Q2 2024 Citigroup Inc Earnings Call

Speaker Change: Hello, and welcome to Citi's second quarter 2024 earnings call.

Speaker Change: Today's call will be hosted by Jen Landis, Head of City Investor Relations.

Speaker Change: We ask that you please hold all questions until the completion of the formal remarks, 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.

Operator: Hello, and welcome to City's second quarter 2024 earnings call.

Unknown Executive: Hello, and welcome to Citi's second quarter 2024 earnings call. Today's call will be hosted by Jen Landis, head of Citi Investor Relations. We ask that you please hold all questions until the completion of the formal remarks, at which time you'll 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.

Jennifer Landis: Today's call will be hosted by Jen Landis, head of City Investor Relations. We ask that you please hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question-and-answer session. Also, as a reminder, this conference is being recorded today.

Speaker Change: Ms. Landis, you may begin.

Speaker Change: Co-operator, good morning and thank you all for joining our second quarter 2024 earnings call. I am joined today by our Chief Executive Officer, Jane Fraser, and our Chief Financial Officer, Mark Mason.

Operator: If you have any objections, please disconnect at this time.

Operator: Miss Landis, you may begin.

Jennifer Landis: Operator, good morning, and thank you all for joining our second quarter 2024 earnings call. I am joined today by our Chief Executive Officer, Jane Fraser, and our Chief Financial Officer, Mark Mason. I'd like to remind you that today's presentation, which is available for download on our website, citigroup.com, may contain forward-looking statements, which are based on management's current expectations and are subject to uncertainty 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 filing. And with that, I'll turn it over to Jane. Thank you, Jen, and good morning to everyone.

Speaker Change: I'd like to remind you that today's presentation, which is available for download on our website citigroup.com, may contain forward-looking statements which are based on management's current expectations and are subject to uncertainty and changes in circumstances.

Speaker Change: 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 with that, I'll turn it over to Jane.

Operator: 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 filing.

Jane Nind Fraser: Thank you, Jen, and good morning to everyone.

Jane Nind Fraser: Before I discuss the results of the quarter, let me first address the regulatory actions by the Federal Reserve and the Office of the Comptroller of the Currency, which were announced on Wednesday.

Jane Fraser: And with that, I'll turn it over to Jane. Thank you, Jen, and good morning to everyone. Before I discuss the results of the quarter, let me first address the regulatory action by the Federal Reserve and the Office of the Controller of the Currency, which were announced on Wednesday. These actions pertain to the consent orders we entered into with both agencies in 2020, and those orders covered four primary areas: risk management, data governance, controls, and compliance. Addressing these areas is the primary goal of our transformation; our number one priority. It is a multi-year effort to modernize our infrastructure, unify disparate tech platforms, and automate processes and controls.

Jane Nind Fraser: Before I discuss the results of the quarter, let me first address the regulatory actions by the Federal Reserve and the Office of the Comptroller of the Currency, which were announced on Wednesday. These actions pertain to the consent orders we entered into with both agencies in 2020. And those orders covered four primary areas, risk management, data governance, controls, and compliance.

Jane Nind Fraser: These actions pertain to the consent orders we entered into with both agencies in 2020. And those orders covered four primary areas, risk management, data governance, controls, and compliance.

Jane Nind Fraser: Addressing these areas is the primary goal of our transformation, our number one priority. It is a multi-year effort to modernize our infrastructure, unify disparate tech platforms, and automate processes and controls.

Jane Nind Fraser: Addressing these areas is the primary goal of our transformation, our number one priority. It is a multi-year effort to modernize our infrastructure, unify disparate tech platforms, and automate processes and controls. This week's actions focus primarily on data quality management.

Jane Nind Fraser: This week's actions focus primarily on data quality management. We've been public this year about the fact that we were behind in this particular area and that we had increased our investment as a result.

Jane Fraser: This week's actions focus primarily on data quality management. We've been public this year about the fact that we were behind in this particular area and that we had increased our investment as a result. The regulatory action consisted of two civil money penalties and under the amended consent order with the OCC, a new process designed to ensure we're allocating sufficient resources to meet our remediation milestones. That is called the Resource Review Plan. We are currently developing the plan for submission to the OCC. By way of background, while the Federal Reserve is the primary regulator for Citigroup, our bank holding company, the OCC is the primary regulator for Citibank NA, we call it CBNA, which is our largest banking vehicle with approximately 70% of our assets.

Jane Nind Fraser: The regulatory action consisted of two civil money penalties and under the amended consent order with the OCC, a new process designed to ensure we're allocating sufficient resources to meet our remediation milestones, and that is called the Resource Review PAM.

Jane Nind Fraser: We've been public this year about the fact that we were behind in this particular area and that we had increased our investment as a result. The regulatory actions consisted of two civil money penalties and, under the amended consent order with the OCC, a new process designed to ensure we're allocating sufficient resources to meet our remediation milestones. That is called the Resource Review Plan. We are currently developing a plan for submission to the OCC.

Jane Nind Fraser: We are currently developing the plan for submission to the OCC.

Jane Nind Fraser: Now, by way of background, while the Federal Reserve is the primary regulator for Citigroup, our bank holding company,

Jane Nind Fraser: The OCC is the primary regulator for Citibank NA, we call it CBNA, which is our largest banking vehicle with approximately 70% of our assets.

Jane Nind Fraser: Now, by way of background, while the Federal Reserve is the primary regulator for Citigroup, our bank holding company, the OCC is the primary regulator for Citibank NA. We call it CBNA, which is our largest banking vehicle with approximately 70% of our assets. The amended consent order with the OCC allows CB&A to continue paying to Citigroup at a minimum the dividends necessary for debt service, preferred dividends, and other non-discretionary obligations

Jane Nind Fraser: The amended consent order with the OCC allows CBNA to continue paying to Citigroup at a minimum the dividends necessary for debt service, preferred dividends, and other non-discretionary obligations.

Jane Fraser: The amended consent order with the OCC allows CBNA to continue paying the City Group at a minimum the dividends necessary for debt service, preferred dividends, and other non-discretionary obligations. While we're developing and seeking OCC consent for our resource review plan, dividend amounts above that would require the OCC's non-objection. Now these dividends are intercompany payments that are made from CBNA ultimately to the parent City Group. They should not be confused with the common dividends; Citigroup pays through its shareholders. Indeed, there is no restriction on City Group's ability to pay common dividends to shareholders, nor is there a restriction to buying back shares.

Jane Nind Fraser: While we're developing and seeking OCC consent for our resource review plan, dividend amounts above that would require the OCC's non-objection.

Jane Nind Fraser: Now these dividends are intercompany payments that are made from CBNA ultimately to the parent Citigroup.

Jane Nind Fraser: While we're developing and seeking OCC consent for our resource review plan, dividend amounts above that would require the OCC's non-objection. Now these dividends are intercompany payments that are made from CB&A ultimately to the parent Citigroup. They should not be confused with the common dividends Citigroup pays to its shareholders. Indeed, there is no restriction on Citigroup's ability to pay common dividends to shareholders, nor is there a restriction on buying back shares.

