Citi(US:C)2023-12-06 15:58Summary of Citigroup Inc. Conference Call Company Overview - Company: Citigroup Inc. (NYSE:C) - Event: Goldman Sachs 2023 U.S. Financial Services Conference - Date: December 6, 2023 - Participants: Mark Mason (CFO), Richard Ramsden (Goldman Sachs) Macroeconomic Outlook - Global Growth: Despite geopolitical tensions and inflation, global growth has held up better than expected, but a slowdown is anticipated heading into 2024 [2][3] - U.S. Economy: Expected to experience a soft landing with a mild recession likely in the latter half of 2024. The corporate and consumer base remains resilient [4] - Euro Area: Anticipated to face recession as contraction continues into 2024, particularly affecting Germany [5] - China: Expected growth around 5.3% for 2023, with a slight decline in 2024. Positive growth anticipated in India, Thailand, and Mexico [5][6] Citigroup's Financial Performance - Revenue Guidance: Expected top-line revenue for Q4 to be between $78 billion and $79 billion, likely closer to $78 billion due to pressures from Argentina elections and currency impacts [9][10] - Market Activity: Client activity in various asset classes has been muted, with a seasonal decline expected from Q3 to Q4 [10][11] - Investment Banking: Continued momentum in debt capital markets, particularly in healthcare, despite historical lows in investment banking wallets [12][22] Key Financial Metrics - Expenses: Guidance for total expenses around $54 billion for the year, with an additional FDIC special assessment charge of approximately $1.65 billion expected [13][37] - Cost of Credit: Anticipated to be between $2.2 billion and $2.3 billion for the quarter, reflecting normalization in credit portfolios [13][29] - Net Interest Income (NII): Expected to be slightly better than previous guidance of $47.5 billion, but a tapering down is anticipated for Q4 [15][16] Business Segments Performance - Services Revenue: Up 18% year-to-date, driven by strong TTS and security services performance [20] - Wealth Management: Disappointment in growth, with new leadership brought in to drive improvements [23] - Card Business: Strong momentum observed, particularly in branded cards, with expectations for card NCLs to reach pre-COVID levels by year-end [25][27] Organizational Changes - Reorganization: Aimed at simplifying the structure and improving efficiency, with a reduction in management layers from 13 to 8 [32][34] - Cost Reduction Strategy: Focus on three levers: organizational simplification, transformation benefits, and divestitures to drive down expenses [41] Capital Management - CET1 Ratio: Strong position at approximately 13.6%, with ongoing buybacks planned [48] - Basel III Impact: Concerns about competitiveness and operational risk, with strategies in place to mitigate potential impacts [42][45] Future Outlook - Return Targets: Aiming for 11% to 12% RoTCE by 2026, with a focus on maintaining revenue growth of 4% to 5% CAGR [49][50] - Expense Management: Projected expenses to decrease in 2024, with a target range of $51 billion to $53 billion to achieve return targets [53][54] Conclusion - Citigroup is navigating a complex macroeconomic environment with a focus on maintaining revenue growth, managing expenses, and executing a significant organizational restructuring to enhance operational efficiency and drive shareholder value.