Q1 2024 Citigroup Inc Earnings Call

Works.

At which time you will be given instructions for the question and answer session.

Also as a reminder, this conference is being recorded today. If you have any objections. Please disconnect at this time Ms. Landis you may begin.

Thank you operator, good morning, and thank you all for joining our first quarter 2024 earnings call.

I am joined today by our Chief Executive Officer, Jane Frazier, and our Chief Financial Officer, Mark Mason I would like to remind you that today's presentation, which is available for download on our website Citigroup dot com may contain forward looking statements, which are based on management's current expectations and are subject to uncertainty.

<unk> and changes in circumstances actual results may differ materially from these statements due to a variety of factors, including those described in our earnings materials as well as in our SEC filings and.

And with that I'll turn it over to Jane.

Thank you Jane and good morning to everyone.

Today, I'm going to touch on the macroeconomic environment before I update you on the progress, we're making and then I will discuss the quarter.

Global economic performance was surprisingly Desynchronization last year. The overall story has been consistent of late one of economic resiliency supported by tight labor markets and the consumer.

CCA looks poised to slow in many markets and conditions are generally disinflationary, we're already seeing some central banks in the emerging markets.

<unk> rates in the U S. A soft landing is viewed as increasingly likely.

But we continue to see a tale of two Europe with Germany hurt by the weak demand for goods, while southern European countries, such as Spain, and Greece benefit from stronger demand in services.

In Asia, Japan is joining India was a bright spot and China's economy has gained more traction.

It's property market remains a concern.

Amidst all of these dynamics, we continue to focus on executing against our strategy and delivering the best of city to all our stakeholders.

He said 2024 will be a pivotal year for us as we put our business and organizational simplification largely behind us and we focus on two main priorities the transformation and the performance of our businesses.

Last month marked the end to the organizational simplification that we announced in September.

The result is a cleaner simpler management structure fully aligns to and facilitate cell strategy.

We are now more client centric, we're already seeing faster decision, making and a nimbler organization at what.

We have clear lines of accountability, starting with my management team.

<unk> increased spans of control and frankly, much less bureaucracy and needless complexity.

It will all help us run the company more efficiently.

We'll enhance our clients' experience and improve our agility and ability to execute.

[music].

And while reducing expenses wasn't the primary driver of the program more roles, where ultimately impacted than the 5000 that we discussed in January. We also took a number of other steps to sharpen our business focus and improve returns by right, placing businesses to better capture synergies.

Exiting certain businesses in markets that just didnt fit with our strategy and right sizing the workforce in wealth.

As a result of all these combined steps which include the simplification, we are eliminating approximately 7000 positions, which will generate $1 5 billion of annualized run rate expense saves.

The combination of these actions and the measures we're taking to eliminate our remaining stranded costs will drive two to $2 5 billion in cumulative annualized run rate saves in the medium term.

We are keeping a close eye on the execution of these efforts and overall resourcing to ensure we safeguard our commitment to the transformation.

As you know given its magnitude and scale. The transformation is a multiyear effort to address issues that have spanned over two decades.

We've made steady progress as we retire multiple legacy platforms streamlined end to end processes and strengthen our risk and control environment, all of which are necessary not only to meet the expectations of our regulators, but also to serve our clients more effectively.

A transformation of this magnitude while it's never linear.

So while we've made good progress in many areas. There are a few where we are intensifying our efforts such as automating certain regulatory processes and the data related to regulatory reporting we're committed to getting these right and we will look to self fund the necessary investments to do so.

Turning to the quarter, we had a good start to a pivotal year.

We reported net income of approximately $3 4 billion.

Earnings per share of $1 58.

Alright, TCE of seven 6% on over $21 billion of revenues.

Our revenues were up over 3% year over year, excluding divestitures, which was primarily the 1 billion gain from the India consumer sale last year.

Our expenses were slightly down quarter over quarter, excluding the FDIC special assessment.

Services continues to perform well and generate very attractive returns revenue was up 8% for the quarter as both businesses won new mandates and deepened relationships with existing clients.

Fees were up a pacing 10% for services year over year.

Driven by the investments we've made across our product offerings platforms and client experience in.

In security services, we took share again this quarter and then TTS cross border activity continued to outpace global GDP growth and commercial card spend remained robust we look forward to diving deeper into these two businesses at our investor presentation on stuff.

In June.

Markets bounce back from a tough final quarter in 2003.

While revenues were down 7% as lower volatility impacted rates and currencies that was off a very strong first quarter last year.

We saw good client activity in equities and in spread products with both new issuance and securitization activity.

<unk> robust.

We fully integrated our financing and securitization capabilities within our markets business and we started to see the benefits of having a unified spread product offering for our clients.

The rebound in banking gaining speed during the quarter led by near record levels of investment grade debt issuance as improved market conditions enables issuers to pull forward activity.

So a bit of a slow start ECM picked up in the second half of the quarter, notably in convertibles.

Our strong performance in both DCM and ECM drove investment banking revenue growth of 35% and overall banking revenue growth of 49%.

M&A revenues are still low across the street.

I was pleased that we participated in some of the significant deals announced in the quarter.

Such as Diamond backs merger with Endeavour energy and confidence merger with knows our holdings.

We are cautiously optimistic that we could see a measured reopening of the IPO market in the second quarter in light of improved market valuations.

[music].

Corporate sentiment is quite positive, especially in the U S and our clients around the world have very sound balance sheet.

We very much look forward to welcoming this rat Gabon to city to lead our banking franchise in early June.

Like other new top talent, who joined the firm he will inject fresh thinking to help us achieve our firm's full potential.

And well.

While revenues were down in the quarter, we grew fees and gathered an estimated $22 billion.

Of net new assets over the past 12 months.

As you've seen.

<unk> continues to form his team and is focused on three areas first rationalizing the expense space.

Turning on the growth engine by focusing on investment revenues and third enhancing our platforms and capabilities to elevate the client experience now these won't happen overnight, but getting these things right will help us get more than our fair share of the five.

<unk> of assets that all clients have away from us and that will help us get all returned to where they need to be in this business in the medium term.

SBB had double digit revenue growth for the sixth straight quarter.

We feel good about our position and our resiliency as a prime lend centric issuer and are seeing positive momentum across proprietary card and partner businesses.

Healthy spend growth persists in branded cards, primarily driven by our more affluent customers across both portfolios increased demand for credit continues to drive strong growth in interest earning balances.

Your line is muted they've seen capabilities within our markets business.

I wanted to see the benefits of having a unified product offering for our clients.

Well there are only a small part of our portfolio. We are keeping an eye on the customers and the lower FICO bands. We also continued to see strong engagement in digital payment offerings, such as Citi pay as a point of sale lending product, which is easily integrated into merchants.

The rebound in banking fees during the quarter.

It's by near record levels of investment grade debt issuance as improved market conditions enabled issuers pull forward activity.

Speaker Change: I know, it's a bit of a study.

Speaker Change: E C M picked up in the second half of the culture, notably income vegetables.

Check out processes and.

And we are driving more value from our retail branches as well as getting the expense space right to increase returns there.

Speaker Change: Our strong performance in both E C N and E C N towards investment banking revenue growth of 35% and overall banking revenue growth of 14, 9%.

Our balance sheet is strong across the board and intentional result of our high quality assets robust capital and liquidity positions and rigorous risk management.

Speaker Change: Well M&A revenues are still low across the street I was pleased that we participated in some of the significant deals announced in the quarter, such as Diamondback budget within debit energy and confidence merger it knows the whole things.

During the first quarter, we returned one and a half billion in capital to our common shareholders and that includes $500 million through share buybacks.

Speaker Change: We are cautiously optimistic that we could see a measured reopening of the IPO market in the second quarter and lots of improved market valuation.

CET, one ratio ticked up to a preliminary 13, 5% and we grew our tangible book value per share to $86 67.

Corporate sentiment is quite positive, especially in the U S and all clients around the world has a very sound balance sheet.

We have a great franchise around the world with great clients, who are served by great colleagues.

Speaker Change: We very much look forward to welcoming back our band it needs to meet our banking franchise in early June.

I'm pleased with where we are and I'm excited about where we're going.

With the organizational simplification behind us and a good quarter under our belt. We have started this critical year on the right foot.

Speaker Change: Like other new top talent to join the firm he will inject fresh thinking to help us achieve <unk> full.

Speaker Change: <unk> potential.

While there will be bumps in the road no doubt, we will continue to execute with discipline and we are committed to reaching our medium term targets.

Speaker Change: Well.

Revenues were down in our culture, we grew fees and gathered an estimated $22 billion of net new assets over the past 12 months.

With that I'd like to turn it over to Mark and then we will both be delighted as always to take your questions. Thank you.

Speaker Change: As you've seen.

Speaker Change: <unk> continues to perform his team is focused on three areas first.

Speaker Change: Rationalizing the expense base.

Thanks, Jane and good morning, everyone I'm going to start with the firm wide financial results focusing on our year over year comparisons for the first quarter unless I indicate otherwise and then spend a little more time on the business.

Speaker Change: Turning on the growth engine by focusing on investment revenues.

Speaker Change: Third enhancing our platforms and capabilities to elevate the client experience that these won't happen overnight.

On slide six we show financial results for the full firm.

In the first quarter, we reported net income of approximately $3 4 billion.

Speaker Change: Getting these things right will help us get more than all of the five trillion dollars of assets.

So the $1 58, and an <unk> of seven 6% or $21 $1 billion of revenue total revenue.

Speaker Change: All clients have away from us and that will help with that I'll return to where they need to be in this business in the medium term.

<unk> were down 2% on a reported basis, excluding divestiture related impacts largely consisting of a $1 billion gain from the sale of the end of your consumer business in the prior year revenues were up more than 3%.

Speaker Change: U S. P D had double digit revenue growth for the sixth straight quarter.

Speaker Change: We feel good about our position and our resiliency as a prime lend centric issue at and are seeing positive momentum across proprietary code and part of it.

Driven by growth across banking, USP and services, partially offset by declines in markets and well.

Expenses were $14 2 billion up 7% on a reported basis.

Speaker Change: Healthy spend great faith in branded cards, primarily driven by our more affluent customers.

Excluding divestiture related impacts and the incremental FDIC special assessment.

Speaker Change: Across both portfolios increased demand for credit continues to drive strong growth in interest earning balances.

Revenues were up 5%.

Cost of credit was approximately $2 4 billion.

Primarily driven by higher card net credit losses, which were partially offset by ACL releases in wealth banking.

Speaker Change: And while there are only a small part of our portfolio. We are keeping an eye on the customers and the lowest wind turbines.

Banking and legacy franchise.

Speaker Change: So continue to see strong engagement in digital payment offerings, such as Citi pay as a point of sale lending product, which is easily integrated into much checkout processes.

At the end of the quarter, we had nearly $22 billion in total reserves with a reserve to funded loan ratio of approximately two 8%.

On slide seven we show the expense trend over the past five quarters.

And we are driving more value from our retail branches as well as getting that's been space right to increase returns.

We recorded expenses of $14 2 billion, which included the incremental FDIC special assessment of roughly $250 million.

Also included in this number are $225 million of restructuring charges largely related to the organizational simplification.

Speaker Change: Our balance sheet is strong across the board.

Speaker Change: And a result of our high quality asset robust capital and liquidity positions and rigorous risk management.

In total we've incurred approximately $1 billion of restructuring costs over the last few quarters as part of these actions. We expect approximately one $5 billion of annualized run rate saves over the medium term related to our head count reduction of approximately 7000.

Speaker Change: During the first quarter, we returned $1 billion in capital to our common shareholders and that includes 500 million through share buyback.

Speaker Change: CET, one ratio ticked up to a preliminary 13, 5% and we grew our tangible book value per share to $86 and 67%.

In addition to the restructuring we took approximately $260 million of repositioning cost largely related to our efficiency efforts across the firm, including a reduction of stranded costs associated with the consumer divestiture.

Speaker Change: We have a great franchise around the world with Great client, who has served by great colleagues.

The expected savings from these actions will allow us to continue to fund additional investments in the transformation this year.

Speaker Change: I'm pleased with where we are and I'm excited about where we're going.

And relative to the prior year the remainder of the expense growth was largely driven by inflation and volume related expenses, partially offset by productivity savings and.

Speaker Change: With the organizational simplification behind us and a good quarter under our belt.

Speaker Change: You have still could be some critical you're on the right foot no. While there will be bumps in the road no doubt, we will continue to execute with discipline.

And the remainder of the year, we expect a more normalized level of repositioning which is already embedded in our guidance.

Speaker Change: We are committed to reaching our medium term target.

Therefore, you can expect our quarterly expense trend to go down from here in line with our 53 and a half to $53 8 billion ex FDIC expense guidance on slide eight we show net interest income deposits and loans, where I'll speak to sequential variances in the first quarter net interest income.

Speaker Change: With that I'd like to turn it over to Mark and then we will both be delighted overweight to take your questions. Thank you.

Mark: Thanks, Jane and good morning, everyone I'm going to start with the firm wide financial results focusing on our year over year comparisons for the first quarter unless I indicate otherwise and then spend a little more time on the business.

<unk> by $317 million, largely driven by markets, which resulted in a four basis point decrease in net interest margin.

Mark: On slide six we show financial results for the full berth in.

Mark: In the first quarter, we reported net income of approximately $3 4 billion EPS of $1 58, and an <unk> of seven 6% or $21 $1 billion of revenue.

Excluding markets net interest income was relatively flat.

Average loans were up $4 billion, primarily driven by loans and spread products and markets as well as card and mortgage loans in U S personal banking, partially offset by declines in services and.

Mark: Total revenues were down 2% on a reported basis.

Excluding divestiture related impacts largely consisting of the $1 billion gain from the sale of the Indian consumer business in the prior year revenues were up more than 3% driven by growth across banking USB and services, partially offset by declines in market and well.

And average deposits were up nearly $7 billion.

Primarily driven by services as we continue to grow high quality operating deposits on slide nine we show key consumer and corporate credit metrics. This quarter, we adjusted our FICO distribution to be more aligned with the industry reporting practices and now show our FICO mix using a 660, Brussels across branded cards and reach.

Mark: Expenses were $14 2 billion up 7% on a reported basis.

Dale services, approximately 85% of our card loans are to consumers with FICO scores of 660 or higher.

Mark: Including divestiture related impacts and the incremental FDIC special assessment.

Mark: We're up 5%.

Mark: Cost of credit was approximately $2 4 billion, primarily driven by higher card net credit loss.

And we remain well reserved with our reserve to funded loan ratio of eight 2% for our total card portfolio.

Mark: Which were partially offset by ACL releases in wealth banking.

And our corporate portfolio. The majority of our exposure is investment grade, which is reflected in our low level of non accrual loans at <unk>, 5% of total corporate loans.