Jane Nind Fraser: They should not be confused with the common dividends Citigroup pays to its shareholders. Indeed, there is no restriction on Citigroup's ability to pay common dividends to shareholders, nor is there a restriction to buying back shares.

Jane Nind Fraser: And let me be very clear, even with the investments needed for our transformation, Citigroup has more than sufficient resources to also invest in our businesses and make the planned return of capital to our shareholders.

Jane Fraser: And let me be very clear, even with the investments needed for our transformation, Citigroup has more than sufficient resources to also invest in our businesses and make the planned return of capital to our shareholders. We will increase our dividend from 53 to 56 cents a share, as we announce in late June, and we will resume modest buybacks this quarter. While these actions were not entirely unexpected to us, it is no doubt disappointing for our investors and for our people. We completely understand that. At the same time, we're confident in our ability to get these specific areas where they need to be, as we have been able to do in other areas of the transformation.

Jane Nind Fraser: And let me be very clear, even with the investments needed for our transformation, Citigroup has more than sufficient resources to also invest in our businesses and make the planned return of capital to our shareholders. We will increase our dividend from $0.53 to $0.56 a share, as we announced in late June, and we will resume modest buybacks this quarter. While these actions were not entirely unexpected to us, they are no doubt disappointing for our investors and for our people. We completely understand that.

Jane Nind Fraser: We will increase our dividends from $0.53 to $0.56 a share, as we announced in late June , and we will resume modest buybacks this quarter.

Jane Nind Fraser: While these actions were not entirely unexpected to us, it is no doubt disappointing for our investors and for our people. We completely understand that.

Jane Nind Fraser: At the same time, we're confident in our ability to get these specific areas where they need to be, as we have been able to do in other areas of the transformation.

Jane Nind Fraser: And we are pleased that it was acknowledged on Wednesday that we have made meaningful progress in executing our transformation and simplifying our firm.

Jane Nind Fraser: At the same time, we're confident in our ability to get these specific areas where they need to be, as we have been able to do in other areas of the transformation. And we are pleased that it was acknowledged on Wednesday that we have made meaningful progress in executing our transformation and simplifying our firm. A multi-year undertaking such as this was never going to be linear.

Jane Nind Fraser: A multi-year undertaking such as this was never going to be linear. But I can assure you, the investments we have been making are starting to come together to reduce risk, improve controls, and deliver very tangible outcomes.

Jane Fraser: And we are pleased that it was acknowledged on Wednesday that we have made meaningful progress in executing our transformation and simplifying our firm. In multi-year undertaking such as this was never going to be linear, but I can assure you the investments we have been making are starting to come together to reduce risk, improve controls, and deliver very tangible outcomes. The tech investments we have made are making a difference. We have reduced the time it takes the book loans, automated controls for our traders to reduce errors, moved risk analytics to a cloud-based infrastructure, and increased the resiliency of our platforms to reduce downtime.

Jane Nind Fraser: The tech investments we have made are making a difference.

Jane Nind Fraser: But I can assure you that the investments we have been making are starting to come together to reduce risk, improve controls, and deliver very tangible outcomes. The tech investments we have made are making a difference. We have reduced the time it takes to book loans, automated controls for our traders to reduce errors, moved risk analytics to a cloud-based infrastructure, and increased the resiliency of our platforms to reduce downtime. The changes to our organization and our culture are making a difference. We have eliminated managerial constructs and layers whilst empowering our leaders.

Jane Nind Fraser: We have reduced the time it takes to book loans, automated controls for our traders to reduce errors, moved risk analytics to a cloud-based infrastructure, and increased the resiliency of our platforms to reduce downtime.

Jane Nind Fraser: The changes to our organization and our culture are making a difference. We have eliminated managerial constructs and layers whilst empowering our leaders.

Jane Nind Fraser: We introduced new tools to better manage human capital needs. Our focus on culture has increased accountability and attracted great new talent such as Viz Raghavan, Tim Ryan, and Andy Sieg.

Jane Fraser: The changes to our organization and our culture are making a difference. We have eliminated managerial constructs and layers whilst empowering our leaders. We introduced new tools the best to manage human capital needs. Our focus on culture has increased accountability and attracted great new talent, such as Biz Raghavan, Tim Ryan, and Andy Sig. You have my and the entire management team's commitment that we will address any area of the consent order where we are behind by putting the necessary resources and focus behind it. We will get this work where it needs to be, as we have with the execution of our strategy and the simplification of our organization.

Jane Nind Fraser: We introduce new tools to better manage human capital needs. Our focus on culture has increased accountability and attracted great new talent such as Viz Raghavan, Kim Ryan, and Andy Sieg. You have my and the entire management team's commitment that we will address any area of the consent order where we are behind by putting the necessary resources and focus behind it. We will get this work where it needs to be, as we have with the execution of our strategy and the simplification of our organization.

Jane Nind Fraser: You have my and the entire management team's commitment that we will address any area of the consent order where we are behind by putting the necessary resources and focus behind it.

Jane Nind Fraser: We will get this work where it needs to be, as we have with the execution of our strategy and the simplification of our organization.

Jane Nind Fraser: Now, turning to what was another good quarter, our results show the relentless focus we have in executing our strategy as we continue to drive towards our medium-term return target.

Jane Fraser: Now, turning to what was another good quarter, our results show the relentless focus we have in executing our strategy as we continue to drive towards our medium-term return target. We reported net income of $3.2 billion, with an earnings per share of $1.52 and an ROTCE of 7.2%. Revenues were up 4% overall, as well as up in each of our five core businesses, where all but one had positive operating leverage. Expenses were down 2% year over year. The steps were taking to simplify our organization, right size businesses such as markets and wealth, and reduced stranded costs are beginning to take hold, even as we increase investment in our transformation.

Jane Nind Fraser: Now, turning to what was another good quarter, our results show the relentless focus we have on executing our strategy as we continue to drive towards our medium-term return target. We reported net income of $3.2 billion with an earnings per share of $1.52 and an ROTCE of 7.2%. Revenues were up 4% overall, as well as in each of our five core businesses, where all but one had positive operating leverage. However, expenses were down 2% year-over-year.

Jane Nind Fraser: We reported net income of $3.2 billion, with an earnings per share of $1.52 and an ROTCE of 7.2%.

Jane Nind Fraser: Revenues were up 4% overall, as well as up in each of our five core businesses, where all but one had positive operating leverage.

Jane Nind Fraser: Expenses were down 2% year-over-year. The steps we're taking to simplify our organization, right-size businesses such as markets and wealth, and reduce stranded costs are beginning to take hold, even as we increase investment in our transformation.

Jane Nind Fraser: The steps we're taking to simplify our organization, right-size businesses such as markets and wealth, and reduce stranded costs are beginning to take hold, even as we increase investment in our transformation. Over the medium term, we expect these simplification and stranded cost actions to drive $2 to $2.5 billion in annual run rate savings. Services grew 3%, driven by solid feed growth, which we have prioritized. TTS saw increased activity in cross-border payments and in commercial cards.

Jane Nind Fraser: Over the medium term, we expect these simplification and stranded cost actions to drive $2 to $2.5 billion in annual run rate saves.

