Citigroup (C) 12 Jul 242024 Q2 Earnings call transcript

Hello, and welcome to Citi's Second Quarter 2024 Earnings Call. Today's call will be hosted by Jen Landis, Head of Citi Investor Relations. [Operator Instructions] Also, as a reminder, this conference is being recorded today. [Operator Instructions] Ms. Landis, you may begin.

operator. you, Thank thank XXXX and for our joining Good call. you quarter earnings second morning, all I by Mason. joined our am today Chief Fraser; Officer, Financial and Jane Officer, Mark our Chief Executive presentation, I'd remind on website, like citigroup.com. available you today's our to for which that download is to forward-looking subject and contain and are statements on circumstances. which management's They changes expectations in current based are uncertainty as filings. And in Actual of factors variety that, due to our materials it Jane. results earnings a over may SEC differ materially from in as turn I'll well those with these described our statements to including

Jen, Thank good you, and morning to everyone.

investment our the consent discuss for the These plan. the meet to We've we that to with data platforms a result. about behind the areas Reserve on the civil and and into Before focused processes with and resource risk called the of actions areas: were those ensure agencies under of to Addressing data let particular And modernize sufficient as entered I tech a penalties these area our this this Federal amended OCC, order allocating milestones, our the compliance. regulatory in transformation, resources had regulatory actions pertain a The XXXX. consisted priority. public both four review of controls. This and goal is two process Office infrastructure we're orders actions primary of our which results Wednesday. quality we the Controller covered is me and week's remediation new disparate the first designed money unify fact increased multiyear automate on effort orders that address were management. in been #X the the governance, consent primary year primarily we the that and It quarter, to by actions and Currency, the is announced control management, our

the submission developing are OCC. for currently the plan to We

for Reserve Federal CBNA, to consent is a debt background, holding call banking while of OCC our way bank the by CBNA at is NA. the nondiscretionary dividends vehicle company, our Citigroup, regulator with regulator with it the Now of minimum, Citibank necessary primary We primary assets. the Citigroup largest which to XX% the preferred allows the obligations. paying continue dividends the and for order our OCC service other approximately is Amended

and OCC review seeking developing plan, would for that we're resource above While nonobjection. dividend our consent require the amount OCC's

the parent payments intercompany CBNA nor to Indeed, its They are pays on made that dividends common common dividends, Citigroup's the no to is should ultimately sufficient dividends these confused a restriction shares. shareholders. there be with And shareholders Now even Citigroup. to to from businesses to Citigroup to with are than not in pay there ability transformation is our Citigroup investments our resources buying has clear, me our more for invest planned be shareholders. needed also make and the capital the back of let to very return restriction

announced and dividend our late resume modest this quarter. we to from per buybacks will increase in we will as share, We June, $X.XX $X.XX

reduce The difference. improve deliver are able making going specific have this get to was we executing in risk, be undertaking people. we unexpected pleased in you we doubt never such areas our for that us. very a we the come they understand the to Wednesday need and of It investments as starting where transformation. And are outcomes. it and these areas we tangible are investors have to transformation that a in our We simplifying to but entirely our disappointing progress to been have on I other making to While firm been acknowledged investments not can linear, to our as be tech made ability do was assure have our and multiyear confident is meaningful the these At made controls actions together were we're time, that. no same completely for

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as have executing $X.XX results an in well businesses businesses leverage. towards in but net where costs had to we core Expenses Revenues X% X.X%. strategy of take positive the we stranded [ five drive simplify show of reported rightsize taking increase our overall were steps operating our markets relentless were as our an are of beginning each continue we to $X.X up ] all in and The as targets. reduced and year-over-year. such as and our We with our X% organization, earnings share down up of to one as investment transformation. medium-term hold we're even wealth focus income return per RoTCE billion Our

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loans continue in starting talent There the saw and was our revenue and see benefited Personal combination seeing showcases contributing our strong experience. U.S. to spreads pressured from stress Retail We credit with client operating we USPB delivering is expansion, our the income with of with while and both higher and three and cards growth credit and the Banking referrals were off segment growth saw focus of improved continue and sheet. Andy revolving vintages. the top the business, good to on they to certain to retail expense here. the while Our deposit the services, down again base his improve on pressure. all rationalizing banking balance pay again the differentiation industry wealth. Overall, businesses X%. on lower margin also normalization investments test expect enhancing customers from balance top of as to seasonality team expenses the recent strength known certainly returns poor line. in attract from The focus X%, returns of we branded to by mortgage

now And at October X, ratio we buffer. regulatory to decrease of XX.X%. CETX stands capital requirement capital as XX.X% our reduction our stress expect Our given of to the

grew book value per tangible $XX.XX. to Our share

common billion returned our $X to are we by dividend During in capital shareholders, and increasing our the we X%. quarter,

back around given a buy common to billion we the the quarterly level $X and continue assess particularly expect quarter, will shares uncertainty this the in III of Basel buybacks endgame. on to basis, We

upward the over trajectory. saw of spending a is half second the semiconductors. Despite appears be as tariffs progress, moderately, a and of budget. EVs most albeit their the and performance the produce last drag being inflation enter although we to as is election growing to Investor of U.S. our environment, an years, have environments. in clear In the us macro Services by sound high-tech remained the continues can structurally still government competitiveness challenged the at model November. there at of uncertainty, there results And on China you economy. After our with back Looking Europe, manufacturing growth. is lack when pivot you the is a labor of region's stimulus through of an businesses. macro on trend, market downward on X break while year, on a now our Asia, rate this has our are upside for good consumer across went and there Day world's five And business in is wide softening of variety have a Services we plenty cuts might in tightening heard signs course, In begun,

most amount to have completed made We the organizationally. We've markets. incredible progress streamlined organization strategically exits our simplification, agility and our We decision-making. consumer faster an of national and catalyze of both in of

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deliberate We path. are a on

continue will can our me our time. With will questions. then that, and returns strategy so we our delighted, let to our over transformation further and We Mark, it take improve your execute and meet targets over turn medium-term always, we continue to to then as to be

otherwise, I'm the unless then more morning, a quarter. with Jane, firm-wide start indicate full good and time Slide X, comparisons second spend going for year-over-year little the show for on business. On quarter, financial we on I results, to Thanks, focusing and results the everyone. the financial

