Citigroup’s Loan Portfolio Is Faster Than Its Peers Thanks To Its Diversified Geographical Presence

Citigroup reported an increase in its total loan portfolio from $623 billion in Q1 2017 to $668 billion in Q1 2018 – a jump of 7.2%. This compares with the average loan growth figure of 4.7% across the U.S. banking industry over this period. With the Fed’s ongoing rate hike process putting pressure on commercial as well as mortgage lending over recent quarters, most U.S. banks have had to contend with lukewarm loan growth. However, Citigroup’s geographically diversified business model helped it buck this trend, as the banking giant gained in particular from its strong presence in key developing nations.

Notably, the 5 largest U.S. banks reported a combined loan portfolio of nearly $3.8 trillion worldwide in Q1 2018. This represents nearly 40% of the total loans handed out by all U.S. commercial banks. However, this proportion has gradually nudged lower over recent quarters – primarily because of Wells Fargo’s shrinking loan portfolio.

We capture the trends in loans and deposits for each of the five largest commercial banks in the country – JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, U.S. Bancorp – through interactive dashboards, while also detailing the impact of changes in these key factors on their valuations.

The figures above represent average loans for each bank over the last five quarters as detailed in their latest SEC filings. The total loans for all U.S.-based commercial banks is derived from data compiled by BankRegData.com using quarterly call reports filed by all U.S. banks.

As seen here, the loan portfolio for the five largest U.S. banks has grown by just 2.5% over the last five quarters. Given Citigroup’s strong showing over recent quarters, the subpar combined growth figure for these banks is primarily due to the sequential decline in Wells Fargo’s loan portfolio over the last twelve months. While poor activity levels in Wells Fargo’s core mortgage business are partly to blame, the bank has also been hurt by the Fed’s restriction on growing its balance sheet.

In view of the Fed’s hawkish interest rate forecast over 2018-19, we expect loan growth to remain largely depressed in the near- to mid-term. The growth rate, however, is expected to normalize once the Fed is done with the rate hikes and the interest rate environment stabilizes, which should be sometime around mid 2020. Until then, Citigroup is likely to be the only major bank to report year-on-year loan growth in excess of 5%.

Details about how changes to key Loan and Deposit parameters affect the share price of the five largest U.S. commercial banks can be found in our interactive model for JPMorgan Chase | Bank of America | Wells Fargo | Citigroup | U.S. Bancorp

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