Jane Nind Fraser: Services grew 3%, driven by solid fee growth, which we have prioritized. TTS saw increased activity in cross-border payments and in commercial cards.

Jane Fraser: Over the medium term, we expect these simplification and stranded cost actions to drive $2 to $2.5 billion in annual run-rate saves. Services grew 3%, driven by solid fee growth, which we have prioritized. TTS saw increased activity in cross-border payment and in commercial cards. Security services was up 10% with new client onboarding, deepening with existing clients and market valuations, helping increase our assets under custody by a preliminary 9%. At our recent services investor day, we very much enjoyed the opportunity to talk to you Index about how we're going to continue to grow is high returning business.

Jane Nind Fraser: Security Services was up 10% with new client onboarding, deepening with existing clients and market valuations, helping increase our assets under custody by a preliminary 9%.

Jane Nind Fraser: Security Services was up 10% with new client onboarding, deepening with existing clients, and market valuations, helping increase our assets under custody by a preliminary 9%. At our recent Services Investor Day, we very much enjoyed the opportunity to talk to you in depth about how we're going to continue to grow this high-returning business, and we're very pleased that people are starting to recognize why we describe it as our crown jewel.

Jane Nind Fraser: At our recent Services Investor Day, we very much enjoyed the opportunity to talk to you in depth about how we're going to continue to grow this high-returning business.

Jane Nind Fraser: And, we're very pleased that people are starting to recognize why we describe it as our crown jewel.

Jane Nind Fraser: Overall, markets had a strong finish to the quarter, leading to better performance than we'd anticipated.

Jane Fraser: And we're very pleased that people are starting to recognize why we describe it as our crown jewel. Overall, markets had a strong finish to the quarter, leading to better performance than we anticipated. Big thing come was slightly down year-on-year due to lower effects and rates, but we had good issuance and loan growth and financing and securitization, an area which generates attractive return. Equities was up 37%, driven by strong performance in derivative, which includes again on the Visa B exchange offer. Anking was up 38%, as the wallet rebound gained momentum and we again grew share. Our clients continued to access capital markets with investment grade issuance near record levels.

Jane Nind Fraser: Fixed income was slightly down year-on-year due to lower FX and rates.

Jane Nind Fraser: Overall, markets had a strong finish to the quarter, leading to better performance than we'd anticipated. Fixed income was slightly down year-on-year due to lower FX and rates, but we had good issuance and loan growth in financing and securitization, an area which generates attractive returns. Equities were up 37%, driven by strong performance in derivatives, which includes the gain on the Visa B exchange offer.

Jane Nind Fraser: But we had good issuance and loan growth in financing and securitization, an area which generates attractive returns. Equities was up 37%, driven by strong performance in derivatives, which includes the gain on the Visa B exchange offer.

Jane Nind Fraser: Banking was up 38% as the wallet rebound gained some momentum and we again grew share.

Jane Nind Fraser: Our clients continue to access the capital markets with investment-grade issuance near record levels. Equity issuance increased, particularly in convertibles, as companies wait for a fuller opening of the IPO window.

Jane Nind Fraser: Banking was up 38% as the wallet rebound gained some momentum, and we again grew share. Our clients continue to access the capital markets with investment-grade issuance near record levels. Equity issuance increased, particularly in convertibles, as companies wait for a fuller opening of the IPO window. Investment banking fees were up 63% versus the prior year.

Jane Nind Fraser: Investment banking fees were up 63% versus the prior year, and we've seen some healthy volumes associated with announced deals year-to-date, particularly in natural resources and technology.

Jane Fraser: Equity issuance increased, particularly in convertibles, as companies wait for a fuller opening of the IPO window. Investment banking fees were up 63%. Versus the prior year. And we've seen some healthy volumes associated with announced deals year-to-date, particularly in natural resources and technology. Combined with a strong pipeline, advisory activity looks promising as we think about the rest of the year and into next year. Well, it's starting to improve. Growth in client investment assets drove stronger investment revenue, especially in city gold, and was up a preliminary 15%. Our focus on rationalizing the expense base is also starting to pay off, with expenses down 4%.

Jane Nind Fraser: And we've seen some healthy volumes associated with announced deals year to date, particularly in natural resources and technology. Combined with a strong pipeline, advisory activity looks promising as we think about the rest of the year and into next year.

Jane Nind Fraser: Combined with a strong pipeline, advisory activity looks promising as we think about the rest of the year and into next year.

Jane Nind Fraser: Wealth is starting to improve. Growth in client investment assets drove stronger investment revenue, especially in Citigold, and was up a preliminary 15%.

Jane Nind Fraser: Our focus on rationalizing the expense base is also starting to pay off, with expenses down 4%. Andy and his team continue to attract top talent from the industry as they focus on our investments business and on enhancing the client experience.

Jane Nind Fraser: Growth in client investment assets drove stronger investment revenue, especially in Citigold, and was up a preliminary 15%. Our focus on rationalizing the expense base is also starting to pay off, with expenses down 4%. Andy and his team continue to attract top talent from the industry as they focus on our investments business and on enhancing the client experience. U.S. personal banking saw revenue growth of 6%, with all three businesses again contributing to the top line.

Jane Nind Fraser: U.S. personal banking saw revenue growth of 6%, with all three businesses again contributing to the top line.

Jane Fraser: And in a team continued to attract top talent from the industry as they focus on our investment business and on enhancing the client experience. US personal banking saw revenue growth of 6% with all three businesses again contributing to the top line. There was good revolving balance and loan growth in both branded cards and retail services, and we continue to see differentiation in the credit segments, with the lower income customers seeing pressure. Retail banking benefited from higher mortgage loans and improved deposit spreads while delivering strong referrals to wealth. Overall, while we saw operating margin expansion, our poor returns were pressured by the combination of credit seasonality and the normalization of certain bendages.

Jane Nind Fraser: There was good revolving balance and known growth in both branded cards and retail services. And we continue to see differentiation in the credit segment, with the lower income customers seeing pressure.

Jane Nind Fraser: There was good revolving balance and loan growth in both branded cards and retail services, and we continue to see differentiation in the credit segment, with lower income customers seeing pressure. Retail banking benefited from higher mortgage loans and improved deposit spreads, while delivering strong referrals to wealth. Overall, while we saw operating margin expansion, our poor returns were pressured by the combination of credit seasonality and the normalization of certain vintages. We certainly expect USPB's returns to improve from here.

Jane Nind Fraser: Retail banking benefited from higher mortgage loans and improved deposit spreads while delivering strong referrals to wealth.

Jane Nind Fraser: Overall, while we saw operating margin expansion, our poor returns were pressured by the combination of credit seasonality and the normalization of certain vintages. We certainly expect USPB's returns to improve from here.

Jane Nind Fraser: The recent stress test again showcased the strength of our balance sheet.

Jane Nind Fraser: Our CET-1 ratio now stands at 13.6%.