Mark: Banking and legacy franchise.

Mark: At the end of the quarter, we had nearly $22 billion in total reserves with a reserve to funded loan ratio of approximately two 8%.

As a reminder, our loan loss reserves incorporate a scenario weighted average unemployment rate of approximately 5%, which includes a downside scenario unemployment rates of close to 7%.

On slide seven we show the expense trend over the past five quarters.

Mark: Our reported expenses of $14 $2 billion, which included the incremental FDIC special assessment of roughly $250 million.

As such we feel very comfortable with the nearly $22 billion of reserves, we have in the current environment.

Mark: Also included in this number are $225 million of restructuring charges largely related to the organizational simplification.

Turning to slide 10, I'd like to take a moment to highlight the strength of our balance sheet capital and liquidity.

Mark: In total we've incurred approximately $1 billion of restructuring costs over the last few quarters.

We maintain a very strong two four trillion dollar high quality balance sheet, which increased 1% sequentially.

Mark: Part of these actions, we expect approximately $1 5 billion of annualized run rate save over the medium term related to our head count reduction of approximately 7000.

Despite this increase we were able to decrease our risk weighted assets, reflecting our continued optimization efforts and focus on capital efficiency.

Our balance sheet is a reflection of our risk appetite strategy and diversified business model.

Mark: In addition to the restructuring we took approximately $260 million of repositioning costs largely related to our efficiency efforts across the firm, including a reduction of stranded costs associated with the consumer divestiture.

The foundation of our funding is a one three trillion dollar deposit base, which is well diversified across regions industries customers and account types. The majority of our deposits $812 billion or corporate and spanned 90 countries. Most of our corporate deposits reside in operating accounts that are crucial.

Mark: The expected savings from these actions will allow us to continue to fund additional investment in the transformation this year.

Mark: And relative to the prior year the remainder of the expense growth was largely driven by inflation and volume related expenses, partially offset by productivity savings.

To how our clients from their daily operations around the world in most cases, we are fully integrated in our client systems and help them efficiently manage their operations through our integrated services payments and collections liquidity management and working capital solutions.

And the remainder of the year, we expect a more normalized level of repositioning which is already embedded in our guidance.

Mark: Therefore, you can expect our quarterly expense trend to go down from here in line with our 53 and a half to $53 $8 billion ex FDIC expense guidance.

All of which greatly increase the stickiness of these deposits.

The majority of our remaining deposits about $423 billion are well diversified.

Mark: On slide eight we show net interest income deposits and loans, where I'll speak to sequential variance.

Diversified across the private bank Citi gold retail and wealth at work as well as across regions and products now.

Mark: In the first quarter net interest income decreased by $317 million, largely driven by markets, which resulted in a four basis point decrease in net interest margin.

Now turning to the asset side over the last several years, we've maintained a strong risk appetite framework and have been very deliberate about how we deploy our deposits and other liabilities into high quality assets. This starts with our $675 billion loan portfolio, which is well diversified across consumer and.

Mark: Excluding markets net interest income was relatively flat.

Average loans were up $4 billion, primarily driven by loans and spread products and markets as well as card and mortgage loans and use personal banking, partially offset by declines in service.

Corporate loans and the duration of the total portfolio is approximately one two years.

Mark: And average deposits were up nearly $7 billion, primarily driven by services as we continue to grow high quality operating deposits.

About one third of our balance sheet as held in cash and high quality short duration investment securities that contribute to our nearly one trillion dollars of available liquidity resources.

Mark: On slide nine we show key consumer and corporate credit, but this.

This quarter, we adjusted our FICO distribution to be more aligned with the industry reporting practices and now show our FICO mix using a fixed 60, Brussels across branded cards and retail services, approximately 85% of our card loan or to consumers with FICO scores of 660 or higher.

And for the quarter, we had an LCR of 117% total wrap it up we are active and deliberate in the management of our balance sheet, which is reflected in our high quality assets and strong capital and liquidity position.

On slide 11, we show the sequential <unk> to provide more detail on the drivers. This quarter first we generated $3 $1 billion of net income to common shareholders, which added 27 basis points.

Mark: And we remain well reserved with our reserve to funded loan ratio of eight 2% for our total card portfolio.

Mark: And our corporate portfolio. The majority of our exposure is investment grade, which is reflected in our low level of non accrual loans at <unk>, 5% of total corporate loans.

We returned $1 $5 billion in the form of common dividends and share repurchases, which drove a reduction of about 13 basis points third we saw an increase in our disallowed DTA, which resulted in a 10 basis point decrease and.

Mark: As a reminder, our loan loss reserves incorporate a scenario weighted average unemployment rate of approximately 5%, which includes a downside scenario unemployment rate of close to 7%.

And finally, the remaining six basis point benefit was largely driven by a reduction in <unk>.

Mark: As such we feel very comfortable with the nearly $22 billion of reserves, we have in the current environment.

We ended the quarter with a preliminary 13, 5% CET, one capital ratio, approximately 120 basis points or over $13 billion above our regulatory capital requirement of 12, 3%.

Turning to slide 10, I'd like to take a moment to highlight the strength of our balance sheet capital and liquidity.

Mark: We maintain a very strong two four trillion dollar high quality balance sheet, which increased 1% sequentially.

That said our current capital requirement does not yet reflect our simplification efforts the benefits of our transformation or the full execution of our strategy all of which we expect to bring down capital requirements over time.

Mark: Despite this increase we were able to decrease our risk weighted assets, reflecting our continued optimization efforts and focus on capital efficiency.

Mark: Our balance sheet is a reflection of our risk appetite strategy and diversified business model.

So now turning to slide 12, before I get into the businesses. Let me remind you that in the fourth quarter, we implemented a revenue sharing arrangement within banking and between banking services and markets to reflect the benefit the businesses get from a relationship based lending the.

Mark: The foundation of our funding is a $1 three trillion dollar deposit base, which is well diversified across region industries customers and account types.

Mark: The majority of our deposits $812 billion, our corporate spend 90 countries most of our corporate deposits reside in operating accounts that are crucial to how our clients run their daily operations around the world in most cases, we are fully integrated in our client systems and help them efficiently manage their operations.

The impact of revenue sharing is included in the all other line for each business and our financial supplement.

And services revenues were up 8% this quarter driven by continued momentum across both TTS and security services.

Net interest income increased 6% driven by higher deposit and trade loan spreads noninterest revenue increased 14% largely driven by continued strength across underlying fee drivers.

Mark: Through our integrated services payments and collections liquidity management and working capital solutions.

All of which greatly increase the stickiness of these deposits.

In TTS cross border volumes increased 9% U S. Dollar clearing volumes increased 3% and commercial card spend volume increased 5% all of which was driven by strong corporate client activity.

Mark: The majority of our remaining deposits about $423 billion are well diversified across the private bank Citi goal retail and wealth at work as well as across regions and products now.

And security services, our preliminary assets under custody and administration increased 11% benefiting from higher market valuations as well as new client on boarding the growth in both businesses as a direct result of our continued investment in product innovation, the client experience and platform modernization.

Mark: Now turning to the asset side over the last several years, we've maintained a strong risk appetite framework and have been very deliberate about how we deploy our deposits and other liabilities into high quality assets.

Mark: This starts with our $675 billion loan portfolio, which is well diversified across consumer and corporate loans and the duration of the total portfolio is approximately one two years.

<unk> to gain share across all client segments.

TTS continues to maintain its number one position with large corporate and Fi clients and see good momentum in the commercial clients segment.

Mark: About one third of our balance sheet as held in cash and high quality short duration investment security that contribute to our nearly one trillion dollars of available liquidity resource.

And we continue to gain share in security services.

Expenses increased 11% largely driven by continued investments in technology and product innovation.

Mark: And for the quarter, we had an LCR of 117% so to wrap it up we are active and deliberate in the management of our balance sheet, which is reflected in our high quality assets and strong capital and liquidity position.

Cost of credit was $64 million as net credit losses remain low.

Net income was approximately $1 5 billion.

Average loans were up 4%, primarily driven by strong demand for working capital loans in TTS average deposits were down 3% as the impact of quantitative tightening more than offset new client acquisition and deepening with existing clients. However.

On slide 11, we show the sequential CET, one walk to provide more detail on the drivers. This quarter first we generated $3 $1 billion of net income to common shareholders, which added 27 basis points.

Mark: We returned $1 $5 billion in the form of common dividends and share repurchases, which drove a reduction of about 13 basis points.

However, it is worth noting that we continue to see good operating deposit inflow and services continues to deliver a high <unk> of 24, 1% for the quarter.

Mark: Third we saw an increase in our disallowed DTA, which resulted in a 10 basis point decrease.

On slide 13, we show the results where markets for the first quarter.

Mark: And finally, the remaining six basis point benefit was largely driven by a reduction in <unk>.

<unk> revenues were down 7% as lower fixed income revenues more than offset growth in equities fixed income revenues decreased 10% driven by rates and currencies, which were down 21% on the back of lower volatility and a strong quarter in the prior year.

Mark: We ended the quarter with a preliminary 13, 5% CET, one capital ratio, approximately 120 basis points or over $13 billion above our regulatory capital requirement of 12, 3%.

This was partially offset by strength in spread products and other fixed income, which was up 26% driven by an increase in client activity, particularly in asset backed lending and.

Mark: That said our current capital requirement does not yet reflect our simplification efforts the benefits of our transformation or the full execution of our strategy all of which we expect to bring down capital requirements over time.

And we continued to see good underlying momentum in equities with revenues up 5% driven by growth across cash trading and equity derivatives and we continued to make progress in prime with balances up more than 10%.

So now turning to slide 12, before I get into the businesses. Let me remind you that in the fourth quarter, we implemented a revenue sharing arrangement within banking and between banking services and markets to reflect the benefit the businesses get from a relationship based lending.

Expenses increased 7% largely driven by the absence of a legal reserve release last year.

Cost of credit was $200 million, primarily driven by macroeconomic assumptions related to loans and spread products that impacted reserves.

Mark: The impact of revenue sharing is included in the all other line for each business and our financial supplement.

Mark: And services revenues were up 8% this quarter driven by continued momentum across both Pts and security services.

Net income was approximately $1 4 billion.

Average loans increased 8%, primarily driven by asset back lending in spread products due to an improvement in market activity average trading assets increased 4% sequentially largely driven by seasonally stronger activity in the first quarter markets delivered in our OTC, a 10, 4% for the quarter.

Mark: Net interest income increased 6% driven by higher deposit and trade loan spreads.

Mark: Noninterest revenue increased 14% largely driven by continued strength across underlying fee drivers.

In TTS cross border volumes increased 9% U S. Dollar clearing volumes increased 3% and commercial card spend volume increased 5% all of which was driven by strong corporate client activity.

On Slide 14, we show the results for banking for the first quarter banking revenues increased 49% driven by growth in investment banking and corporate lending and lower losses on loan hedges as I previously mentioned corporate lending results include the impact of revenue sharing from investment banking services.

Mark: And security services, our preliminary assets under custody and administration increased 11% benefiting from higher market valuations as well as new client on boarding the growth in both businesses is a direct result of our continued investment in product innovation, the client experience and platform modernization.

<unk> end markets.

Investment banking revenues increased 35% driven by DCM and ECM as improved market sentiment led to an increase in issuance activity, particularly investment grade, which is running at near record levels at.

Mark: To gain share across all client segments.

Advisory revenues declined given the low level of announced merger activity last year. However in the quarter, we participated in the pickup in announced M&A across sectors, including those where we've been investing such as technology and healthcare.

Mark: TTS continues to maintain its number one position with large corporate and Fi clients and see good momentum in the commercial client segments.

Mark: And we continue to gain share in security services.

Expenses increased 11% largely driven by continued investments in technology and product innovation.

Corporate lending revenues, excluding mark to market on loan hedges increased 34% largely driven by higher revenue share.

Mark: Cost of credit was $64 million at.

Mark: As net credit losses remain low.

We generated positive operating leverage this quarter as expenses decreased 4% driven by actions taken to rightsize the expense base cost of credit was a benefit of $129 million primarily.

Mark: Net income was approximately $1 5 billion.

Mark: Average loans were up 4%, primarily driven by strong demand for working capital loans in TTS average deposits were down 3% as the impact of quantitative tightening more than offset new client acquisition and deepening with existing clients.

Primarily driven by changes in portfolio composition.

The NCL rate was four 3% of average loans and we ended the quarter with a reserve to funded loan ratio of one 5%.

Mark: However, it is worth noting that we continue to see good operating deposit inflow and services continues to deliver a higher ROE TCE of 24, 1% for the quarter.

Net income was approximately $536 million.

Average loans decreased 6% as we maintain strict discipline around capital efficiency as we optimize corporate loan balances.

Mark: On Slide 13, we show the results of our markets for the first quarter <unk> revenues were down 7% as lower fixed income revenues more than offset growth in equity.

<unk> was nine 9% for the quarter, reflecting a rebound in activity reserve releases and continued expense discipline.

Mark: Fixed income revenues decreased 10% driven by rates and currencies, which were down 21% on the back of lower volatility and a strong quarter in the prior year.

On Slide 15, we show the results were well for the first quarter.

<unk> revenues decreased 4% driven by a 13% decrease in NII from lower deposit spreads and higher mortgage funding costs, partially offset by higher investment fee revenues.

Mark: This was partially offset by strength in spread products and other fixed income, which was up 26% driven by an increase in client activity, particularly in asset backed lending and.

We're seeing good momentum in noninterest revenue, which was up 11% as we benefited from higher investment assets across regions, driven by increased client activity as well as market valuations.

Mark: And we've continued to see good underlying momentum in equities with revenues up 5% driven by growth across cash trading and equity derivatives and.

Mark: And we continued to make progress in prime with balances up more than 10%.

Expenses were up 3% driven by technology investments focused on risk and controls as well as platform enhancements, partially offset by the initial benefits of expense reductions as we continue to rightsize. The workforce cost of credit was a benefit of $170 million driven by a reserve release of approximately two <unk>.

Mark: Expenses increased 7% largely driven by the absence of a legal reserve release last year.

Mark: Cost of credit was $200 million.

Mark: Primarily driven by macroeconomic assumptions related to loan and spread products that impacted reserves.

Million.

Mark: Net income was approximately $1 $4 billion average.

Primarily related to a change in estimate as we enhanced our data related to margin lending collateral.

Average loans increased 8%, primarily driven by asset back lending in spread products due to an improvement in market activity.

Net income was $150 million.

End of period client balances increased 6% driven by higher client investment assets average loans were flat as we continued to optimize capital usage.

Mark: Average trading assets increased 4% sequentially, largely driven by seasonally stronger activity in the first quarter markets delivered in Aro TCE of 10, 4% for the quarter.

