Citigroup at Bernstein Conference: Strategic Insights and Optimism

On Thursday, 29 May 2025, Citigroup (NYSE:C) presented at the Bernstein 41st Annual Strategic Decisions Conference 2025. CEO Jane Fraser provided a strategic overview, highlighting growth opportunities in India and the Middle East, while acknowledging challenges in Japan and Europe. The conference underscored Citigroup’s ongoing transformation and its commitment to achieving financial targets, despite a complex global environment.

Key Takeaways

• Citigroup is focused on streamlining processes and improving efficiency as part of its transformation.
• The bank is optimistic about its diversified business model and ability to navigate market changes.
• Key business segments like Global Payments Services and Wealth Management show strong performance.
• Citigroup is committed to capital allocation through share buybacks and dividends.
• The potential IPO of the Banamex franchise in Mexico is in preparation for later this year.

Financial Results

• Global Economic Outlook:

- India is experiencing robust growth, described as a "ten-year positive wave."

- Japan faces challenges due to tariffs, particularly in the auto sector.

- The Middle East benefits from investment in megatrends like AI and advanced manufacturing.

- Germany shows potential growth signs, while the rest of Europe remains vulnerable.

- In the United States, consumer spending is resilient, though decision-making is cautious.

• Business Segment Performance:

- Global Payments Services: Generates industry-leading returns with ROEs over 26%, growing from $12 billion to $20 billion.

- Markets Business: Returns are improving, reaching the 14% zone, aided by FX and interest rate volatility.

- Wealth Management: Achieved over 9% ROEs with 24% revenue growth last quarter, aiming for 25-30% operating margins.

- US Personal Banking: Has seen consistent revenue growth, with a portfolio that is 85-86% prime.

Operational Updates

• Transformation Progress:

- Citigroup is aligning its organizational structure with its strategy, focusing on five core businesses.

- Divesting consumer franchises, recently agreeing on a divestiture in Poland.

- Emphasizing innovation in digital assets and real-time payments via blockchain.

• Investment Banking:

- Improved market share, gaining 80 basis points in the first quarter.

- Revenue nearly doubled year-over-year, with growth opportunities in the sponsor space.

• Banamex (Mexico Franchise):

- Separated into two banks, with performance improvements and IPO preparations underway.

Future Outlook

• Revenue and Expense Management:

- Anticipates growth in core businesses and benefits from divestitures.

- Transformation costs expected to decrease as programs near completion.

• Capital Allocation:

- A $20 billion share buyback program is in place, with $1.75 billion executed last quarter.

- Buybacks to increase after regulatory clarity on SCB.

• Regulatory Environment:

- Potential softening of SLR could aid participation in the bond market.

- Anticipated deregulation could release banks from restrictive frameworks.

Q&A Highlights

• Regulatory Environment:

- Secretary Besson’s engagement is expected to reduce regulatory constraints, focusing on material financial risks.

- Early signs of SLR changes aim to encourage bank participation in the treasury market.

• Banamex IPO:

- Focused on performance improvements and preparing audited financials for a year-end IPO.

In conclusion, Citigroup remains focused on its strategic transformation and financial goals. For further details, readers are encouraged to refer to the full transcript.

Full transcript - Bernstein 41st Annual Strategic Decisions Conference 2025:

Ken Usen, Large Cap Bank Analyst, Autonomous: Everybody. My name is Ken Usen. I’m the large cap bank analyst here at Autonomous. I’m really pleased to have Jane Fraser with us, the CEO of Citigroup.

Jane Fraser, CEO, Citigroup: Hello, everyone.

Ken Usen, Large Cap Bank Analyst, Autonomous: Jane has spent the last several years navigating the bank through a multiyear transformation and simplification of the company since becoming the CEO in 02/2021. Really excited to have you here, Jane, and

Jane Fraser, CEO, Citigroup: talk about

Ken Usen, Large Cap Bank Analyst, Autonomous: the update’s discussion.

Jane Fraser, CEO, Citigroup: Great. Thank you very much indeed.

Ken Usen, Large Cap Bank Analyst, Autonomous: Excellent. Well, for Citi, can’t help starting with a global question given all the news and noise and and things that we’ve all been listening and learning about. So, you know, given Citi’s broad global reach, I’d love to hear just your assessment about the global economic situation and outlook, and what are the most important swing factors we need to be thinking about?

Jane Fraser, CEO, Citigroup: Yeah. I just spent a couple of weeks over in Europe and The Middle East, and there’s nothing like being in Europe to make you feel a bit better about The US from some of the some of the outlook. So I’m unlike I’m feeling more positive about the the economy than the the weather outside. That’s for sure. So if maybe just start off with what some of the things we’re seeing is certainly slowing global growth just because of some of the pause from the tariffs and and the uncertainty that’s out there.

But it’s quite a different picture in different parts of the world. So in you know, it’s some real bright spots in different places in The Middle East and Asia. So India just feels like it’s gonna be riding like a ten year positive wave. And I look at our own bank. You know, we’ve we, you know, we we sold our, our consumer franchise in India about eighteen months ago, and it was a third of the franchise.