Jane Fraser: We certainly expect USPB's return to improve from here. The recent stress test again showcased the strength of our balance sheet. Our CET1 ratio now stands at 13.6%. And we expect our regulatory capital requirement to decrease the 12.1% as of October 1st given the reduction of our stress capital buffer. Our tangible book value per share grew to $87.53. During the quarter, we returned $1 billion in capital to our common shareholders, and we are increasing our dividend by 6%. We expect to buy back $1 billion in common shares with quarter, and we will continue to assess the level of buybacks on a quarterly basis, particularly given the uncertainty around the battle three.

Jane Nind Fraser: And we expect our regulatory capital requirement to decrease to 12.1% as of October 1st, given the reduction of our stress capital buffer. Our tangible book value per share grew to $87.53.

Jane Nind Fraser: The recent stress test again showcased the strength of our balance sheet. Our CET1 ratio now stands at 13.6%, and we expect our regulatory capital requirement to decrease to 12.1% as of October 1st, given the reduction of our stress capital buffer. Our tangible book value per share grew to $87.53.

Jane Nind Fraser: During the quarter, we returned $1 billion in capital to our common shareholders and we are increasing our dividend by 6%.

Jane Nind Fraser: We expect to buy back $1 billion in common shares this quarter, and we will continue to assess the level of buybacks on a quarterly basis, particularly given the uncertainty around the Battle 3 endgame.

Jane Nind Fraser: During the quarter, we returned $1 billion in capital to our common shareholders, and we are increasing our dividend by 6%. We expect to buy back $1 billion in common shares this quarter, and we will continue to assess the level of buybacks on a quarterly basis, particularly given the uncertainty around the Battle 3 endgame. Looking at the macro environment as we enter the second half of the year, the U.S. is still the world's most structurally sound economy.

Jane Nind Fraser: Looking at the macro environment as we enter the second half of the year, the U.S. is still the world's most structurally sound economy.

Jane Nind Fraser: After a break in progress, inflation now appears back on a downward trajectory.

Jane Fraser: Looking at the macro environment as we enter the second half of the year, the US is still the world's most structurally found economy. After a break in progress, inflation now appears back on a downward trajectory. Services spending has remained on an upward trend, although there are clear signs of a softening labour market and the tightening of the consumer budget. And of course, you might have heard there is an election in November. In Europe, while rate cuts have begun, the region's lack of competitiveness continues to be a drag on growth. In Asia, China is growing moderately, albeit with government stimulus, and their pivot to high tech manufacturing is being challenged by tariffs on EVs and semiconductors.

Jane Nind Fraser: Services spending has remained on an upward trend, although there are clear signs of a softening labour market and the tightening of the consumer budget.

Jane Nind Fraser: After a break in progress, inflation now appears back on a downward trajectory. Services spending has remained on an upward trend, although there are clear signs of a softening labor market and the tightening of the consumer budget. And, of course, you might have heard there is an election in November. In Europe, while rate cuts have begun, the region's lack of competitiveness continues to be a drag on growth.

Jane Nind Fraser: And of course, you might have heard there is an election in November . In Europe , while rate cuts have begun, the region's lack of competitiveness continues to be a drag on growth.

Jane Nind Fraser: In Asia, China is growing moderately, albeit with government stimulus, and their pivot to high-tech manufacturing is being challenged by tariffs on EVs and semiconductors.

Jane Nind Fraser: In Asia, China is growing moderately, albeit with government stimulus, and its pivot to high-tech manufacturing is being challenged by tariffs on EVs and semiconductors. Despite this uncertainty, as you saw at our services investor day when we went through our performance over the last two years, our business model can produce good results in a wide variety of macro environments, and there is plenty of upside for us across our five businesses. We have made an incredible amount of progress in simplification, both strategically and organizationally. We've completed most of the exits from our international consumer markets.

Jane Nind Fraser: Despite this uncertainty, as you saw at our Services Investor Day when we went through our performance over the last two years, our business model can produce good results in a wide variety of macro environments.

Jane Fraser: Despite its uncertainty, as you saw in our Services Investor Day, when we went through our performance over the last two years, our business model can produce good results in a wide variety of macro environments, and there is plenty of upside for us across our five businesses.

Jane Nind Fraser: And there is plenty of upside for us across our five businesses.

Jane Nind Fraser: We have made an incredible amount of progress in simplification, both strategically and organizationally. We've completed most of the exits of our international consumer markets. We've streamlined our organization to catalyze agility and faster decision making.

Jane Fraser: We have made an incredible amount of progress in simplification, both strategically and organizationally. We've completed most of the exits of our international consumer markets. We streamlined our organization, the capitalized agility and faster decision making. We are modernizing our infrastructure to improve our client service, and we are automating processes, the strengths and controls. We are on a deliberate path. We will continue to execute our transformation and our strategy so we can meet our medium-term target and then continue to further improve our return over time.

Jane Nind Fraser: We are modernizing our infrastructure to improve our client service, and we are automating processes to strengthen controls.

Mark Mason: We've streamlined our organization to catalyze agility and faster decision making. We are modernizing our infrastructure to improve client service, and we are automating processes to strengthen controls. We are on a deliberate path. We will continue to execute our transformation and our strategy so we can meet our medium-term target and then continue to further improve our returns over time. With that, let me turn it over to Mark, and then we will be delighted, as always, to take your questions. Thanks, Jane, and good morning, everyone.

Jane Nind Fraser: We are on a deliberate path.

Jane Nind Fraser: We will continue to execute our transformation and our strategy so we can meet our medium-term targets and then continue to further improve our returns over time.

Speaker Change: With that, let me turn it over to Mark, and then we will be delighted, as always, to take your questions.

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

Mark Mason: With that, let me turn it over to Mark, and then we will be delighted, as always, to take your questions.

Mark Mason: On slide six, we show financial results for the full FRRR.

Mark Mason: Thanks, Danny.

Mark Mason: I'm going to start with the firm-wide financial results, focusing on year-over-year comparisons for the second quarter, unless I indicate otherwise, and then spend a little more time on the business. On slide six, we show financial results for the PULFER. For the quarter, we reported net income of approximately $3.2 billion, EPS of $1.52, and an ROTCE of 7.2% on $20.1 billion of revenue. Total revenues were up 4%, driven by growth across all businesses, as well as an approximate $400 million gain related to the Vis-a-Vis exchange offer. A significant portion of this gain is reflected in equity markets, with the remainder reflected in all other. Expenses were $13.4 billion, down 2% and 6% on a sequential basis.

Mark Mason: Good morning everyone. I'm going to start with the firm-wide financial result. I'm focusing on year-over-year comparisons for the second quarter unless I indicate otherwise, and then put in a little more time on the business. On slide six, we show financial results for the full firm for the quarter. We reported net income of approximately $3.2 billion, EPS of $1.52, and an ROTCE of 7.2% on $20.1 billion of revenue. Total revenues were up 4% during by growth across all businesses, as well as an approximate $400 million gain related to the Visa be exchange offer. A significant portion of this gain is reflected in equity markets, with the remainder reflected in all other expenses were $13.4 billion, down 2% and 6% on a sequential basis.

Mark Mason: For the quarter, we reported net income of approximately $3.2 billion, EPS of $1.52, and an ROTCE of 7.2% on $20.1 billion of revenue.