Average deposits decreased 1%, largely reflecting lower deposits and the private bank and wealth at work and the continued shift of deposits to higher yielding investments on cities platform, which more than offset the transfer of relationships and the associated deposits from USB.

Mark: On Slide 14, we show the results for banking for the first quarter banking revenue increased 49% driven by growth in investment banking and corporate lending and lower losses on loan hedges as I previously mentioned corporate lending results include the impact of revenue sharing from investment banking services and Mark.

Client investment assets were up 12% driven by net new investment asset flows and the benefit of higher market valuations. Our TCE was four 6% for the quarter. Looking ahead, we're going to improve the returns of our wealth business by executing on our three foundational priorities.

Mark: Yeah.

Mark: Investment banking revenues increased 35% driven by DCM and ECM as improved market sentiment led to an increase in issuance activity, particularly investment grade, which is running at near record levels and.

As Jane mentioned this will take time, but over the medium to longer term. We view this as a greater than 20% return business on slide 16, we show the results for U S personal banking for the first quarter U.

Mark: Advisory revenues declined given the low level of announced merger activity last year. However in the quarter, we participated in the pickup in announced M&A across sectors, including those where we've been investing such as technology and health care.

U S personal banking revenues increased 10% driven by NII growth of 8% and lower partner payments branded cards revenues increased 7% driven by interest, earning balance growth of 10% as payment rates continue to moderate.

Mark: Corporate lending revenues, excluding mark to market on loan hedges increased 34% largely driven by higher revenue share.

Mark: We generated positive operating leverage this quarter as expenses decreased 4% driven by actions taken to rightsize the expense base.

And we continue to see healthy growth in spend volumes up 4%, primarily driven by our more affluent customers.

Cost of credit was a benefit of $129 million, primarily driven by changes in portfolio composition.

Retail services revenues increased 18%, primarily driven by lower partner payments due to higher net credit losses, as well as interest earning balance growth of 9%.

Mark: The NPL rate with <unk>, 3% of average loans and we ended the quarter with a reserve to funded loan ratio of one 5% net.

Mark: Net income was approximately $536 million.

Retail banking revenues increased 1% driven by higher deposit spreads loan growth and improved mortgage margins.

Mark: Average loans decreased 6% as we maintain strict discipline around capital efficiency as we optimize corporate loan balance.

Expenses were roughly flat due to lower compensation costs, including repositioning offset by higher volume related expenses.

Mark: <unk> was nine 9% for the quarter, reflecting a rebound in activity reserve releases and continued expense discipline on.

Cost of credit of approximately $2 2 billion increased 34% largely driven by higher npls of $1 $9 billion as card loan vintages that were originated over the last few years were delayed in their maturation due to the unprecedented levels of government stimulus during the pandemic and.

On Slide 15, we show the results were well for the first quarter.

Mark: <unk> revenues decreased 4% driven by a 13% decrease in NII from lower deposit spreads and higher mortgage funding costs, partially offset by higher investment fee revenue.

Mark: We're seeing good momentum in noninterest revenue, which was up 11% as we benefited from higher investment assets across regions, driven by increased client activity as well as market valuation.

Now maturing.

In branded cards, the NCL rate came in at 365% in line with our expectations and retail services the NCL rate of 632% was.

Mark: Expenses were up 3% driven by technology investments focused on risk and controls as well as platform enhancements, partially offset by the initial benefits of expense reduction as we continue to rightsize the workforce, whilst the credit was a benefit of $170 million driven by a reserve release of.

It was slightly above the high end of our guidance range for the full year and will likely remain above the range in the second quarter, reflecting historical seasonality patterns.

However, given the persistent inflation higher interest rates and continued sales pressure at our partners. We now expect to be closer to the high end of the full year NCL guidance range for retail services. This expectation along with the continued mix shift from transactional to revolvers across both portfolios.

<unk> $200 million primarily.

Mark: <unk> related to a change in estimate as we enhanced our data related to margin lending collateral.

Mark: Net income was $150 million.

Mark: End of period client balances increased 6% driven by higher client investment assets at.

<unk> led to an ACL build of approximately $340 million net income decreased to $347 million.

Mark: Loans were flat as we continued to optimize capital usage average deposits decreased 1%, largely reflecting lower deposits and the private bank and wealth at work and the continued shift of deposits to higher yielding investment on cities platform, which more than offset the transfer our relationships and the associated deposits from.

Average deposits decreased 10% as the transfer of relationships and the associated deposits to our wealth business more than offset the underlying growth.

<unk> for the quarter was five 5%.

We recognize that this business is facing a number of headwinds from a regulatory perspective and from higher credit costs, given where we are in the credit cycle, both of which are putting pressure on returns for the quarter and for the full year 2024.

Mark: Phoebe.

Mark: Client investment assets were up 12% driven by net new investment asset flows and the benefit of higher market valuation. Our TCE was four 6% for the quarter. Looking ahead, we are going to improve the returns of our wealth business by executing on our three foundational priority.

However, this doesn't impact our longer term view of the business, we feel good about our position as a prime and lend centric issuer.

We will continue to take mitigating actions to manage through the headwinds last the credit cycle and drive more value from retail banking and retail services, while improving the overall operating efficiency of the business all of which will ultimately result in a higher returning business over the medium term.

Mark: As Jane mentioned this will take time, but over the medium to longer term, we view this as a greater than 20% return business on <unk>.

Mark: Slide 16, we show the results for U S personal banking for the first quarter.

Mark: Personal banking revenue increased 10% driven by NII growth of 8% and lower partner payments branded cards revenues increased 7% driven by interest, earning balance growth of 10% as payment rates continue to moderate.

On Slide 17, we show results for all other on a managed basis, which includes corporate other and legacy franchises and excludes divestiture related items revenues decreased 9%, primarily driven by closed exits and wind downs as well as higher funding costs, partially offset by higher revenue in Mexico.

Mark: And we continue to see healthy growth in spend volume up 4%, primarily driven by our more affluent customers.

Mark: Retail services revenues increased 18%, primarily driven by lower partner payment due to higher net credit losses, as well as interest earning balance growth of 9%.

No.

<unk> expenses increased 18%, primarily driven by the incremental FDIC special assessment and restructuring charges, partially offset by lower expenses from the wind down and exit markets Slide 18 shows our full year 2020 for outlook and medium term guidance, both of which remain unchanged.

Retail banking revenues increased 1% driven by higher deposit spreads loan growth and improved mortgage margins.

Mark: Expenses were roughly flat due to lower compensation costs, including repositioning offset by higher volume related expenses.

We've accomplished a lot over the past few years and have made substantial progress on simplifying our business and organizational structure.

Mark: Cost of credit of approximately $2 $2 billion increased 34% largely driven by higher npls of $1 $9 billion as card loan vintages that were originated over the last few years were delayed in their maturation due to the unprecedented levels of government stimulus during the pandemic.

The year is off to a good start as we are laser focused on executing the transformation and enhancing the business' performance. These two priorities will not only enable us to be a more efficient agile company, but a client centric one that brings together the best of Citi to drive revenue growth and improve returns.

Mark: And are now maturing.

And we are on the path to reach our 11% to 12% return target over the medium term.

Mark: In branded cards, the NCL rate came in at 365% in line with our expectation.

With that Jane and I will be happy to take your questions.

Mark: In retail services, the NCL rate of 632%.

At this time, we will open the floor for questions. If you would like to ask a question. Please press star five on your telephone keypad.

Mark: It was slightly above the high end of our guidance range for the full year and will likely remain above the range in the second quarter, reflecting historical seasonality patterns.

You may remove yourself at anytime by pressing star five again, and we'll pause for just a moment.

However, given the persistent inflation higher interest rates and continued sales pressure at our partners. We now expect to be closer to the high end of the full year NCL guidance range for retail service.

Okay. Our first question will come from Mike Mayo with Wells Fargo. Your line is open. Please go ahead.

Hi.

Well you just for the seven months of your Org simplification and you said 7000 positions.

This expectation along with the continued mix shift from transact just to revolvers across both portfolios led to an ACL build of approximately $340 million net.

Go away with $1 5 billion of expense savings. So that's that's very concrete but more generally.

After 2030, 40 years, a matrix structure down to five lines of business.

Net income decreased to $347 million.

Mark: Average deposits decreased 10% as the transfer of relationships and the associated deposits through our wealth business more than offset the underlying growth.

Putting these differently you are talking about them differently, but the question.

And then I think a lot of people have is are you simply reporting these lines of business differently or are you actually running them differently.

Mark: Our TCE for the quarter was five 5%.

We recognize that this business is facing a number of headwinds from a regulatory perspective and from higher credit costs, given where we are in the credit cycle, both of which are putting pressure on returns for the quarter and for the full year 2024.

Thank you for the question.

The simplification that we've just gone through is what we said is is the most consequential set of changes not any to the organization model that we have how we run the bank.

However, this doesn't impact our longer term view of the business, we feel good about our position as a prime and lend centric issuer we.

Align the structure with the strategy simplified the bank, it's eliminated needless complexity.

Mark: We will continue to take mitigating actions to manage through the headwinds lapped the credit cycle and drive more value from retail banking and retail services, while improving the overall operating efficiency of the business all of which will ultimately result in a higher returning business over the medium term.

That's great and greater transparency into the five businesses and that performance as you can see it's increased accountability.

Very simply it's just easier for our people to focus on our clients, but also getting things done and the execution that we have ahead of us.

Mark: On Slide 17, we show results for all other on a managed basis, which includes corporate other and legacy franchises and excludes divestiture related items.

Maybe if I try and bring us a bit more alive.

The first thing we did was we elevated the five businesses not eliminated the ICT and PWM.

Mark: Revenues decreased 9%, primarily driven by closed exits and wind down as well as higher funding costs, partially offset by higher revenue in Mexico and.

And that report.

All the elements that the business is needed to run and to and under the direct management of those five business heads and example, being operations and.

<unk> expenses increased 18%, primarily driven by the incremental FDIC special assessment and restructuring charges, partially offset by lower expenses from the wind down and exit markets.

It's enabled transparency.

Greater accountability and it's end to end and total P&L focus that focus on the bottom line and the returns driving growth expense discipline et cetera.

Mark: Mid 18 shows our full year 2020 for outlook and medium term guidance, both of which remain unchanged.

We also right place businesses to align with the strategy. So banking opening under one umbrella at the investment bank the corporate Bank commercial bank really helping us drive synergies Theyre, putting finance.

Mark: We've accomplished a lot over the past few years and have made substantial progress on simplifying our business and organizational structure.

Mark: The year is off to a good start as we are laser focused on executing the transformation and enhancing the business' performance.

And securitization into market. So that we have a unified spread product. They're also beginning to see the benefits of that this quarter. So that for example in the businesses, but I do want to highlight a couple of other areas around this change.

Mark: These two priorities will not only enable us to be a more efficient agile company with a client centric one that brings together the best of Citi to drive revenue growth and improve returns.

Mark: And we are on the path to reach our 11% to 12% return target over the medium term.

So by eliminating the regional lab and putting in a slimmer lighter management structure in place and the geographies that enable us to make sure that our countries are focused on client delivery and local entertainment Tonight, and we've eliminated the whole shadow.

Speaker Change: With that Jane and I will be happy to take your questions.

Mark: Yeah.

Speaker Change: At this time, we will open the floor for questions. If you would like to ask a question. Please press star clients on your telephone keypad.

P&L, we've eliminated a large number of committees in the geographies and this is where we loaded the functional.

Jane: You may remove yourself at anytime by pressing star five again, and we will ask for just a moment.

And management roles with streamlined and eliminated.

Jane: Okay. Our first question will come from Mike Mayo with Wells Fargo. Your line is open. Please go ahead.

Through the last seven months.

That break the regions into smaller life Tech cluster and that allows us to much better capture the big changes in trade flows and financial flows et cetera, we're seeing around the world.

Jane: Hi.

Michael Lawrence Mayo: Well you just finished your seven months of your Org simplification and you said 7000 positions.

Nimbler.

The third piece, we created the client organization.

Michael Lawrence Mayo: Go away with $1 5 billion of expense savings. So that's that's very concrete but more generally.

That organization make sure that our core capabilities and disciplines are being applied firm wide to drive revenue synergies.

Michael Lawrence Mayo: After 2030, 40 years, a matrix structure down to five lines of business.

Michael Lawrence Mayo: Putting these differently you are talking about them separately, but the question.

And then the governance, we've got a lot easier it took up a lot of time.

Michael Lawrence Mayo: And then I think a lot of people have is are you simply reporting these lines of business differently or are you actually running them differently.

And we've given much clearer mandates statement more than half the number of committees.

200 committees plus that we've eliminated in the either.

Speaker Change: Thank you for the question.

Either by consolidating and eliminating that.

Speaker Change: Okay, Great simplification that we've just gone through is what we said is is the most consequential set of changes not only to be organization model that we have how we run the bank.

It spans and layers. If you exclude me 98% at the firm now operates within <unk> that is a much much faster decision, making it's much quicker to get execution.

Speaker Change: Align the structure with the strategy simplified the bank, it's eliminated needless complexity.

It also means that you cannot you can very quickly get close to where the engine room at the pharmacy.

Speaker Change: He has created greater transparency into the five businesses in that performance as you can see it's increased accountability and very simply it's just easier for our people just focus on our clients, but also getting things done and the execution that we have ahead of us and so maybe if I try and bring us a bit more.

We've got clear Accountabilities, we've eliminated nice co heads we've reduced matrix reporting.

We've got the precursor to non producer ratio improved so so all of this really means as I've said at clear deck. So we can be laser focused on business performance in those five businesses and the transformation it already feels different.

Speaker Change: Elias.

Speaker Change: The first thing we did was we elevated the five businesses not eliminated the ICT and P. D. W. N.

And my table are much closer to the businesses and the clients. It makes it much easier for Mark and I and the rest of the team to run the bank like an operator.

Speaker Change: And that and we put all.

Speaker Change: All the elements that the business that needed to run end to end under the direct management of days five business had an example, being operations and it's enabled transparency.

This is the head of the holding company.

Have to go through these aggregator less to get things done.

And.

We have done as we said we would be at this point, we're wrapping up the final consultation periods not an easy few months that the organization. We've had to say goodbye to some very good people, we put a lot of change for the organization and now as we close the chapter on this.

Speaker Change: The HOA accountability and it's end to end and take till P&L focus that focus on the bottom line and the returns driving growth expense discipline et cetera.

Speaker Change: We also right place businesses to align with this strategy our banking opening under one umbrella at the investment bank. The corporate Bank commercial bank really helping us drive synergies theyre, putting finance and fitness and securitization into market. So that we have a unified spread product there.