We are now bigger in India than we were when we owned that when we owned the consumer franchise. There’s been a lot of growth, a lot of positive momentum there that our team, I’m glad to say, took full advantage of. So in India is a bright spot. Japan more challenged with the tariffs, particularly on the the auto front, and they’re worried about the aluminum and steel. But otherwise, Japan as well in a pretty pretty good position from the companies now much more of a return focus like Citi, and that they’re they’re looking abroad for global growth and dynamic there.

And The Middle East is, it’s just an exciting place because they’re on a lot of the megatrends of investing lot of heavy investing in The States and then domestically and taking advantage of the energy, and all of the, data center AI, advanced manufacturing kind of playing to their favor. So they they can benefit from investment in it as well as investing in those areas. And then, over in Europe, I saw a bit more of a spring in the step in Germany than I’ve seen in a while. Not so much for this year, but I think they see that they’ve got a path to some more growth after, you know, seven years of not really growing much. And I saw a bit more confidence from some of the corporate sector there.

But that said, quite a lot of structural challenges to be addressed, but I think they’re they’re encouraged with the government. But the rest of Europe, I think, can be hit quite hard by, the tariff impact and some of the fragility of the economy. And it’s really, will they seize this moment to drive some of the structural change, get more labor mobility, get the capital market union put in place, things like that. And most of the CEOs you speak to there, they are dubious, I think, be the best way of describing it. But, you know, they can see that this should be the moment, but they’re just a bit skeptical that Brussels will get there.

So with all of that, you come back to The States, and it’s, as you’ve been hearing over the last couple of days, you the consumer’s really holding up. You know, the spending’s good. There’s some benefit of the gas prices being lower. Essentials doing better on the spend, things like that. But the main thing we’re seeing is this pause, that’s been going on.

It’s not brought everything to a grinding halt, but we’ve certainly seen some decisions that have been held up, and we’ll start seeing that impact coming through. We’ll see some of the supply chain disruptions starting to come through. And I I think our bank’s not gonna see so much of it because I think it’s a see, those who’ve got the SME exposures and the smaller mid market ones, again, you know, that that’s where I think the pain is gonna hit first. For us, I don’t wanna sound complacent in the least, but because we’re such a a blue chip focus, they’ve got much more flexibility, diversified business models to to play with.

Ken Usen, Large Cap Bank Analyst, Autonomous: So when you bring that back down to Citi, sitting in the middle of a lot of that, you know, what do you see as far as the client franchise, the changes that clients are making, and where Citi’s participating in that?

Jane Fraser, CEO, Citigroup: Yeah. I mean, Mark and I were chatting. Don’t you think you all know Mark Mason? You know, about the fact of, you know, we keep talking about the last three years when’s there going to be a recession. And it just it it kept never coming.

And when what we’re seeing is still the consumer in The States in good health. When we look at the the mindset, we’re seeing, as I say, essentials getting a bit more of a pop, but we’re still seeing good spend on the retail and discretionary side and pretty healthy. And for a little while, it was to buy stuff forward. But as soon as you saw the pause, it reverted back to more it wasn’t it wasn’t a great pull forward. Although, particular, I’ll buy some sneakers for my son, some extra ones just in case.

I’m Scottish. But then, I the delinquency behavior is the one I’m really happy about is that we’re seeing quite a response fiscally responsible consumer at the moment. So delinquencies are, certainly stabilized, but I they’re improving in many different areas. So that, I think, gives us, that gives me some optimism. What we keep an eye on, therefore, is is gonna be unemployment.

And we see we’ve all seen the numbers. They hold up. We’ll see how that plays out, like, you know, over the next few quarters and what that means. So far, so good, but it’s a lot of uncertainty out. And then from the corporates, again, I’ve just been pleasantly surprised by how much activity is still going on, particularly in the M and A and the other arenas.

We’ll probably talk a bit more about that later. But we have three different levels of engagement with the corporate. The first is around supply chains. I think as you all know, we’re in about a hundred countries. We operate in a 80.

And so so we know we reach we reach the countries others others don’t get to. And for the the corporate sectors, they’re all looking at how do I need to rethink about my my supply chain again. And they’re they’re getting quite good at rethinking about supply chains because after COVID and others, they had to rethink them. And they’re getting ready. But until we’ve got clarity on the tariffs and the structure, no one’s gonna be actually pulling that much.

They’ll they’ll make some moves, but no regrets, but the big shift doesn’t happen. Second level we talk to them about is then obviously the hedging and their financing and how they’re looking at how they’re looking at things. And, again, with the hedging, we’ve got to see what happens with rates, what happens with dollar and different currencies, and some of the movements you’ve been seeing. And we’ve been pretty busy on that front, as you would imagine. And with some of the financing, let’s take advantage of windows when the markets are very fully open.

And that that’s been that’s been pretty active. But then the one, as I say, that it’s a strategic dialogue, some of that’s AI driven, some of that’s the the big capital investments we’ve been talking about. But we’ve seen a lot of m and a. We know we had a $40,000,000,000 m and a the other day. The thing that we’re waiting for is, and I was with, I was in Washington yesterday and getting the assurances that we should be starting to see more clarity on the FTC and where the president wants to go with m and a.

And I think once we get some more clarity on that, that will also potentially help on the big unlock we have been waiting for, with sponsors selling even more into corporates. But it’s it’s been quieter than it would have been, but it’s still pretty active, and the pipeline’s great. Yeah. So I don’t wanna sound overly optimistic. I think we’re in this wait and see from a lot of the corporates, but it it’s pretty I mean, it’s busy.

