Citigroup Inc Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Glenn Schorr - Evercore ISI - Analyst : Hi, thanks very much. So I know it's early, but I'm curious if you could help us with a refresher on Treasury and Trade Solutions and services in general. In terms of what opportunities -- there's risk, but also opportunities in helping clients manage through this retariffing and redrawing of economic lines. I think about nationalization and vertical integration is bad things, but a lot of shipping and maybe you can help clients deal with all that shifting. But anything -- any help there would be great.

Question: Jim Mitchell - Seaport Global - Analyst : Hey, good morning. Maybe Jane, just following up on that conversation and you talked about leading into as being important storm and leading into it. So I guess in the near term, are you seeing sort of demand already in terms of your balance sheet, whether it's raising liquidity and deposit flow like sort of flight to safety deposit flows and sort of the trading aspect of it from this volatility in April, have you sort of already seen greater demand from clients?

Question: Jim Mitchell - Seaport Global - Analyst : Sure. No, I appreciate that color. And then maybe for Mark, I mean, you highlighted at least on a period-end basis, deposit growth

Question: Mike Mayo - Wells Fargo - Analyst : Hi. I just wanted to continue the discussion about -- on the one hand you're reporting the storm. You've been embedded decades, and you're not a bunch of suitcase bankers, so that message landed. On the other hand, I mean you are the bank that facilitates global trade in the middle of a global trade war. And so I think the concern is not just the possibility that revenues will notice a dive, but that credit will implode. Or as I've heard many times, that Citigroup is going to stub its toe, just 100 countries in the mix of it all. What else can you say, in addition to what you said, to either reassure investors that the oversight is strong or that you have your arms around the situation the best that you can, again, recognizing that it's a fluid situation. Thank you.

Question: Mike Mayo - Wells Fargo - Analyst : Okay. The flip side of this is you did say the drivers are the same. They might be different in magnitude to take you from where you are now. You had over 9% RoTCE in the quarter. You said you're on track to get to 10% to 11% next year. Can you put a little meat on the bones kind of verbal waterfall chart, if you would, or maybe some numbers around org simplification traded costs, productivity savings. How do we get from 9% in the first quarter to that magical double-digit return target for next year?

Question: Ebrahim Poonawala - Bank of America - Analyst : Good morning. I guess Mark, just wanted to on slide 9 and the capital waterfall. I guess we are all thinking about what buybacks can do in the second half of this year. So if you don't mind, one, the RWA sort of Jack, the 32 basis points, is that normal as we think about what the RWA consumption should look like? Just talk about that in the context of getting to a 13.1% CET1 by the end of the year? And how we can back into the pace of buybacks?

Question: Ebrahim Poonawala - Bank of America - Analyst : Understood. And I guess you mentioned, I think, in your prepared remarks, the reserves on the card book went up to 8.2%. Remind us, I mean, I think -- and the genesis of both questions is I think there's a fragility to your RoTCE guidance for next year that I think makes investors nervous. And I'm just trying to get to the pieces around buybacks? And then in terms of credit, like how -- what's it baking in around the unemployment rate? What would cause you to ratchet up provisioning in the near term? What kind of an empty job market deterioration do we need to see for the credit outlook to deteriorate fast and materially? Thanks.

Question: Ebrahim Poonawala - Bank of America - Analyst : Thanks for walking through that. Thank you.

Question: John McDonald - Truist Securities - Analyst : Thank you. Hi Mark. I wanted to ask you about capital optimization levers that you have to. You've done made some good progress in RWA mitigation. Is there still some room to go there? And then also, could you maybe increase the pace of DTA utilization to reduce the TCE density in a way to help the ROTCE goal?

Question: John McDonald - Truist Securities - Analyst : Thanks, Mark. I wanted to ask Jane about the Banamex IPO planning. Just an update on where that stands, assuming that market conditions create some risk to the timing. Is it fair to say that there were pros and cons from the shareholder perspective to holding on to that business longer given that it's a profitable entity?

Question: John McDonald - Truist Securities - Analyst : Great. Thanks, Jane.

Question: Ken Houston - Autonomous Research - Analyst : Thanks. Good morning. I wanted to follow up on the points you made about the consumer hanging in there through April. And Mark, you mentioned that there could be more uncertainty as we get later. But I believe you're still intact with your charge-off guide for the year. I think just noticing Retail Services was, I think, expectedly higher than the high end at [643]. Can you just remind us again how you're expecting the cadence of credit card losses to trajectory for both branded cards and retail services as you go forward? Thanks.

Question: Ken Houston - Autonomous Research - Analyst : Very good. And one just a follow-up on NII and your outlook. Did you make any changes to including card fee still in the NII guide? Is that now removed? Does that fill in there? I know there's a lot of puts and takes given the change in the forward curve, if you can help us understand which curve you're using and some of the balancing act there, that would be great. Thank you.

