Citigroup, Inc.

Hello and welcome to Citi's First Quarter 2021 Earnings Review with Chief Executive Officer Jane Fraser and Chief Financial Officer Mark Mason. Today's call will be hosted by Elizabeth Lynn, Head of Citi Investor Relations. We ask that you please hold all questions until the completion of the former remarks, at which time you will be given instructions for the question and answer session. Also, as a reminder, This conference is being recorded today. If you have any objections, please disconnect at this time. Ms. Lynn, you may begin.

Thank you, operator. Good morning, and thank you all for joining us. Before we get started, I'd like to remind you that today's presentation, which is available for download on our website, citigroup.com, may contain forward-looking statements which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results capital and other financial conditions may differ materially from these statements due to a variety of factors, including the cautionary statements referenced in our discussions today and those included in our SEC filings, including, without limitation, the risk factor section of our 2020 Form 10-K. With that said, let me turn it over to Jane.

Thank you, Liz, and good morning to everyone. I am delighted to join you for my first earnings call as the city's CEO. Mark and I have a lot to cover today, so let's get cracking. Earlier today, we announced our earnings for the first quarter, as well as the initial strategic actions we're taking in our global consumer bank to focus on our competitive advantages and to improve our returns to our shareholders. I'll start with some observations, therefore, on the first quarter, and then I'll update you on the ongoing work on our strategy. It's been a much better than expected start of the year, and we are optimistic about the recovery ahead of us, and we're positioning the bank for a period of sustained growth. For the quarter, we reported earnings of $3.62 per share on net income of $7.9 billion. This was a record quarter in net income, driven by good performance in our institutional business and a release of $3.9 billion from our allowance for credit losses as a result of the improving economic outlook. In the institutional clients group, our markets businesses benefited yet again from an active environment. We saw solid performance in fixed income after a very strong first quarter last year and a record quarter in equities. We also had a record quarter in investment banking reflecting high levels of activity in equity underwriting. Treasury and trade solutions, which are the backbone of our global network, grew deposits even though revenues continued to be impacted by low interest rates. Global consumer banking revenues were down quarter over quarter as a result of the pandemic. However, we clearly see a recovery taking root in Asia as well as the U.S., And that was reflected in our ACL release. And I'd note, this is the healthiest we have seen the consumer emerge from a crisis in recent history, driven in large part by the US government stimulus package. Now, while loan demand was down, we did see strong growth in wealth management and in digital engagement, both of which are central to the consumer franchise we are building. And our capital levels remain strong and stable, allowing us to respond to the needs of our clients and to return capital to our shareholders. At 11.7%, our common equity tier one ratio is unchanged from the fourth quarter, and we resumed the repurchase of common stock, which we voluntarily paused at the onset of the pandemic. Our tangible book value increased to $75.50 up 5% from a year ago. Now, turning to our strategy. When we spoke in January, I pointed to four principles which we're using to guide the refresh of our strategy. First, we said we will be clinical in assessing which businesses we can retain or secure leading market positions in. Next, we're going to be focused by directing resources to higher returning businesses and away from the others. Third, we're going to be connected so we ensure our businesses fit well together and that they generate synergies. And last, we're going to be simpler, to better serve our clients, fulfill our obligations to our regulators, and unlock value for our shareholders. We also committed to take the strategic decisions needed to best position Citi to win and to close the gap in returns with our competitors. And we committed to share these decisions with you as we made them. And that's what we're doing again today. Now, I spoke in January about our new focus on wealth. We believe we're very well positioned to capture strong growth and attractive returns in this business, particularly in Asia and the U.S. Today, wealth at Citi represents roughly six and a half billion dollars in revenues with three quarters of a trillion dollars of client assets. And there's many synergies with our markets, BCMA and commercial banking franchises across our global network. Yesterday, we announced the management team for Citi Global Wealth and the work and investments are well underway on the business strategy and growth plans. And today, we announced our decision to focus our consumer banking franchise in Asia and EMEA solely on four wealth centers, namely Singapore, Hong Kong, UAE, and London. This positions us to capture the full spectrum of the wealth opportunity through these important hubs where we can serve onshore and offshore clients. And in Asia, this will allow us to continue operating our leading consumer businesses in Singapore and Hong Kong, which are both scaled and very high returning. We will therefore pursue exits of our consumer businesses in the remaining 13 markets in Asia and EMEA. Now, while these are excellent franchises, we don't have the scale we need to compete and we've decided we simply aren't the best owners of them over the long term. So consistent with the principles we outlined for the strategy refresh, we believe our capital, our investment dollars and other resources are better redeployed against higher returning opportunities elsewhere. What does this mean? This means that global consumer banking will consist of two scale franchises in the US and Mexico, and these four hubs serving 100 million customers in total. Let me be very clear on one very important point. Citi will continue to invest behind and serve our institutional clients in these 13 markets. We have a high returning and leading institutional franchise in Asia, and it is an absolutely central part of our success going forward. And we see important opportunities to invest and gain share with our institutional clients region-wide. Indeed, I thought from my own experience in Latin America how the institutional businesses in each market really benefited from the increased focus once we had exited our subscale consumer franchises and simplified the operating model in the region. I fully expect the same will be true in Asia. And in the meantime, the comprehensive work on our strategy refresh continues. We will continue to share the decisions we make with you as we work to close the gap in returns with our peers. In parallel, we are of course hard at work on our transformation. We're making our next submission to the OCC this quarter, and it's a massive body of work. We continue to work closely with our regulators to meet their expectations, and we expect to submit our complete plan to both regulators no later than the third quarter. We've identified the end states, performed the gap analyses and are currently working through the detailed resourcing and program plans and interdependencies, and we've begun execution on several fronts. The investments required go hand in hand with our strategy work. So, for example, when we talk about simplification, we're pursuing it through changes to our operating model, but also by removing manual processes and controls. And make no mistake about it, we want to achieve nothing less than a fundamental transformation by delivering excellence in our risk and control environment, in our operations, and in our service to clients. So I am excited about the road ahead, and I have no doubt that these investments and others that we're going to make in talent and technology are going to help us modernize the bank and position Citi to win. And finally, I want to update you on some of the commitments we're making in terms of ESG. Now we've prided ourselves in being a leader in many dimensions of ESG over the years. I see it as embedded in what we offer to our clients and the communities we serve around the world. And as you may know, on my first day as CEO in the beginning of March, I committed that Citi would reach net zero greenhouse gas emissions by 2050, and we will deliver our plan on how we will do so within the next 12 months. Critical to helping our clients transition to a low-carbon economy is the support we provide them through our environmental finance activities. So to that end, We're going to extend our current environmental finance target from $250 billion by 2025 to $500 billion by 2030. And in addition, we finance other activities in support of the UN Sustainable Development Goals outside of environmental finance. And these include our important investments in affordable housing, in health care, and workforce development. We are committing an additional $500 billion to these activities by 2030, making our total sustainable development goal commitment $1 trillion by 2030. And with that, I am going to turn over to Mark, and then we will both be delighted to take your questions. Mark.