We look forward to being back can be a new mode again, continuing to drive improvements in simplification and processes and the like but now the focus is going to be really getting the full benefit from all the changes we've made in business and organization and moving forward.

Speaker Change: Also beginning to see the benefits of that this quarter. So that's an example in the businesses, but I do want to highlight a couple of other areas around this change.

Our next question is from Glenn Schorr Evercore. Your line is open. Please go ahead.

Speaker Change: So by eliminating the regional lab and putting in a far slimmer lighter management structure in place in that geography.

Thanks very much.

So I think it shows how much helps us simple.

Simpler organization I think people are totally bought into the expense story. So a lot of credit Suisse.

Speaker Change: That's enabled us to make sure that our countries are focused on client industry and legal entity managed Tonight and we've eliminated the whole shadow geographic P&L, we've eliminated a large number of committees in the geographies and it gets very loaded the functional.

I think.

Personally and others. So questions on is on the revenue side.

Getting to those 4% to 5% medium term target so.

Could you take us just conceptually, where we're going to where you think you will drive that growth from from this baseline where we're at now.

Speaker Change: Management roles with streamlined and eliminated through the last seven months.

The price of the regions into smaller lighter cluster and that allows us a much better capture the big changes in trade flows and financial flows et cetera, we're seeing around the world. It's just much nimbler.

If you want you can totally use my second question and then tell us what good things Youre doing inside the investment banking line.

One of them.

Speaker Change: The third piece, we created the client organization.

Okay.

It's not that one England.

So.

Speaker Change: That organization make sure that our core capabilities and disciplines are being applied sunlight to drive revenue synergies.

I'll kick off.

Some of this pocket to Mark and then I'll come back to find King So look.

Speaker Change: And then the government has got a lot easier. It took a lot of time I'm, Amit getting much clearer mandates and with more than half the number of committees.

We are laser focused on.

On the growth and improving the returns of these businesses to where they should and will be in the medium term and it's not just a great story, but let me I am correct.

Speaker Change: 200 committees class that is eliminated in the sub either by consolidating and eliminating them.

Those medium term return.

<unk> targets.

In services, we want to continue around the mid 'twenty.

Speaker Change: It spans and layers. If you exclude me 98% at the firm now operates within eight that's that is a much much faster decision, making is much quicker to get execution done.

And in our OTC banking should be getting to around 15% market, 10% to 13%. So we'd like to see at the higher end of that range AOSP getting that back to the mid teens and then moving on to the high teens in the medium term.

Speaker Change: It means that you cannot you can very quickly get placed with the engine amendment assignments is weak.

Speaker Change: We've got clear Accountabilities, we've eliminated nice co heads we introduced matrix protein.

And then lastly, as Andy and Mark have talked about getting wealth to a 15% 20% return in the medium term, but the goes to the mid <unk> in the longer term here.

Speaker Change: Got a producer to non produce the ratio improved so so all of this really means as I've said, a clearer deck. So we can be laser focused on business performance in those five businesses and the transformation it already feels different around my table and much closer to the businesses and.

And we are confident that our strategy is going to drive the revenue growth of 4% to 5% take up in the medium term and that's a combination of maintaining our leadership in subsea.

Business is gaining shares in others.

Speaker Change: Clients. It makes it much easier for Mark and I and the rest of the team to run the bank like an operator that is the hedge at the holding company debt.

Good client growth look at our win rate for example in TTS at over 80%.

We've got our commercial bank also bringing in new clients in the mid market and helping them accelerate their growth.

Speaker Change: That have to go through these aggregator labs to get things done.

Speaker Change: And we.

Speaker Change: As we said we would be at this point, we're wrapping up the final consultation periods not an easy few months. The organization, we've had to say goodbye to some very good people, we put a lot of change for the organization.

Success around the world, but let me pass it over to you Doron.

Morning, Glenn and we appreciate the acknowledgment around the around the expenses as you know we've been quite focused on that and working hard to ensure that we deliver on what we say we're going to do there.

Speaker Change: And now as we close the chapter on message.

Speaker Change: We look forward to even back can be a new mode again, continuing to drive improvements in simplification and processes and the like but now the focus is going to be really getting the full benefit from all the changes we've made in business and organization and move.

On the revenue line I'd first point to if you look back since Investor day, we've in fact been able to deliver on the guidance that we've given for the medium term, so that 4% to 5% topline growth and yes. It was a different rate environment with that growth that we delivered over the past couple of years has been a mix of both revenue and.

Speaker Change: Going forward.

<unk> business strength as you think about the guidance we've talked about for this year, we talked about the NII ex markets being down modestly and so what that means is that the momentum and the growth that we expect is going to come from the non interest revenue and I think this quarter is a good example of where and how thats likely to.

Speaker Change: Our next question is from Glenn Schorr Evercore. Your line is open. Please go ahead.

Glenn Paul Schorr: Thanks very much.

I think it shows how much it helped us see the simple.

Glenn Paul Schorr: Simpler organization I think people are totally bought into the expense story. So a lot of credit Suisse.

Glenn Paul Schorr: I think we're I E.

Through so the revenue top line being up 3%, but when you look through each of the businesses and if you look on each of the pages, where we disclose the revenue you can see the underlying NII growth in the bottom left hand corner of each of those pages, that's coming through as well So security services up.

Glenn Paul Schorr: I personally and others.

Glenn Paul Schorr: <unk> of questions on is on the revenue side and getting to those 4% to 5% medium term target. So.

Speaker Change: Could you take us.

Speaker Change: Separately.

Speaker Change: Where we're going and where you think you will drive that growth from from this baseline where we're at now.

14% with growth in both TTS between cross border clearing commercial cards, but also.

Speaker Change: And if you want you can totally use my second question and then tell us what good things Youre doing inside the investment banking line.

And security services right with the growth that we're seeing from continued momentum in assets under custody, we expect that trend to continue with existing clients and more clients new clients as well as how we do more with our commercial market middle commercial middle market business excuse me so NII growth.

Speaker Change: One of them.

Speaker Change: It's not that one England oven.

Speaker Change: I'll kick off.

Speaker Change: Some of this pocket to Mark and then I'll come back to Lion King.

Speaker Change: Look we are laser focused on <unk>.

There the investment banking piece is the other driver of fees, we're seeing that wallet start to rebound.

Speaker Change: The growth and improving the returns at these businesses to where they should and will be in the medium term.

Part of that rebound the announced transactions were part of those in sectors that we've been investing in we're bringing in new talent to help us realize an experienced that and even in wealth, where we're not pleased with the top line performance this quarter down 4%. When you look through that we do have good underlying NII grow.

Speaker Change: Just a great story, but let me and correct in those medium term return targets.

Speaker Change: In services, we want to continue around the mid 'twenty.

Speaker Change: And in our OTC banking should be getting to around 15% market tend to 13%. So we'd like to see at the higher end of that range.

In the quarter in wealth, and that's up 11% year over year and it's in the area that Andy and the team is leaning in on which is investments and not just in one region, but across all the regions and then finally, the USP b piece, which is showing good NII growth as well so the long and short of it is that before 4%.

Speaker Change: S P getting that back to the mid teens and then moving on to the high teens in the medium term.

Speaker Change: And then lastly, as Andy and Mark have talked about getting to a 15% 20% return in the medium term, but to go to the mid <unk> in the longer term here.

Growth that's implied in $80 billion to $81 billion is going to be continued momentum largely in fees, helping us to deliver for our clients and made continued progress towards that medium term target.

Speaker Change: And we were confident that our strategy is going to drive the revenue growth at 45% take up in the medium term and that's a combination of maintaining our leadership in certain businesses gaining shares in others. We have good client growth.

So let me pick up the site I'm sure Jim Landers will get the April <unk> and a second question that Glenn, but let me, let me pick up on banking.

Speaker Change: Okay.

Right for example in TTS at over 80%.

What's going on there. So we have a very clear strategy that we've been executing over the last couple of years ready to lay the foundation for growth in banking.

Speaker Change: We've got a commercial bank also bringing in new clients in the mid market and helping them accelerate their growth and success around the world, but let me pass it over to you Brian Good morning, Glenn and we appreciate the acknowledgment around the around the expenses as you know we've been quite focused.

North America is our key priority is the biggest contributor to the global IP wallet.

Tech healthcare and industrials are likely to constitute over 50% of the fee wallet going forward. So we have better aligned our resources to position the franchise for this defending areas of traditional strength in industrials and the like energy, whilst investing in high growth sectors, such as healthcare and <unk>.

Brian: On that and working hard to ensure that we deliver on what we say we're going to do there.

Brian: The point on the revenue line I'd first point to if you look back since Investor day, we've in fact been able to deliver on the guidance that we've given for the medium term, so that 4% to 5% top line growth and yes. It was a different rate environment, but that growth that we delivered over the past couple of years has been a mix of both revenue and <unk>.

Technology.

With some with some strong talent.

Financial sponsors are sitting on three trillion dollars of estimated fire power, which they are incentivized to deploy.

Brian: Underlying business strength as you think about the guidance we talked about this year, we talked about the NII ex markets being down modestly and so what that means is that the momentum and the growth that we expect is going to come from the non interest revenue and I think this quarter is a good example of where and how that's like.

So they are likely to be between 20% to 30% of global investment banking fees.

Great relationships in this community, we felt that over years and decades.

You're going to see us more active in the lapping space in the right situations for our key clients and we will continue to ensure we are well positioned to active around.

Brian: To play through so the revenue top line being up three plus percent, but when you look through each of the businesses and if you look on each of the pages, where we disclose the revenue you can see the underlying <unk> growth in the bottom left hand corner of each of those pages, that's coming through as well So security services.

This important opportunity.

You'll likely see is seeking to remain competitive in the private capital asset class that can be an important source of liquidity for many clients.

In the middle market will be fertile hunting ground for corporate and private equity and our investment banking commercial banking to be closely coordinated to harvest the deal flow around the world.

Brian: Up 14% with growth in both GTS between cross border clearing commercial cards, but also.

Brian: And security services right with the growth that we're seeing from continued momentum in assets under custody, we expect that trend to continue with existing clients and more clients.

And indeed, the new Org structure I was just talking about really enables us to drive a more joined up client centric strategic coverage across corporate commercial and investment banking, so over and above the wallet recovery, Mark and I can be very laser focused on him.

Brian: And new clients as well as how we do more with our commercial market middle commercial middle market business excuse me. So NAR growth there the investment banking piece is the other driver of fees, we're seeing that wallet start to rebound we're part of that rebound the announced transactions were part of those <unk>.

During that we're driving revenue growth from a more holistic focus on the wallet share across flow and episodic activity.

Today's ragavan is the right person to take over at this important moment for our banking franchise.

Brian: <unk> that we've been investing in we're bringing in new talent to help us realize an experienced that and even in well where we're not pleased with the top line performance. This quarter down 4%. When you look through that we do have good underlying NII growth in the quarter in wealth and that's up 11% year.

Mentioned that we've been generating with the foundations being Lang the intention here from him is accelerate that.

And he will focus on increasing our performance intensity driving productivity and disciplined growth and he will keep us firmly on the path towards delivering on our commitments fundamentally improving the operating margin generating high returns on that all important fee revenue.

Brian: Over a year and it's in the area that Andy and the team is leaning in on which is investments and not just in one region, but across all the regions and then finally the U S. P. B piece, which is showing good NII growth as well so the long and short of it is that the four 4% growth that's implied in $80 billion to $81 billion is going to be.

Our next question is from Betsy <unk> at Morgan Stanley. Your line is open. Please go ahead.

Brian: <unk> momentum largely in fees, helping us to deliver for our clients and made continued progress towards that medium term target.

Hi, good morning, or yes, we're almost paying into the afternoon here.

Hi.

Speaker Change: So let me pick up I'm.

I guess a couple of question as well.

Speaker Change: I'm sure Ken Landa forgetting the Ebola Ifas, Nick and a second question that Glenn Beck.

I know, we talked through the institutional securities business already on moving that expense ratio a little bit can we dig in a little bit on the wealth side because the expense ratio there is running a little higher and so the useful just to understand.

Speaker Change: Let me, let me pick up on banking.

Speaker Change: And what's going on there. So we have a very clear strategy that we've been executing over the last couple of years relating to lay the foundation for growth in banking.

The.

Pes or speed or.

Speaker Change: North America is our key priority is the biggest contributor to the global IP wallet.

Timeframe, when we should expect to see that start to inflect.

Speaker Change: Tech healthcare and industrials are likely to constitute over 50% at the fee wallet going forward. So we have better aligned our resources to position the franchise for this.

Absolutely and some of it.

As a reminder, the actions that we've been taking on Oct simplification and is also being taken in the wealth business.

Speaker Change: Funding areas of traditional strength in industrials and the like LNG, whilst investing in high growth sectors, such as healthcare and technology.

It.

We'll walk through notice periods in the coming weeks and say you'll start you'll see the impact coming through in our head count numbers any wealth in the expense space next next quarter.

With some strong talent.

Speaker Change: Financial sponsors are sitting on three trillion dollars of estimated fire power, which they are incentivized to deploy.

Look as.

Mark said in his opening.

And he's been talking about it should be <unk> up to a 30% pre tax margin business.

Speaker Change: They're likely to be between 20% to 30% of type of investment banking fees, we have great relationships with this community, we felt that over years and decades.

<unk> is focused on rationalizing the expense space. He is also as Mark said turning on the growth engine is enhancing our platforms and capabilities to elevate the client experience.

Speaker Change: You're going to see us more active in the lapping space in the right situations for our key clients and we will continue to ensure we're well positioned to active around this important opportunity.

The heart of the opportunity for US lies with our existing clients. They are an extraordinary client base, but they're under penetrated so a lot of the operating efficiency.

Speaker Change: I would like D. C. C is seeking to remain competitive in the private capital asset class that can be an important source of liquidity for many clients.

It's frankly going to be.

Owing to come on the revenue side here.

That said Andy has taken a number of pretty decisive moves this quarter on the expense side, Mark Let me Josh.

In the middle market will be fertile hunting ground for corporate and private equity and our investment banking commercial banking to be closely coordinated to harvest the deal fly around the world.

To us it over to you, yes, I mean look I think that the quarter expenses that you see of growth of 3% is not yet reflective of the work that Andy has been steadfast that.

Speaker Change: And indeed, the new Org structure, I guess talking about really enables us to drive a more joined up client centric strategic coverage across corporate commercial and investment banking.

There are still some investment in there in technology and in the platform that's important but I think coming out of the first quarter Youll start to see some of the the reduction in expenses. That's a byproduct of that work and the work has been across the entire expense base in the wealth wealth business. So that includes noncore.