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by we this Fed million the the $XXX money and the was which quarter, and and cost sequentially, the penalties our by civil by earlier continued costs, of OCC and organizational week. investment partially savings primarily expenses repositioning X% expenses reported This in billion, and driven notes. down The associated stranded simplification, in with decrease X% transformation includes lower OCC offset $XX.X reduction imposed Fed

operations transformation over infrastructure. technology the and As continue and months, few control modernize to the in invest our we and past risk to said we will

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credit a process and systems quality processing. Overall, streamline to resiliency. improved and to consolidated of examples meaningful upgraded data architecture represent enhanced and we've our We've and only governance ultimately as data and operations efforts and These compliance efficiency also management to we straight-through facilitate lot improve operating there's assessment in experience. while This how a do, has model milestones. our wholesale risk regulatory enhanced platforms year. with we've made reduced risk we're the particularly the and capabilities First, increase beginning and for client a to risk and improvements loan multiple technology. of making technology progress related where That have and against end-to-end consistent fallen to but since the management, in reporting, monitoring. our not data transformation enhanced we acknowledged operating consolidated we said, risk which implemented we data, short stood publicly And our automation up more systems

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XXX consumer our in were with loans the key And FICO net card we funded in offset transfers portfolio. an and they into was revolving account largely higher risk When has nonoperational rates. Lower more to divergence we've our Across outflows translation, remain driven taken consumers consumer, interest scores business. we total see this are by and markets, in of delinquency in discuss metrics, drops look exchange disciplined well rates. a was the Excluding as growth and card impacted over inflation later, across Slide seasonal a or of across And credit corporate which Argentina, approximately and reserve are our XXX clients, while Average portfolios, to income slight of said, largely average of borrowing and seeing consumer as outflows income our down X% a by to reserved and spreads score only by all seeing balances investments deposit see appetite loan to band. in continue of performance reserving, we driving partially deposits lower interest show X.X% cards and we FICO acutely flat we're band continue declines for and in to behavior the in beginning X%, decreased growth with highest FICO consumer cards driven TTS. On and of our it payment they foreign at customers will and lower across quartile across that roughly That as and Mexico XXXX, interest sharper are and our is XX% more wealth. reflect spend largely our than did ratio offset as U.S. customers by and rates by rates resilient income stabilization also high savings card seasonally portfolio. the by as and FICO XX, maintaining performance we framework. in high card signs loans overall higher. we are more payment well wealth impact

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with comfortable very billion current nearly we feel in we of such, have the reserves As the environment. $XX that

capital our this periods and Slide strength clients volatility. take us uncertainty balance to support of through is and strength a sheet, to that of to Turning XX. I'd moment the to highlight allows liquidity. It like

a business strategy is reflection risk diversified and appetite, sheet balance model. Our our of

Citigold, industries, diversified heard how crucial well our span deposits are are the around the these our the types. nature clients in Services over wealth countries. And in retail is banks, and billion Of are well across regions, to the with stable. remainder base private deposit of at currency. world, across Investor The making operational Day, most therefore, XX accounts $XXX and trillion customers corporate XX and U.S. our them $XXX about across of and and billion deposits well The you operating total very account dollar-denominated, that majority of deposits, as work held regions products. daily remaining $X.X deposits, at are offerings our fund as their Our spanning as are XX% operations majority diversified

our also reflects strong risk mix asset appetite Our framework.

loans. billion cash balance $XXX loan diversified duration is of of consumer portfolio resources. available across our contribute Our approximately investment our $XXX held and And billion short to securities, well corporate high-quality and that liquidity sheet X/X is in about

ratio, regulatory walk the of billion the above and quarter quarter. this approximately preliminary basis our We We the continue good for show CETX the industry sequential for or drivers of XX.X%. assets position us XXX strength detail quality to a Slide feel strength ratio with which balance requirement sheet of the provide points our ended clients. On to XX, our XX.X% be more very and approximately we about a our and of on of liabilities our capital a CETX to current capital importantly, source $XX

SCB of capital October decrease X.X% as the share stress to doing buffer our and quarter. billion X.X% this incorporates the of reminder, simplification of reduction, said, our from a to with efforts, capital per reduction which our our we in buybacks fully announced to capital common on announced requirements indicative reduction XX.X% to not dividend reflect of full does our to requirement per of as mentioned $X.XX or we following expect to X, SEB in the transformation our We increase all we ago. We $X the benefits Jane strategy which the yet from the over the improvement SCB. capital $X.XX in of even weeks the our of plan we corresponding expect were requirement And execution results our our pleased see an DFAST regulatory couple And time. share reduce earlier, a as our results. That to

Slide to XX. turning now So

revenues offset innovation, tax platform our driven driven XX%, to businesses by smaller that period. benefit as higher as Noninterest X%, reminder, banking largely The by U.S. transaction release At Latin the of rates finance, in well expense, was non-U.S. million, the and technology. in a by deposit credit ACL from continued benefit impact XX%, X%, quarter by was get quarter. On were in year, arrangement billion, supplement. In devaluation income the markets down back prior continued deposits deliver income is and our Services during to as agency underlying see TTS income Before and I tighter expense result which to lower this the in were Asia, month. Expenses continued increased up business by up capital a investments our and increased in XX% and modernization by revenues financial products $X.X quarter, approximately lending. was higher rates continued revenue by a for XX, and product outflows. sharing at income of and growth services the demand innovation continued the an within we all Argentina. we Argentina-related were our in relationship-based in by relative product to and the a time, and implemented Investor up spreads. fixed The offset quarter. lower the Net growth services. into services between reflect fourth and of of loan businesses, year results highlighted and securitization loans earnings of interest included of commercial the corporate America across strength by continues is underlying partially revenues reflecting both decreased driven on a currency we XX.X% high Cost $XX driven businesses for and driven last each to get other a revenue client X%, benefit coming down continue impact on Asia. the for revenue-sharing last largely of net loans currencies, fees. we were fee banking, Markets legal down Day inflows. underwriting nonoperating was a primarily primarily well Services, second other working for and experience Fixed Average the were good in in Average in drivers driven settlement driven partially in up as line momentum operating This both Net for show investments X%, the continued investment as our and volatility quarter. markets an X%, security export in and spread deposit across by same interest from Argentina, Slide in X%. particularly which was underlying and the X% driven RoTCE strength clients

