Citigroup, Inc.

And welcome to Citi's second quarter 2023 earnings review with the chief executive officer, Jane Fraser, and chief financial officer, Mark Mason. Today's call will be hosted by Jen Landis, 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. Landis, 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 may differ materially from these statements due to a variety of factors, including those described in our earnings materials as well as in our SEC filing. And with that, I will turn it over to Jane.

Thank you, Jen, and good morning to everyone. While this quarter wasn't as eventful as the first quarter, it was not without its moments. The global economy continues to be remarkably resilient, although the macro backdrop differs across key markets. And while the bulk of the tightening is behind us, Central banks are responding vigorously to inflation and have made it clear the cycle of hikes isn't over. In the U.S., the tight labor market keeps pushing the timing of this elusive recession later into this year or 2024, with the robust demand for services providing a backstop for the economy. The Eurozone has also exceeded expectations. However, most countries there are facing pressure from labor and energy costs, challenging the region's longer term competitiveness. China is the biggest disappointment as growth decelerated after an initial post reopening pop. I was there last month and let's just say few on the ground expect China to be as strong a driver of global growth this year as some had hoped. So bottom line, globally, we continue to see the same quite challenging macroeconomic conditions that we saw in the first quarter. From Citi's perspective, we continue to see the benefits of our diversified business model and strong balance sheet. We remain laser focused on executing our strategy and simplifying and modernizing our bank. Despite the turbulence and macro backdrop of the first half, we're on track with the plan we laid out at Investor Day, and we remain committed to our strategy and our medium-term ROTCE target. Today, we reported net income of $2.9 billion and an EPS of $1.33. Our revenues ex-investors are relatively flat to last year, and we remain on track to meet our revenue guidance of $78 to $79 billion for the year. We're also on track to meet the expense guidance for the year. And consistent with the plan we shared with you at our Investor Day, we are pursuing cost-saving opportunities to help offset the significant investments in our transformation. In services, TTS continues to deliver with revenues up a healthy 15%. This was driven by both net interest income and non-interest revenue. As we win fee-generating mandates with new clients and deepen our relationships with existing large corporate and commercial clients, we're proud of our number one ranking for large institutional clients. And this week, we announced our latest innovation, Citi Direct Commercial Banking, a digital platform to help our growing commercial clients tap into our global network. Security services revenues were also up 15%, driven by higher interest rates across currencies. We're really pleased with execution in this business. which are up by approximately $2.4 trillion in the last year. We've gained 100 basis points in share year over year as a result of the investments we've been making. Markets revenues were down 13% compared to an exceptionally strong second quarter last year. From early April, clients stood on the sidelines as the debt ceiling played out. and we continued to experience very low levels of volatility throughout the quarter. Despite this, our corporate client flows remained strong, and we retrieved our medium-term revenue to RWA target again this quarter. In banking, the momentum in investment-grade debt has spread into other DCM products, but the long-awaited rebound in investment banking has yet to materialize. And it was a disappointing quarter in terms of both the wallet and our own performance, with investment banking revenues down 24%. We continue to right-size a business to the environment whilst making investments in selected areas such as technology and healthcare. In the U.S., taken together, our cards businesses had double-digit revenue growth. aided by customer engagement and the continued normalization in payment rates. In branded cards, spend is still strong in travel and entertainment, and acquisitions remain pretty healthy. This is a great franchise, and we have launched a raft of new innovations, from transforming our Thank You Rewards platform to our enhanced value proposition for the premium card with our long-term partner, American Airlines. credit normalization is happening faster in retail services given the profile of the portfolio and overall i'd say we're seeing a more cautious consumer but not necessarily a recessionary one wealth revenues were down five percent as the business continues to be negatively impacted by the deposit makeshift particularly in the private bank and by lower investment revenues however We have seen activity pick up a bit in Asia for two quarters with growing net new assets. Referrals from the US retail bank are increasing and globally new client acquisition in the private bank and wealth at work has grown significantly on the back of our investments in our network of client advisors and bankers. Turning to expenses, they were elevated this quarter as we expected. This includes the additional repositioning actions we took to right-size certain businesses and functions in light of the current environment. Year-to-date, severance is about $450 million, including $200 million in the quarter. Separate to repositioning, we remain committed to bending our expense curve by the end of 2024 through three significant efforts. First, We continue to make investments in our transformation and other risk and control initiatives, which are necessary to modernize our infrastructure, automate our controls, as well as to improve the client experience. As we've said before, we will start to see the more material benefits of these investments over the medium term. Second, as part of our simplification efforts, We expect to close the sales of our remaining two Asia consumer franchises by year end, and we plan to restart the exit process in Poland. As you can see on the slide, we made excellent progress this quarter in the consumer businesses we're winding down, aided by material asset sales. And we are now attacking stranded costs and closing out the TSAs in the markets that we have already exited. You saw our determination to execute when we decided to IPO Banamex after exploring a sale. We should complete the process of separating the two businesses fully next year in preparation for the IPO. And I'm pleased with the progress on the ground. We are about to begin acceptance testing on the new systems for the retained businesses. All this means that by year end, considering how far the divestitures and wind-downs have progressed, legacy franchises will have materially reduced its exposures and primarily be down to Mexico, Poland, Korea, and the elimination of the remaining stranded costs. As such, as we move through the second half of the year, we will be in a position to focus on the third leg of bringing down our expense base, through a leaner organizational model. Together, these three efforts are why we have confidence in saying that we will start to bend the curve on an absolute basis by the end of 2024 and continue to bring down expenses over the medium term. Let me end with capital. Well, you won't be shocked to hear that we were disappointed with the increase to our stress capital buffer. We have engaged in active dialogue with the Fed to better understand the differences between our model and theirs in terms of non-interest revenue. And the industry awaits further clarity on capital requirements and, importantly, their implementation timing from the holistic review the regulators have undertaken and the expected Basel III endgame NPR. There is still uncertainty as to what the final rules will be, and we, like the rest of the industry, will need to work through the implications. The exit of 14 international consumer markets, coupled with the results of our transformation investments and change in business mix, will help reduce our capital ratios. In addition, we have other levers to pull over time, such as capital allocation, DTA utilization, our GSIB score, and our management buffer of 100 basis points. We are committed to returning capital to our shareholders, as you saw with our decisions to repurchase $1 billion in common stock and increase the dividend. We ended the second quarter with a CET1 ratio at 13.3%. That's 100 basis points above our upcoming requirement. after returning a total of $2 billion in capital. And we grew our tangible book value per share to $85.34. Given the environment, we will continue to look at our level of capital return on a quarter-to-quarter basis. Overall, we're pleased with the progress we've made, but there remains a lot to do. We will continue to update you on the progress we are making every quarter. And with that, I'd like to turn it over to Mark, and then we would both be.