Speaker Change: Over and above the wallet recovery, Mark and I can meet very laser focused on ensuring that we're driving revenue growth from a more holistic focus on the wallet share across flow and episodic activity.

Speaker Change: <unk> is the right person to take care of that.

<unk> facing roles in support staff. It includes looking at the productivity of existing bankers and advisers and and those those kind of reductions will start to play out in the subsequent quarters I do want to point out as Jane mentioned this is a growth business for us and so you can see on some of the metrics on <unk>.

Speaker Change: Importantly for our banking franchise.

Speaker Change: Mentioned that we've been generating but the foundations are in line at the intention here from him is to accelerate that.

Speaker Change: And he will focus on increasing our performance intensity driving productivity and disciplined growth and he will keep us firmly on the path towards delivering on our commitment fundamentally improving the operating margin generating high returns and that all important fee revenue.

<unk> 15 of bottom left some of those good signs of investment momentum and I highlight that because as the expenses come down from some of those efficiencies there will be a need for us to continue to invest and replenish low performing or low producing bankers and advisors with with resources that actually can.

Speaker Change: Our next question is from Betsy <unk> Morgan Stanley. Your line is open. Please go ahead.

Great. The revenues, we expect can take advantage of the client opportunity. That's in front of us So long winded way of saying there is some operating efficiency upside for us for sure. It's a combination of the top line and the expense work playing through the balance of the quarters in the year here.

Betsy: Hi, good morning, or yes.

Betsy: Hanging into the afternoon here.

Betsy: Hi, Betsy.

Betsy: <unk>.

I guess a couple of question well.

Betsy: I know, we talked through the institutional securities business already on moving that expense ratio a little bit could we dig in a little bit on the wealth side.

Our next question is from Jim Mitchell at Seaport Global Your line is open. Please go ahead.

Okay. Good morning.

Because the expense ratio there is running a little higher until the useful just to understand the <unk>.

Jean Marc and very much appreciate the comments on your growth opportunities and driving growth, but revenues are often dictated by the macro that it's a little bit out of your control can you talk a little bit about the flexibility on the expenses you have a range in 2026 of 51 to 53. So if revenues are coming in below.

Betsy: Pes or speed or.

Betsy: Timeframe, when we should expect to see that start to inflect, yes.

Speaker Change: Yes, absolutely.

Speaker Change: Some of it just as a reminder, the actions that we've been taking on oak simplification and is also being painting in the wealth business.

The targets is it I guess, a fair to assume you'd be at the very low end of that range or is it and I think there is some revenue growth built in there. So is there some flexibility to the downside to try to get to your targets of a tougher revenue environment. Thanks.

Speaker Change: We will walk through notice periods in the coming weeks and say you'll start you'll see the impact coming through in our head count numbers any wealth in the expense base next next quarter.

Yes look I mean, the top line growth as you've heard us say is a CAGR of 4% to 5%.

Speaker Change: As.

Speaker Change: Mark said in his opening and <unk> been talking about it should be <unk> up.

We put that target out there of 51 to 53 as a range of what we're working towards we're giving you a good sense of how we expect to get there with the two to $2 $5 billion reduction by then we've already signaled a 1 billion and a half thats in front of US. The reality is that if there is softness in revenues that is why we have a range obviously.

Speaker Change: Up to a 30% pre tax margin business and is focused on rationalizing our expense base.

Speaker Change: I'll say that Mark said, turning on the growth engine is enhancing our platforms and capabilities to elevate the client experience.

The volume related expenses would come down with any softness in revenue and depending on the drivers of why that revenue is softening we'd look at the investments that we're making across the business and make sure that those are appropriately calibrated for where we are in the cycle and what we're seeing on the top line with that.

Speaker Change: The heart of the opportunity for US lies with our existing clients. They are an extraordinary client base, but they're under penetrated so a lot of the operating efficiency.

Speaker Change: Frankly going to be is going to come on the revenue side here.

That said and he's taken a number of pretty decisive moves this quarter on the expense side Mark Let me.

That said, we've got to continue to invest in the transformation, we're not going to compromise that that's going to be something that we have to spend on to ensure we continue to get right, but thats kind of how the dynamic works. There is there is a top we've got our mix of businesses that.

Over to you, yes, I mean look I think that the quarter expenses that you see.

Mark: Growth of 3% is not yet reflective of the work that Andy has been steadfast at.

Think we've demonstrated resiliency around if you think about the past couple of years.

Mark: There is still some investment in there in technology and in the platform that's important but I think coming out of the first quarter Youll start to see some of the the reduction in expenses. That's a byproduct of that work and the work has been across the entire expense base.

And we expect those to continue to drive some topline momentum, but we've got levers in case they do.

Okay.

Our next question is from Ebrahim <unk> Bank of America. Your line is open. Please go ahead.

Mark: In the wealth business.

Thank you I guess, just one question Mark on capital. So you talked about $13 million over the Greg minimum.

Mark: So that includes non client facing roles in support staff. It includes looking at the productivity of existing bankers and advisers and and those those kind of reductions will start to play out in the subsequent quarters I do want to point out as Jane mentioned this is a growth business for us and so.

Like you could easily be doing two X the buyback did it in one quarter if not more just I know you don't like to talk about out quarters, but give us a sense of the case this quarter should we expect the pace of buybacks to increase then if you could provide additional color as we think about the rest of the year will be greatly appreciated. Thank you.

You can see on some of the metrics on page 15, the bottom left some of those good signs of investment momentum and I highlight that because as the expenses come down from some of those efficiencies there will be a need for us to continue to invest and replenish low performing low producing bankers and advisors with.

Sure. Yeah look you know and I've said it repeatedly Janus said it repeatedly given where we trade.

We think buying back a smart and we'd like to do as much as we possibly can and as much as makes sense in light of the uncertainty that's out there we have run at about 13, five this quarter that does give us capacity above the 13, 3%, but it's important to keep in mind that there is client demand that will continue to evolve we want to make sure we can support.

Mark: With resources that actually can generate the revenues, we expect can take advantage of the client opportunity. That's in front of us. So long winded way of saying there is some operating efficiency upside for us for sure. It's a combination of the top line and the expense work playing through the balance of the quarters in the year here.

The clients that that want to do business with us whether that'd be in markets, where other parts of the franchise and then there's still uncertainty out there about how the capital regulation evolves.

Mark: Our next question is from Jim Mitchell at Seaport Global Your line is open. Please go ahead.

The good news is we are hearing kind of favorable things about how the Basel III and game proposal could evolve, but that hasnt happened yet it's not finalized it is not in place yet and so we wanted to see how that continues to play out. We're obviously in the midst of the CCAR process, we want to see how that evolves and we will continue to take the buyback decision on a quarter by quarter basis, but we recognize.

James Francis Mitchell: Okay. Good morning.

Jean Marc I very much appreciate the comments on your growth opportunities and driving growth, but revenues are often dictated by the macro that it's a little bit out of your controls can you talk a little bit about.

James Francis Mitchell: The flexibility on the expenses you have a range in 2026 of 51 to 53. So if revenues are coming in below the targets is it I guess, a fair to assume you'd be at the very low end of that range or is it and I think there is some revenue growth built in there. So is there some flexibility to the downside to try to get to your targets in the tougher rather.

That there is an opportunity there and we will get after it just as soon as it makes good sense for us.

Our next question is from Erika Najarian at UBS. Please Amit your line and ask your question.

Hi, good afternoon.

I hear it wrong.

So.

Speaker Change: The environment. Thanks.

Clearly the theme of the.

Speaker Change: Yes look I mean.

The margin on a Q&A Inc.

Speaker Change: The topline growth as you've heard us say is a CAGR of 4% to 5%.

A healthy scepticism about the revenue targets in line with me.

We put that target out there 51 to 53 as a range of what we're working towards we're giving you a good sense of how we expect to get there with the two to $2 $5 billion reduction by then we've already signaled a billion and a half that's in front of US. The reality is that if there is softness in revenues Thats why we have a range obviously.

The expense declines, which.

It's not really us analysts or sort of a little bit parroting, what we're hearing from long only investors that haven't yet jumped into the stock so to that end I guess I'm going to ask <unk> question differently. Then ask a question about card late fees.

How are you balancing clearly your valuation.

Speaker Change: The volume related expenses would come down with any softness in revenue and depending on the drivers of why that revenue was softening we'd look at the investments that we're making across the business and make sure that those are appropriately calibrated for where we are in the cycle and what we're seeing on the topline with.

Demand at the buybacks, we wrapped ramped up from $500 million, but growing revenues at a 4% to 5% CAGR.

It would mean potentially some capital back into the into the business I guess how are you balancing.

What especially given that the demand for buyback is louder at city than any other money center pier and could you give us a sense of like card linked fees are and how that would impact <unk> 1 billion for the year I think you get an earlier implementation in October.

Speaker Change: That said, we've got to continue to invest in the transformation, we're not going to compromise that that's going to be something that we have to spend on to ensure we continue to get right, but thats kind of how the dynamic works. There is there is a top we've got a mix of businesses that I think we've demonstrated resiliency around if you think about the past couple of years.

Yes. Thank you everyone on the first part of the question I, just remind you and everyone else that were planned for the long term here right. So we.

Speaker Change: And we expect for those to continue to drive some topline momentum, but we've got levers in case they don't.

Speaker Change: Okay.

We have set some medium term targets, obviously Jane has recaptured the vision and the strategy I think we're making very good progress against that but we're playing for the long term and what that means is that we have to continue to invest in the franchise. It's why I'm, giving you a range around the expenses at least in part it's why I continue to stress the importance of.

Our next question is from Ebrahim <unk> with Bank of America. Your line is open. Please go ahead.

Ebrahim: Thank you I guess, just one question Mark around capital. So you talked about $13 billion over the break minimum.

Ebrahim: Like you could easily be doing two extra buyback you did in one quarter if not more just I know you don't like to talk about our quarters, but give us a sense of the case this quarter should we expect the pace of buybacks to increase then if you could provide additional color as you think about the disappear with the gateway appreciate it. Thank you.

The transformation and risk and control spend and it's why I started the answer to <unk> question by saying that we want to be sure that we can match the client demand out there where the returns to do so makes sense and so we are having to balance kind of the use of capital and other resources.

Ebrahim: Sure.

Speaker Change: And I've said it repeatedly Janus said it repeatedly given where we trade.

Speaker Change: We think buying back a smart and we'd like to do as much as we possibly can and as much as makes sense in light of the uncertainty that's out there we have run at about 13, five this quarter that does give us capacity above the 13, three but it's important to keep in mind that there is client demand that will continue to evolve we want to make sure we can support.

Against that longer term strategic objective and utilize it where it makes sense and generates good returns against the idea of returning that to shareholders and so we'll continue to do that it's an it's an everyday assessment, it's an everyday discussion with the teams frankly, it's why things like <unk>.

Speaker Change: The clients that that want to do business with us whether that'd be in markets, where other parts of the franchise and then there is still uncertainty out there about how the capital regulation evolves.

The revenue sharing has been put in place to intensify the discussion around the clients that we're using balance sheet with and ensuring that we're driving broader revenues across the platform and so that's kind of how we are operating in terms of making that trade off on a regular basis. In addition to obviously the broader regulatory environment.

Speaker Change: The good news is we are hearing kind of favorable things about how the Basel III and gained proposal could evolve but that hasnt happened yet it's not finalized its not in place yet and so we wanted to see how that continues to play out. We're obviously in the midst of the CCAR process, we want to see how that evolves and we'll continue to take the buyback decision on a quarter by quarter basis, but we recognize.

That we're in in.

In terms of the.

The second part of your question around late fees, we haven't disclosed kind of the dollar amount of the late fees. What I would say is that we did and have factored that into the $80 billion to $81 billion.

That there is an opportunity there and we'll get after it just as soon as it makes good sense for us.

And the only thing I would add to that is it did kind of it's being implemented a bit earlier than what we had assumed but again.

Speaker Change: Our next question is from Erika Najarian at UBS. Please.

Ask your question.

Erika Najarian: Hi, good afternoon.

It's inside of the range of the guidance that I've given you for topline topline revenue for the year.

Erika Najarian: Aragon, Okay. So.

Erika Najarian: Clearly the theme of the.

Just as a reminder, 85% of our two car portfolio as a prime.

Erika Najarian: The margin on the Q&A, Inc.

Aragon: A healthy scepticism about the revenue targets in line with me.

And in Crs way you tend to see some of the lower income households, we do have that.

Aragon: Or the expense declines, which.

Aragon: It's not really a analyst day, where I started a little bit parroting, what we're hearing from long only investors that haven't yet John.

The economics of the sea change will be shared with our partners in Crs.

Aragon: Jumping to the stock so to that end I guess I'm going to ask <unk> question differently than asked a question about card late fees.

We want our customers to pay on time with a number of mechanisms to do so but in terms of the economics I think we along with the rest of the industry will be putting in mitigating actions over time, some of which we've already begun to implement.

Aragon: How are you balancing.

Aragon: Your valuation.

Demand the buybacks, we wrapped ramped up from $500 million, but growing revenues at a 4% to 5% CAGR.

With that thank you.

Our next question is from John Mcdonald.

Aragon: It would mean potentially some capital back.

This research your line is open. Please go ahead.

Aragon: Back into the into the business I guess, how are you balancing.

Thanks.

I was hoping you could give a little more color on how you're feeling about the credit card charge offs you maintained the outlook for the year you mentioned the higher end on retail services do you still feel like you'll see a peak this year and what kind of metrics are you looking at in terms of delinquency formation and seasoning.

Aragon: What especially given that you know the demand for buyback as ladder at city than any of the money center here and could you give us a sense of like card linked fees are.

Aragon: And how that would impact <unk> 1 billion for the year.

Aragon: You get an earlier implementation in October.

Inform that view that you might see the peak in card charge offs. This year.

Yes.

Speaker Change: Thank you everyone on the first part of the question I, just remind you and everyone else that were planned for the long term here right. So we have set some medium term targets. Obviously Jane has recaptured the vision and the strategy I think we're making very good progress against that but we're playing for the long term and what that means is that we have to continue.

Yes, Thanks John.

We have obviously continue to manage this portfolio very actively we've seen continued topline growth. We have seen continued average interest earning balance growth. We've talked about how we expect for the cost of credit to to normalize and we've seen that continue to happen the range that we have.

To invest in the franchise, it's why I'm, giving you a range around the expenses at least in part is why I continue to stress the importance of protecting the transformation and risk and control spend and it's why I started the answer too Abrahams question by saying that we want to be sure that we can match the client demand.

Given on branded cards, we are inside of that range. When you. When you look at the spend across the portfolio as the spend is really happening with the affluent customers more so than anything else and so we are watching the lower income customer profile or customers that we have but again as Jane mentioned, we tend to skew to the higher end to begin with.

