Gonzalo Luchetti, Citi head of U.S. personal banking, joins 'Power Lunch' to discuss the company's new credit card, why the high-end of the consumer scale and much more.

Citigroup has launched a new credit card designed for affluent customers, re-entering a competitive segment of the market after previously scaling back. The card is positioned in the affordable luxury space and aims to attract savvy, high-end consumers by offering a high earn rate and flexible benefits that are easy to use and not tied to specific retailers or complex conditions.

The decision to launch the card follows research indicating that affluent customers seek simplicity and flexibility in their credit products. Citigroup's cards business has shown strong growth, and the company reports continued financial resilience among U.S. consumers, with stable spending and improving credit quality.

Citi launches new credit card for affluent customers

Brian, I might not know, but Gonzalo Lucchetti might have an idea. Thank you very much for being here, the head of U.S. Personal Banking for Citigroup. You oversee the group that launched this card. You have it here, actually, in case those sitting at home want to take a look at it. So why do this? And I ask in the context of in 2021, you all kind of pulled back a bit from this space, and now it's become increasingly competitive in the four years since then. So what strategically was behind the decision to really reenter this market in a big way? Well, thank you for having me, Leslie, first of all. And yes, I have the card to sell it if anybody in the studio wants to get it. And no, we're very excited about this launch. But if we take a step back in our credit card business, it's one of our fantastic franchises where I call it the triple threat because it's a very large market, a revenue pool of more than $150 billion. It's growing faster than the GDP of the country. And we have a large, one of the leading positions in the market. So we really, it's a business that helps us drive growth and returns. And then when you look at our cards business, we just presented our second quarter earnings and you saw it growing at 11%. So it has good momentum across acquisitions, across spend, across borrowing. And we feel like we have a pretty good, decent leading position as it relates to cash products, as it relates to the lending products. And this is an area where we had an opportunity to really double in. You mentioned 2000 and in the past as well, where we had pulled back. This is, I think, an opportunity for us to step more purposefully into this segment and really play for the African customer. Why the high-end in particular? And I know obviously the fee versus the benefits, there's kind of a balance there. So how did you think about kind of the pricing structure for this card, the benefits it provided and just the high-end customer and what they're looking for right now? Yes. No, we thought about it being first one big piece of our puzzle, as I was talking about in our portfolio. And then secondly, when you think about the price point, and Brian was referencing that, we are targeting really the affordable luxury space, right? We really wanted all of the savvy, affluent customers. So what we aim for, and this was on the back of research, customers were telling us in droves, we really want simplicity. We want flexibility. We wanted to, I don't want to have a PhD in order to understand what the benefits look like. So for us, it was very important that the end rate was high, that it was real in terms of being flexible and benefits that the customers could really use. And it didn't have a lot of constraints attached to them, whether it was time or whether it was with this retailer or that retailer. So yes, we leveraged a lot of our strategic partnerships, especially if you're an American Airlines customer, this has additional perks, but even the core benefits around the high earn rate and the flexibility of the benefits that you can really use it with different flavors of your spend was very important to us. What about the state of the consumer right now? You all reported earnings a couple of weeks ago, and I know that CEO Gene Frazier spoke a bit about kind of the bifurcation of the consumer and their spending trends right now. How would you characterize, you know, we talked a bit about the high-end consumer. What about the lower-end consumer right now? What are you seeing from your purview? Yeah, well, overall, there's always going to be cohorts of vulnerability, and we have a few pockets of that. But if you look across the overall U.S. consumer, we still see a lot of financial resilience. And when you look at the macro, you see, you know, income sources have been growing even from pre-pandemic times at or greater than the speed of inflation, whether it's wages or home prices or stock prices. When you look at the debt levels, you know, on the personal side, they are reaching or at the levels of pre-pandemic as well. And then the labor market has been relatively constructive. And then when we look inside our 70 million customers, what we see is first continuation of spend. So customers are still growing their spend by about 4%, which is what we talked about in the second quarter's earnings. And then on the flip side, on the delinquency side, things are stable to improving. So in what we presented in the second quarter is the first quarter, I think, since the second half of 2022 that we saw a near-and-near decline in terms of net credit losses, and I saw that across the industry. So to us, that's pretty constructive. You see a consumer that's still spending and still very disciplined as it relates to his or her, you know, debts. Yeah, credit quality holding up remarkably well in the normalization trends you're speaking about also seem to continue. Gonzalo Lucchetti, thank you very much for being here from the New York Stock Exchange.

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