Citigroup, the third-largest banking institution based in the United States, has been keeping an eye on their credit card clientele to spot any form of financial difficulty, according to CEO Jane Fraser. She commented to CNBC that they are taking into consideration the credit scores of those that possess lower ratings from Fair Isaac Corp. Furthermore, the extent of job layoffs and expenditure savings that the bank implemented when they organized their restructuring will be announced with the fourth-quarter financial statement.
As their bank accounts dwindle in size, Citigroup CEO Jane Fraser told CNBC's Sara Eisen in an interview on Friday that lower-end consumers have shifted their buying patterns in an effort to save money. Referring to the widely used credit-scoring system from Fair Isaac Corp, Fraser said, "We are paying attention to the lower FICO consumer, where there are cracks forming." She pointed out that with the Federal Reserve's most aggressive interest rate hiking cycle in four decades, credit card, mortgage and auto debt have become more expensive and that late payments and defaults have been increasing. Furthermore, Fraser reported that CEOs have told her that demand has been softening, especially for the lower end of the consumer, noting that "you're seeing some shift in the buying patterns to lower categories in the spend." She added that while the economy should have a "soft landing," if it does tip into recession, it will likely be "manageable". Lastly, she discussed her plans for the bank which would be revealed through fourth quarter-earnings. This reorganization would entail moving away from the "financial supermarket" model of the past into a more streamlined operation which would include job cuts and expense savings.
Comments