Citigroup SWOT Analysis
Citigroup is known to be the largest credit card issuer in the world.
It has a diverse range of products to meet the different needs and demands of its clients for example retail banking, investment banking, trade finance, asset management, commercial banking, e-commerce and consumer finance
Being one of world’s largest financial services providing companies it has a strong market position. This gives Citigroup a competitive advantage and enables it to tap opportunities across different geographic markets.
Citigroup employs 374,000 members from all around the world, and holds over 200 m customer accounts in more than 100 countries worldwide.
Citigroup has the Global Consumer Group which operates a huge network with 8,527 branches, approximately 20,000 ATMs and 530 Automated Lending Machines. In 2007, according to Forbes Global 2000, the total assets of the company were about $2.2 trillion.
Citigroup is a leader when it comes to consumer service business, which that has three large segments, Cards, Consumer Finance and Retail Banking,
In 2007, its net welfare revenues accumulated were about 21%, with about a 25% in average receivables and a 15% in average deposits, including the impact of the acquisitions of GFU, Egg, and Grupo Cuscatlan, and the integration of the Credit Card portfolio. This shows the strength of its policies and strategies.
A weak area of the company is Debt obligations related to assets backed by securities and subprime market.
The company has some very complicated financial products that fail to attract the clients and customers.
The capital adequacy ratio of the company is continuously declining. The Tier 1 ratio of Citigroup declined from 8.9% in 2003 to 8.6% in 2006. Also, its capital adequacy ratio declined from 12% to 11.7% during the same period. The confidence of the investor is declining due to heavy losses and downgrade ratings which have dilutive effect on the earnings of Citigroup.
In the accounting period of 2007, the company’s exposure to subprime crisis led to heavy write downs, the maximum in the industry till January 22, 2008. Due to the poor capital adequacy ratio Moody’s downgraded the long-term ratings of Citigroup from Aa2 to Aa3 and lowered the Bank Financial Strength Rating from A to B in later part of 2007.
The extensive range of services that the company offers enhances its cross-selling opportunities to weak financial markets even.
The online and the mobile banking services are new opportunities for the financial sector and can greatly increase the growth of Citigroup as well. There are new emerging markets that the company can capture.
Acquisition of Automated Trading Desk by Citigroup is a new opportunity for the company.
Growing US assign bill market is again an opportunity for the company to grow and be more successful. There are more than 150m client accounts in the US, Canada and Puerto Rico. The US assign bill market is predicted to rise to CAGR of 5.7% during 2006–2011.
Being the World’s largest issuer of credit card means huge liability and high risk.
Weakening financial markets is affecting the retail banks all over the world and also is a threat for the Citigroup.
With the increase in number of financial institutes the competition is growing severe day by day.