Breakdown of the loan portfolio
Citigroup (C) reports loans in two categories—consumer and corporate. Consumer loans are loans managed primarily by the group’s global consumer banking business. Corporate loans are the ones mainly managed by the institutional client group. Consumer loans make up ~60% of the bank’s total loan portfolio.
Citigroup’s total loan portfolio is smaller than those of Bank of America (BAC), JP Morgan (JPM), and Wells Fargo (WFC). Meanwhile, Citigroup’s loans outside the US are greater than those of other banks. Combined, these four banks make up ~28% of the Financial Select Sector SPDR ETF’s (XLF) portfolio.
The bank has a greater volume of corporate loans outside the US than within. The situation is reversed with consumer loans, as you can see in the graph above. This is in line with the bank’s strategy to deal mainly with corporate clients outside the US.
Consumer loan portfolio
Mortgage and real estate and card loans constitute 80% of the consumer loan portfolio, as shown in the graph above.
Citigroup has a risk management process associated with its consumer loan portfolio. The bank monitors credit quality indicators such as delinquency status, loan-to-appraised value ratios, and consumer credit scores, like FICO.
In the US, independent credit agencies rate an individual’s creditworthiness based on the individual’s credit history and assign a FICO credit score. FICO is the name of the company that first introduced these scores. The scores are based on factors such as the individual’s payment history, amounts owed, types of credit used, etcetera. These scores are continually updated based on an individual’s credit actions like taking a new loan or missing a payment.
Corporate loan portfolio
Citigroup’s corporate loan portfolio includes commercial and industrial loans, loans to financial institutions, mortgage and real estate, installment, revolving credit, and other loans. Commercial and industrial loans make up 42% of Citigroup’s corporate loan portfolio, followed by loans to financial institutions. More than 70% of the corporate loans are classified as investment grade by the bank.