driven driven see mortgage-backed equity as for show prime spread corporate Markets we continued of of by favorable the increased in income banking increased a we driven balances growth primarily seeing Cost productivity and lending. discipline with a for as strong net macroeconomic leverage share. We Banking improvement market $XX demand lower rightsize banking by this delivered combined reflecting and with and loss. a across positive B Net benefit loss. expense of driven higher base. the than the of DCM, close. revenues, the driven higher make for continue in income X%, X.X% securities. lending around and an operating ACL Average from continue partially million mark-to-market benefit largely in as was mortgage XX% assets by to a revenues credit hedges, an In and by offset from increased investing. to in investment generated Expenses largely driven credit excluding offset release technology, exchange XXXX, trading the performance progress a driven revenues credit X% expenses good fruition was share to driven and for positive expenses. treasuries by loans products. Visa and higher offer, we in decreased those outlook by for an driven decreased led transactions for as Both net activity as momentum Slide issuance partially in $XX higher client and Corporate approximately more was actions we gained largely announced volume-related XX%, of credit pickup Average advisory, asset-backed by to net to fee derivatives, activity X%, up advisory, underlying advantage offset and with ROTCE decrease offset in increased addition increase coming maintained wealth as XX%. IPO the again credit. a in as the increased Investment half $XXX as from in billion, equity context X% ECM loans and $X.X X%, and XX%, as XX% well in activities, by quarter. where number costs. more XX.X% results quarter. On approximately RoTCE a market by driven second loan for for Average returns longer. issuers advisory, million, environment. In NII to we're revenues by demand show Slide well year-to-date take an ECM, from particularly release And banking convertible strict leverage second low the of across the investment XX% quarter benefit revenue [ A quarter. On revenues taken conditions. overall of could markets ] relatively we quarter. results quarter, in by in and NIR the the a seeing generated funding we capital what given by revenues on continued the strength increased we're in XX, revenues, plans global to macro by the primarily funding XX, higher by grade mainly excluding partially second lending continue derisk U.S. benefit issuers to equity revenues DCM was Wealth volatile investment be in as from been ACL million operating advance issuance we've China elections of strong shares, the important Cost for of expectations rates be of for savings, XX% decreased

client to partners volume growth due from X%, more balance net lower second by client balances balances growth higher continue of X% personal revenues X%, We increased increased increased largely with driven XX%, we banking quarter. higher well by investment the initial we up net higher down noninterest continue to Wealth this to or to driven spreads volume-related growth assets driven internationally, and expense a of also see to losses. net in loss. Preliminary good workforce down both than we and revenue X%, driven increased momentum million Expenses client the quarter. On new associated credit platform. Citi's from North growth, results $XXX well revenues deposit by operating banking higher. and delivered costs, and positive and net scores in expenses assets Cost show U.S. we you investment base. driven generated U.S. quarter. But the quarter X% we of and spend RoTCE $X.X of X%. as market credit of this deposits valuation. release NII an partially interest-earning and Retail by flows moderate, asset as this Cost with And increased double-digit as and the investments million to valuation. America offset driven net as by by for higher customers $X expense by driving in driven as the X.X% for higher mortgage deposits payments. remind end-of-period operating XX, rates of driven in as build the partially income continue X% ACL reductions leverage X%, for X%, up billion, expenses. well of by quarter quarter. technology let of lower USPB, Client by Slide higher X% credit things Personal largely partner our asset approximately and services shift of of rightsize ACL as billion was benefited client market were continue X% in of $XXX by driven primarily X% new volume benefit lower grew revenues generated investment interest-earning payments compensation benefit as driven our as payment NCLs of leverage million NCLs investment cards offset higher of an on as revenues and increased benefit deposits credit a flat to Citi were offset loan relationships the primarily me $X.X Branded an as reflecting usage. the Retail positive increased the loans from Average Banking and of Average investment optimize reflecting by transfer higher-yielding FICO by with growth deposits. to installment assets capital three XXX were by driven growth. USPB see

originated were in are unprecedented same These levels that stimulus vintages at due pandemic. maturation loan the government vintages maturing the delayed all during last were years the few time. over card of First, the their to

the higher seasonally Second, in we continue NPLs to second quarter. see

and be customers higher impacted higher rates interest pockets of by resulting inflation certain Third, losses. persistent continue in to

to still NCL of to However, these we signs range stabilization the inflation in of to watch rates across persistent year full are performance, branded factors, as continue and X.X% will delinquency in Despite we year we the progresses. seeing interest the to X.XX%. the and but for expect the Services Retail X% the to growth. and cards high be both of the impact deposits underlying the than deposits end X.XX% transfer XX% high to $XXX of as was more offset be relationships range and at the Net X.X%. business for of quarter Average million RoTCE the wealth was income decreased and our associated portfolios,

driven to operating wind-down grow and primarily we efficiency a Visa includes said partially through year the results of return the term. On guidance, business B basis, closed on higher improving for by will exits other and all while continue ultimately impact the growth offset which medium-term in and Mexico regulatory Slide the the high-teens of decreased franchises XX, manage to credit take we show remain driven by overall legacy as lap closed to before, managed corporate get and As a and we and cycle Revenues and our exits the other divestiture-related which and actions both medium the costs, decreased exchange the revenue offer. downs. Slide and to And XXXX headwind and expenses unchanged. XX items. excludes wind funding XX% shows outlook full by primarily well as from X% over

I take executing remain that, a laser-focused will Jane recognize to to more your there's medium-term to the towards on transformation, while these enhancing and pleased our be lot and business' committed on transformation do to we we're making on and And XXXX continue happy and targets. With are We questions. with the remain performance. our progress we targets that

first come [Operator from question Wells Fargo. Mike Instructions] Mayo with Our will

a to do you talking it your your more hasn't OCC, Could disappointing it they and Are Dugan, consent overall, a language. that consent into been gotten column, the like need nice week. this bit guess Jane, same resolved and some way? their what's it John of the I years a exit you to have regulatory dollars. seems people, was I say card, I the last Is XX,XXX the and at more out you way as why the in to we problem, you what, things, amended you It's little money. about column almost at have, it you you elaborate said and people not of have thrown order, X on the on order passed the not look on -- Lead the Director, Independent got mean, little bit not different looks and it is grades that's you went enough got too. maybe billions of -- report failing Is data it management. and but like wind mean, it

be is to it's So resolved. haven't already your but confidence been been going years resolved, four

continuing more items, bones. can resolve office, the And better. put back So you you mentioned achieving? what how serving while nebulous take so here? but shareholders since from is on then wind And where can regulatory to meat or the some is concerns going column, those in it are it's you You

