Citigroup, Inc.

Hello, and welcome to Citi's third 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'll 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 third 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, 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'll turn it over to Jane.

Thank you, Jen, and a very good morning to everyone. Well, we certainly live in interesting times. And while I usually start our calls with our views on the global macroenvironment, We're particularly proud of our progress this quarter, and so I shall start there. Indeed, in a pivotal year, this quarter contains multiple proof points that we are moving in the right direction and that our strategy is delivering concrete results. We saw revenue growth and positive operating leverage for the firm and across all five businesses. Our businesses performed well as the rate-cutting cycle began, with a double-digit increase in fee-based revenues, reflecting the growing diversity of our earnings mix. We continue to have share gains in services and banking. In wealth, we saw a sizable increase in client investment and flows. We brought expenses down whilst continuing to invest in our transformation and businesses. And we continued to attract the top leaders in the industry and successfully combine them with our own teams in banking and wealth. So while we are not yet where we want to be, the impact of the changes we're making is clearly evident in our momentum and our improving performance. Turning to the macro. Now, while growth is a notch slower than last year, global economic performance continues to be surprisingly resilient. Whatever you want to call the U.S. landing, the sentiment around it is more optimistic, supported by the recent positive payrolls report. And we see a healthy yet more discerning U.S. consumer and a U.S. corporate sector on its front foot. Manufacturing weakness is restraining a modest rebound in Europe. which continues to struggle with more structural challenges around its competitiveness, as highlighted by Draghi's report. And in China, consumer sentiment and the property market remain a concern, as markets await details on the expected fiscal stimulus. India, ASEAN, Japan, the Middle East, Mexico and Brazil are all notable bright spots globally. Today, we reported net income of $3.2 billion and earnings per share of $1.51 with an ROTCE of 7%. Overall revenues grew by 3% extra vestiges. with each of our core businesses delivering growth and positive operating leverage. While we continue to make substantial investments in our transformation, the efficiencies gained from our simplification and other efforts drove a 2% reduction in overall expenses. Turning to the five businesses, services delivered a record quarter, with revenues up by 8%. Fee growth the best indicator of underlying momentum was significant. And this, combined with loan and deposit volume growth, drove this quarter's excellent performance. Treasury and trade solutions was up 4% year over year, reflecting good underlying momentum in the core drivers. and security services was up 24%, reflecting the benefit of new mandates and an increase in assets under custody. Both TTS and security services achieved over 10% wallet share in our target markets through the first half of the year. Last week, we announced that we are the first global bank to complete the integration of our cross-border services with MasterCard Move. Now, this will ultimately enable near-instant, secure payments to the vast MasterCard debit network, starting with 14 markets with more to come early next year. And this is another great example of our continued investment in market-leading innovations. In markets, revenues were up slightly on the back of a better-than-expected September. Equities was up 32%, with robust performance across all products. Our continued strong performance in equities validates both our strategy and execution to grow prime and cash. Fixed income, however, was down 6%. Our rate concurrency's business didn't match last year's standout performance. It was a particularly pleasing quarter in banking. Despite the muted IPO market, investment banking fees are up 44%. That's driven by investment-grade debt issuance as our clients pulled forward activity ahead of the U.S. election. Corporate sentiment remains positive as boards pursue strategic transactions, such as the $36 billion Mars acquisition of Telenova, where we are the sole advisor and the lead financier. our strategy in banking continues to gain momentum. We are steadily growing our share in key target sectors, such as healthcare and tech, with a healthy pipeline ahead. And a significant upside of our franchise continues to attract the top talent to Citi. During the quarter, we announced an innovative $25 billion private credit partnership with our longtime client, Apollo, giving us the ability to source new transactions without using our balance sheet. This partnership positions us with another solution for debt financing for our clients, and it allows us to engage in private credit with the same depth and expertise as we currently do with syndicated debt markets. We're also starting to see the positive impact of the significant changes we've implemented in our wealth franchise. with revenues up 9%. It's a notable example of the traction that I referenced earlier. As Andy and the team intensify the focus on our investments business, we grew client investment assets by 24%. And we were particularly pleased with the performance in Asia and in Citigold. I continue to be excited by the opportunities and the sheer potential of our franchise. During the quarter, we signed an agreement to exit trust administration and fiduciary services as we continue to sharpen the focus of our wealth business. We have more to do to reach our medium-term margin and return targets, but this quarter is a good indicator that we are on the way there. U.S. personal banking revenues were up 3%. We grew branded cards revenues by 8% with account acquisitions, spend, and payment rates all driving higher interest earning balances. Lower discretionary spending is impacting our retail services portfolio. However, we continue to see lower payment rates contributing to interest earning balances. In retail banking, we're growing our mortgage portfolio as the rate environment shifts, as well as growing overall loans. The U.S. consumer dynamics remain remarkably consistent with prior quarters. Our customers are healthy but more discerning in their spend, with signs of stress isolated to the lower FICOs. We have maintained strong credit discipline, and our card portfolios continue to perform very much in line with our expectations. In terms of capital, while uncertainty about the Basel III endgame prevails, our capital position remains very robust, and we ended the quarter with a CET1 ratio of 13.7%. During the quarter, we returned $2.1 billion in capital, including the repurchase of $1 billion of common shares. We will continue to repurchase stock as we evaluate the right level on a quarterly basis. As you know, our transformation is our number one priority. This quarter, we closed another longstanding consent order, which related to the effectiveness of our anti-money laundering systems. We have increased our investment in areas where we have not made sufficient progress, such as data quality management. I and the management team remain steadfast and determined to get this transformation right and to get this done. We will close out this pivotal year with momentum and with determination to continue to improve performance in each business and the firm overall. We are committed to meeting our revenue and expense targets for the year, as well as our return target for the medium term. I am very proud of our senior leadership and the entire organization. as we demonstrate the potential of our unique global franchise. It is a privilege to lead this firm. With that, I would like to turn it over to Mark, and then we will be delighted, as always, to take your questions.