Citigroup, Inc.

Hello, and welcome to Citi's second 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 formal 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. 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 precautionary statements referenced in our discussion today and those included in our SEC filings, including, without limitation, the risk factor section of our 2020 Form 10-K. Before we get started, I'd also like to welcome our incoming head of IR, Jennifer Landis, who will be joining CITI next month and hosting this call beginning in October. As I lead the seat to assume a new role within Citi, I'd like to thank you all for your partnership and support over the past few years. With that said, let me turn it over to Jane.

Thank you, Liz, and good morning to everyone. I'm delighted to join you again today. And first I'm going to discuss the results of my first full quarter as CEO, and then update you on the progress against our strategic priorities. For the quarter, we reported $6.2 billion in net income, or $2.85 per share. We continue to benefit from an improving macro environment, as evidenced by another significant release of our allowances for credit losses. Indeed, the pace of the macro recovery is exceeding earlier expectations across the globe, and with it comes growing consumer and corporate confidence. And this also came through loud and clear in my conversations with clients over the course of the week I just spent in London. Now clearly, we have to remain mindful of the unevenness in that global recovery due to continued contagion and challenges in vaccine distribution in several parts of the world. But we are optimistic about the momentum ahead and as a result, we deliberately accelerated some of our investments. In our institutional businesses, we saw the expected normalization of fixed income trading compared to the striking volatility of Q2 last year. And our equities franchise had a particularly strong quarter. Looking forward, we do expect the wallet in markets to be higher than pre-COVID level. Performance in our investment banking franchise remained healthy with good momentum in M&A and a very solid pipeline ahead for the rest of the year. We saw very good progress in our strategies to increase fee revenues with double-digit growth in our ICG fee revenues and specifically over 20% year-over-year fee growth in treasury and trade solutions, in security services, and in the private bank. Now, TTS is the backbone of the unique global network we deliver for our clients. And while the business continues to be impacted by lower rates We particularly like how we are positioned here from a market share perspective as the post-pandemic recovery takes shape. In consumer banking, while our loan book and revenues were impacted by the elevated payment rates in cards, spending is well above pre-COVID levels now, with a 38% increase in global purchase sales year over year. We expect this to translate into loan growth in the second half of the year, and we continue to have good momentum in both deposit growth and AUMs across our consumer franchises. In the U.S., as we've discussed, we're investing in our home market, as demonstrated by the well-received launch of our innovative custom cash card in June. Internationally, the picture for our consumer businesses diverges. So while there is still the softness in the Mexican economy, in Asia, loan growth returned, and that's despite new COVID outbreaks. Turning to capital. For the first two quarters of 2021, we returned close to $7 billion to our shareholders, which was the maximum amount permitted under the Federal Reserve's rules. Going forward, we're committed to returning any excess capital over and above the amount necessary to invest in our franchise. So while our stress capital buffer increased to 3% as a result of the Fed's recent stress test, that won't impact the common equity Tier 1 target we've been managing to of approximately 11.5%. We ended the quarter at 11.9% on a standardized basis and have excess capital to return to our shareholders through a healthy dividend and ongoing stock repurchase program. Lastly, our tangible book value per share increased to $77.87, up over 9% from a year ago. Now let's turn to three of our strategic priorities, strategy, transformation, and talent. I'm very pleased with the progress we've made on our strategy refresh. We have moved swiftly to begin the sales process for the 13 consumer markets we plan to exit in Asia and EMEA. The first round of bids was very encouraging and competitive, which isn't a surprise because these are terrific businesses for the right owners. In those regions, we're off to a running start in our wealth strategy. We're making significant strategic investments in product capabilities, technology, and talent, and have already seen this in increased client acquisition. We continue to do thorough and rigorous work to refresh our strategy across our consumer institutional businesses, guided by the four principles I outlined to you earlier in the year, being clinical, being focused, and ensuring both connectivity and simplification. Our overarching goal is to increase the returns we generate and close the gap with our peers by investing in the franchises that will drive the most growth. The three most notable of which are TTS, wealth, and commercial banking. And I'm very confident in the growth and return prospects these connected franchises will afford us. As we have done so far, we will share our decisions with you as we make them on the strategy. And we're also looking forward to presenting our plans to you more comprehensively during an investor day, which we intend to hold in the first quarter of next year. We're going to put our entire vision for the firm in front of you so you can then hold us accountable for executing against it. As we discussed in the call last quarter, we're also working very hard and diligently on our transformation. This is a significant It's also an exciting body of work, and we're working closely with our regulators to meet their expectations, and we intend to submit our plans to them this quarter. Now, while addressing the consent orders is an intense focus of the transformation, our work here goes well beyond the orders themselves. We've set out to modernize our bank. We want to achieve nothing less than excellence. And this means investing in our risk and control environment, but also in the infrastructure we need to serve our clients in an increasingly digital world. So let me give you an example in TTS. These investments will improve the scalability of our platform. Automation will drive efficiency and client experience, and investments in data will enhance revenues. And the investments we're making will help position us to retain our leading position as the preeminent global corporate bank. And that leads me finally to talent, where we have made material progress over the last few months. I'm delighted with the caliber of talent we have been attracting to the firm to grow our businesses and support our transformation. We've enhanced our existing ranks with best in market hires, in data risk strategy and controls as well as in the front lines of wealth the commercial bank and bcma in particular we continue to invest in a culture of excellence and our own people providing them with new leadership and growth opportunities and it's this combination of new perspectives and our existing high caliber talent pool that will enable us to take the firm forward with excellence urgency and accountability. Now, before I turn it over to Mark, I would like to thank Liz Lynn for her great work leading our investor relation efforts over the past several years. And as you know, and as she mentioned, she is going to be our finance lead for BCMA, where we all know that she is going to do a wonderful job. With that, Mark will go through our presentation, and then we'll both be happy to take your questions.