Yes. of a different parts few you, Thank Mike. That's that.

a So just back. step taking let's start by

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meaningful made have and or Mark? simplification. on We transformation no progress our

Yes.

of of includes what so and Remember, risk. and we've data the includes order related order those progress proof data transformation Jane consent evidence It it the we've work and things. as reporting. compliance. -- the controls. all regulatory that that against and parts multiple It spans It consent work. And of to progress said, got includes includes points transformation made, And

you, Thank Mark.

time. year, serve not will so able At business answer regulators. on same priorities: about beginning do and are we our improving Transforming largely the in we deck. Citi do And clients This to drive transforming and shareholders we benefits So cleared our our fix investors for and is at how to exclusive. it our two the the of we've our because the the honed performance. transformation mutually question

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priorities, can do we these on So to two are we able focus both.

multiple know strategy. we the the that And on this execution of in fronts. see both do quarter. proof on again points solid can our You results what we to need

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over we've data more the that lot said, So progress years. With considerable couple making done be work. past of been there's work regulatory the reporting to a around

quality data make thousands If we're we've efficiently you right? think So those take more about reconcile reports it Citi, be. the going into reg that But that's we've to got the we to got doing people XX,XXX the want it data sure information. reports, to that importantly, total it of of global that doesn't that that is

activity And example is standards again, -- of quality that this approaching to efficiently and have we're without, has end-to-end way that multiple an it. have. ensures liquidity so that in it's of the data we're And the is it data. be that is again, governance collecting that It we XXX,XXX having wanted process systems important, XXXXa to manual it. supporting One it's report the we from with lines that

comes Glenn question from with Evercore. Schorr next The

X% P&L conservative rate are credit with cost Mark, And here? for costs some credit we cuts little of we a credit your roll the from forward, be year. is evolve? now, that in How it Can credit you're put what rest for talking bit I a slower does and lower, economy comments a expecting improve right this the as But a likely So revenues are heard how economy? to I position come in your because could it guess space. be a of the path I the my forward need to almost I'm USPB U.S. out you be. personal question figure margin year. reserve. to impactful comments in up heard to just half obviously on very think I'm past if it marches in banking. I slowing trying you the does where this

medium is in I to like we that the said, we've do think certainly Look, that upside there USPB. Yes. targets We're ourselves. for set term looking that for upside

the You've the that at there. in the we're at and got of seeing And that the for period well. a as others of of us. in not true frankly quarter to I cost We're credit. compounding look where just time the still at vintages normalization of when That's prepared the remarks, mentioned true as look effect through remember you a now you you [indiscernible] have playing P&L. same multiple kind maturing That's that's for

we we'd delinquencies you at expect, do -- believe are cresting now. of some And when seeing signs so we look we're and a

the And returns from to what drive we're those to the certainly where in medium and both that guided and growth deliver the term. At improve to will line volume we've expect investing so continued and as the term top combination with to on come in to. things rates help we line. And the same and towards in as those line start today of the us growth we would and go losses we time, normalize start the top looking loss we business, towards down, medium we're see sit

like into feel expense the returns on And plays we us the combination performance allowing line top business. we've a it's credit growth top of reasonable USPB around there. that from So that, discipline assumption a of to improved line Cost environment across but line for obviously, normalizing, get volume. got continued

One appreciate I quickie Okay. all on DCM. that.

we to good sure You Could second us [ the performance. through think when help perpetuity. about on into you had that make mind [ don't like thinking start this this just pull of There's DCM driving activity. forward of conversation amazingly like half just ] X/X ] about plenty year just refi the

demand Look, to strong years. banking. in our the maturing potential a about activity wall half, of accelerating of that did got but the the couple quite for issuances into mix think securities on be volatility. products. a in up first coming second getting debt I carry we of ahead clients of market see expect do a to see 'XX, you've think different Because going market we back half when of still across we're We capital some half

to rate deal-making regulatory bit although expect the elements put the M&A as continued mix, damper you well financing think it put be part to I accommodative have of a all if being together, So and environment larger of we a the continue that. the to some as overall markets with in on

the to thing of the going is, only year depend is look, obviously on for couple a add to that wallet The I'd things.

ongoing just So finally, one, conflicts global elections IPO U.S. the and seeing look but all the the and normalized witnessing. interest abroad. kind what outcomes we're mentioned as then return a direction not those more market And like, volatility in and The remarks, Jane to her of the rates. of that in of

so sense. the we of factors there to makes to be to in believe play we way are and good a serve do wallet. But And economic as we're number to said, a will that so positioned there well our that clients there

is next Mitchell Global. The question from Seaport with Jim

for Just down year. NII, X% bit Mark, the maybe on of the more It than a almost little modestly guidance year-over-year. down seemed

takes and of and we about So of can the quarterly think you should how puts discuss for sort the quarter rest the year? the trajectory this

Yes.

So couple of a things. I'd say

have ex That's driven we happened, and but I largely about see FX lower translation played Argentina, we X%. that it through capital markets seasonally quarter, down balances one, that line. you And was capital lower the in were that less flows then some X, mentioned in And revolving adjusted also obviously through, that on the interest some Argentina. card what rates by rate in downward. as So and as earn The is, policy on is NII there. that Slide

down, half to keep takes of we As have a the and modestly are year of and the I think puts about of the in mind. couple back guidance there

right? tailwind I earn an So a that as can be NII point the will from yield plays through on reinvestment, about So be is higher that going that view. one we think of rates, to

we portfolio, across growth volume continued see and volume second to expect the growth, do card The in portfolio. -- would branded certainly be particularly the our loans

And for the so be another tailwind that on us will line. NII

side. XXXX, In that will terms headwinds, We play in through. betas Argentina assumed you've got lower to NII CFPB still got fees. average higher the the from forecast, non-U.S. of in have our rates the earned continue impact specifically late of on We've the in

that for it's have this and an that, lost in then that from NII And of assuming goes the So have. the exits impact year, effect that into forecast. will we the impact

back probably we bit of the And NIR mean than will guidance the of down. is that gave combination the again, but the things the that little with modestly half, higher first of year in half a those so consistent

no maybe restructuring And or expected helpful. That's was quarter. this a of just quickly, expenses, question than on charges. better kind but similar there repositioning

in I think a up more to be to get to maybe because have little range, back the you Is Or half? expense of just rate. the bit that end second expect restructuring talk here? half your high in from you'd the repositioning XQ trajectory through run from