Mark Mason: Total revenues were up 4%, driven by growth across all businesses, as well as an approximate $400 million gain related to the Vis-a-Vis exchange offer.

Mark Mason: A significant portion of this gain is reflected in equity markets, with the remainder reflected in all other.

Mark Mason: Expenses were $13.4 billion, down 2%, and 6% on a sequential basis. The combination of revenue growth and expense decline drove positive operating leverage for the firm and the majority of our businesses.

Mark Mason: Foster Credit was $2.5 billion, primarily driven by higher card net credit losses, which were partially offset by ACL releases, and all businesses except USPB, were rebuilt for loan growth.

Mark Mason: The combination of revenue growth and expense decline drove positive operating leverage for the firm and the majority of our businesses. Foster credit was $2.5 billion, primarily driven by higher card net credit losses, which were partially offset by ACL releases and all businesses except USPB, where we built for loan growth. At the end of the quarter, we had nearly $22 billion in total reserves, with a reserve for funded loan ratio of approximately 2.7%.

Mark Mason: The combination of revenue growth and expense decline drove positive operating leverage for the firm and the majority of our business. Cluster credit was $2.5 billion, primarily driven by higher card net credit losses, which were partially offset by ACL releases, and all businesses except USPB, where we built for loan growth. At the end of the quarter, we had nearly $22 billion in total reserves, with a reserve-to-funded loan ratio of approximately 2.7%.

Mark Mason: At the end of the quarter, we had nearly $22 billion in total reserves, with a reserve-to-funded loan ratio of approximately 2.7%. On slide 7, we show the expense trend over the past five quarters.

Mark Mason: This quarter we reported expenses of $13.4 billion, down 2% and 6% sequentially, which includes the $136 million civil money penalties imposed by the Fed and OCC earlier this week.

Mark Mason: On slide seven, we show the expense trend over the past five quarters. This quarter, we reported expenses of $13.4 billion, down 2% and 6% sequentially, which includes $136 million silver money penalties imposed by the Fed and OCC earlier this week. The decrease in expenses was primarily driven by savings associated with our organizational simplification, stranded cost reduction, and lower repositioning costs. Partially offset by continued investment in transformation and the Fed and the OCC penalties. As we said over the past few months, we will continue to invest in the transformation and technology to modernize our operations and risk and control infrastructure.

Mark Mason: On slide 7, we show the expense trend over the past five quarters. This quarter, we reported expenses of $13.4 billion, down 2% and 6% sequentially, which includes the $136 million civil money penalties imposed by the Fed and OCC earlier this week. The decrease in expenses was primarily driven by savings associated with our organizational simplification, stranded cost reduction, and lower repositioning costs, partially offset by continued investment in transformation, and the Fed and the OCC penalty.

Mark Mason: The decrease in expenses was primarily driven by savings associated with our organizational simplification, stranded cost reduction, and lower repositioning costs.

Mark Mason: Partially offset by continued investment and transformation, and the Fed and the OCC penalty.

Mark Mason: As we said over the past few months, we will continue to invest in the transformation and technology to modernize our operations and risk and control infrastructure. We expect these investments to offset some of our saves and headcount reduction going forward.

Mark Mason: As we've said over the past few months, we will continue to invest in transformation and technology to modernize our operations and risk and control infrastructure. We expect these investments to offset some of our savings and headcount reduction going forward. However, based on what we know today, we will likely be at the higher end of the expense guidance range, excluding the FDIC special assessment and the civil money penalty. With that said, we will, of course, continue to look for opportunities to absorb the civil money penalty.

Mark Mason: However, based on what we know today, we will likely be at the higher end of the expense guidance range, excluding the FDIC special assessment and the civil money penalty.

Mark Mason: We expect these investments to offset some of our sales and headcount reduction going forward. However, based on what we know today, we will likely be at the higher end of the expense guidance range, excluding the FDIC special assessment and the civil money penalties. With that said, we will, of course, continue to look for opportunities to absorb the civil money penalties.

Mark Mason: With that said, we will of course continue to look for opportunities to absorb the civil money penalties. Before going into the balance sheet and the business results for the quarter, I'd like to also give more color on the transformation and address what the Fed and OCC announced Wednesday.

Mark Mason: We've made good progress on our transformation in certain areas over the last few years, and I want to highlight some of those areas before discussing the announcement.

Mark Mason: Before we're going into the balance sheet and the business results for the quarter, I'd like to also give more color on the transformation and address with the Fed and OCC announced Wednesday. We've made good progress on our transformation in certain areas over the last few years, and I want to highlight some of those areas before discussing the announcement. First, wholesale credit loan operations where we implemented a consistent end-to-end operating model and consolidated multiple systems with enhanced technology. Energy. This is not only reduced risk, but enhanced operating efficiency and the client experience. We've also made improvements in risk and compliance as we enhanced our risk assessment and technology capabilities to increase automation per monitor.

Mark Mason: Before going into the balance sheet and the business results for the quarter, I'd also like to give more color on the transformation and address what the Fed and OCC announced Wednesday. We've made good progress on our transformation in certain areas over the last few years. And I want to highlight some of those areas before discussing the announcement. First, wholesale credit and loan operations, where we implemented a consistent end-to-end operating model and consolidated multiple systems with enhanced technology.

Mark Mason: First, wholesale credit and loan operations, where we implemented a consistent end-to-end operating model and consolidated multiple systems with enhanced technology.

Mark Mason: This has not only reduced risk, but enhanced operating efficiency and the client experience.

Mark Mason: We've also made improvements in risk and compliance as we enhanced our risk assessment and technology capabilities to increase automation for monitoring.

Mark Mason: This has not only reduced risk but enhanced operating efficiency and the client experience. We've also made improvements in risk and compliance as we enhanced our risk assessment and technology capabilities to increase automation for monitoring. And in data, while there's a lot more to do, we've stood up a data governance process and streamlined our data architecture to ultimately facilitate straight-through processing.

Mark Mason: And in data, while there's a lot more to do, we've stood up a data governance process and streamlined our data architecture to ultimately facilitate straight-through processing.

Mark Mason: Overall, we've improved risk management and consolidated and upgraded systems and platforms to improve our resiliency.

Mark Mason: And in data, while there's a lot more to do, we stood up a data governance process and streamlined our data architecture to ultimately facilitate straight-through processing. Overall, we've improved risk management and consolidated and upgraded systems and platforms to improve our resiliency. These efforts represent meaningful examples of how we're making progress against our transformation milestones. That said, we have fallen short in data quality management, particularly related to regulatory reporting, which we've acknowledged publicly since the beginning of the year. As such, we've begun to put additional investments and resources in place to not only address data quality management related to regulatory reporting and data governance, but also stress testing capability, including deep-ass and resolution recovery.

Mark Mason: These efforts represent meaningful examples of how we're making progress against our transformation milestones.

Mark Mason: Overall, we've improved risk management and consolidated and upgraded systems and platforms to improve our resiliency. These efforts represent meaningful examples of how we're making progress against our transformation milestone. That said, we have fallen short in data quality management, particularly related to regulatory reporting, which we've acknowledged publicly since the beginning of the year.