And it’s busy back in 388 Greenwich, and it’s busy all around the world with the companies. Will act once there’s more clarity.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yep. And speaking of another place where we’re awaiting more clarity, the regulatory environment. Yeah. Obviously, the tone has gotten much better, but we’re waiting for a plethora of potential rules and outcomes. I guess, from your perspective, how are you looking at what we’re expecting and what the best balance is between proper bank regulation and good bank flexibility?

Jane Fraser, CEO, Citigroup: I think secretary Besson has been extremely consistent and very clear in what he’s saying. He said, you know, he feels his words that banks have been straightjacketed. And he looks at many different companies and feels that, you know, similarly, there’s that there will be a benefit of release, from some deregulation. He certainly has no intention of of harming safety and soundness and wants the focus to be on material financial risks and probably a lessening of focus around some of the governance and other areas. And so that’s one aspect that I think we can expect him to be quite engaged with and the team, both the Fed and OCC and and the other regulators we’ve been looking at.

And there seems to be good alignment, but it’s early days. The check isn’t in the in the post yet, let alone in the bank account, so we have to see how it translates. Mhmm. And we’ve got some early signs with SLR. Secretary Bessant wants to have banks participate in the treasury market in times of stress.

We welcome some of those changes and other pieces. And just generally for our clients, I think we’re we’re looking forward to seeing some the permitting reform go through, which will help facilitate infrastructure investing in the private credit arena and our own financing business. And, we’re also looking forward to getting clarity on the capital rules. Strong alignment amongst the views of the different bank CEOs. We’d like to have clarity.

We think it’s good for our investors, and we want to have clarity around the entire capital stack, and we like to see that being analytically based. So holistic, analytically based without tremendous volatility and the transparency that ensures that models are fit for purpose.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yep. And so when we start to think about how this all starts to apply to Citi, as I mentioned in the intro, you’ve been moving forth this multiyear transformation. In terms of, like, the top things that are left to do and that it’s an ongoing project, but, you know, in sim obviously, there’s the the regulatory side of it, and then there’s also just the business side and technology and the investments you’re making in the franchise. Can you kinda cascade us through where you are and where we’re going in that front?

Jane Fraser, CEO, Citigroup: So if you think about the journey we’ve been on, the first piece was setting up what it what is Citi, and the vision that we had around is really largely revolving around being the banking partner for clients with cross border needs, then setting the five businesses and getting those set up. And, you know, they that was quite a bit of work. Banking, for example, you have the investment bank, corporate bank, commercial bank, all under one umbrella and one structure, bringing wealth, which had been fragmented in multiple different parts of business into one structure. So that, getting the strategies clear and then getting them on the path to delivering the returns that you would expect each of those businesses to be delivering and getting them set up once and for all the right way. So that that work was all ongoing at the same time as we were divesting of all the consumer franchises.

Got another one agreed, this week. There’d been a holdout out in Poland where we’re given the war in Ukraine and the like. And so we really gotta move on with that. And part of that move on was once you got out of these local businesses, you’re then able to run the bank very differently because you’re able to run it off global platforms rather than being universal banking, multiple countries everywhere with a very different management structure, highly decentralized, lot of fragmentation. Getting out of those businesses then enabled us to do the org work that we did, so we lined up the structure with the strategy.

We took out a lot of activity that we didn’t need to do anymore. And now the focus that we have is how do we then get the processes to line up with with a simpler business construct, much more a global business that all revolves around clients with cross border needs rather than multiple different client segments that all have different needs, local to global, etcetera. And that one, I wish you could wave a wand, and that was done overnight. It’s it is a heavy lift and hard work, and this is where you’ve heard us talk a lot about how the consent order work and this work kind of very much merges, which is great for our shareholders because we’re starting to see some of the efficiency of benefits coming through from the investments we’ve made. But we’ve still got work that we’re doing in driving through that process efficiency, and that’s really the work the next few years so that we are a boring thing of incredible simplicity and beauty that you all understand perfectly will be at our long term target returns, and you’ll be asking me what’s next.

But that’s sort of where we’re focusing on now is the longer term. We know we’ve we we don’t let up in the discipline for what we commit for ’25, what we deliver for ’26 on the medium term. But the as a management team, we’re we’re now focusing beyond, and that’s what you’ll hear us talking a lot more about particularly next year, obviously, as well.

Ken Usen, Large Cap Bank Analyst, Autonomous: Excellent. So when we start to dig into the five businesses a little bit, kinda connected to the GlobalPoint services is is fully integrated into everything. It’s something that

Jane Fraser, CEO, Citigroup: you It that that is a thing of beauty already, just to be clear.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yeah. And within that, the ROE has continued to be way above, you know, industry north, say 26%, the best business in terms of the return priorities. So what’s the differentiation today, and especially how’s that standing out in the environment you have in terms of what you guys are providing and how that’s creating that activity for Citi?

Jane Fraser, CEO, Citigroup: Yeah. It’s, I mean, if you look at the business, it is a through the cycle business. You know, we expect it to be be delivering mid 20% returns through the cycle. It has a lot of growth potential because, a lot of the work what it’s just we are deeply embedded inside companies. So we are helping do their payroll, their liquidity management, their, receivables, their collectibles.