Yes.

and does of of with half back the couple the second higher that each a and across then do line came quarter marketing about so reposition investment will the spending a the about guidance third the the a and to that the some pace other combination through I'm will we did need work the done. It a and That's including QX. quarter, sticking quarter second of that businesses that around in the transformation onetime I of quarters hiring work expecting. than we in likely of up And the than for items. come be second that's lower we downward some the or continue franchise. first have right. after of and And it -- the also might When to includes in talked pick in I to delayed were advertising will take or So will trend take charges and talked kind the that that bit quarter has things, our of mean as in second quarter. the quarter year the we a fourth firm

guidance third the -- than with given. half will the be second fourth back consistent will quarter, quarter second the higher the I've the but yes, quarter, and that So

with Najarian Erika from is UBS. question next The

to ]. of [ let's expenses your just follow-up $XX.X it's questions. say had first clarify I'll billion highest I good since the a And to at one on two first, end to take ask the Mark, range the previous.

will think how Just trying move. about to consensus

So add year-to-date the far ] of billion [ of ] [ so then we penalties $XX.X ]. the take expenses FDIC that XXX and money XXX add [ civil and

year? billion us [ second charges billion year gets that So already repositioning And included for any $XX.X would other the ]? of the the in be half the to in $XX.X

So question answer your part to yes. of yes, is the your last

That ], of given $XX.X repositioning charges. XXX for and year, in billion excludes [ $XX.X that saw [ range that So that the any it full and CMP assessment excludes our I've the to includes FDIC we the restructuring the year in range the earlier ]. special estimate billion

is Got I'm getting capital tired it. question And you're my a on And second Jane. question of sure return. for

the Basel have the this just billion the back buyback of that any moving So I'm readdress this waiting of when because comfortable $X context I buy $X I'm we half any consensus from higher. fully you're up Banamex number like question specifically It But course, that nearly the quarter? also, feel quarter. wondering, buying ramping $X second pace. that And want appreciate about in attach billion first for quarter. asked the for didn't year billion beginning in pace this the back clarification. the in guidance. to fourth that And buy and quarter. the and away $X of buy wait staying IPO different I'm I to is you has asking Banamex I peers at do you quarter-to-quarter also next because rate to appreciate back And also you billion which the the company just for to back for didn't of from guess, you fully And this question a IPO second looks coming, -- plan need is in I are

Okay.

So giving around our to going buybacks. guidance forward we are be not going

to as about with to of a uncertainty quarterly a going is that are the continue to level. it -- And We the changes. make the regulatory give lot quarterly do determination to forthcoming

to and with and out. our were business I we a playing -- delighted quarterly are guidance. benefits see good resiliency slight capital uncertain, the in we the that's reflecting buffer, of with stress regulatory changes one of continue the strategy of also model for our But reduction the financial think to to major strength the see us factors our

right. That's

with On the prudent part and to I'd regulators, call discussions in quarter of our we buybacks were look, relates for first the question, made in a say, Erika, your as it QX. we

So and billion, necessarily would $X as QX, that not be about, rate we a should talked be viewed as run at level.

by here. Jane quarter from As we'll mentioned, quarter it take

Gerard The next is from Cassidy with question RBC.

about credit Mark, if us. are this that also losses, into losses? regarding score the playing three part the during credit any the for about pandemic be these Was was inflation card of as folks. back that comments you of made And there Can you the you FICO at a higher credit these all factor the you factors might gave question. talk kind

that any have your that do we guys You factored color mentioned the the Where look. on you that? CFP, you on well? fees you in that have Do the lower fees, factored into as forward stand

Yes.

first the in where of growth we're of we to the environment, spend driving that In what been there drop FICO is made the about we've ensuring underwriting COVID inflation higher frankly, So light borrowing. sharper that, in been the been on very scores analyzed it's are as FICO have in still for and rates seeing the acquisitions savings. And have the part the We've that think that the I appropriately we're moving comfortable the of where of looked the that seeing focused bringing the kind of that all I on. that prospect have the higher customers customers we look, about new talked strong really on of balances during past in of and acquisitions. question, FICO But that get time. of have we back more at customers period score payment have now, kind quality dichotomy with towards mentioned, account we've band lower FICO new continued

built and a have mix effectively assumption on like -- on the We fees, said, so that. point. formal that this in portfolio in at have when the certainty an the in I it. of late kind And FICO has have terms out our terms inflation an we don't of we forecast. fizzled at of timing, in the of we've I update CFPB dynamic the in don't customer I the -- And of look update the But

from is next with Usdin The question Jefferies. Ken

beginnings first the now starting about for between outlook a NII cut. fact And got contributions. have difference that of at Mark, know discrepancy that to thinking Qs then I part you a U.S. some us relative in and and generally of like of bit little go maybe their little non-U.S. the discrepancy the NII the we've bit curve you longer? of that talking through a non-U.S.-related and we've II good how put understand least forward? help the about that just the starting rates you Can U.S.-related the higher how got as you're informs between that just forth

Yes. Thank you.

or say, a So we term, seen as growth look, investments. the of terms obviously instances, the the large that of we've for medium historically. to -- relative should were I and in see to level, managing we've And because I earn rolled out modest securities what has part -- that's a through on they expect than continued yield at as were through think in them some to NII how have part, it look at that some we and been certainly earning. In lower what reinvest because X-year higher we on certainly these allowed us balance off sheet,

the rates of there's we through expecting bit U.S. around view. The beta kind that off U.S. And little about outside a reinvestment make the non-U.S. point that upside of coming a as point will we're kind of you some or from so we still think play of increases dollar think

see with assumed pressure loans we'll we we've and expecting there. But net-net, than U.S. less across rates we're that offsetting we're a little of of that we growth. higher the on some about yield portfolio, think I way higher continued a kind combined NII of pick combination that more kind that over we we earn growth the that come volume betas forecasting substantive of we deposits have pricing of the the so And have in the between our beta, off have than NII outside believe capabilities can up as medium term, if could assets

assumes And and across is balance parallel currencies. And curve what that be terms As of in full the negative again, things I that the to doesn't about But remember moving in is sheet. that case, that able current point IRE I the at billion, sheet the to think point a the often that, would that shift XXX shock it downward have analysis you to be simultaneously that that a account like of higher to those assume billion earn. non-U.S. dollar. about all the $X.X mentioned and coming reinvestment rebalancing $X.X I currencies the down yields the of come from with and same balance for that does of time basis we'd

