I think their strength in TTS segment is under appreciated
Bang! This quarter Citi outperforms so strongly on the back of TTS. Here is an interesting exchange between Mike Mayo and Jane. At the end of it Mark, CFO explains the TTS business. Worth the read.
Mike Mayo – Wells Fargo Securities – Analyst
Hi. I’m trying to figure out if you’re lucky or smart, and the reason I say that is at your investor day, I mean, right up front, you said you have five core interconnected businesses led by services, led by TTS. And then a few months later, you have your best quarter in a decade. And it just seems so coincidental that you highlight that as a growth area and then just a couple of quarters later, boom, here we are.
So how much of that TTS growth is simply because of one-off factors? How much of it is due to a higher baseline because of, say, interest rates? And how much of that is due to market share gains? And just remind us what TTS and securities services is again because I think you got everyone’s attention with this quarter.
Jane Fraser – Chief Executive Officer
So why don’t I kick off, and then I’ll pass it to Mark? And it’s a danger here of how long you have, Mike, because there’s a lot to talk about. So I would encourage you to sit at the beach this weekend and have an excellent read of the supplement because we’ve provided you with a lot of good facts and proof points and information both around the services businesses and the others about the early progress on the strategy. TTS was able to fire, as I said, on all cylinders this quarter. About two-thirds of the performance was driven by business actions, and one-third was by rates.
And as Mark said, very active management of the deposit base, beta discipline across all the regions. And the NIR growth that you saw was driven by cards, by payments, by receivables, and by trade. When you look in the strategic drivers we laid out at investor day this quarter, cross-border transaction value, up 17% year over year; clearing volume, up 2% in U.S. dollar; commercial comp spend, up 62% as that business recovered; average trade loan balances, up 14%; average deposit balances, up 2%.
So that two-thirds that was not rates-related has a very broad and substantive set of drivers behind it that, as Mark said, puts us into a very strong position for continued momentum here. This level of year-over-year growth is very pleasing, but we would expect to see it revert to the medium-term guidance we gave you at investor day over time. But this was across the board, all elements firing. And I will give a shout-out to Shahmir, the Head of TTS, as well as to our securities services team.
But he has really instituted a culture of intensity, of tremendous focus, of discipline in how he is running the business as well. And I think that is also a contributing factor to the confidence that you’re hearing from us about this. Mark, do you want to explain what TTS and securities services is?
Mark Mason – Chief Financial Officer
Again, as you’ve heard us describe, the TTS franchise is core to our business. It provides obviously a network to the large multinational clients in over 90 countries. We manage the full swath of their working capital and cash management needs. We also provide trade financing for them and the vendors and partners.
And this is essentially, in many ways, what differentiates our franchise from others. And not only is it in and of itself a core growing, high-returning business but is one of the businesses that is well connected to the rest of the franchise when you think about the markets business that we have and the FX that we manage on behalf of clients. And so – and this is a particularly relevant time for us to be engaged with those partners as they manage through supply chain issues. And we’re there to again help them work through those things and provide them alternatives to their production and operations and similar-type services we provide to our investor client base from a securities services point of view.
Look, the strategy here did not start with investor day. That is – we obviously spent time with you talking about that. But this has been a part of the franchise that we’ve been investing in on an ongoing basis. And it’s important that we continue to do that, investments in technology, investments in onboarding of new clients and the services we provide, and enhanced digital capabilities and the operations.
So all of those things and some of that, what you see here is those investments starting to pay off.
https://www.fool.com/earnings/call-transcripts/2022/07/15/ci…