Citigroup, Inc.

Hello and welcome to Citi's first quarter 2024 earnings call. 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 our first quarter 2024 earnings call. I am joined today by our Chief Executive Officer, Jane Fraser, and our Chief Financial Officer, Mark Mason. I'd like to remind you that today's presentation, which is available for download on our website, citygroup.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 filings. And with that, I'll turn it over to Jane.

Thank you, Jane, and good morning to everyone. Today, I'm going to touch on the macroeconomic environment before I update you on the progress we're making, and then I'll discuss the quarter. Well, global economic performance was surprisingly desynchronized last year. The overall story has been consistent of late, one of economic resiliency supported by tight labor markets and the consumer. Growth this year looks poised to slow in many markets and conditions are generally disinflationary. We're already seeing some central banks in the emerging markets starting to cut rates. In the US, a soft landing is viewed as increasingly likely. But we continue to see a tale of two Europes, with Germany hurt by the weak demand for goods, while southern European countries, such as Spain and Greece, benefit from stronger demand in services. In Asia, Japan is joining India as a bright spot, and China's economy has gained some more traction, although its property market remains a concern. Amidst all these dynamics, we continue to focus on executing against our strategy and delivering the best of Citi to all our stakeholders. I said 2024 will be a pivotal year for us as we put our business and organisational simplification largely behind us and we focus on two main priorities, the transformation and the performance of our businesses and the firm. Last month marked the end to the organisational simplification that we announced in September. The result is a cleaner, simpler management structure that fully aligns to and facilitates our strategy. We are now more client-centric. We're already seeing faster decision-making and a nimbler organisation at work. We have clear lines of accountability, starting with my management team. Fewer layers, increased spans of control, and frankly, much less bureaucracy and needless complexity. This will all help us run the company more efficiently, will enhance our clients experience and improve our agility and ability to execute. And while reducing expenses wasn't the primary driver of the programme, more roles were ultimately impacted than the 5000 that we discussed in January. We also took a number of other steps to sharpen our business focus and improve returns by right-placing businesses to better capture synergies, exiting certain businesses in markets that just didn't fit with our strategy, and right-sizing the workforce in wealth. As a result of all these combined steps, which include the simplification, we are eliminating approximately 7,000 positions, which will generate 1.5 billion of annualized run rate expense saves. The combination of these actions and the measures we're taking to eliminate our remaining stranded costs will drive 2 to 2.5 billion in cumulative annualised run rate saves in the medium term. We are keeping a close eye on the execution of these efforts and overall resourcing to ensure we safeguard our commitment to the transformation. As you know, given its magnitude and scale, the transformation is a multi-year effort to address issues that have spanned over two decades. We've made steady progress as we retire multiple legacy platforms, streamline end-to-end processes and strengthen our risk and control environment, all of which are necessary not only to meet the expectations of our regulators, but also to serve our clients more effectively. A transformation of this magnitude, well, it's never linear. So while we've made good progress in many areas, there are a few where we are intensifying our efforts, such as automating certain regulatory processes and the data related to regulatory reporting. We're committed to getting these right and will look to self-fund the necessary investments to do so. Turning to the quarter, we had a good start to a pivotal year. We reported net income of approximately $3.4 billion, earnings per share of $1.58, and an ROTCE of 7.6% on over $21 billion of revenues. Our revenues were up over 3% year over year, excluding divestitures, which was primarily the billion-dollar gain from the India consumer sale last year. Our expenses were slightly down quarter over quarter, excluding the FDIC special assessments. Services continues to perform well and generate very attractive returns. Revenue is up 8% for the quarter as both businesses won new mandates and deepened relationships with existing clients. Fees were up a pleasing 10% for services year over year, driven by the investments we've made across our product offering platforms and client experience. In security services, we took share again this quarter, and in TTS, cross-border activity continued to outpace global GDP growth, and commercial card spend remained robust. We look forward to diving deeper into these two businesses at our investor presentation on services in June. Markets bounced back from a tough final quarter in 23. While revenues were down 7% as lower volatility impacted rates and currencies, that was off a very strong first quarter last year. We saw good client activity in equities and in spread products, where both new issuance and securitization activity were particularly robust. We fully integrated our financing and securitization capabilities within our markets business, and we started to see the benefits of having a unified spread product offering for our clients. The rebound in banking gained speed during the quarter, led by near record levels of investment grade debt issuance as improved market conditions enabled issuers to pull forward activity. And after a bit of a slow start, ECM picked up in the second half of the quarter, notably in convertibles. Our strong performance in both DCM and ECM drove investment banking revenue growth of 35% and overall banking revenue growth of 49%. While M&A revenues are still low across the street, I was pleased that we participated in some of the significant deals announced in the quarter, such as Diamondback's merger with Endeavour Energy and Catalan's merger with Nova Holdings. We are cautiously optimistic that we could see a measured reopening of the IPO market in the second quarter in light of improved market valuations. Corporate sentiment is quite positive, especially in the US, and our clients around the world have very sound balance sheets. We very much look forward to welcoming Viz Raghavan to Citi to lead our banking franchise in early June. Like other new top talent who've joined the firm, he will inject fresh thinking to help us achieve our firm's full potential. In wealth, While revenues were down in the quarter, we grew fees and gathered an estimated $22 billion of net new assets over the past 12 months. As you've seen, Andy continues to form his team and is focused on three areas. First, rationalising the expense base. Second, turning on the growth engine by focusing on investment revenues. And third, enhancing our platforms and capabilities to elevate the client experience. Now, these won't happen overnight, but getting these things right will help us get more than our fair share of the $5 trillion of assets that our clients have away from us. And that will help us get our returns to where they need to be in this business in the medium term. USPB had double digit revenue growth for the sixth straight quarter. We feel good about our position and our resiliency as a prime lens centric issuer and are seeing positive momentum across proprietary card and partner card businesses. Healthy spend growth persists in branded cards, primarily driven by our more affluent customers. Across both portfolios, increased demand for credit continues to drive strong growth in interest earning balances. and while they're only a small part of our portfolio we are keeping an eye on the customers in the lower fico bands we also continue to see strong engagement in digital payment offerings such as city pay as a point-of-sale lending product which is easily integrated into merchants checkout processes And we are driving more value from our retail branches as well as getting the spent space right to increase returns there. Our balance sheet is strong across the board, an intentional result of our high quality assets, robust capital and liquidity positions and rigorous risk management. During the first quarter, we returned one and a half billion in capital to our common shareholders, and that includes 500 million through share buybacks. Our CET1 ratio ticked up to a preliminary 13.5% and we grew our tangible book value per share to $86.67. We have a great franchise around the world with great clients who are served by great colleagues. I'm pleased with where we are and I'm excited about where we're going. With the organisational simplification behind us and a good quarter under our belt, we have started this critical year on the right foot. Now, while there will be bumps in the road, no doubt, we will continue to execute with discipline and we are committed to reaching our medium term targets. With that, I'd like to turn it over to Mark and then we will both be delighted, as always, to take your questions. Thank you.