Mark Mason: That said, we have fallen short in data quality management, particularly related to regulatory reporting, which we've acknowledged publicly since the beginning of the year.

Mark Mason: As such, we've begun to put additional investments and resources in place to not only address data quality management related to regulatory reporting and data governance, but also stress testing capabilities, including DFAS and resolution recovery.

Mark Mason: As such, we've begun to put additional investments and resources in place to not only address data quality management related to regulatory reporting and data governance but also stress testing capabilities, including DFAS and resolution recovery. We have also reprioritized our efforts to ensure we're focused on data that impact these reports first. We take this feedback from our regulators very seriously, and we're committed to allocating all the resources necessary to meet their expectations. Now, turning back to the quarterly results. On slide 9, we show net interest income, deposits, and loans, where I'll speak to sequential variance. In the second quarter, net interest income was roughly flat.

Mark Mason: We also reprioritized our efforts to ensure we're focused on data that impact these reports first.

Mark Mason: We take this feedback from our regulators very seriously, and we're committed to allocating all the resources necessary to meet their expectations. Now turning back to the quarterly results. On slide 9, we show net interest income, deposits, and loan, where I'll speak to sequential variance.

Mark Mason: We also reprioritized our efforts to ensure we're focused on data that impact these reports first. We take this feedback from our regulators very seriously, and we're committed to allocating all the resources necessary to meet their expectations.

Mark Mason: In the second quarter, net interest income was roughly flat.

Mark Mason: Excluding markets, net interest income was down 3%, largely driven by the impact of foreign exchange translation, seasonally lower revolving card balances, and lower interest rates in Argentina, partially offset by higher deposit spreads in wealth. Average loans were roughly flat, as growth in cards and Mexico's consumer was largely offset by slight declines across businesses. And average deposits decreased by 1%, largely driven by seasonal outflows and transfers to investments in wealth, as well as non-operational outflows in TTS.

Mark Mason: Now, turning back to the quarterly results. On slide 9, we show net interest income, deposits, and loan where I'll speak to sequential variance. In the second quarter, net interest income was roughly flat. Excluding markets, net interest income was down 3%, largely driven by the impact of foreign exchange translation, seasonally lower evolving card balances, and lower interest rates in Argentina, partially offset by higher deposits spread in wealth. Average loans were roughly flat, as growth in cards and Mexico consumer was largely offset by slight declines across business. An average deposit decreased by 1%, largely driven by seasonal outflows and transfers to investments in wealth, as well as non-operational outflows in TTS.

Mark Mason: Excluding markets, net interest income was down 3%, largely driven by the impact of foreign exchange translation, seasonally lower revolving card balances, and lower interest rates in Argentina, partially offset by higher deposit spreads in wealth.

Mark Mason: Average loans were roughly flat as growth in cards and Mexico consumer was largely offset by slight declines across businesses.

Mark Mason: An average deposits decreased by 1%.

Mark Mason: Largely driven by seasonal outflows and transfers to investments in wealth, as well as non-operational outflows in TTS. On slide 10, we show key consumer and corporate credit metrics, which reflect our disciplined risk appetite framework.

Mark Mason: Across our card portfolios, approximately 86% of our card loans are to consumers with FIFO scores of 660 or higher.

Mark Mason: On slide 10, we show key consumer and corporate credit metrics that reflect our Disciplined Risk Appetite Framework. For example, across our card portfolios, approximately 86% of our card loans are to consumers with FICO scores of 660 or higher. And while we continue to see an overall resilient U.S. consumer, we also continue to see divergence in performance and behavior across FICO and income bands. For example, when we look across our consumer clients, only the highest income quartile has more savings than they did at the beginning of 2019.

Mark Mason: On slide 10, we show key consumer and corporate credit metrics, which reflect our disciplined risk appetite framework. Across our card portfolios, approximately 86% of our card loans are to consumers with BIPO scores of 660 or higher. And while we continue to see an overall resilient U.S. consumer. We also continue to see a divergence in performance and behavior across FICO and income ban. When we look across our consumer clients, only the highest income portal has more savings than they did at the beginning of 2019. And it is the over 740 FICO score customers that are driving the spend growth and maintaining high payment rates.

Mark Mason: And while we continue to see an overall resilient U.S. consumer, we also continue to see a divergence in performance and behavior across FICO and in combat.

Mark Mason: When we look across our consumer clients, only the highest income quartile has more savings than they did at the beginning of 2019, and it is the over 740 FICO score customers that are driving the spend growth and maintaining high payment rates.

Mark Mason: Lower FICO ban customers are seeing sharper drops in payment rates and borrowing more as they are more acutely impacted by high inflation and interest rates.

Mark Mason: And it is the over 740 FICO score customers that are driving the spend growth and maintaining high payment rates. Lower FICO ban customers are seeing sharper drops in payment rates and borrowing more as they are more acutely impacted by high inflation and interest rates.

Mark Mason: That said, as we will discuss later, we're seeing signs of stabilization in delinquency performance across our CARDS portfolio.

Mark Mason: Lower FICO ban customers are seeing sharper drops in payment rates, and borrowing more as they are more acutely impacted by high inflation and interest rates. That said, as we will discuss later, we're seeing signs of stabilization and delinquency performance across our card portfolio. And we've taken this all into account in our reserving, and we remain well-reserved with a reserve-to-funded loan ratio of 8.1% for our total card portfolio. Our corporate portfolio is largely investment grade at approximately 82% as of the second, and we saw a nearly $500 million sequential decrease in corporate non-accrual loans, largely driven by upgrades and repayments.

Mark Mason: And we've taken this all into account in our reserving, and we remain well-reserved with a reserve-to-funded loan ratio of 8.1% for our total card portfolio.

Mark Mason: That said, as we will discuss later, we're seeing signs of stabilization in delinquency performance across our card portfolio. And we've taken this all into account in our reserves, and we remain well-reserved with a reserve to funded loan ratio of 8.1% for our total card portfolio. Our corporate portfolio is largely investment grade at approximately 82% as of the second quarter, and we saw a nearly $500 million sequential decrease in corporate non-accrual loans, largely driven by upgrades and repayments.

Mark Mason: Our corporate portfolio is largely investment grade at approximately 82% as of the second quarter.

Mark Mason: And we saw a nearly $500 million sequential decrease in corporate non-accrual loans, largely driven by upgrades and repayments.

Mark Mason: Additionally, this quarter, we saw an improvement in our macro assumptions driven by HPI, oil prices, and equity market valuation.

Mark Mason: And our credit loss reserves continues to incorporate a scenario-weighted average unemployment rate of nearly 5% and a downside unemployment rate of nearly 7%. As such, we feel very comfortable with the nearly $22 billion of reserves that we have in the current environment.

Mark Mason: Additionally, this quarter, we saw an improvement in our macro assumptions driven by HPI, oil prices, and equity market valuation. And our credit loss reserves continue to incorporate a scenario-weighted average unemployment rate of nearly 5% and a downside unemployment rate of nearly 7%. As such, we feel very comfortable with the nearly $22 billion of reserves that we have in the current environment.

