This summer, Citigroup (NYSE:C) cut the ROA target on its credit cards business to 2.15% from 2.25%. Last month, CFO John Gerspach spoke of slower than hoped revenue growth mostly thanks to the rewards war taking place in the card market.
“It’s clear that the company has gotten off to a slower-than-expected start” on hitting credit-card targets, says Compass Point's Charles Peabody.
And cards are of particular importance to Citi - they make for 24% of the bank's lending, a far higher proportion than peers like JPMorgan and Bank of America.
The bank's longtime promotional favorite - 0% interest deals - is a costly one, particularly in the middle of a Fed rate hike cycle. Citi's hope has been to cut back on those promos and lean more on mobile features or rewards points to boost growth. While Citi has made progress on those fronts, it's sticking with the no-interest offers for now.