Citi’s Tepid Deposit Growth Shows What Happens Without Bank Branches

The latest quarterly results from Citigroup Inc. show at least one advantage of a sprawling branch network, according to Credit Suisse Group AG.

Citigroup’s deposits in the U.S. grew by just $5 billion in the first three months of the year, even after the federal government pumped more than $1 trillion of stimulus funds into the economy -- something that caused balance sheets to swell at rivals JPMorgan Chase & Co. and Bank of America Corp.

“Citigroup’s balance-sheet growth in 2020 looks eerily similar to Wells Fargo’s: practically speaking, both are flat,” Zoltan Pozsar, an analyst at Credit Suisse, said in a note to clients Friday. “We know that Wells Fargo is subject to an asset-growth ban, but what keeps Citigroup from growing its U.S. deposit base?”

Pozsar’s conclusion: Citigroup doesn’t have the extensive branch network that its largest competitors do. That means it had a harder time capturing deposits that came into the financial system via the stimulus checks distributed by the U.S. government. Instead, Citigroup has the largest amount of so-called non-operating deposits among the global systemically important banks in the U.S., Pozsar said.

“This is why Citigroup has been the most selective with deposit growth,” Pozsar said. “The balance sheet snippets released with Citigroup Inc.’s first-quarter earnings confirmed the anecdotal information we’ve been hearing since the start of 2021 -- namely that the bank has been charging institutional depositors on balances that exceed Dec. 31, 2020, levels.”

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.