Citigroup, Inc. · NYSE:C
Citigroup — Investor Day (2022)
48 slides from Citigroup's investor day presentation, 2022
Slide 1: Investor Day
I N V E S T O R D AY PROPRIETARY AND PROTECTED INFORMATION. MAY NOT BE COPIED, SHARED OR DISTRIBUTED WITHOUT CITIGROUP WRITTEN CONSENT. ©2022 CITIGROUP INC.
Slide 2: Mark Mason, Chief Financial Officer, Citi
MARK MASON CHIEF FINANCIAL OFFICER, CITI 1
Slide 3: The Path Forward
STRATEGY • Focused on businesses with competitive advantages • Focused on growth opportunities where the foundation is already in place • Investment plans and capital are aligned with our strengths and opportunities The Path EXECUTION • An organization executing with urgency Forward • Culture shifts
Slide 4: We Have a Multi-Year Strategy to Drive Shareholder Value
We Have a Multi-Year Strategy to Drive Shareholder Value GOALS • Interest rates and consumer lending recovery are 1 important drivers in the near and medium-term • Medium and longer-term, business-led • Higher Quality investments will drive growth, particularly Earnings Mix... REVENUE in growth prio
Slide 5: Brief Recap of Our Historical Performance
Brief Recap of Our Historical Performance Assessment of our challenges and drivers of underperformance 4
Slide 6: Our Results Highlighted Challenges in Our Business Model
Our Results Highlighted Challenges in Our Business Model ($ in Billions, except per share data) REVENUE EXPENSES AND EFFICIENCY RATIO ~$1.4B Revenue growth ‘17-’19 2.80% 2.75% 2.69% 2.22% 67.0% 1.99% 59.0% NIM 58.1% 58.8% 70. 0% 57.0% 60.0% $73.7 $74.0 $75.1 $75.5 $71.9 $44.4 $48.2 $43.5 $43.0 $42.8
Slide 7: The Pandemic Drove a Shift in Our Balance Sheet
The Pandemic Drove a Shift in Our Balance Sheet END OF PERIOD ASSETS ($B) LOAN QUALITY ($B) Corporate Credit Exposure5 U.S. Card FICO6 $2,291 $794 $134 $1,951 262 $1,842 Cash 181 194 513 369 17% 18% Investments, Net 352 527 659 Trading-Related Assets1 485 CAGR: CAGR: +2% (3)% Loans, Net2 655 687 651
Slide 8: We Returned Capital to Shareholders; Capital Remained Strong
We Returned Capital to Shareholders; Capital Remained Strong ($ in Billions, except per share data and ratios) CAPITAL RETURN REGULATORY MINIMUM 2021 Aggregate Return of ~$77B CET1 Capital 12.4% 11.9% 11.8% 12.2% 10.5% 12.2% 11.5% Ratio1 $22.3 $17.1 $18.4 4.4 Total Capital 13.5% 16.0% 2.6 3.9 Ratio1
Slide 9: Our Underperformance Versus Peers Arises from Multiple Factors
Our Underperformance Versus Peers Arises from Multiple Factors 16.0% 12.0% 4.8% 0.5% REVENUE (0.6)% (2.9)% CAGR Peer 1 Peer 2 Peer 3 Peer 4 Citi Peer 5 (2017-2021) Non-interest Revenue as % of Total Revenue (Average 2017–2021) 89% 89% 52% 49% 38% 46% EXPENSE 9.0% 13.3% 15.4% CAGR 4.6% 4.9% 4.4% 4.3%
Slide 10: Our Path Forward Comes in Three Phases
Our Path Forward Comes in Three Phases OUR CITI’S VISION Be the preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in our home market PHASE 1 PHASE 2 (3-5 YEARS) PHASE 3 Execute and Invest Deliver Medium-Term Targets L
Slide 11: Phase 1 – Execute and Invest
Phase 1 – Execute and Invest Deliver on strategic refresh, transformation and investment agenda 10
Slide 12: Our Well-Positioned Businesses Give Us a Foundation for Growth
Our Well-Positioned Businesses Give Us a Foundation for Growth INSTITUTIONAL LINKAGES ACROSS PERSONAL BANKING & CLIENTS GROUP THE FIRM WEALTH MANAGEMENT • $40B Revenue • $23B Revenue • $789B Deposits • $446B Deposits • $285B Loans ICG Revenue Capital Markets • $318B Loans from Payments & Revenue fro
Slide 13: We Are Investing to Transform Our Operations and Grow
We Are Investing to Transform Our Operations and Grow ($ in Billions) $48 $43 $43 $44 LEGACY • Mexico Consumer, Asia Consumer $43 Legacy Franchises FRANCHISES1 and Legacy Holdings Legacy Legacy Franchises Legacy Legacy Franchises Franchises Franchises TRANSFORMATION • Consent Orders ~4% / $2 • Enter
Slide 14: We Are Building a Modern, Well-Controlled and Simpler Bank
