Treasurer at Citigroup
Thank you, Peter, and good morning, everyone. On today's call, I will cover a number of topics. First, I'll briefly discuss our second quarter 2022 operating results, which we feel good about, especially given the operating environment. Second, I will cover recent balance sheet trends, including our robust liquidity and capital position. Third, I'll share some thoughts on what our issuance activity might look like over the near term. And then Mark and I would be happy to take your questions.
But before I discuss the highlights of the quarter in more detail, I do want to spend a moment reflecting on the current macro and geopolitical environment, which remains complex and uncertain. U.S. consumer and corporate balance sheets remain healthy, but the risk of a recession, particularly abroad, has increased. That said, we feel very good about our balance sheet with strong capital, liquidity and ample reserves, all of which position us well to weather any number of economic scenarios, continue to serve our clients and execute on the strategy we laid out at Investor Day. With that, let's turn our attention to Citi's operating results.
Slide 3 covers some of the highlights from the quarter. We executed on our strategy with revenues up 11% year-over-year, which benefited from higher rates and continued strong client engagement, especially across markets and services. We increased deposits, maintained robust liquidity and grew our capital base, positioning us well to meet our increased SCB and G-SIB requirements in the coming quarters, which I'll talk more about in a moment.
Slide 4 outlines our second quarter results in more detail. In the second quarter, we reported net income of $4.5 billion and an ROTCE of 11.2% on $19.6 billion of revenue. Net income was up sequentially on strong growth in net interest income, but down year-over-year largely driven by the absence of a large ACL release in the prior year period.
On Slide 5, we show key capital and liquidity metrics in our average balance sheet. We saw both advanced and standardized risk-weighted assets come down both year-over-year and sequentially as we continue to optimize RWA. We ended the quarter with a standardized CET1 ratio of approximately 11.9%, which is approximately 50 basis points higher than the first quarter and about 140 basis points above our current regulatory requirement of 10.5%.
Going forward, we expect our regulatory requirement to increase to 11.5% in October 2022 to account for the increase in our stress capital buffer. In January 2023, our regulatory requirement will increase to 12% as a result of an increase in our G-SIB surcharge. The combination of earnings generation, closing of divestitures and continued RWA optimization will be important tools as we manage towards this higher CET1 requirement.
On the bottom left, you can see that we continue to maintain strong liquidity levels with $531 billion of average high-quality liquid assets or 22% of Citi's average total assets supporting a healthy LCR. Total assets increased 2% year-over-year on higher trading-related assets, reflecting a continuation of strong client engagement.
Slide 6 presents trends in our loan portfolio over the past 5 quarters. Total average Citigroup loans decreased 2% year-over-year as growth in PBWM and ICG was more than offset by a decline in legacy franchises. In PBWM, average loans increased 4% year-over-year, largely driven by growth in branded cards and retail services. In ICG, average loans increased 3% year-over-year, largely driven by growth in trade finance. And as expected, legacy franchise loans continued to decline, largely driven by the reclassification of loans to held-for-sale.
Turning to Slide 7. We show trends in average deposits over the past 5 quarters. Total average Citigroup deposits were relatively flat year-over-year as growth in PBWM and ICG was offset by declines in legacy franchises and Corp/Other. In PBWM, average deposits increased 6% year-over-year, driven by growth across retail and wealth. In ICG, average deposits increased 1% year-over-year, driven by the deepening of existing client relationships and new client acquisitions. And despite the industry pressure from quantitative tightening, we remain very focused on growing operating deposits and expect modest deposit growth for the full year.
On Slide 8, we provide an update of our LCR metric and drivers. Our average LCR remained relatively stable at 115%.
Now let me cover our parent benchmark debt issuance program on Slide 9. So far this year, we have issued roughly $20 billion, and we were pleased to issue an affordable housing bond, and we continue to diversify the Syndicate group and our debt issuance across underrepresented groups. Going forward, we'll continue to maintain the flexibility to issue a mix of tenors, currencies and structures as we prudently manage the liquidity profile of the firm and support our clients.
On Slide 10, we show the composition of our long-term debt outstanding. Our total long-term debt on an end-of-period basis decreased by approximately $8 billion to roughly $257 billion. This decrease reflects the optimization of funding in the bank as we continue to maintain robust deposit levels.
On Slide 11, let me cover our issuance, maturity and redemption expectations. As you can see in the middle of the slide, we have issued $20 billion of benchmark debt so far this year. At this point, we estimate that we could potentially issue up to an additional $10 billion over the second half of this year, depending on how our needs and opportunities evolve. So this would translate into approximately $20 billion to $30 billion of issuance for the full year 2022.
Moving to our last slide, let me summarize several key points. The franchise continues to perform well through this period of macroeconomic and geopolitical uncertainty. We remain committed to the strategy outlined at Investor Day and are seeing it play out in our results. We earned over $4.5 billion of net income in the second quarter. We maintain a strong capital position with a standardized CET1 capital ratio of 11.9%, an SLR of 5.6% and a surplus above our TLAC requirement. We also maintained a strong liquidity position with an average LCR of 115% over $960 billion of available liquidity resources, and we are comfortably in compliance with the NSFR rule, which became effective last year.
Before we move on to Q&A, let me touch briefly on LIBOR. As you may know, federal legislation was signed into law earlier this year that provides a solution for legacy LIBOR instruments. Importantly, we expect the legislation to apply to all of Citi's outstanding U.S. dollar LIBOR-based securities without appropriate fallbacks. We are obviously pleased with the industry solution that this outcome provides and look forward to seeing the final rule.
And with that, Mark and I will be happy to answer your questions.