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Key takeaways from the call:
During the earnings call, Citi reported a 9% increase in total revenues on a reported basis and 10% excluding divestiture-related impacts. Expenses were up 6%, primarily due to investments in transformation and risk and controls. The cost of credit rose by 35% to approximately $1.8 billion, driven by card net credit losses and volume growth. The bank maintained over $20 billion in total reserves with a reserve-to-funded loan ratio of approximately 2.7%.
The company also announced the divestiture of its Taiwan consumer business and the sale of its consumer wealth portfolio in China to HSBC. The sale of its Indonesia consumer business is expected to close in the fourth quarter. Citi remains committed to its transformation efforts, which include automating manual controls and processes, consolidating tech platforms, and upgrading its data architecture.
In an effort to streamline operations, Citi is integrating its investment bank, corporate bank, and commercial bank. This consolidation is expected to enhance cross-selling and synergies among different banking sectors. The bank expects to complete this process by the end of the first quarter.
Citi’s executives expressed confidence in the company’s ability to achieve its revenue growth targets of 4% to 5%. CEO Jane Fraser highlighted the tailwinds behind their core strategy and the control they have over the drivers of growth. She also emphasized the importance of organizational simplification in reducing expenses. Despite facing headwinds from macro, regulatory, and geopolitical factors in recent years, Fraser affirmed that Citigroup has consistently met its revenue and expense guidance and remains committed to executing its strategy.
CFO Mark Mason discussed the trajectory of Net Interest Income (NII) for the next year, expecting to benefit from higher rates across currencies and card interest-earning balance growth. However, Mason also noted that the company’s NII will be impacted by the exits of certain countries, such as Taiwan.
In terms of credit, there has been a slight increase in delinquencies and losses in corporate loans, driven by country rating adjustments and a few specific names. However, Mason assured that the company is well reserved for these expectations.
The call concluded with closing remarks from Jen Landis, directing any follow-up questions to the Investor Relations team.
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