We Are Building a Modern, Well-Controlled and Simpler Bank DEFINITION OF TRANSFORMATION INVESTMENT IN TRANSFORMATION Consent Orders Foundational Enterprise ($ in Billions) Planning & Execution Technology Investments $3 – $3.5 EXPECTED BENEFITS OVER TIME $1.7 $1.7 Ensures Safety & Soundness Improves
Slide 15: We Continue to Invest to Support Accelerated Growth Priorities
We Continue to Invest to Support Accelerated Growth Priorities... INVESTMENT 17-21 AVG BUSINESS THEMES PROGRESS TO DATE KPIs RoTCE1 • Cross-border payments • Introduction of CitiConnect • Average Deposits • Improving client • Instant payments in 28 markets TTS experience • USD Clearing Volumes2 ~22%
Slide 16: ...And to Capture the Momentum with Targeted Share Gains
...And to Capture the Momentum with Targeted Share Gains INVESTMENT 17-21 AVG BUSINESS THEMES PROGRESS TO DATE KPIs RoTCE1 • Hired ~70 MDs with 25 in high growth • M&A Wallet Share • Talent in key growth areas sectors over last two years BANKING • Seamless client • ECM Wallet Share ~15% • Increased
Slide 17: In 2022, We Expect Revenue Growth Across Both NII and NIR
In 2022, We Expect Revenue Growth Across Both NII and NIR NET INTEREST INCOME ($B) FY 2022 Low-single digit growth in total revenue, $44.8 $42.5 excluding 2022 divestiture impacts3 $5.2 Markets 1 $5.2 0% • Interest Rates $39.6 (6)% • Modest Loan Growth Ex-Markets $37.3 • Modest Deposit Growth 2020 2
Slide 18: Near-Term Expenses Will Continue to Increase
Near-Term Expenses Will Continue to Increase ($ in Billions) TOTAL EXPENSE GROWTH OF ~5-6%, EXCLUDING 2022 DIVESTITURE IMPACTS1 FY 2022 FY 2022 vs. PY ~3-4% ~2% ~1% ~(1)% ~5-6%1 ~5-6% growth in expenses, ex- 2022 Divestiture • Inflation / ~7-8% impacts1 merit Ex-2021 Impact of Asia • Transformation
Slide 19: We Expect Cost of Credit to Begin to Normalize in the Near-Term
We Expect Cost of Credit to Begin to Normalize in the Near-Term ($ in Billions) U.S. CARD BALANCES BY FICO1 & NCL RATE CURRENT RESERVE LEVELS CECL 3.7% 3.9% CREDIT COMPARISON DAY 12 4Q21 3.5% 3.7% PBWM 2.3% NCLs3 $1.4 $0.6 $145 $149 $140 % of Loans 1.7% 0.7% $130 $134 33 90+ DPD4 0.7% 0.4% 31 33 24
Slide 20: Our Priority is to Return Capital While Building to ~12% CET1
Our Priority is to Return Capital While Building to ~12% CET1 CET1 RATIO CAPITAL RETURN DRIVERS AND EXPECTATIONS Day 1 Impact Build up to from SA-CCR 3.5% G-SIB • Significant drivers of capital capacity: Adoption Requirement1 12.2% – Earnings contribution ~12% ~11.7% – Disallowed DTA utilization 1.7
Slide 21: Phase 2 – Path to Medium-Term Targets
Phase 2 – Path to Medium-Term Targets Transparent path to achieving our plan and delivering shareholder value 20
Slide 22: In Phase 2, We Expect Revenue Growth to Accelerate
In Phase 2, We Expect Revenue Growth to Accelerate MEDIUM-TERM REVENUE BUSINESS BUSINESS FOCUS KEY DRIVERS CAGR TARGET Build on established • Growth in cross-border commerce SERVICES TTS High single digits leadership • E-commerce expansion SECURITIES Continue recent share • Investments in infrastruc
Slide 23: Faster Revenue Growth Will Come from a Variety of Factors
Faster Revenue Growth Will Come from a Variety of Factors ILLUSTRATIVE CONTRIBUTION OF REVENUE GROWTH OVER THE NEXT FEW YEARS DRIVERS Rates Consumer • Existing balance sheet well-positioned to capitalize RATES on higher interest rates given asset sensitivity Lending Recovery CONSUMER • Partial recov
Slide 24: In Phase 2, Our Expenses Will Begin to Normalize
In Phase 2, Our Expenses Will Begin to Normalize ($ in Billions) Efficiency Ratio excluding 65% 60% – 63%2 impact of Asia Divestitures1 < 60% Expenses excluding impact of Asia ~$47 Legacy Franchises Divestitures1 Legacy Franchises Legacy Franchises ~$40 2021 Near-Term Medium-Term ICG + PBWM + Corp /
Slide 25: Continued Capital Allocation Shift to Higher-Returning Businesses