Mark Mason: Additionally, this quarter, we saw an improvement in our macro assumptions driven by HPI, oil prices, and equity market valuation. And our credit loss reserves continues to incorporate a scenario-weighted average unemployment rate of nearly 5%, and a downside unemployment rate of nearly 7%. As such, we feel very comfortable with the nearly $22 billion of reserves that we have in the current environment.

Mark Mason: Turning to slide 11, I'd like to take a moment to highlight the strength of our balance sheet, capital and liquidity.

Mark Mason: It is this strength that allows us to support clients through periods of uncertainty and volatility.

Mark Mason: Turning to slide 11, I'd like to take a moment to highlight the strength of our balance sheet, capital, and liquidity. It is this strength that allows us to support clients through periods of uncertainty and volatility. Our balance sheet is a reflection of our risk appetite, strategy, and diversified business model. Our $1.3 trillion deposit base is well diversified across regions, industries, customers, and account types. The majority of our deposits are corporate at $807 billion and span 90 countries. And as you heard at the services investor day, most of these deposits are held in operating accounts that are crucial to how our clients fund their daily operations around the world, making them operational in nature and therefore very stable.

Mark Mason: Turning to slide 11, I'd like to take a moment to highlight the strength of our balance sheet, capital, and liquidity. It is this strength that allows us to support clients through periods of uncertainty and volatility. Our balance sheet is a reflection of our risk appetite, strategy, and diversified business model. Our $1.3 trillion deposit base is well diversified across regions, industries, customers, and account types. The majority of our deposits are corporate, at $807 billion, and span 90 countries.

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

Mark Mason: Our $1.3 trillion deposit base is well diversified across regions, industries, customers, and account types.

Mark Mason: The majority of our deposits are corporate at $807 billion and span 90 countries.

Mark Mason: And as you heard at the Services Investor Day, most of these deposits are held in operating accounts that are crucial to how our clients fund their daily operations around the world, making them operational in nature and therefore very stable.

Mark Mason: And as you heard at Services Investor Day, most of these deposits are held in operating accounts that are crucial to how our clients fund their daily operations around the world, making them operational in nature and therefore very stable. The majority of our remaining deposits, about $404 billion, are well-diversified across the private bank, city goals, retail, and wealth at work offering, as well as across regions and products. Of our total deposits, 68% are U.S. dollar denominated, with the remainder spanning over 60 currencies.

Mark Mason: The majority of our remaining deposits, about $404 billion, are well diversified across the private bank, city gold, retail, and wealth at work offering, as well as across regions and products.

Mark Mason: The majority of our remaining deposits, about $404 billion, are well diversified across the private bank, city goals, retail, and wealth at work offering, as well as across regions and products. Of our total deposits, 68% are US dollar denominated, with the remainder spanning over 60 currencies. Our asset mix also reflects our strong risk appetite framework. Our $688 billion loan portfolio is well diversified across consumer and corporate loans. And about one third of our balance sheet is held in cash and high quality, short duration investment securities that contribute to our approximately $900 billion of available liquidity resources.

Mark Mason: Of our total deposits, 68% are U.S. dollar-denominated, with the remainder spanning over 60 currencies. Our asset mix also reflects our strong risk appetite framework.

Mark Mason: Our $688 billion loan portfolio is well diversified across consumer and corporate loans.

Mark Mason: Our asset mix also reflects our strong risk appetite framework. Our $688 billion loan portfolio is well diversified across consumer and corporate loans. And about one third of our balance sheet is held in cash and high quality, short-duration investment securities that contribute to our approximately $900 billion of available liquidity resources. We continue to feel very good about the strength of our balance sheet and the quality of our assets and liabilities, which position us to be a source of strength for the industry and, importantly for our clients.

Mark Mason: And about one-third of our balance sheet is held in cash and high-quality, short-duration investment securities that contribute to our approximately $900 billion of available liquidity resources.

Mark Mason: We continue to feel very good about the strength of our balance sheet and the quality of our assets and liabilities, which position us to be a source of strength for the industry and importantly, for our clients.

Mark Mason: On slide 12, we show a sequential walk to provide more detail on the drivers of our CET1 ratio this quarter.

Mark Mason: We continue to feel very good about the strength of our balance sheet and the quality of our assets and liability, which position us to be a source of strength for the industry and, importantly, for our clients.

Mark Mason: We ended the quarter with a preliminary 13.6% CET1 capital ratio, approximately 130 basis points, or approximately $15 billion above our current regulatory capital requirement of 12.3%.

Mark Mason: On slide 12, we show a sequential walk to provide more detail on the drivers of our CET1 ratio this quarter. We ended the quarter with a preliminary 13.6% CET1 capital ratio, approximately 130 basis points, or approximately $15 billion above our current regulatory capital requirement of 12.3%.

Mark Mason: On slide 12, we show a sequential walk to provide more detail on the drivers of our CET-1 ratio this quarter. We ended the quarter with a preliminary 13.6% CET-1 capital ratio, approximately 130 basis points or approximately $15 billion above our current regulatory capital requirement of 12.3%. We expect our regulatory capital requirement to decrease to 12.1% as of October 1st, which incorporates the reduction in our stress capital buffer from 4.3% to the indicative SCB of 4.1% we announced a couple of weeks ago. We were pleased to see the improvement in our deep fast result and the corresponding reduction in our SCB.

Mark Mason: We expect our regulatory capital requirement to decrease to 12.1% as of October 1st, which incorporates the reduction in our stress capital buffer from 4.3% to the indicative SCB of 4.1% we announced a couple of weeks ago.

Mark Mason: We expect our regulatory capital requirement to decrease to 12.1% as of October 1st, which incorporates the reduction in our stress capital buffer from 4.3% to the indicative SCB of 4.1% we announced a couple of weeks ago. We were pleased to see the improvement in our DFAS result and the corresponding reduction in our SCB. That said, even with the reduction, our capital requirements do not yet fully reflect our simplification efforts, the benefits of our transformation, or the full execution of our strategy, all of which we expect to reduce our capital requirements over time.

Mark Mason: We were pleased to see the improvement in our DFAS result and the corresponding reduction in our SCB.

Mark Mason: That said, even with the reduction, our capital requirement does not yet fully reflect our simplification efforts, the benefits of our transformation, or the full execution of our strategy, all of which we expect to reduce our capital requirements over time.

Mark Mason: That said, even with the reduction, our capital requirement does not yet fully reflect our simplification efforts, the benefits of our transformation, or the full execution of our strategy, all of which we expect to reduce our capital requirements over time. and as a reminder, we announced an increase to our common dividend from $0.53 per share to $0.56 per share following the SCB result. And as Jane mentioned earlier, we plan on doing a billion dollars of buybacks this quarter.

Mark Mason: And as a reminder, we announce an increase to our common dividend from $0.53 per share to $0.56 per share following the SCB results.

Mark Mason: And as Jane mentioned earlier, we plan on doing a billion dollars of buybacks this quarter.