Got it.

do you that be review guys the specifically on And you seems that of like have size what it on amendment. in one of that's the resource -- the you long sight Okay. written a And take Because to to finish? in of terms follow-up get about the understanding how other will language line should done OCC need related is and just plan, to what order? what terms we like thinking of in the just that

pretty obviously After it's Ken, be, Essentially, constantly to OCC look, today. a than this what formalized in timely compliance do the OCC. it if on a with allocated way get review sustainable resources required that. with that as It's We ensure review we'll share that additional sufficient plan achieving or the already we could back resource plan. area an delayed towards the then to will have plan a just is is and any, looking if determine on finalized track. with more the working resourcing, ourselves. We're the we And order.

will that disclose. it we can't supervisory So confidential be information

complicated won't be We're won't to get we're take be expecting talked to it. of but we not the to tell the much able be, plan is whether nature is to going So long. what than plan expecting about. more this we that what And it -- the you the

is from Betsy Stanley. with Graseck question next The Morgan

Okay.

about the I quite we expenses way I between we So here? think in which the us lot bit far we of heavier a know kind is overarching give expenses. skewed about process. disease our could Maybe term how and have requirements, with on bit here, a path being talked left should the along little what's met you we sense a more as are of out to we or overlapping than a a just how towards simplification regulatory long come requirements are on one question now impact medium on expenses as simplification from simplification have and the

thank things. you, I'd So Betsy. a I say of couple guess

So it past. I we said in the think

to of $XX target the I think medium billion the around term, XXXX is for billion So expenses. $XX somewhere

costs we've billion in over said, period. have medium-term eliminating savings another stranded restructuring $XXX that productivity the $X.X we'll from additional related reductions about well to $X as as that expense million done related to the and we've billion As net to

with made, very charges mentioned that simplification headway, will and Jane restructuring org the generate. the has saves And think, those have so associated good started as I to we've in

continued likely will those but that have saves trend in downward towards achieving business this should the and that we led And range. offset areas business in also of investment in by the terms of would growth. transformation, we're a the you of meaning part in expect that, be like making that or Some trend year of XXXX driven early

well RoTCE I And the manage the confident shareholders. well we have elements to we got we that our been the resources And be as XX% our term. sufficient businesses. ability return transformation, of that we want the as investing we've -- remain reiterate, as talking track into about sure so in with to different XX% we're today, over that just target we've as on can making capital to our will the the medium meet to

we can that. about confident so feel We And around this. and good manage that

Yes.

spend transformation-related for earlier, first the work spend we stay that. We've of year, right? under for first productivity Look, still the the for of in earlier had we frankly, we've live year. I half, And done than year Jane. reality the point, little was regulatory that to some a on the in had I think half and this more to we've than us transformation billion Jane pointed is, guidance we've related opportunities things on allow great we have last that work as about And a given in that we've focused within been through a year. data and been that out able data $X called the more the and the to full and mentioned bit funded little plan that work. that's year, that to planned And for spent us bit as is find to the the we reporting, that the

to and for are where areas accordance So in track whole eye we're in an entire base, to with us allow of we the are And managing towards areas of inefficiencies we view required where it, $XX-plus shore it we're expense to to behind billion are managing the where there that on up what up So point right? other a this that accelerate free can keep requires. actively to expense tracking not from base. what's order transformation the

we've get that where to on out which up are focused roles, continued done of out efficiencies finance the of opportunities drive we like we and keenly we've that finding are quarter inefficient of. tease in processes that have things in expense in parts things And greater around the -- base team down the been been they're have XX% are able see work banking, that actually their can this with Sieg they're that we parts business. efficiency you so where to areas the Andy where duplicative done there that and USPB of has

the saying, understand we expense of way long-winded given. So that guidance we've

funding We transformation required, understand both. we're of also what's importance and doing with the the and stress

is with Juneja The Vivek next JPMorgan. question from

Okay.

$XX.X to on have to [ make clarify and Mark you right. the far consent The resources order. resource may does we what fix meaning just would Am review need just you James, there? to what ] put on right have I anything thus it the plan, additional include to spend think sure this. billion billion not all that me Let to $XX.X you

you're not No, right.

the you've think our about in is in heard now and that I for us addressing some while So people. that back that the that behind investments we a those knew talk elements of of making we and began the program were areas as transformation we

Some technology acknowledge saw that who that the tools regulators fact in in get is spend. the well behind. year. we and our And pointed you capabilities areas to begun addressing It's earlier And that as that addressed of by to earlier. using we that began were areas the already

as not despite that more, or to that's the have spend we're heard $XXX guidance. we right, to have have ] some guidance, for you that mentioned, worked we are on so areas already million have and what that [ And And within Jane Jane. changing needed so ways having and to we we've is more No, absorb so looked right? our -- doing

Okay.

and should even by So be regulators, we though still of expect together this change not sort approved expense. the going any to plan to this put forward, is

Look, plan execution. our resources that we what demonstrating technology, plan, the people review Appropriate accomplishing allocating the we resources that have. the to are a -- regulators. to spending to be resource we're the That them to ensuring better mentioned, appropriate the and for as can process through will working range from now and Jay commitments is enhancing processes with

we've this will you think being those out might it what what or something and it framing like tease If of on get proper ensure able about areas to back look me as we how identify think entail, where delay entail track. are funding root got any that about will that's allocated to And like. the cause behind delayed areas, I that out we

we're what then we're track. headwinds. thus we things to going is repeatedly, get we're far on this year, say I quarters absorb come identify for those opportunities those to going we've so haven't as you've in to process those is already, that back clear. we as whatever that's going if And issues issues. that, to spend identified done that's heard look hope the we're necessary to apply saying And to the us And to

question with is Matt O'Connor next Bank. from Deutsche The

like remarks, was decline It credit I What what drove the they looks opening but to the aggregate, missed down about were X% average XQ? driver in though if Apologies up. card spending went revenues up, of even that? loans in it the in from XQ went

there. seasonality revenues, through card Credit playing

Sequential.