Speaker Change: Out there where the returns to do so makes sense and so we are having to balance kind of the use of capital and other resources against that longer term strategic objective and utilize it where it makes sense and generates good returns against the idea of returning that to shareholders and so this is will.

And we're really seeing.

The pressure is.

Where I mentioned in terms of retail services and so there.

<unk> current npls are higher than the high end of our full year range that I've, given but if you look back.

Speaker Change: Can you to do that it's an it's an everyday assessment, it's an everyday discussion with the teams frankly, it's why things like the revenue sharing has been put in place to intensify the discussion around the clients that we're using balance sheet width, and ensuring that we're driving broader revenues across the platform and.

That is not inconsistent with seasonality that we've seen in the past in that portfolio, where the first two quarters are higher than the back half of the year in part because of coming out of the holiday season, and how the and how losses tend to mature our materialized through that process and so I would expect.

Speaker Change: So that's kind of how we are operating in terms of making that trade off on a regular basis. In addition to obviously the broader regulatory environment that we're that we're in in.

So not only see them be higher than the average range in Q1, but also in Q2 before coming down and then I still expect that in 2025, you tend to see them further normalize and come down a bit.

Speaker Change: In terms of B. The second part of your question around late fees, we haven't disclosed kind of the dollar amount of the late fees. What I would say is that we did and have factored that into the $80 billion to $81 billion.

Half of these ranges, but look the reality is that we continue to watch it and the factors that are out there that are important include how unemployment evolves.

What happens with inflation, what happens with interest rates and those will be important factors as to how the loss rates continue to.

Speaker Change: And the only thing I'd add to that is it did kind of it's being implemented a bit earlier than what we had assumed but again.

Continue to evolve over time, I think the final point I'd make and I mentioned it in the in the prepared remarks.

Speaker Change: It's inside of the range of the guidance that I've given you for a topline topline revenue for the year.

Our remarks is that we have to remember that the loss rates in both portfolios reflect kind of multiple vintages maturing at the same time.

Speaker Change: Just as a reminder, our 85% of our two car portfolio as a prime.

Speaker Change: And in Crs way you tend to see some of the lower income households, we do have that are the.

And Youll recall and this is an industry dynamic through the Covid pandemic period losses were at an all time low payment rates at all time highs supported by government stimulus and now coming out of that we're seeing the COVID-19 vintages mature.

Speaker Change: The economics of the sea change will be shared with our partners and Cri. So are we.

Speaker Change: We want our customers to pay on time, a number of mechanisms to do so but in terms of the economics I think we along with the rest of the industry will be putting in mitigating actions over time, some of which we've already begun to implement.

At a lagged pace from what would be normal and we're seeing the incremental acquisitions that we've done start to mature at their normal pace and so these loss rates are exacerbated by that impact and Thats an important factor, we can't lose sight of but the bottom line is that we are watching it on the macro factor.

Thank you.

John Eamon McDonald: Our next question is from John Mcdonald Autonomous Research. Your line is open. Please go ahead.

John Eamon McDonald: Thanks, Mark I was hoping you can give a little more color on how you're feeling about the credit card charge offs you maintained the outlook for the year you mentioned the higher end on retail services do you still feel like you'll see a peak this year and what kind of metrics are you looking at in terms of delinquency formation and seasoning.

As matter, we feel good about the quality mix that we have in and we'll kind of see how things evolve from here.

Okay and on the branded side, you still expect kind of the peak this year youre still inside of the range for the full year and expect 2025, you could move lower on the brand and charge offs.

John Eamon McDonald: To inform that view that you might see the peak in card charge offs. This year.

Yes, yes, that's still kind of expect that that trend line of peaking and then kind of moving a bit lower than branded.

Mark: Yes, Thanks John.

Mark: We have obviously continued to manage this portfolio very actively we've seen continued topline growth. We have seen continued average interest earning balance growth. We've talked about how we expect for the cost of credit to to normalize and we've seen that continue to happen the range that we've given them.

Our next question is from Ken Houston at Jefferies. Your line is open. Please go ahead.

Great. Thanks can I follow up on the on the card line of thinking and just ask Mark to talk a little bit about just cost of credit.

Mark: In branded cards, we're inside of that range. When you when you look at the spend across the portfolios. The spend is really happening with the affluent customers more so than anything else and so we are watching the lower income customer profile or customers that we have but again as Jane mentioned, we tend to skew to the higher end to begin with where we are.

We did still see some card related build this quarter, even with the comments you just made and seasonal softer loan growth. So just from a bigger picture respective.

How do you think continue to think about reserve builds from here and how that informs your outlook for cost of credit.

Yeah sure look I think that.

Mark: Seeing.

When I think about the reserve builds.

Pressure.

Mark: As where I mentioned in terms of retail services and so there. The current npls are higher than the high end of our full year range that I've, given but if you look back.

I think it's the same factors that come into play. So obviously the view on the macros important and right now if you think about some of the key macro factors that impact the cards portfolio. The unemployment assumption weighted is about 5%.

Mark: That is not in consistent with seasonality that we've seen in the past in that portfolio, where the first two quarters are higher than the back half of the year in part because of coming out of the holiday season, and how the and how losses tend to mature have materialized through that process and so I would expect.

The downside is about 7% kind of weighted over the period.

And so feel how that evolves will be an important factor.

Now <unk> will be an important consideration here for this portfolio, but also what happens with volumes becomes a factor of factor on reserve builds in <unk> and how important.

Mark: So not only see them be higher than the average range in Q1, but also in Q2 before coming down and then I still expect that in 2025, you tend to see them further normalize and come down a bit.

Horton or how much they increase or decrease and then the final piece is mix and is kind of related to that wall revolver a point.

Mark: Off of these ranges, but look the reality is that we continue to watch it and the factors that are out there that are important include how unemployment evolves.

As we see the mix evolved from trans actors to revolvers, that's going to play into how much of a reserve from a lifetime point of view, we have to continue to build and so it's why I mentioned on Jon's question the importance of looking at the <unk>.

Mark: What happens with inflation, what happens with interest rates and those will be important factors as to how the loss rates continue to.

Mark: Continue to evolve over time, I think the final point I'd make and I mentioned it in the in the prepared.

Interest rates looking at what's happening with inflation washing the lower income customer base, because all of those things combined with how we think about the scenarios and the waiting will be a factor on the reserves, but I will say.

Mark: Our remarks is that we have to remember that the loss rates in both portfolios reflect kind of multiple vintages maturing at the same time.

Ken as I as I sit here and think about.

What we have in the quarter I feel very good about the reserve levels.

And you will recall and this is an industry dynamic through the Covid pandemic period losses were at an all time low payment rates at all time highs supported by government stimulus and now coming out of that we're seeing the COVID-19 vintages mature.

Eight 2% for.

Combined kind of.

ACL to loan ratio feels right for the mix of this portfolio and we will continue to watch it.

Okay and a separate question on TTS.

NII related to TTS has been remarkable with rising rates. This quarter granted there was a lesser day and there could be currency stuff in there the first quarter that it step back I'm, just wondering like where is that.

Mark: At a lagged pace from what would be normal and we're seeing the incremental acquisitions that we've done start to mature at their normal pace and so these loss rates are exacerbated by that impact and that's an important factor we can't lose sight of but the bottom line is that we're watching it on the macro factor.

Asset liability sensitivity of the TTS NII and what are your thoughts about that piece of the NII puzzle going forward. Thanks.

Mark: <unk> matter we.

Sure, Yes, I mean, I think I'd say a couple of things you do we do have kind of some Argentina, playing through the NII line I will say that the best way to think about it as kind of the underlying beta activity and we have seen this as a corporate client. It is an institutional client we have seen betas, particularly.

Mark: We feel good about the quality mix that we have in and we'll kind of see how things evolve from here.

Mark: Okay and on the branded side, you still expect kind of the peak this year, you're still inside of the range for the full year and expect 2025, you could move lower on the branded charge offs, yes.

Mark: So, yes, I still kind of expect that that trend line of peaking and then kind of moving a bit lower than branded.

In the U S ad.

Add kind of normalize or terminal levels, and playing a bit through that.

Kenneth Michael Usdin: Our next question is from Ken Houston Jefferies. Your line is open. Please go ahead.

We're seeing betas outside of the U S.

<unk> to increase as it relates to the TTS client base, but all of that again is inside of the range that we've talked about I don't expect to see kind of year over year growth on the NII line anywhere close to kind of what we've seen in prior years prior quarters, just in light of kind of how the rate environment evolved.

Kenneth Michael Usdin: Okay great.

Kenneth Michael Usdin: Great. Thanks can I follow up on the on the card line of thinking and just ask you Mark to talk a little bit about just cost of credit.

Kenneth Michael Usdin: We did still see some card related build this quarter, even with the comments you just made and seasonal softer loan growth. So just from a bigger picture respective.

And in light of kind of quantitative tightening and tightening and the impact on deposit levels.

How do you think continue to think about reserve builds from here and how that informs your outlook for cost of credit.

Last point I'd make on this is we will continue to drive and see growth as it relates to the operating deposits and that'll be an important important tailwind that kind of plays through.

Speaker Change: Yeah sure look I think that.

Speaker Change: When I think about the reserve builds.

Speaker Change: I think it's the same factors that come into play. So obviously the view on the macros important and right now if you think about some of the key macro factors that impact the cards portfolio.

Our next question is from Vivek, Tunisia at J P. Morgan. Your line is open. Please go ahead.

Hi, Thank you.

Jean Marc just a question maybe.

Speaker Change: Unemployment assumptions weighted is about 5% of that.

Ards.

Tina.

Speaker Change: The downside is about 7% kind of weighted over the period and.

You had.

You've shown a 100 million in NII.

Total net income benefit of 500 million after tax so probably implying about 500 600 of noninterest income benefit which line item, So which segment did that come through and is that sustainable.

Speaker Change: And so feel how that evolves will be an important factor how HP eyeballs will be an important consideration here for this portfolio, but also what happens with volumes becomes a factor of factor on reserve builds in <unk> and how important or how much they increase or decrease and then.

Yes.

Theres a mix obviously of.

Speaker Change: Final pieces mix and is kind of related to that wall revolver a point.

Things that are driving that net income including a.

A tax impact on the heels of last year Argentina.

Speaker Change: As we see the mix evolve and trans actors to revolvers, that's going to play into how much of a reserve from a lifetime point of view, we have to continue to build and so it's why I mentioned on John's question.

Devaluation activity that's in that line, but the short answer is that.

Do you think about the nature of the business that we do in Argentina.

Speaker Change: Portance of looking at the interest rates looking at what's happening with inflation watching the lower income customer base, because all of those things combined with how we think about the scenarios and the waiting will be a factor on the reserves, but I will say Ken.

Is a big part of our institutional client relationships.

And the primary activity is include some of the TTS type of activities that.

That we've talked about liquidity management payments cause.

Within the services business and so you would see a good portion of the activity in Argentina, playing through the services business some of it in markets as well, but again the majority of the activity in services.

Speaker Change: <unk> as I sit here and think about.

Kenneth Michael Usdin: What we have in the quarter I feel very good about the reserve levels.

Kenneth Michael Usdin: Eight 2%.

Kenneth Michael Usdin: Combined kind of <unk>.

Kenneth Michael Usdin: L to loan ratio feels right for the mix of this portfolio and we'll continue to watch it.

Great as a reminder, can I. Please remind everyone just one question.

Okay and a separate question on TTS.

Per person. Thank so much. Our next question is from Scott <unk> at 10% of your line is open. Please go ahead.

NII related to TTS has been remarkable with rising rates. This quarter granted there was a lesser day and there could be currency stuff in there the first quarter that step back I'm, just wondering like where is that in its asset liability sensitivity of the TTS NII and what are your thoughts about that piece of the ni puzzle going forward. Thanks.

Hi, everyone. Thanks for taking the question.

Mark I think you touched on at least a component of this a couple of questions ago, but maybe just broadly an update on your rate positioning I guess I only ask because it looks like we might be starting to diverge in terms of global rate trajectory. As you know if we potentially go lower in Europe, but higher here for a while in the aggregate to these kind of complicate your management or it makes you feel better or worse.

Speaker Change: Sure, Yes, I think I'd say a couple of things you do we do have kind of some Argentina, playing through the NII line I will say that the best way to think about it as kind of the underlying beta activity and we have seen this as a corporate client. It is an institutional client we have seen betas.

The overall.

NII momentum for the company.

Yes, let me, let me try and take it in.

In two pieces I guess, so so one is if I think about how the rate implies have evolved from the three to six to now something a little bit north of one in the context of what I expect for our performance.

Speaker Change: Particularly in the U S ad.

Speaker Change: Add kind of normalize or terminal levels, and playing a bit through that.

Speaker Change: We're seeing betas outside of the U S continued to increase as it relates to the TTS client base, but all of that again is inside of the range that we've talked about I don't expect to see kind of year over year growth on the NII line anywhere close to kind of what we've seen in prior years prior quarters.

It doesn't have a material impact on the guidance that I've given of $80 million to $81 million and in part that's because as I think about the timing for the planned cuts which was generally back loaded.

As well as some of the other factors that play through so Argentina, just announced a policy rate reduction yesterday or a couple of days ago.

Speaker Change: Just in light of kind of how the rate environment evolved and in light of kind of quantitative tightening and tightening and the impact on deposit levels.

Speaker Change: Last point I'd make on this is we will continue to drive and see growth as it relates to the operating deposits and that'll be an important important tailwind that kind of plays through.

If rates are a bit higher for longer we'll watch how the betas continue to evolve I mentioned earlier the late fees for the cards business happened a bit soon or late these are actually booked in our in our NII line and so those factors put me in a place where I feel like there'll certainly be puts.

Speaker Change: Our next question is from the back to nature at J P. Morgan. Your line is open. Please go ahead.

Speaker Change: Hi, Thank you.

And takes around.

Speaker Change: Jean Marc just a question maybe.

How that rate curves evolves and therefore, I'm very comfortable kind of leaving the guidance where it is to answer your broader question in terms of kind of how we're positioned and I would point you to the 10-K that we have that's out in that 10-K, we offer as we have before a number of <unk>.

Argentina.

Speaker Change: Had.

Speaker Change: You've shown 100 million in NII.

Total net income benefit of 500 million after tax show, probably implying about 500 600 of noninterest income benefit which line item.

Sorry scenarios for plus or minus 100, 100 basis points and what it means for our for our business and if you look at it youll see that for the aggregate firm for Citi U S dollar and non U S. Dollar that were asset sensitive so as rates increase we should see an increase in.

Speaker Change: Which segment did that come through and is that sustainable.

Yeah look there's a mix obviously of.