Question: Betsy Graseck - Morgan Stanley - Analyst : Hi. Good morning. Two questions. Just first on the buyback, I noticed, you came in at $1.75 billion, is that right this quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 3:00PM, C.N - Q1 2025 Citigroup Inc Earnings Call

Question: Betsy Graseck - Morgan Stanley - Analyst : And I know you indicated that you're looking to keep pace. And I'm wondering, does that mean at [$1.75 billion] or does that mean keep pace with the increased Q-on-Q, which was turn (inaudible) million. And so that little -- I know you're laughing up. Just trying to understand how you think about that, given, what we discussed last quarter, which is you have so much opportunity here for buyback and the accretion is so powerful, so.

Question: Betsy Graseck - Morgan Stanley - Analyst : Okay. Excellent. And then, Jane, just separately, on slide 2, you identify the main priorities for '25 and '26, many of which we've talked about here this call. I just wanted to understand from your perspective on the transformation, how far along do you feel you are in the modernizing your infrastructure? And what kind of time frame do we have to go from here to check the box on that one, if you ever can check the box. And then separately on the commercial banking segment, if you could just give us some insights there, too.

Question: Erika Najarian - UBS - Analyst : Hi, good afternoon. Just a follow-up question here on the buyback pacing. Your message has been pretty clear about the first half versus the second half. That said, with the stock at $65 versus tangible book at $90, I guess, are you just so scared from the volatility of the SCB result that that just must be hurdle before you can accelerate the buyback? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 3:00PM, C.N - Q1 2025 Citigroup Inc Earnings Call And Mark, perhaps if you could sort of dispel some of the notion that sometimes happens in some of these chats with buy siders about your inability to dividend from the bank sub to the holding company in order to increase your buybacks over the near term. If you could address that, too, that would be great.

Question: Erika Najarian - UBS - Analyst : Got it. And just my second question. Mark, you mentioned the four cuts that's now embedded in your NII outlook, I'm guessing that's for the US. How should we think about how you're thinking of global rates. Obviously, it's a basket of countries and currencies that we have to think about. And if your top exposures are exposed to lower rates, how should we think about deposit spreads in services from here?

Question: Erika Najarian - UBS - Analyst : Got it. Thanks.

Question: Vivek Juneja - JPMorgan - Analyst : Thanks for taking my question. A couple of them as follow ups to questions that have been asked. First one for you, Mark. The pay and doing buybacks of the dividending from the bank to the holding company that we just asked, how much are you willing to let your double leverage go up? Is there any sort of internal limits that you follow? What would be the implications of that from a funding cost standpoint.

Question: Vivek Juneja - JPMorgan - Analyst : So Jane, sharing about all the turmoil and reading some new stories about mandates being shifted from US broker dealers to local players. Jane, are you concerned about that? Is that a a shift that's starting outside the US. And for big players like yourselves and others who are widespread globally, does this start to create stronger competitors or move some business away over time?

Question: Vivek Juneja - JPMorgan - Analyst : Okay. Thanks, Jane.

Question: Gerard Cassidy - RBC - Analyst : Mark, you touched on in your opening comments about the seasonal increase in trading-related assets. And then the growth was very strong. Was there any types of strategies that you guys employed? Because when you go back in other season periods, first quarter of prior years, we've not seen this kind of growth. So what led to this kind of success of growing your trading assets so well this quarter?

Question: Gerard Cassidy - RBC - Analyst : Very good. And then as a quick follow-up, you guys gave us good details about the allocation of equity. I think it was slide 23. I was curious I noticed that you've lowered some -- the total equity doesn't change, of course, but you did lower the allocation of the equity for different lines like wealth and banking. What was the thinking behind lowering it in the first quarter relative to 2024?

Question: Gerard Cassidy - RBC - Analyst : Great, appreciate the color as always. Thank you.

Question: Matt O'Connor - Deutsche Bank - Analyst : Hi. Just a follow-up on the expenses came in a bit lower than expected 1Q even ex the accounting change. What's your thought process for the rest of the year? Because I'm getting at is off in 1Q is the high-water mark. So if you trickle down a little bit from here, that would imply costs coming in a bit below what you're expecting. Can you just talk about the trajectory here? Thanks.

Question: Matt O'Connor - Deutsche Bank - Analyst : Okay. And just any way to frame how much cost will go up from 1Q to 2Q based on what you're thinking now?

Question: Matt O'Connor - Deutsche Bank - Analyst : Okay, fair enough. All right. Thank you.

Question: Saul Martinez - HSBC - Analyst : Hi, thanks for taking my questions. Just following up on the expenses, your 2026 target of 10% to 11% RoTCE. I think you're targeting expenses being below $53 billion. Should we, I assume with the accounting change that should recalibrate to being below, call it 535 -- or $52.5 billion? Is that a fair assumption or conclusion from that.

Question: Saul Martinez - HSBC - Analyst : Got it. Just wanted to clarify that. And then I guess, secondly, on wealth management. The net new assets are pretty impressive then trend, $16.5 billion, I think, something like 11% of beginning period of client assets over the last couple of quarters. So it seems like Andy is really delivering there. Just anything in strength across the different products, but anything you want to highlight there as to what's driving that? And any comments just on the durability of that kind of momentum?