Yes. sequentially. Yes,

the -- see But if It's the the you'll The driven and by and be year-over-year, in common customer. slowing areas is is of a growth -- some the there. think and seeing Mark trend a you -- I to, look spend able to being referred as Matt. are the in numbers the we spending pretty consumer underlying of lot had affluent

Yes.

to the I think playing the or reward there's the from of through also -- one the on of across a portfolio rewards other. dynamic quarter CRS

So line are of playing the those things there. the revenue combination through

that's particularly Matt. us, nothing But worrying

the out And the separately ] the being be of dividends on of because the holding can OCC bank kind talked or prepared the that the Okay. you [ upstreamed then of early company in just what about very part week. remarks, speaking this from of came terms capped

dividends how and just on outside? change there at company purposes, notice subsidiary like the liquidity no to buybacks is impact or intents that company. of does the all I you For your impact a or a capital? impact the holding run But comment, that did would any from or we

just that our from to The our capital -- let's impact CBNA ability dividends the referenced not -- be clear, return does are are this the the Look, action to shareholders. parent. to payments intercompany

And So all, we -- don't all. the the or first company, subsidiary, going not to capped. the dividends we at run the liquidity of here, will is the capital are how dividend a confuse it's what impact not

Yes. . Yes.

objective. the and -- right? the to lose between the debt Jane purpose certainly nondiscretionary is, dividends priority the let's of referenced mentioned, other thing get the the up reference do. allocating the that And from as not above the and it now as right. the the that's that doing the to not of anything that that there we're this that ensure that that review is require establishing that is of service does parent are to cap, what plan. But want there to The it's parent the is of the regulators And are the a sight orders to think right? parent being things resource I so nonobjection And preferred So a out right, dividend purpose is for us or want, there same from we and the will constrain it from obligations OCC. essentially appropriately, would to think are not Jane, done, opposed -- the the orders need of I and funding effort

the resource Until plan as agreed.

we're problem. the And seen, as submitted anticipating you'll XX to indicated, be days. to plan As working have that needs resource one be within not on I a and that

is question next with The from Saul Martinez HSBC.

guess I to question. to I up on just latter I want just the want be very follow clear.

is should impact, benefits, for about upstream of Mark, that nonobjection capital you simplification. ability benefit your your So you you it the how that think end example, softened rule what has in you're the Basel think about in a game to how -- restrict talked doesn't way some and impact the that from, any parent -- or to terms that flexibility, example, to of does for about before saying a that you requirement CBNA not your dividending receive the

play actually So forward of impacting capital of you flexibility things ability stock out. level to don't repurchase this going some these do your see ongoing in your if

No.

can That enough. is it be, as as clear Fair good.

seeing you're for Second point cards. losses think and is pretty I [indiscernible] in just to -- digit But question want that even at normalization even if I I follow up reserve I these -- business I USPB. still cards would levels, single still mean on on your NCO adjust profitable. builds, your get the I

a the seem about you I high-teen levels, of the drag player of pre-pandemic even to can and But that don't higher bank can don't that is sort to color It it imply that -- not in do I of improve much it's profitability bank get you that scale you're retail sort talked just Your give any know. know losing profitability -- talk if but maybe can you more the RoTCE retail just would terms to huge path about? on you money, dramatic what above I doesn't when like by to a amount. seem even

Yes.

industry growth term. the And here. digital the industry we're the elevated at the I and to hold, that, medium headwinds off generating efficiency, -- mean and some point seen the expense core in the in the in see returns very But this had of the NCL those revenue we're improve to the However, in branch medium-term to low about. But positive markets, medium our in of of those of a And look, would Let the quarters expect teens against we're And credit number rates have operating and the expecting you've of looking wealth Mark firm-wide said, wealth quarter. me retail leveraging level the us on network. high the knew leverage and good point continuing productivity said as putting been and over franchise. We're In the improve will kick improving the to It's see from let's the And doing at operating talked being our USPB. bank there. credit management retail we returns of get the the I we're very It carefully returns We've the my disciplined driving as our I USPB plays continuing growing pressure year, cycle. share NCLs healthy important the growth. cycle. managing low returns targets. to we've as -- point bank, us focus high digital say, all for place remarks, clearly, role focused take on and an physical that as are the approach and that fixed state steady improve us assets. enabling we're we're mitigating in we the the in continuum of support our and actions from levels we this on headwinds at

Chubak Steven with is question from Wolfe next The Research.

that the billion. fairly about So NOLs. suppose, deduction is profitable. equates over cap. have news Mark, specifically market It being come to seen The of And significant on $XX back it the very XX% capital I a over technical But I utilization the time. your into good years DTA here, the roughly utilization at we've question firm little and still despite X is past should fairly

that And there so understand I better actually can wanted to your utilize is utilization generation. constraining to horizon catalysts organic what's on that help earnings beyond And are ability the DTAs. those accelerate

Yes. Thank you.

we utilize the going to comes driving we quarter, that question. income you We a I'm the to that DTA. to focused really U.S. income, right? as complicated medium But the give it So in all we've to and not driver It some of of to the allows simple answer see on move term. for us saw expect are we major just that disallowed driving of down the through utilization. that but in so mentioned, things higher the very U.S. that a is more And of very

many opportunity as And well. of our we very heads that around business focused have much

Similarly, important see see it in it in the strategy leg commercial from Personal services. is opportunities Banking in -- see example, in and the the we U.S. is wealth. of in So -- obviously very winning for We that bank, in a we refreshing U.S. Vis

of So just from view we're financial from we're focused point very -- the side. not a strategy business on this,

a And just follow-up. maybe quick

Just on business. Services Retail the

] are [ across been to in and your from with some We speak increased seeing price some of offer what set or your seeing competitor to better appetite potentially peers? evidence willingness mandates. the have that win I competitors to economics leading you your space could some the was more to in aggressive, an you're just in effort hoping new competition response

Well, than I we're hear think on on very just focused revenues. that delighted you'll rather be to returns

we're of be the benefits with enter how the or shift the the may such a team probably a around with this, in the ways pleased the business into from very returns disciplined profile at And new is looking things. rather I'm than the the about being it. revenue it's past, Dillard, as other seeing and a side discussions of but RFP partner some with just new we their all it's one for ones, portfolio and we when of who So agreed

