and emerging market growth has slowed.”

Exiting consumer operations in 11 markets

“We are exiting our consumer operations in 11 markets plus our consumer finance business in Korea. As you can see on slide seven, these actions include markets across Latin America, Asia and EMEA. Substantially all of these operations were previously classified as optimized markets in our country bucketing framework and while we have made steady progress in many of these businesses we ultimately determined that our scale did not provide for meaningful returns.”

Credit trends remained favorable around the world

“. Overall, Global Consumer Credit trends remained favorable in the third quarter, with net credit losses and delinquencies both improving as a percentage of loans. In North America, the NCL rate continued to improve while 90-plus day delinquent rates were flat. Asia remains stable. And in Latin America, we saw a modest uptick in the NCL rate while the delinquency rate improved slightly. Net credit losses grew broadly in line with our expectations in the third quarter, driven by portfolio growth and continued seasoning in the Mexico Cards portfolio as well as the impact of both slower economic growth and fiscal reforms in that market.”

Especially important that we see good credit in North America cards business

“We continue to see real favorable credit in North America, certainly in both our Mortgage business, but importantly in both of our Cards businesses, Branded Cards as well as Retail Services. So that story is still continuing. When I look at the net credit margin, which I think you see it in the supplement, the net credit margin in our Branded Cards business this quarter was over 950 basis points. So that’s really outstanding performance in that U.S. Branded Cards business.”

We still do fine if the Fed raises rates but the long end doesn’t move higher

“If the front end went up but the long end dropped – there is scenario we’ve laid out for you which has 100 basis point increase in short term and relatively flat long-term. I think what you see in that type of environment we capture the lion’s share of the $1.9 billion. I don’t have that number in my head. But it’s virtually – it’s substantial portion of the $1.9 billion.”

Still good growth from EM, just a little slower than we would have expected

” from an emerging market view, we still see good growth, good overall growth coming out of the emerging markets especially when compared to the developed markets. It’s just a little bit less growth than what we would have anticipated earlier in the year.”

Mortgage market isn’t working right now

“the mortgage market today isn’t functioning what we’d like. If you’re not 20% down in high FICO it’s been tough for people to get in and be able to afford and buy homes.”