Continued Capital Allocation Shift to Higher-Returning Businesses ($ in Billions) 2022 MEDIUM-TERM ALLOCATED TCE1 TCE DIRECTION MEDIUM-TERM DRIVERS • Services — • Markets — • Continue to grow loans and deposits in Services • Banking — • Improve capital productivity in Markets ICG $96 • U.S. Personal
Slide 26: We Will Continue to Prioritize Returning Excess Capital
We Will Continue to Prioritize Returning Excess Capital MEDIUM-TERM CET1 TARGET MEDIUM-TERM PAYOUT EXPECTATION We have multiple paths to lowering our required • Significant drivers of capital capacity capital levels over the medium-term ‒ Earnings contribution ~12% ~11.5-12.0% ‒ Disallowed DTA utili
Slide 27: Taken Together, We Expect Returns of 11-12% in the Medium-Term
Taken Together, We Expect Returns of 11-12% in the Medium-Term ASSUMPTIONS RoTCE1 TARGETS BY BUSINESS • Healthy macro environment 2021 RoTCE, TARGET 2021 RoTCE1 EX-ACL2 RoTCE • Fed funds target of 2.00% by Medium-term Institutional 15% 13% ~14-16% • Revenue CAGR of ~4-5% Clients Group • Loan CAGR of
Slide 28: Phase 3 – Longer-Term
Phase 3 - Longer-Term citi
Slide 29: Our Strategy Will Shift Our Business Mix and Grow Returns
Our Strategy Will Shift Our Business Mix and Grow Returns ILLUSTRATIVE BUSINESS MIX EVOLUTION BUSINESS CHARACTERIZATION ACCELERATED GROWTH • We have characterized our businesses into CCB3 two categories: Targeted Share Gains and Accelerated Growth Services Wealth • Targeted Share Gains – scaled busi
Slide 30: Summary — Our Plan and Execution Priorities Are Clear
Summary — Our Plan and Execution Priorities Are Clear CLEAR CULTURE OF ACCOUNTABILITY FOCUSED STRATEGY STRONG EXECUTION AND EXCELLENCE Judge us not on what we say… but what we do A multi-year journey… need patience and conviction Longer-term benefits for shareholders… and benefits along the way Tran
Slide 31: Forward-looking Statements
Forward-looking Statements Certain statements in this presentation are “forward-looking statements” within the Private Securities Litigation Reform Act of 1995, including statements made orally by Citi’s management. Such statements may be identified by words such as believe, expect, anticipate, inte
Slide 32: Investor Day
I N V E S T O R D AY PROPRIETARY AND PROTECTED INFORMATION. MAY NOT BE COPIED, SHARED OR DISTRIBUTED WITHOUT CITIGROUP WRITTEN CONSENT. ©2022 CITIGROUP INC.
Slide 33: Total Medium-Term Walk by P&L
Total Medium-Term Walk by P&L ASSUMPTIONS RoTCE1 TARGETS BY BUSINESS • Healthy macro environment 2021 RoTCE, TARGET 2021 RoTCE1 EX-ACL2 RoTCE • Fed funds target of 2.00% by Medium-term Institutional Clients Group 15% 13% ~14-16% • Revenue CAGR of ~4-5% • Loan CAGR of ~6-7% Personal Banking & 23% 13%
Slide 34: KPIs to Track Our Accelerated Growth Businesses
KPIs to Track Our Accelerated Growth Businesses 17-21 DRIVER 17-21 REVENUE BUSINESS KPIs 2021 CAGRs CAGRs • Average Deposits • $664B • 10% 0% TTS • USD Clearing Volumes1 • 146M • 8% 3% NIR • Cross-Border Transaction Value2 • $280B • 12% SERVICES SECURITIES • AUC / AUA3 • $24T • 11% 4% SERVICES • Dep
Slide 35: KPIs to Track Our Targeted Share Gain Businesses
KPIs to Track Our Targeted Share Gain Businesses 17-21 DRIVER 17-21 REVENUE BUSINESS KPIs 2021 CAGRs CAGRs • M&A Wallet Share1 • 4.3% • ~0 bps BANKING • ECM Wallet Share1 • 5.4% • +30 bps 6% • DCM Wallet Share1 • 4.9% • (80) bps • Revenue / RWA • 4.5% • (80) bps MARKETS • Fixed Income Wallet Share2
Slide 36: Planned Execution Timelines
Planned Execution Timelines 2021 2022 2023 Buyer Country 2H’21 1H’22 2H’22 1H’23 2H’23 NAB Australia Closing Signed Union Philippines Signed Closing Bank Thailand Signed Closing Malaysia Signed Closing UOB Indonesia Signed Closing Vietnam Signed Closing DBS Taiwan Signed Closing Note: Closing timeli
Slide 37: Adjusted Results Reconciliations – Citigroup