I a you as in appropriate different CECL end from see may and have lifetime but have full partnership, works for part cards, we mean, when retail medium-term about And hear we're and that reserves But balance the from up we're up that to we're yes, those focused how we brought what Jane generating achieving players other as you through be that, an keenly these you space. ensuring reserves good our That's we the on of the return. mentioned, since economics. you targets. And ultimately, know, sharing sheet, the think establishing establish partner that's where partnerships, on splitting

these as important another it's So to sense sure consideration that think make good relationships taking about renegotiating we and us. making and expanding on returns partnerships for

come I being at that. and And saying Mark disciplined that no revenue have no very problem and around right returns doesn't the to

is question JPMorgan. with Vivek next The from Juneja

does you on it that? stuff, year? sense get sense Sorry, just of of through much years? couple you to timing, consent this of longer this this in talking you order Jane. us -- terms that? of longer to think Is Any of now how Is a think you? sort a it follow-up do past by What Any are a helping

its data are Look, control. is and around in management, areas consent governance and to terms order. of around the the It's compliance had order four There delays. it's risk areas the consent we've

behind we've address to certain investing in said, been were And behind. related areas we've data. we that falling we areas As to the were

in scope We the also related saw an to regulatory increase reporting.

So of well we're there, we bodies more work underway. added some and

this are to we we for will that when the we complete the expectations not of have So on consent work original expecting the body order. extend

the state different target of for a have it. areas We

that this our solutions we're time remediate, frame. of for and this clients to And states. plan our as necessary our rather change those as make the fixes But get target issue. the that series what we the not the City we're And well to regulators ensure in putting this way, by a are investments because to shareholders don't delivering so. done fix have call but band-aids all. would We'll do I'm strategic but is We'll which the and I We making achieve way, benefit will we strategic than robustly as investments possible. that and underlying actually try quickly as that as doing expecting old

of Mayo The final Fargo. line with Mike the Wells from question comes

Just two clarifications.

need And order. XXX,XXX So And which you this of is amendment a your it controls and just which Is to broader can grades. that see really confirm people what fix? saying "Hey, scope It's the that data more as more really some say, if I a consent about But the regulatory hear very XX,XXX think relates Is in are of this really data. risk, correct? of of is to have to I you're hear Because saying failing about compliance resiliency. externally and overall it's and important data high data. you you you passing but I picture. think what a and controls you're lines terms that the regulatory the reports, of getting the the talking profile reporting, I slice of

asking Mike, question. -- maybe great a it's an Yes. you're important I and --

and we area the an it's try I that I pointed elements data maybe because Mark and explain -- to. So what have

of We month. all So the first million we data firm. all, use it every XX to use customer deliver over statements

in and dollars we if liquidity done roughly real Service moving the data you've as on pretty millisecond of can Day, across on $X our pristine highly real-time per clients, world. We multiple platforms automated about the trading Investor data access corporate account billions CitiDirect. Our only you we're see got day at countries those clients be heard the ecosystems. trillion trade And in our our around world. can positions around This for time

the management strategic and we we're What And of the as overhaul and infrastructure. but governance it's data transformation it said, upgrading -- doing those is the how over what flows. a -- our doing through So doing? I've large is simplifying firm is of parts about moves

golden being and error Mark make controls in the in you use system, the accurately book sure are this automation. We'll about no we talk of We're they the rate we're making when standardized reporting data building data So doing. means a what smart a seen data smart sure trade. errors have we there's We've our place been regulatory XX% firm down me capturing manage historically. Mark's tools using Barry a of about it. and often you've our repository downstream they talked single the governor is two [ about as repositories. in over thousands the of Data And the that times. a and data place all a upstream all Hub, We're which put sources, the few data that in result ] data, They other the are sit the than talk standardized heard Gordon having as distributed one investing now been rather infrastructure. And what for populating quality areas. reports sourced all model, rules, nimpus

a suite full through You've the And we've reporting heard so we're in six of about the reporting all of ledgers automation systems past. the us consolidated single talk had and versus delivering streamlining or through that this ledger data flows.

through pipes. multiple in being go single of instead So pipes, the flows

some that did in fix this we've regulatory comprehensive back than So a what and knew a we originally lot it's have -- it's scope when improving to I plan, also of It's to get reports, we plumber the of understand you do execute of a accelerated need increased not Because important for a overhaul. more more series is. work the accuracy it fixes. Where a identify and of as bit on specific address, as our the it's place. we on work. work and but areas think planned. as work the we to strategic It's we behind we we There's to the we're well. on It's sorry issues plan moment, we the tactical data,

And orders. plan. Clearly, more at opportunities, data service, the to is leapfrog the drive here end enable fewer learning important adding pilot, in the things is that enterprise-wide and to quickly. buffers, investment, it broader areas. data goal a So other it deployment from there we're We're are AI us how it better the some the resources hope of that and to in we're accelerate have I consistent what in So behind doing, in we're is learning revenue very all helping data I and some we're the manner? great to get data practices of for advantage identify from side a are firm best to becomes We're begun few data element efficiencies. the culture scale and the using about, competitors, end We've we We're going Mark get data also client experts. as of related tools anomalies We're a of that to side, flows the We'll done. talked it more much the consent at That firm. done. investing. a already competitive these do across

Real short follow up to that.

but like that, all sentence, why that, it done just get all that just So now, will that and like have get said you a if one-sentence be didn't eyes you're you still still despite doing after done. stuff one short great explanation it. regulators the Why doing it didn't for all you you the described, in fixed the of doing stuff this regulator this fell you great

I magnitude be transformation this not always said would that over years of linear. multiple a

We many steps forward. have

forward adjust, them, get we track. and setbacks, from have We we on learn back move we we

of regulators. discussing reports as here U.S. that pivotal to those And U.S. number XX a XX impacts through ensuring played And probably are to are There our prioritizing are Mike, was if is the you I because context could reports number a what landscape the we're reports regulatory XX this. XX which that to core that about put lot here. of across one into back global XX,XXX, we're that just the we work data

There are Jen for will no the now call Landis further turn closing remarks. over questions. to I

Thank Please you joining questions. you. all you if any for follow-up us Thank know let us. have

concludes This Second Quarter Citi's Earnings Call. XXXX

You disconnect. may now