We’re looking at all of the supply chain dynamics, and it it’s just it is like five root canals to get us out of any one country. It’s very sticky deposit business. It’s got strong, fee profile to it as well. And when we we follow the clients around the world. So when things change let’s look at what happened with Russia, and the war happened with Ukraine.

You saw us growing tremendously because you saw companies building up activities locally. And this is a this is quite a local business. It is how do you help a company on the ground operate their working capital every day and open their door every day. Then you’ve got the cross border nature of it and where the flows go and move. But this is sort of deeply rooted into local economies everywhere around the world with a an extraordinary installed base, but also an area with a lot of innovation.

So what can you expect from us going forward? It’s to continue to innovate. We could talk about the power of this network. And I think, hopefully, our investors are beginning to understand that this network, when things happen in the world, we make more money. We grow more.

And you’ve just seen that consistently. And I I think the proof has been in multiple years of the pudding on this one, but we’ve grown that business from 12,000,000,000 to 20,000,000,000, and it it will continue, growing robustly from product innovation. One I’m excited about at the moment as well is just in the digital asset space. A question often comes up from investors, help us understand digital asset. So if you’re a con let’s let’s take Procter and Gamble.

You’ve got an account with us in The US, and you’ve got account with us in, let’s say, Germany. What we do is we take and you wanna move money from US to Germany. This goes on our blockchain, real time instant payment, and it leaves New York, and it arrives back in Germany. And it goes from cash on our blockchain and then back up to cash again. The client loves it because it’s cash to cash for them.

They’re not worried about compliance. They’re not worried about, oh, this is digital assets. What do we need to do about it? And it’s just a use case as to why the banks are always pushing the regulators to say, let let us have that space because we can be the best use cases for digital assets out there at scale, and, you know, it’s a great example of, how how these different assets are adding to the toolkit for us.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yeah. And you mentioned, earlier about how, you know, there’s a bit of a pause on some of the corporate activity, but some but the offset to that has been the strength in the markets business. Right? So we’ve we’ve seen improving returns in the markets business to the 14% zone. How does that business act in this environment?

The talk about, like, the fee pool being bigger than it used to be. You guys have spent time regaining share over the course of time. So in that environment, does that continue to be a good hedge to some of the slowdown?

Jane Fraser, CEO, Citigroup: Yeah. Very very much so. And, you know, we’ve seen that consistently over the last few years where when there’s been periods of this volatility, we we have been in the street, but we’ve been making a lot of money from that and good returning, high returning money from it, which is what we’re particularly focused on. And Andy Morton is as well running that business. So if you look at the moment, as we talked about, what where are some of the challenges for folks?

FX, interest rate hedging. Yeah. During the issues the last couple of years, there’s a lot of commodity and rates and FX hedging. Here, we’ve got a shift in the rate environment again. We’ve got a shift in some of the FX dynamics.

You’ve got companies probably moving some of their expense and their revenue profile around, and that again needs to be adjusted for. So that that’s one element where we’re very active right now with our corporate clients and some of the investors everywhere in the world. Then you’ve got other areas like equities, where some you know, when when rates is busier, equities might be quieter or the other way around. But we’re very focused on both bringing in this getting more scale into our into the lot of the work we’re doing in the prime business. I’m quite pleased with that where that’s going, but I’d like to see that growing faster.

So Mark and I are looking at how do we support some more investment in that area because we just feel that’s got a very good return profile to it, and it’s a good complement to the strength that we have in equity derivatives in particular that has just been a we’re a top top two, three player in that space consistently. So that’s a bit that’s a business that’s, I’m pleased with how it’s going, but we are being selective about where in that in that space you play because there are some low returning parts of equities. We avoid those ones. And then on the, on the spread side, and this is an area Micky Bartio, leads for us. And, again, we are all seeing the opportunity in financing here, being the private credit, some of the real estate areas.

I mean, there’s a number of different ones. And we we have been doing very nicely there. We’re we’re one of the top franchises in that, But you’ve also seen us be very disciplined in some of the areas within that that we felt were low returning like munis and others. So the strategy there has really been paying off for us. So we’re we’re benefiting from the the higher activity.

We’re also benefiting from a unique franchise. There’s a lot of synergies between services and, our markets business. With Viz coming in and building up our episodic business, Andy Morton is constantly pushing him to get more and more share. He was teasing him the other day saying you’ve been here a year. Why aren’t you a top two player yet?

And he’s looking at getting more and more of the activity for markets of, you know, stronger episodic business. We’ve been doing a lot more of the big, more chunky alpha trades, which are good for what used to be more of a a flow shop. And then, of course, wealth is another area where there are a lot of synergies with markets and benefit from. So all these different pieces come together and help drive our growth as well and markets benefit.

Ken Usen, Large Cap Bank Analyst, Autonomous: Great. And on the this point, so he’s now been in the seat for Yeah. Close to, I believe, a year now. Focused also on just picking up those incremental share points. And in this environment where we are in a bit of this pause, you know, how do you identify

Jane Fraser, CEO, Citigroup: of our market share gains.