Speaker Change: Things that are driving that net income, including a a tax impact on the heels of last year Argentina.

Speaker Change: Devaluation activity that's in that line, but the short answer is that if you think about the nature of the business that we do in Argentina.

Our NII performance, but if you look at the breakdown and that's about I think it was about $1 billion for something in terms of the impact of that move, but if you look at the breakdown.

Speaker Change: It is a big part of our institutional client relationships and.

Speaker Change: And the primary activities include some of the TTS type of activities that that we've talked about to liquidity management payments.

What the what the breakdown will show is that for U S. Dollar at this point, we're net neutral.

So if rates were to go up rates were to go down no material impact as it relates to our revenue for the non U S. Dollar were still quite asset sensitive right and so that should give you some sense for that and we recognize the limitations with IRI. It assumes a 100 basis point.

Speaker Change: Custody within the services business and so you'd see a good portion of the activity in Argentina, playing through the services business some of it in markets as well, but again the majority of the activity in services.

Speaker Change: Great as a reminder, can I. Please remind everyone. Just one question per person. Thank so much. Our next question is from Scott seafood that 10% of your line is open. Please go ahead.

Parallel shift across the curve, the static balance sheet et cetera, but that should give you some sense for the implications.

The rate curves move rate curve moves as it relates to our book of business.

Scott: Hi, everyone. Thanks for taking the question.

Scott: Mark I think you touched on at least a component of that a couple of questions ago, but maybe just broadly an update on your rate positioning I guess I only ask because it looks like we might be starting to diverge in terms of global rate trajectory. As you know if we potentially go lower in Europe, but higher here for a while you know in the aggregate to these kind of complicate your management or it makes you feel better or worse about.

Our next question is from Gerard Cassidy of RBC capital markets. Your line is open. Please go ahead.

Hi, Mark and James.

Okay. Thank you Alex.

Mark can you share with us.

Obviously, the conversation around the credit card charge offs and the credit quality there if we could shift over to the corporate side, which obviously is very strong.

Scott: The overall.

Our momentum for the company.

Mark: Yeah, Let me, let me try and take it in.

<unk> seen spreads narrow in the markets.

Mark: In two pieces I guess, so one is if I think about how the rate implies have evolved from the three to six to now something a little bit north of one in the context of what I expect for our performance.

High yield corporate debt leverage debt et cetera.

Very robust out there, but around the global geopolitical risk do you think the spreads will be widening.

Can you guys share with us what youre seeing on the corporate side in terms of competition, our underwriting San is getting a little weaker now as people are trying to grow their books, what are you seeing on that front.

Mark: It doesn't have a material impact on the guidance that I've given of 80 to 81 billion.

Mark: And in part that's because as I think about the timing for the planned cuts, which was generally back loaded.

Look we're still seeing.

Good demand for corporate credit and.

Mark: As well as some of the other <unk>.

What I'd say is that we've been very disciplined about where we want to play on the risk profile here, we've been very disciplined in terms of the investment grade.

Mark: Factors that played through so Argentina, just announced day, a policy rate reduction yesterday or a couple of days ago.

Large multinationals that we that we serve.

Mark: If rates are a bit higher for longer we'll watch how the betas continue to evolve I mentioned earlier the late fees for the cards business happened a bit soon or late these are actually booked in our in our NII line and so those factors.

And that hasn't that hasnt shifted from an underwriting point of view, we have seen spaces like private credit pick up quite a bit.

And that I think will continue to evolve I think importantly, as we think about our corporate lending activity.

Put me in a place where I feel like they will certainly be puts and takes around.

Youll note that actually we've been very disciplined about how we wanted to deploy balance sheet.

Mark: How that rate curves evolves and therefore, I'm very comfortable kind of leaving the guidance where it is to answer your broader question in terms of kind of how we're positioned.

And part of that again is a byproduct of the revenue sharing that we've implemented where theres been healthy debate and discussion around the names that we want to continue to serve in whether they are positioned to take advantage of the broader platform that we have and so.

Mark: Point you to the 10-K that we have that's out and in that 10-K, we offer as we have before a number of scenarios for plus or minus 100, 100 basis points and what it means for our for our business and if you look at it youll see that for the aggregate firm for Citi.

I think the space will continue to evolve I think theres been good healthy demand. Despite continued strong balance sheets and part of that demand has been because of where rates are likely likely to go and continue to evolve and I think we're well positioned to be thoughtful about that with Jane you may want to add a couple of points to it yes.

Mark: The U S dollar and non U S. Dollar that were asset sensitive so as rates increase we should see an increase in our NII performance, but if you look at the breakdown and that's about I think it was about $1 billion for something in terms of the the impact of that move, but if you look at the <unk>.

Yes around the world the corporate client base.

And our commercial banking mid market client base have very healthy balance sheet.

And we are also seeing market access gradually opening up as well, which is which is also helpful. For the quality issue is across all asset classes, where you're seeing both the issue is taking advantage as.

Mark: Take down.

Mark: What the what the breakdown will show is that for U S. Dollar at this point, where we're neutral.

Mark: So if rates were to go up rates were to go down no material impact as it relates to two hour revenue or the non U S. Dollar.

As well as the investors that deals as well.

If a subscriber.

That's also been beneficial as corporates think about.

Mark: So quite asset sensitive right and so that should give you some sense for at that and we recognize the limitations with IRI. It assumes a 100 basis point parallel shift across the curve the static balance sheet et cetera, but that should give you some sense for the implications.

Their financing needs and the other piece I just pop out there as well.

Yep.

The recent large M&A announcements.

In multiple industries.

Sign of rising confidence from Ceos, and boards and active discussions are increasing as supportive capital markets create confidence as people think about larger strategic transactions. This is going to feed.

Mark: The rate curves move rate curve moves as it relates to our book of business.

Acquisition Finance bridge financing and some of the higher margin capital market.

Mark: Our next question is from Jared Cassidy of RBC capital markets. Your line is open. Please go ahead.

And lending activity as well.

Gerard Sean Cassidy: Hi, Mara Cringing.

Look forward I think is recognizing the shift in some of the drivers.

Gerard Sean Cassidy: Thank you Rod.

Gerard Sean Cassidy: Yeah.

Gerard Sean Cassidy: Mark can you share with us.

From company, just investing refinancing looking at where they can diversify that capital raising in in different quarters, but I just close by saying I couldn't agree with you more about geopolitical risks and facility I think the market too.

Obviously, a lot of the conversation around the credit card charge offs and the credit quality. There if we could shift over to the corporate side, which obviously is very strong we've seen spreads narrow in the markets.

Gerard Sean Cassidy: High yield corporate debt leverage debt et cetera.

Gerard Sean Cassidy: Very robust out there, but around the global geopolitical risk do you think the spreads will be widening and you guys share with us what.

But it <unk> it.

With risk pricing on some of these factors.

Gerard Sean Cassidy: You are seeing on the corporate side in terms of competition, our underwriting span is getting a little weaker now as people are trying to grow their books, what are you seeing on that front.

Our next question is from Matthew O'connor with Deutsche Bank. Your line is open. Please go ahead.

Hi.

Prepared remarks, you talked about in turn providing certain efforts.

Look we're still seeing.

Gerard Sean Cassidy: Good demand for corporate credit and what.

Regarding regulatory processes and data on slide four here and was just wondering if you can elaborate on.

Gerard Sean Cassidy: What I'd say is that we've been very disciplined about where we want to play on the risk profile here, we've been very disciplined in terms of the investment grade.

I guess, what youre doing or planning to do differently.

On that front and if there's any meaningful financial impact. Thank you.

Gerard Sean Cassidy: Large multinationals that we that we serve.

Gerard Sean Cassidy: And that hasn't that hasn't shifted from an underwriting point of view, we have seen spaces like private credit pick up quite a bit.

Yes look.

I think Matt as we've talked about many times. It transformations are top priority. It will be for the next Cvs is foundational for all future success. Both in terms of delivering the strategy on the medium term financial path.

Gerard Sean Cassidy: I think we will continue to evolve I think importantly, as we think about our corporate lending activity.

Gerard Sean Cassidy: Youll note that actually we've been very disciplined about how we wanted to deploy balance sheet.

And we've been making significant investments behind it as well is.

Gerard Sean Cassidy: And part of that again is a byproduct of the revenue sharing that we've implemented where theres been healthy debate and discussion around the names that we want to continue to serve in whether they are positioned to take advantage of the broader platform that we have and so.

Not only on the consent order, but also making sure we bought this modern efficient infrastructure.

We're currently in.

A very large body of work upgrading our data architecture, automating manual controls and processes consolidating fragmented.

Gerard Sean Cassidy: I think the space will continue to evolve I think theres been good healthy demand. Despite continued strong balance sheets and part of that demand has been because of where rates are likely likely to go and continue to evolve and I think we're well positioned to be thoughtful about that but Jane you may want to add a couple of points to it yeah.

That forms and all of these help enhance business performance more broadly not just the risk and control in.

In the medium term.

As I've said, though there are a few areas, where we are intensifying our efforts.

Such as the automation of certain regulatory processes and data remediation, particularly related to regulatory reporting we're committed to getting this right.

Look around the world the corporate client base.

Jane: And our commercial banking mid market client base have very healthy balance sheet.

Jane: And if we are also seeing market access gradually opening up as well, which is which is also helpful for them to put the quality issue is across all asset classes, where you're seeing but the issue is taking advantage as.

The auction the org changes will help us with execution on that.

And making sure that where we are.

We have the <unk>.

Impetus in everything that we need behind it investments that we made we keep a close eye on execution, making sure. We thought the right level of Resourcing and expertise and we will invest what we need to do to make sure that we address these different concerns I can't go into much more detail in terms of <unk> CSI obesity, but.

Jane: As well as the investors that it was a well oversubscribed.

Jane: So that's also been beneficial as corporates think about there.

Jane: Our financing needs.

Speaker Change: The other piece I, just pop out there as well.

Speaker Change: Yeah.

Speaker Change: The recent large M&A announcements in multiple industries.

Something of this magnitude you would expect us to have some areas, where we have good progress and others, where we need to intensify efforts.

Speaker Change: <unk> of rising confidence from Ceos, and boards and active discussions are increasing as supportive capital markets create confidence as people think about larger strategic transactions. This is going to feed.

I think that I think thats exactly right, but you don't you would also expect that in this type of environment on the heels of the regional bank stress last year that we're looking at stress scenarios, we are enhancing our CCAR processes, we're enhancing our resolution and recovery processes all of those things just to kind of to make sure that we are.

Speaker Change: Acquisition Finance bridge financing and some of the higher margin capital markets and.

Speaker Change: And lending activity as well so as we look forward I think is recognizing the shift in some of the drivers.

During up capabilities and you would expect that across the industry quite frankly.

Speaker Change: From company, just investing on refinancing Nokia, where they can diversify their capital raising and in different quarters, but I'd just close by saying I couldn't agree with you more about geopolitical risks and facility I think the market too.

Our next question is from Sohu Martinez at HSBC. Your line is open. Please go ahead.

Hi, good afternoon.

They'll change tact, a little protect a little bit here, but im curious if theres any update.

Speaker Change: But eight two benign and it's it with.

On the Mexican IPO and more specific I'm kind of curious how set in stone.

Speaker Change: They are based pricing on some of these factors.

<unk> process is you will have a new administration and even if the candidate from the same party.

Speaker Change: Important for us to say.

Speaker Change: Yes.

Speaker Change: Is from Mathew Oconnor with Deutsche Bank. Your line is open. Please go ahead.

She may have a less confrontational view of the private sector.

Unknown Executive: Hi in your prepared remarks, you talked about in corn profiling.

It would be more allowing of low bank global bank to extract value.

Unknown Executive: Efforts.

Regarding our regulatory processes and data on slide four here and let's just wondering if you can elaborate on.

From buying a bank.

I guess, if the facts on the ground were to change.

Would you be open to.

Unknown Executive: I guess, what youre doing or trying to do differently.

Sales potentially being back on the table because it does seem like this is a situation where a private market valuation could be.

Unknown Executive: On that front and if there's any meaningful financial impact. Thank you.

Higher even materially higher than public market valuation.

Speaker Change: Yes, and yes.

Speaker Change: I think Matt as we've talked about many times. It transformations are top priority. It will be for the next C. D is it is foundational for all future success, both in terms of delivering the strategy in the medium term financial path.

The guiding principle that we have and we've had all along is making sure that we make a decision here that is in the best interest of all shareholders. It makes the most sense for them.

Yes.

And we'd be making significant investments behind it.

You never say never but we are very focused on the IPO path here. We believe it is the right one.

Speaker Change: Well, it's not.

The consent order, but also making sure we bought this modern efficient infrastructure.

All shareholders.

We are well on track and the path in Mexico, We are very pleased that Britain.

Speaker Change: And we're currently deep into.

Speaker Change: Very large body of work upgrading at the age of architecture, automating manual controls and processes consolidating fragmented tech platforms and all of these help enhance our business performance more broadly not just at risk and control.

Sure.

Panamax chairman.

To help guide the IPO process.

We announced the management teams for the two banks earlier this quarter, we are far down the path of the technological separation of both banks and then the full legal separation in the second half of the year.

Speaker Change: In the medium term.

Speaker Change: As I've said, though there are a few areas, where we are intensifying our effort.

Speaker Change: Such as the automation of certain regulatory processes and data remediation, particularly related to regulatory reporting we're committed to getting this right.

The elections coming up fairly shortly.

But we're not anticipating that we would be aviation from the IPO path that is the path that we're on at the moment.

Speaker Change: You may all be all changes will help us with execution on that.

I'll never say never.

But we do believe that this is the right one.

Speaker Change: And making sure that we're.

We will keep an eye on what's happening in Mexico, as we always do.

We have the.

The impetus in everything that we need behind it investments that we made we keep a close eye on execution, making sure. We got the right level of Resourcing and expertise and we will invest what we need to do to make sure that we address these different concerns I can't get into much more detail in terms of CSI I hope, it's safe but.

Our next question is from Chris Cholmski at Oppenheimer. Please go ahead.

Good afternoon. Thanks, just a quick one for Mark.

Obviously, you had talked about bending the cost curve between the third and the fourth quarter of this year and on this call I thought I heard you say, it's basically been that second quarter should be down and we should be sequentially lower from here. So does it just happened six months earlier or is there still some other bending that comes late this year.

Speaker Change: Yep.

Speaker Change: This magnitude you would expect us to have some areas.

Speaker Change: Good progress and others, where we need to intensify efforts.

Speaker Change: I think that I think thats exactly right, but you would also expect that in this type of environment on the heels of the regional bank stress last year that we're looking at stress scenarios, we are enhancing our CCAR processes, we're enhancing our resolution and recovery processes all of those things just to kind of to make sure that we're sure.

