Citigroup Inc Q2 2023 Earnings Call Transcript

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

Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst : So I apologize having to ask the expense question again, but I think it's just very important because there's really 2 potential long-only investment thesis on Citi, right? One is the buyback given your tangible book value's at $85 and the stock's at $46 and the other is this bending the curve on expenses. So let me just ask Jim's question another way. In looking back to 2017, and I'm just looking at 2017 because I can break out legacy and core that way, and then fast forward to 2022. You produced revenues ex legacy franchises, about $61 billion in 2017 and about $67 billion in 2022. The associated expenses, again, without legacy franchises, was about $34.5 billion in 2017 versus $43.5 billion in 2022. So you're surpassing the revenue uplift during that period by $3 billion. I guess the question is, you have so much certainty about the timing of this expense and I'm wondering how much of this $9 billion can go away. We understand that there's a lot of opportunity for reinvestment in the core business. But I think all of us are struggling to really understand that magnitude. And I think that the investor base in the market fully understands the legacy franchise story and how the exits will take time. But I think they're most interested in the core business and how much of that can come out.

Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst : All right. And just a follow-up on that. I guess, you guys have been pretty clear on the timing, and you guys have been pretty clear on why the curve will bend. I guess I'm wondering is it just a timing issue that you're not giving us sort of the dollar numbers that could go away from the transformation? Is it just a timing issue? Or are you still at a point where you don't know how much of that you would need to reinvest to arrive at that 5% revenue CAGR?

Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst : Expenses. So we get loud and clear why the curve will bend. We get loud and clear when the curve will bend, right? And there's clearly just expenses there that are catch-up expenses, that are transformational expenses to everything that Jane talked about. And that message has been loud and clear. And I'm wondering, you haven't told us what could come out of those expenses because it's just a timing issue. It's July 14 versus 4Q '24? Or have you not yet made decisions in terms of how you may allocate those expenses in terms of do you need some of those expenses that could come out to grow your revenue base to that 5% CAGR versus having it fall to the bottom line? Sorry, that's the question.