Ken Usen, Large Cap Bank Analyst, Autonomous: Well, that’s exact. So how do you focus on across the main product areas on on seeing that market share while things might be a little bit quiet? What’s how’s the strategy evolve?

Jane Fraser, CEO, Citigroup: Look. This I think the the good news for investors is you’re seeing proof points on the strategy. So we put if you look at the structure, we have our investment bank, corporate bank, commercial bank all in a single structure. Just saying we’re the first bank to do that, and everyone else is copying us. Just saying.

But what what we’re seeing from it is our investment banking side is really seeing the benefit from the relationships we have with the corporates around the world. And our clients trust Citi. We we they they don’t open the door in many countries without us. Many of the different areas that that we’re engaged with them have become much more strategic. I mean, chain is a c suite issue at the moment.

So that that relationship over decades with many of these corporates and being seen as reliable and trusted is is really given with the right talent that we’ve been investing in in the last few years into the investment banking and that this has been, you know, stepping up once more on is giving we we’re seeing that translate. And the piece I’m happy with last year, we got about 50 basis points of share gain in investment banking, and a lot of that was from the investment grade DCM, strength that we have given the nature of client base we serve. This year, 80 basis points of share gain in the first quarter, And you saw we had very strong results in banking year over year growth. We almost doubled the revenue, but it came from LEVFIN m and a. And that’s kind of a bit of the holy grail because when you have those relationships, we need the largest LBO.

We’ve been doing the largest m and a deal. Some of them, we were the sole adviser on. You know, one quarter in that, yeah, there’ll be some ups and downs, I’m sure, around it, but we can really see the momentum there. And where does the opportunity sit for us? We’re really strong with the corporate franchise.

We have not been as strong and invested as highly in the sponsor space. So now what we’re doing is we’ve been, you know, in the the wrong end of the top 10 in in the sponsor league table. We can get to top five with our sponsor clients, that gets us to top three in investment banking. And it’s one where the sponsors have kind of been a bit too dependent on just two players. They want a third player.

This is where the Apollo capability has also been very valuable on the private credit and other space as well. And they want to do more business with Citi. They also love the wealth strategy because they’ll be partners for us in, being on the platform there. So, it’s a big opportunity. So Viz basically has no excuse.

And he’s he you know, he’s doing a good job, but he’s doing it the right way. He’s putting good disciplines into the banking force, looking at the call calling, looking at the clients we’re serving, where is it that we’ve got the good c suite, making sure there’s a single client executive who’s the entry point for the whole city relationship, and that person is doing their job well. They are the right person. It’s working with the clients. So I think you would just see us pretty systematically build out to the potential that we probably should have been for a few years now.

But you can you can see the proof points strategy is working, and we’ll take advantage with continued investment in the right talent. I don’t want gunslinger talent. I want and, you know, we’re very aligned around this. We want talent. We want to build a franchise.

And, you know, that’s that’s the group that we’re bringing in and marrying with our own own team.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yep. And and you mentioned before wealth management’s connection to the other markets. So, Andy, been in that world now for a few years and got the ROEs improved to 9% plus. That’s becoming a bigger, more stable part of the revenue stream. Talk incremental opportunity.

Jane Fraser, CEO, Citigroup: About the 24% growth last quarter in the revenues. Yes. So it’s it’s really coming together for, I think, our investors to see why wealth makes so much sense for our franchise. So we have $5,000,000,000,000 off us, from our existing client base, and we are not being shy now that we’ve got the investment platform in good shape. We’ve got our deposit and our, you know, lending platforms in good shape now, and he’s got a stellar team.

I mean, it it’s an exciting team who are coming together because they can see this opportunity to be the leading global wealth manager. That’s why they came to Citi, and they came from great different jobs and roles and terrific other firms. They they’re just so excited to build to the potential here. And the linkages in with the other businesses, our mid market clients around, I mean, this this is when you go internationally, we are not the wealth manager for retired doctors and dentists when you go abroad. Like, these are the people that are shaping the global economy, building new businesses, into the mid market, in the global supply chains.

And, they look at Citi and look at Citi in India. It’s a hundred and twenty four years there. They view us as local but global that we understand these different dimensions. It’s just a very different feel. And so it’s right team, and we’re delivering the proof points in the investment assets.

It’s net new investment assets. It’s the north star of the business and the team, but at the same time, very good efficiency and good discipline. Andy’s been focused making sure we get the 25, 30 percent operating, margins and that we get to first to the mid teens and that we get to the sort of 20% ROTC in that business. And all of the franchises are now beginning to perform. The private bankers have been the laggard, but we saw good growth in that last quarter.

Andy kind of grasped that one by the reins, and he’s driving driving it forward in a good way. So as you can tell, quite excited about this one. It’s just I I think for you all, you can see the different proof points getting delivered, and you’ll just continue to see the consistency of that.

Ken Usen, Large Cap Bank Analyst, Autonomous: So wrapping up on the businesses Yeah. To to come back to US personal banking. Yeah. You mentioned in your intro about things we’re watching for Yep. The US consumer.

Yeah. And you said still, you know, hanging in there and and and doing pretty well. And and one of the questions that comes up a lot for Citi is is that card portfolio that that we know is rather, you know, big in terms of the loan book. And so talk us through just that confidence that you see in terms of The US consumer and in terms of the metrics that you’re looking at inside the the the different card books.