Adjusted Results Reconciliations – Citigroup 2021 2020 2019 2018 2017 ($ in M) Reported Non-Interest Revenue $29,390 $30,750 $26,939 $26,292 $27,383 1 Impact of Gain / Loss on Sale related to Asia Divestitures (694) - - - - Adjsted Non-Interest Revenue $30,084 $30,750 $26,939 $26,292 $27,383 Reporte
Slide 38: Adjusted Results Reconciliations (continued)
Adjusted Results Reconciliations (continued) INSTITUTIONAL CLIENTS GROUP PERSONAL BANKING AND WEALTH MANAGEMENT 2021 2021 ($ in M) ($ in M) Reported Net Income (Loss) $14,225 Reported Net Income (Loss) $7,734 Impact of 2021 ACL release (2,216) Impact of 2021 ACL release (3,346) Net Income (Loss) exc
Slide 39: Common Equity Tier 1 Capital Ratio and Components
Common Equity Tier 1 Capital Ratio1 and Components 2021 2020 2019 2018 2017 ($ in M) 2 Citigroup Common Stockholders' Equity $183,108 $180,118 $175,414 $177,928 $181,671 Add: Qualifying noncontrolling interests 143 141 154 147 153 Regulatory Capital Adjustments and Deductions: Add: CECL transition a
Slide 40: Supplementary Leverage Ratio; TCE Reconciliation
Supplementary Leverage Ratio; TCE Reconciliation SUPPLEMENTARY LEVERAGE RATIO TANGIBLE COMMON EQUITY & TANGIBLE BOOK VALUE PER SHARE 2021 2021 2020 2019 2018 2017 ($ in M) ($ in M) 1 Common Equity Tier 1 Capital (CET1) $149,305 Total Citigroup Stockholders' Equity $201,972 $199,442 $193,242 $196,220
Slide 41: Footnotes
Footnotes Slide 5 Note: NIM (%) includes the taxable equivalent adjustment (based on the U.S. federal statutory tax rate of 21% for 2018-2021 and 35% for 2017). 1. Net Income, EPS and RoTCE exclude the one-time impact of Tax Reform in 2017 and 2018 and are non-GAAP financial measures. For a reconcil
Slide 42: Footnotes (continued)
Footnotes (continued) Slide 8 Note: Peer information sourced from company filings. Peer set is BAC, GS, JPM, MS and WFC. 1. Excludes the impact of costs related to the Korea Voluntary Early Retirement Program (VERP) of approximately $1.1 billion (approximately $0.8 billion after-tax) and contract mo
Slide 43: Footnotes (continued)
Footnotes (continued) Slide 12 1. Represents a segment that will consist of all the businesses Citi intends to exit including the 13 Asia / EMEA consumer markets, Mexico consumer, small business and middle market banking and remaining Legacy Holdings assets. Slide 14 1. Return on Tangible Common Equ
Slide 44: Footnotes (continued)
Footnotes (continued) Slide 17 1. Excludes any potential impacts associated with divestitures of 13 exit markets in Asia or Mexico consumer, small business and middle-market banking operations. 2. Excludes the impact of costs related to the Korea Voluntary Early Retirement Program (VERP) of approxim
Slide 45: Footnotes (continued)
Footnotes (continued) Slide 23 1. Excludes the impact of costs related to the Korea Voluntary Early Retirement Program (VERP) of approximately $1.1 billion (approximately $0.8 billion after-tax) and contract modification costs related to the Asia divestitures of approximately $119 million (approxima
Slide 46: Footnotes (continued)
Footnotes (continued) Slide 32 1. Return on Tangible Common Equity (RoTCE) is a non-GAAP financial measure. RoTCE represents annualized net income available to common shareholders as a percentage of average TCE. For a reconciliation to reported results, please refer to Slide 36. 2. RoTCE excluding t
Slide 47: Footnotes (continued)
Footnotes (continued) Slide 36 1. Pre-tax loss related to the sale of the Australia consumer business of approximately $680 million (approximately $580 million after-tax) in 3Q21 and true-up of approximately $14 million (approximately $12 million after-tax) in 4Q21. Results of operations excluding t
Slide 48: Glossary of Terms
Glossary of Terms ACL Allowance for Credit Losses DCM Debt Capital Markets GS Goldman Sachs NSFR Net Stable Funding Ratio ACLL Allowance for Credit Loan Losses DFAST Dodd-Frank Act Stress Test GWM Global Wealth Management PBWM Personal Banking & Wealth Management ANR Average Net Receivables DTA Defe