Citigroup Inc.'s treasury division is gaining market share faster than expected, a win for CEO Jane Fraser, who made the business a key component of her turnaround of the bank.
The treasury and trade solutions unit gained 70 basis points (bps) of market share in just the first nine months of 2022, surpassing its goal of at least 50 bps in coming years, Shahmir Khaliq, who leads the division, told investors at a conference Tuesday.
The division, which provides working capital and payments services for some of the world's biggest companies, is typically less headline-grabbing than Wall Street's flashier investment-banking and trading operations.
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Revenue from the division soared in 2022, benefiting from the Federal Reserve's aggressive push to raise benchmark U.S. interest rates. In the final six months of the year, it took in $6.5 billion, up 38 percent—and the first time in at least a decade that the unit pulled in more than Citigroup's fixed-income traders during the last half of the year, according to data compiled by Bloomberg.
"Our aspiration is to continue to build and gain share in the institutional space, and, by definition, the midmarket space, where we're significantly under-penetrated," Khaliq said.
Citigroup shares have jumped 13 percent this year, outpacing the 6.9 percent advance of the S&P 500 Financials Index.
Khaliq said net interest income usually contributes 50 percent to 60 percent of the unit's revenue, while about a quarter is derived from fees the firm charges for business including cross-border payments and commercial card services. The unit also gets a little more than 10 percent of revenue from trade finance and 5 percent from trade services, including opening up letters of credit.
"As you think about our revenue, there is very little concentration," Khaliq said, adding that it's a "fairly well-dispersed business with four very critical revenue streams."
Investors have long sought more detailed disclosures about the business, which is one of the New York-based company's most profitable divisions. Last year, Citigroup began releasing key metrics, including the value of cross-border transactions on its network, which jumped 11% percent in 2022.
Fraser in recent months has sought to reassure investors that the business isn't hindered by the worsening macroeconomic picture around the globe.
"There is a bit of a myth at the moment that the global environment is detrimental to activity," she said in October. "We see quite the opposite. Volatility is something in which we're very active in helping our multinational clients." she said, adding: "It's what makes the network the crown jewel of Citi."
—With assistance from Sridhar Natarajan.
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