Jane Fraser, CEO, Citigroup: So we have first of we have a terrific leader of that business, Gonzalo Licetti. He’s got a he’s got a strong team, and they’ve delivered three years of revenue growth. We’ve had 11 quarters now of positive operating leverage. And you know, dry we saw the returns into the, into the teenager category, last quarter. And I I it’s just been run very in a very strong and disciplined manner.

Lot of investment into innovation. The digital proposition there is very strong, and this is not the Citi consumer franchise of old. If you think back to what it used to be, what it is today, it’s 85, 80 six percent prime, from the cons from the, from the portfolio basis. It’s very well reserved. It’s at 8.2% reserve, which is plenty.

And I like I like the discipline that we’ve seen that whole team have as different portfolios come up for renewal. They’ll turn them down. They’re pushing and driving for much higher return profiles from them. And I feel very good about the growth prospects from new client acquisition. I feel very good about the partnerships we’ve got.

We’ve been refreshing a number of the the the cards, the strata cards, the one that we’ve been doing. Been winning a lot of awards, and you’ll see the client satisfaction rising. And then the other piece that’s coming in there is AI. And we’ve started doing quite a bit of work in the AI space. So I see more room for that efficiency that really has markedly improved as you’d expect with that amount of positive operating leverage for so long.

You know, we we still still see some good runway there whilst continuing to invest in marketing and in the product innovations and other pieces we need. So, yeah, let’s keep our eye on the unemployment numbers, and we’re certainly doing our best to make sure that, we can deliver the returns that you would expect Yep. From that business and the support from the retail bank as well. Plays an important feeder role.

Ken Usen, Large Cap Bank Analyst, Autonomous: So thank you for walking through the the the the the core businesses. And one that still has some change ahead of it is the potential future IPO of the Mexico franchise. Really?

Jane Fraser, CEO, Citigroup: No idea. That that’s new. Right? No.

Ken Usen, Large Cap Bank Analyst, Autonomous: I appreciate You’ve spoken very consistently consistently about getting that ready. When can you give us an update in terms of,

Jane Fraser, CEO, Citigroup: like, that’s I’m afraid I’m gonna be horribly boring on this one. So the t the the huge work was to separate out Yep. Into two banks. And and just, again, just to reinforce the importance of Citi in Mexico for the the core franchise from the Citi perspective, it was made a Citi in Mexico. It’s the about the eighth largest bank there playing a very important role connecting Mexico and the world, the world of Mexico, and, very encouraged by the leadership we see in in the country as well.

So for, Banamexing, it has its own management team. It has its own external reporting now. We are it’s a lot of work to go from having separated everything is now making sure we’re driving the performance, up, making sure that we’re getting all the audited financials, getting that in place for IPO. There’s a there’s a there’s a big body of work to make sure that we’re ready to be IPO able at the end of the year. And we’re just keeping the team really focused around that.

So just, you know, get this done. Get this done well so that, you know, whenever regulatory approvals come through and market conditions are appropriate, you know, we can seize the right opportunity with investors. But our goal again is the IPO is the waypoint, the destination. So the next is is the deconsolidation and is then the no. And, ultimately, the full exit.

So, I know everyone always asks me about the IPO, and that’s that is very important. But we’re we’re very focused on the path all the way through and making sure that we’re not doing shortcuts now in the preparation that you’d end up regretting when it came to looking at how to make sure we can deconsolidate and that we can get the final exit done. So we’re on a mission on this one, but focused and not distracting the team with other things at the moment. And along the way, it’s

Ken Usen, Large Cap Bank Analyst, Autonomous: good to have as a business. Right? I’ll

Jane Fraser, CEO, Citigroup: I’ll Yeah. It’s pleased to see performing bet you know, performing better, and the the focus actually on both franchises doesn’t help doesn’t hurt there.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yep. Yeah. So talking a little about about financial trends and targets. So interesting start to the year, of course, as we’ve already walked through and discussed. So quarter started out the year very well.

Obviously, some things that have been a little quite eventful. But what do you see in terms of this, the key drivers of revenue growth from here that informs your outlook?

Jane Fraser, CEO, Citigroup: Okay. You’ve heard from us in terms of our outlook that we’re looking at sort of 83.1 to 84,100,000,000.0 as the range, and we’re comfortable with that. Do we know exactly what the mix will be in the second half of the year? Nope. But it’s the beauty of the diversified business model that, we can see the paths there of the different scenarios we’ve got.

So we’re feeling comfortable around that side of things, and the same from the the expense and other guidance that we’ve given.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yep.

Jane Fraser, CEO, Citigroup: So it it really, the question is, what exactly happens with the rates environment? What happens with the tariffs? Where does this pan out in terms of whether it’s very active with M and A, does it end up being more active, do IPOs come back eventually, that one may be a little bit more optimistic for this year, and but we’ll certainly see plenty of activity on hedging, financing, these other areas in the meantime. And the rest of it’s the upside because the great ungumming has to happen at some point. Right.

And, you know, that that will be some, you know, new waves of growth to counter where there may be other things that slow down further down.