Sure.

I'll take that.

I want to hit that one.

Downward.

I'll take the I'll take the win.

A downward trajectory from here.

Through the through the end of the year in line with the guidance of $53 five to 53, eight and so so yes.

Speaker Change: During up capabilities and you'd expect that cross the industry pipeline.

Speaker Change: Okay.

Speaker Change: Our next question is from Sohu Martin Evans HSBC. Your line is open. Please go ahead.

Our next question is from Stephen Ju backup Wolfe Research. Your line is open. Please go ahead.

Hey, good afternoon.

Martin Evans: Hi, good afternoon.

Steve Martin David.

Martin Evans: They'll change tact, a little protect a little bit here, but I'm curious if there's any update.

Hey, James Hey, Mark did wanted to ask on DFAST and SCB just recognizing this will be the last opportunity before the results come out.

Martin Evans: On the Mexican IPO and more specific I'm kind of curious how set in stone.

On the macro scenario further assumptions look quite similar to last year, where just given the significant transformation that's underway repositioning actions, which admittedly depressed earnings last year wanted to get a sense as to whether there are any factors that could result in greater SCB volatility in the coming exam and just broader thoughts.

The IPO process is you will have a new administration and even if the candidate from the same party.

Martin Evans: She may have a less compensation a view of the private sector.

Martin Evans: Perhaps be more allowing of low bank local bank to extract value.

Martin Evans: From buying a bank.

Martin Evans: I guess, if the facts on the ground were to change.

On the longer term trajectory for the SUV, just given New York simplification efforts that are underway.

Martin Evans: Would you be open to a sale potentially being back on the table because it does seem like this is a situation where a private market valuation could be higher.

Yes, Stephen the first part of your question is just impossible to answer to be to be candid with you right I mean, it's.

Martin Evans: Higher even materially higher than our public market valuation.

We obviously have an internal base scenario, we've run we have a severely adverse scenario that we've run.

Martin Evans: The guiding principle that we havent made pad all along is making sure that we make a decision here that is in the best interest of our shareholders. It makes it makes sense for them.

We have provided our balance sheet as part of the submission, but ultimately the regulators have to run through their models. The information that we've provided and that informs what happens with the stress capital buffer and we don't have as much transparency to that as we'd like and so really hard to call at this stage. The second part of your question.

We are yeah. It never say never but we are very focused on the IPO path here. We believe it is the right one for all shareholders.

We are well on track and in the past in Mexico. We are very pleased to bring that JJ Shaw and I said Panamax chairman to help guide the IPO process.

I think as I think is spot on and I kind of alluded to.

In my prepared prepared remarks in that.

We have the medium term targets that we've set and we're still in the midst of kind of the execution of our strategy. The evolution of the business mix in the business model.

Martin Evans: When we announced the management teams the two banks earlier this quarter, we are far down the path.

Martin Evans: The cheaper oil separation of both banks and then the full legal separation in the second half of the year.

Mix towards more consistent predictable and repeatable revenue streams that would impact PNR, the simplification, which obviously plays through an expense base that will be lower when we get to.

Obviously, the elections coming up fairly shortly.

Martin Evans: But we're not anticipating that we would be <unk> from the IPO path that that is the path that we are on at the moment.

That medium term period, so all of those things the divestitures and kind of what that means and how that might impact the G. SIB score and the like and the freeing up of capital of which we've already freed up $6 billion or so and so all of those things are kind of yet to have been factored in.

Speaker Change: I'll never say never.

Speaker Change: But we do believe that this is the right one.

We will keep an eye on what's happening in Mexico as they always do.

And we believe will be beneficial to the FCB over the medium term.

Our next question is from.

Oppenheimer: Our ski at Oppenheimer. Please go ahead.

Oppenheimer: Thanks, just a quick one for mark.

Our next question is from Mike Mayo at Wells Fargo. Your line is open. Please go ahead.

Oppenheimer: Previously you had talked about bending the cost curve between the third and the fourth quarter.

Hi, a follow up Mark you said.

Oppenheimer: This year and on this call I thought I heard you say, it's basically bent that second quarter should be down and we should be sequentially lower from here. So it did it just happened six months earlier or is there still some other.

GTS.

We said, we will have growth and operational deposits.

And.

Just wondering what gives you such confidence that you will or is that accelerating or the same pace or what.

Oppenheimer: Bending that comes late this year.

We have seen growth in the quarter in operating deposits. The confidence comes from the focus that we've had with our with our existing clients as well as the growth we've seen with new clients doing more with existing in more countries.

I'll take it I'll take that.

Speaker Change: I want to hit that one.

Speaker Change: Downward or down no I mean, I'll take the I'll take the win.

A downward trajectory from here through the through the end of the year in line with the guidance of 53, and a half to 53 eight and so so yes.

More deeply penetrating the commercial middle market space and so we've been very thoughtfully focused on deposits that obviously gives us the most value and also provide the most stickiness as it relates to that relationship and so yes. The competences is rooted in what we're seeing in the way of underlying operating deposit.

Our next question is from Stephen Toback Wolf Research. Your line is open. Please go ahead.

Stephen Toback: Hey, good afternoon.

Stephen Toback: So the Markel Steven.

Stephen Toback: Hey, James Hey, Mark did want to ask on the DFAST and SCB just recognizing this will be the last opportunity before the results come out on.

Growth, including inside this quarter.

<unk>.

As noted the investments that we've been making.

Phil.

A lot of the growth we thought we have a market leading product innovation.

Stephen Toback: The macro scenario further assumptions look quite similar to last year, where just given the significant transformation. That's underway repositioning actions, which are merely depressed earnings last year wanted to get a sense as to whether there are any video or factors that could result in greater SCB volatility in the coming exam and just broader thoughts on.

<unk>.

<unk> to drive good returns good growth if it's a city token services to the payment expressed 24 <unk> all of these different elements really mean that this business is awfully invaluable and indispensable to our clients and the stickiness of the deposits and the operating profit.

Stephen Toback: The longer term trajectory for the C V. Just given New York simplification efforts that are underway.

It comes with that so we feel good about that growth and Youll hear more about this as well Mike <unk> Investor day in mid June which will be I think we hope will be very helpful to have we want and so you really get your arms around how this business operates makes money in.

Speaker Change: Yeah, Stephen the first part of your question is just impossible to answer to be to be candid with you right I mean, it's.

Speaker Change: We obviously have an internal base scenario, we've run we have a severely adverse scenario that we've run.

Speaker Change: We provided our balance sheet as part of the submission, but ultimately the regulators have to run through their models. The information that we've provided and that informs what happens with the stress capital buffer.

See why we called it a crown jewel.

Our next question is from Dave Kinney Jacques.

J P. Morgan Your line is open. Please go ahead.

Hi, Marc completely different topic, because I think I understood.

Speaker Change: And we don't have as much transparency as to that as we'd like and so really hard to call. At this stage. The second part of your question. I think is I think is spot on and I kind of alluded to.

Secondly, just from my previous question to be the tax benefits. So we'll leave it at that.

Hi, This is Jeff.

Speaker Change: In my prepared prepared remarks in that.

I need to go down that path, but the question that was signed.

Signed onto Asquith, you've talked about the percentage of revolvers, increasing and.

Speaker Change: We have the medium term targets that we've set and we're still in the midst of kind of the execution of our strategy. The evolution of the business mix in the business model the.

From contractors and the private label and the retail partner card.

What is that percentage and how does that compare with what it was.

Speaker Change: The mix towards more consistent predictable and repeatable revenue streams that would impact P. PNR.

Pre pandemic.

Yes.

We haven't broken down the transact of versus revolver mix and so on.

Speaker Change: Simplification, which obviously plays through an expense base that will be lower when we get to.

Im not going to get into that I will say that the revolver levels or at least back to where they were pre pandemic and leave it at that but we are seeing kind of continued revolver activity, which you would expect kind of given the way the cycle has evolved and given payment rates have started to moderate.

Speaker Change: That medium term period, so all of those things the divestitures and kind of what that means and how that might impact the G. SIB score and the like and the freeing up of capital of which we've already freed up $6 billion or so and so all of those things have kind of yet to have been factored in.

Speaker Change: We believe will be beneficial to the SCB over the medium term.

Stimulus is kind of unwound and so all of that is kind of consistent with expectations, but obviously as a factor in reserve levels as I mentioned earlier.

Speaker Change: Our next question is from Mike Mayo at Wells Fargo. Your line is open. Please go ahead.

Our final question is from Betsy <unk> at Morgan Stanley. Your line is open. Please go ahead.

Michael Lawrence Mayo: Hi, a follow up Mark you said.

Michael Lawrence Mayo: TTS.

Hi, Thanks, so much I just wanted to make sure of one.

Michael Lawrence Mayo: We said, we will have growth and operational deposits.

One thing on the expenses I know in the past you've talked about the fact that <unk> will be a little elevated with the restructuring.

Michael Lawrence Mayo: And I.

Michael Lawrence Mayo: Just wondering what gives you such confidence that you will or is that accelerating or the same pace or what.

And you showed that was the $2 5 million in the quarter and then when we look to <unk>, we should should we still be expecting a step down into Q.

Michael Lawrence Mayo: We have seen growth in the quarter in operating deposits. The confidence comes from the focus that we've had with our with our existing clients as well as the growth we've seen with new clients doing more with existing in more countries.

And is that step down just the elimination of the 225.

Or is there some.

And our restructuring that we're likely to see in <unk> as well in other words.

Michael Lawrence Mayo: More deeply penetrating the commercial middle market space.

Michael Lawrence Mayo: And so we've been very thoughtfully focused on deposits that obviously gives us the most value and also provide the most stickiness as it relates to that relationship and so yes. The competencies is rooted in what we're seeing in the way of underlying operating deposit growth, including inside this quarter.

Fade.

Sequentially to $3 <unk> to hit your annual number or is there a bigger step down in <unk> that I should still be expecting here. Thanks.

Sure I think you should just faded.

To answer your question very directly but I'd also point out that.

In Q1, if you if you really look through to it it has the $250 million of FDIC charge in it and so when you back that out we effectively are coming in lower than what we had guided.

Michael Lawrence Mayo:

Michael Lawrence Mayo: <unk> noted the investments that we've been making them feel.

Michael Lawrence Mayo: A lot of the growth rate.

Michael Lawrence Mayo: Have a market leading product innovation.

Speaker Change: It does.

Speaker Change: Continue to drive good returns good growth if it's a city type of services. They need payment Express 24, <unk> all of these different elements really mean that this business is awfully invaluable and indispensable to our clients.

Alright.

Despite that I'm, telling you the same I'm, making the same point, which is you can expect a downward trend from here through to the end of the year and while there won't be additional restructuring charge it will be the normal <unk>.

Speaker Change: The stickiness of the deposits and the operating part of it comes it comes with that so we feel good about that quest and you'll hear more about this as well Mike can make investor day at mid January rates will be I think we hope will be very helpful to everyone. So you really get your arms around how this business operates makes them on hand.

Activity around repositioning that plays through so hopefully that answers your question Betsy the guidance still holds and the downward trend is what we are managing towards.

As we kind of play out the balance of the year.

There are no further questions I will turn the call over to Jim Landers for closing remarks.

See why we called it a crown jewel.

Thank you all for joining us if you have any follow up questions. Please call us and we look forward to talking to you. Thank you very much.

Speaker Change: Our next question is from Jimmy <unk> Jpmorgan. Your line is open. Please go ahead.

Jimmy: Hi, Marc completely different topic, because I think I understood.

This concludes the <unk> first quarter 2024 earnings call you may now disconnect.

The answer could be just from my previous question to be the tax benefits. So we'll leave it at that.

Jimmy: Hi, This is Jeff I need to go down that path, but the question I have.

Speaker Change: I signed onto Asquith, you've talked about the percentage of revolvers, increasing and.

Jeff: From coming back and the private label and in the retail partner, because what is that percentage and how does that compare with what it was.

Jeff: <unk> pandemic.

Jeff: Yes.

Speaker Change: We haven't broken down the trans active versus revolver mix and so on.

Speaker Change: Not going to get into that I will say that the revolver levels or at least back to where they were.

Speaker Change: Pre pandemic and leave it at that but we are seeing kind of continued revolver activity, which you would expect kind of given the way the cycle has evolved and given payment rates have started to moderate and the stimulus is kind of unwound and so all of that is kind of consistent with expectation, but obviously as a factor in <unk>.

Speaker Change: <unk> levels as I mentioned earlier.

Speaker Change: Our final question is from Betsy <unk> at Morgan Stanley. Your line is open. Please go ahead, Oh, hi, thanks, so much I just wanted to make sure.

Betsy: One thing on the expenses I know in the past you've talked about the fact that <unk> will be a little elevated with the restructuring.

Betsy: And you showed that was the $2 5 million in the quarter and then when we look to two <unk>, we should should.

Betsy: Should we still be expecting a step down into Q and.

Betsy: Does that step down just the elimination of the <unk> five.

Betsy: Or is there some in.

Betsy: And our restructuring where that we're likely to see in <unk> as well in other words should I just fade.

Betsy: Sequentially to $3 <unk> to hit your annual number or is there a bigger step down in <unk> that I should still be expecting here. Thanks.

Speaker Change: Sure I think you should just faded.

To answer your question very directly but I'd also point out that.

Speaker Change: In Q1, if you if you really look through to it it has the $250 million of FDIC charge in it and so when you back that out we effectively are coming in lower than what we had guided.

Speaker Change: Alright.

Speaker Change: Despite that I'm, telling you the same I'm, making the same point, which is you can expect a downward trend from here through to the end of the year and while there won't be additional restructuring charge that will be the normal.

Speaker Change: Activity around repositioning that plays through so hopefully that answers your question Betsy the guidance still holds and the downward trend is what we are managing towards.

Speaker Change: As we kind of play out the balance of the year.

There are no further questions I will turn the call over to Jan amendments for closing remarks.

Jan: Thank you all for joining us if you have any follow up questions.

Jan: Please call us and we look forward to talking to you. Thank you very much.

Jan: Okay.

Jan: This concludes the city's first quarter 2024 earnings call you may now disconnect.

Jan: [music].

Yes.

Jan: Yes.

Okay.

Jan: Sure.

Jan: Yeah.

Yes.

Jan: Sure.

Jan: Yes.

Jan: Okay.

Jan: Okay.

Jan: Yes.

Jan: Yeah.

Jan: Yes.

Jan: [music].

Jan: Okay.

Jan: Okay.

Jan: Yes.

Jan: Okay.

Jan: Okay.

Jan: Okay.

Yes.

Jan: Okay.

Jan: Yes.

Jan: [music].

Jan: The highest attended this call goodbye.