How Will December’s Rate Hike Affect Citigroup’s Margins?



Citigroup’s interest rate sensitivity

Citigroup’s interest rate sensitivity is the lowest among its banking (XLF) peers. A parallel 100-basis-point increase in interest rates would add $1,979 million to Citi’s revenues, which compares to a $2.4 billion increase for Wells Fargo, a $5.3 billion increase for Bank of America (BAC), and a $2.8 billion increase for JPMorgan. For Wells Fargo (WFC), the net interest margin would rise by 5–15 basis points if the yield curve shifted upward by 100 basis points. Higher interest rates would be negative for Citigroup, as higher credit costs would likely offset gains in net interest income.

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