Ken Usen, Large Cap Bank Analyst, Autonomous: And and one thing that that you and Mark had talked about on the earnings calls for the last couple years is the revenues are going up. The expenses are going down. As you get through the transformation, the simplification, there’s a lot of operating leverage kinda built into the model as as you look forward, and we’ll see how the environment, like, adds to that. But those jaws that I just mentioned, how built into your expectation set of how you get from point a to point b on on growth and returns over time?

Jane Fraser, CEO, Citigroup: Yeah. I I I think, again, we I’ll be horribly boring. It’s same things that Mark and I have been consistently talking about, that so you’ve seen the the revenue drivers that we’ve got across the different businesses. Some of the mix may be different. On the expense front, we’re certainly looking for next year.

We’ve got the targets out there of roundabout, you know, 52,600,000,000.0. And it’s but it’s the same drivers. It’s that we’re looking at. Where is it that the stranded cost benefits come through as we’re divesting and taking those out? Where are the benefits from the investments that we’ve been making coming through?

Some of that in transformation and in the regular investments that we’re making in the franchise to drive more efficiency. You’ll also see some of the transformation costs coming down as we get, you know, more towards the end of that program. And, you know, to my mind, there’s still areas that we’ve got investments in our controls. We’ve got investments we’re making in areas that are still manual that will get automated, and all of these will start will continue to have the benefits playing out into the longer term and will continue. But I’m also mindful we need to be investing in the franchise.

We’re mindful that we need to be making share buybacks as well given where we’re trading. Not so we’re we’re we’re very careful around around the balance of all those things. Where is it we’ve gotta make sure that we’re competitive? Where is it that we’re making investments that will have important payoffs on revenue or expense benefits? And where else is it that we need to be giving more money back to the shareholders?

All of those things driving us to improve our returns.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yep. And on the expense point, in terms of making sure you’re making the right investments, how do you get the comfort that you’re making the right amount Because on the surface, of course, it looks like cut, cut, cut as you as you simplified and and and transform. But what’s the right dialogue dial in in terms of, like, making sure you’re doing all the right forward looking things for growth, for technology, for risk, for compliance?

Jane Fraser, CEO, Citigroup: Well, again, I I hope you can see what we’ve been delivering in terms of that because, we have been delivering good, top line revenue growth in the different businesses. At the same time, as I’d remind everyone, we’ve also been divesting. So you’ve had that you’ve had that element coming as a drag as it were on the top line, but at the same time, the the five businesses have been, you know, performing with the positive operating leverage and and good growth. And and we have a very active dialogue. We’ve got a very good process around it.

We every quarter, we’re going through and looking at what are investments that we need to be making. We think about them on a multiyear basis. But, equally, if something’s not delivering, we have no qualms about shutting it off, and, having the different milestones, along the way. So it it’s it’s a constant dialogue. You know?

It’s it’s constantly looking at the different things that we’re doing. Are they delivering? Are they delivering the way they thought we would? What does competitive landscape look like? Where is it the AI is changing things?

Where is it digital assets maybe changing things? And what does that mean that we need to be investing in? And are there other things that actually we dial it back because we’re finding it’s not as effective or it’s not delivering as much? Yep. So it’s it’s a bit like man you know, it’s a bit like managing a toddler.

You gotta have your eyes on everything all the time and be on top of it. It it’s not a it’s not a sort of hands off hand wavy thing. It’s it’s micromanagement, you know, by by all of us to make sure that this has been done well.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yep. And and you mentioned just before that getting the returns up over time also includes returning more capital to shareholders.

Jane Fraser, CEO, Citigroup: So Yep.

Ken Usen, Large Cap Bank Analyst, Autonomous: CET one in the first quarter was $13.01. You’ve discussed that getting to that 10% goal next year does incorporate getting the CET one or built on a thirteen one. One. So talk about talk about what that progress looks like and and your confidence in being able to continue to,

Jane Fraser, CEO, Citigroup: you know, imply rapid development. To tell you a little bit more often as Mark will after we get the SCB pieces through. And I think, importantly, we’ve all been pushing, our regulators as well as to, you know, can we make sure that the models are delivering results that we can all understand, and that there’s a bit more transparency into them. So I think that will benefit us all. But in the meantime, I I think it’s it’s fairly simple.

We like giving capital back to our shareholders. It’s a very important priority given where we’re trading. We’ve announced the $20,000,000,000 share buyback. You’ve seen us give back 1,750,000,000.00 on the share buybacks last quarter, a little bit more, $250,000,000 more than we said we would do. We we could see the room to do that because we had good results.

And if we get good results and we have clarity on SCB, you know, I think Mark and I, you can all do the math, would expect to see the buybacks ramping up through, you know, once we got got through that, SEB clarity. Yep. Yeah.

Ken Usen, Large Cap Bank Analyst, Autonomous: And and, obviously, at at sub tangible book, the buyback is a great use of

Jane Fraser, CEO, Citigroup: incremental capital. And it it puts a high bar for what we look at the investments internally as well. Like, that that’s one where, you know, when we’re going through the planning, we’re looking at what is the stuff that’s a 20% marginal RoTCE benefit. You know, we’re not looking at the things that are that are smaller on that, and some of them may take a couple of years. So it doesn’t actually hit you, you know, year one because I don’t wanna be tactical in running the firm that way.

We will make the right long term decisions, but with the right short term disciplines to it.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yeah. And

Jane Fraser, CEO, Citigroup: Yeah. There’s a lot of yeah. There’s some yelling and screaming that goes on amongst the management team as you’re going through all of these things. There’s a lot of passion because people want to invest in the business. Right.

And we’re saying, yep. But if you if you’re not getting that return, it’s going to the shareholder.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yep. And and just to put the other use of cap, how does Yeah. How does dividends, factor into that organic versus dividend versus buyback?

Jane Fraser, CEO, Citigroup: We’ve increased the dividend as you’ve seen, a bit each time, but we’re also we are very mindful that the way we trade. And so the the the focus is much more to you’d rather give the the marginal capital back through the buyback, as opposed to the dividend. And I really look forward to, hopefully, in the near future where that’s a much tougher decision than it is right now.

Ken Usen, Large Cap Bank Analyst, Autonomous: Absolutely. Absolutely. Soon. Soon. One question I want to do wanna come back to on the capital, regime.

So you you mentioned, earlier the SLR potential softening. Yep. How what’s the benefit to Citi? It’s clear what the benefit is to the bond market. Mhmm.

How does Citi participate differently if SLR given that you’re not bound by it?

Jane Fraser, CEO, Citigroup: Yeah. I think it’s part of the how do we just be our how do we do our job as a bank. So in times of stress, it will certainly ease the ability of a number of us, to participate in the bond market and help support treasuries and the like at those moment. And that’s the intent, stated intent from secretary Besson. Whereas for some other players, they’re bound by it.

We aren’t. But I think it’s we take seriously the role that we wanna play in the markets. Let bank be a bank. And that, you know, in addition to lending, helping participate in those moments is is an important part of, what we should do, and this this will help in that. But it’s it’s not a it doesn’t release us so much on the other front.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yeah. And given that it’s not a constraint, like so would you necessarily, like, participate that much more than you already are?

Jane Fraser, CEO, Citigroup: In this we’re in moments of stress. It definitely could could it it will be helpful. Yep. It will unquestionably be helpful. Yep.

And, you know, we all, as large banks and the leaders of the greatest financial system in the world and with the role to as the leading global players in the world, I think all of us take seriously that role of supporting markets at times of stress.

Ken Usen, Large Cap Bank Analyst, Autonomous: Yep.

Jane Fraser, CEO, Citigroup: You haven’t asked me about the transformation yet. So

Ken Usen, Large Cap Bank Analyst, Autonomous: bringing all that back and including the transformation, let talk about the return improve improvement Yep. That you’ve path that you’ve been on. Yep. 11% for ’26. Just talk us through the confidence you have in that.

Yeah. What needs to go right? What could go wrong? And and the March forward that we just kind of incorporated.

Jane Fraser, CEO, Citigroup: Look. I think you’re to just talk talk on the transformation at the moment. I think what you’ve been hearing from us is, you know, we we feel, good about the progress that we’re making there. We’ve got a number of programs that are getting towards the being operating at target state, and I I would liken it to building a house where you have that punch list at the end in order to get it to the the state of perfection that is expected. But we’ve got a number of the different areas, you know, getting to that those target states or even operating in the target states.

So a number of other pieces of the broader transformation beyond the consent order is also, say, related to technology. We’ve got a big body of work going on at the moment in tech where we’ve been rationalizing the number of vendors that we’ve got. We’ve been looking at different sites. So, you know, what’s the optimal number of sites we’ve got? How do we restructure to make sure that we’ve got people in right places, right skill set for the decade ahead as well?

So that’s an area that’s a a particular focus for us at the moment. In addition to the work we’re doing in, you know, getting the final stages of moving from multiple platforms to single platforms, We’ve also got quite a lot of investment going on into automation. And as we’ve moved to single processes for doing things as well as single platforms, you know, how do we make sure that, those those are as automated and sensible and a AI ready as possible. And that, again, is work that goes well beyond the consent order. This is the final stages of transformation for Citi into the bank that we want to be the new Citi.

So I am feeling good about progress. I’m you’re hearing confidence around that our business strategies are delivering what we thought they would be, and, you know, a few of them even ahead of schedule, particularly the services side that has been, but you’re seeing banking. You’re seeing wealth, really coming into their own now. Market’s performing well. The expense base, I think what you’re hearing from me is we’ll carry on investing, but we still see opportunities to drive more efficiency.

There will also be opportunities as we get to the end of transformation not to cap carry the tax that comes of that, and be able to bring that elevated expense base down further. And we we will do that the right way that continues to invest in our safety and soundness, but it will also drive to a more efficient bank from it. And to make sure we’ve got the technology platform and operational disciplines so that, you know, we are really delivering at the speed, accuracy, timeliness that’s required for a digital world with digital assets, and other capabilities that AI is going to, thrust upon us. And I’m excited by it. Excited by the team we’ve got.

I’m and we still got, you know, some good hard work ahead of us. We’re not there yet. We’re not done yet. It’s a different city, and we’re delivering what we said we would for you, And we will continue doing so, with a little bit more skip in our step, as we do so now.

Ken Usen, Large Cap Bank Analyst, Autonomous: Excellent. Alright. Great, Jane. Thanks so much for walking us through all of Thank you. Thank you.

Joining us. Good to hear.

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