Mark Mason: And as a reminder, we announced an increase in our common dividend from $0.53 per share to $0.56 per share following the SCB results. And, as Jane mentioned earlier, we plan on doing a billion dollars of buybacks this quarter. So now, turning to slide 13.

Speaker Change: So now turning to slide 13, before I get into the businesses, as a reminder, in the fourth quarter of last year, we implemented a revenue-sharing arrangement within banking and between banking, services, and markets to reflect the benefit the businesses get from our relationship-based lending.

Mark Mason: So now turning to slide 13, before I get into the businesses, as a reminder, in the fourth quarter of last year, we implemented a revenue sharing arrangement within banking and between banking services and markets to reflect the benefit the businesses get from our relationship-based lending. The impact of revenue sharing is included in the All Other line for each business in our financial supplement. In services, revenues were of 3% this quarter, reflecting continued underlying momentum across both TTF and security services. Net interest income was down 1%, largely driven by lower earnings on our net investment in Argentina, partially offset by the benefit of higher US and non-US interest rates relative to the prior year period.

Mark Mason: Before I get into the businesses, as a reminder, in the fourth quarter of last year, we implemented a revenue sharing arrangement within banking and between banking services and markets to reflect the benefit the businesses get from our relationship-based lending. The impact of revenue sharing is included in the all other line for each business in our financial supplement. In services, revenues were up 3% this quarter, reflecting continued underlying momentum across both TTS and security services. Net interest income was down 1%, largely driven by lower earnings on our net investment in Argentina, partially offset by the benefit of higher U.S. and non-U.S. interest rates relative to the prior year period.

Speaker Change: The impact of revenue sharing is included in the All Other line for each business in our financial supplement.

Speaker Change: In services, revenues were up 3% this quarter, reflecting continued underlying momentum across both TTS and security services.

Speaker Change: Net interest income was down 1%, largely driven by lower earnings on our net investment in Argentina, partially offset by the benefit of higher U.S. and non-U.S. interest rates relative to the prior year period.

Speaker Change: Non-interest revenue increased 11% driven by continued strength across underlying fee drivers, as well as a smaller impact from currency devaluation in Argentina.

Speaker Change: The underlying growth in both businesses is a result of our continued investment in product innovation, client experience, and platform modernization that we highlighted during our Services Investor Day last month.

Mark Mason: Non-interest revenue increased 11%, driven by continued strength across underlying seed drivers, as well as a smaller impact from currency devaluation in Argentina. The underlying growth in both businesses is a result of our continued investment in product innovation, client experience, and platform modernization that we highlighted during our services investor day last month. Expenses increased 9%, largely driven by an Argentina-related transaction tax expense, a legal settlement expense, and continued investments in product innovation and technology. Cost of credit was a benefit of $27 million, driven by an ACO released in the quarter. Average loans were up 3%, primarily driven by continued demand for export and agency finance, particularly in Asia, as well as working capital loans to corporate and commercial clients in Latin America and Asia.

Mark Mason: Non-interest revenue increased 11% driven by continued strength across underlying fee drivers as well as a smaller impact from currency devaluation in Argentina. The underlying growth in both businesses is a result of our continued investment in product innovation, client experience, and platform modernization that we highlighted during our Services Investor Day last month. Expenses increased 9%, largely driven by an Argentina-related transaction tax expense, a legal settlement expense, and continued investments in product innovation and technology.

Speaker Change: Expenses increased 9%, largely driven by an Argentina-related transaction tax expense, a legal settlement expense, and continued investments in product innovation and technology.

Speaker Change: Cost of credit was a benefit of $27 million, driven by an ACL release in the quarter.

Speaker Change: Average loans were up 3%, primarily driven by continued demand for export and agency finance, particularly in Asia, as well as working capital loans to corporate and commercial clients in Latin America and Asia.

Mark Mason: The cost of credit was a benefit of $27 million, driven by an ACL release in the quarter. Average loans were up 3%, primarily driven by continued demand for export and agency finance, particularly in Asia, as well as working capital loans to corporate and commercial clients in Latin America and Asia. Average deposits were down 1%, driven by non-operating deposit outflows.

Speaker Change: Average deposits were down 1% driven by non-operating deposit outflows. At the same time, we continue to see good operating deposit inflows.

Speaker Change: Net income was approximately $1.5 billion and services continues to deliver a high ROTCE coming in at 23.8% for the quarter.

Mark Mason: Average deposits were down 1%, driven by non-operating deposit outflows. At the same time, we continued to see good operating deposit inflows. Net income was approximately $1.5 billion, and services continues to deliver a high ROTCE, coming in at 23.8% for the quarter.

Mark Mason: At the same time, we continue to see good operating deposit inflows. Net income was approximately $1.5 billion, and services continued to deliver a high ROTCE, coming in at 23.8% for the quarter. On slide 14, we show the results for markets for the second quarter. Markets revenues were up 6%. Fixed income revenues decreased 3%, driven by rates and currencies, which were down 11% on the back of lower volatility and tighter spreads.

Speaker Change: On slide 14, we show the results for markets for the second quarter.

Speaker Change: Markets revenues were up 6%.

Speaker Change: Fixed income revenues decreased 3% driven by rates and currencies which were down 11% on the back of lower volatility and tighter spread. This was partially offset by strength in spread products and other fixed income which was up 20% primarily driven by continued loan growth and higher securitization and underwriting fees.

Mark Mason: On slide 14, we show the results for markets for the second quarter. Markets revenues were up 6%; 16 come revenues decreased 3%, driven by rates and currencies, which were down 11% on the back of lower volatility and tighter spread. This was partially offset by strength in spread products and other fixed income, which was up 20%, primarily driven by continued loan growth and higher securitization and underwriting fees. In addition to a benefit from the visa B exchange offer, we continued to see good underlying momentum and equity, primarily driven by equity derivative, and we continued to make progress in prime with balances of approximately 18%.

Speaker Change: In addition to a benefit from the Visa B Exchange offer, we continue to see good underlying momentum in equity, primarily driven by equity derivatives, and we continue to make progress in prime with balances up approximately 18%.

Mark Mason: This was partially offset by strengthened spread products and other fixed income, which was up 20%, primarily driven by continued loan growth and higher securitization and underwriting fees. In addition to a benefit from the Visa B Exchange offer, we continue to see good underlying momentum in equity, primarily driven by equity derivatives, and we continue to make progress in prime, with balances up approximately 18%. Expenses decreased 1% driven by productivity savings, but it was offset by higher volume related expenses.

Speaker Change: Expenses decreased 1% driven by productivity savings, falsely offset by higher volume related expenses.

Speaker Change: Foster Credit was a benefit of $11 million as an ACL released more than offset net credit loss.

Mark Mason: Expenses decreased 1%, driven by productivity saving, partially offset by higher volume-related expenses. Foster credit was a benefit of $11 million as an ACR released more than offset net credit law. Average loans increased 11%, largely driven by asset back lending and spread products. Average trading assets increased 12%, largely driven by client demand for treasuries and mortgage back security. Markets generated positive operating leverage and delivered net income of approximately $1.4 billion with an ROTCE of 10.7% for the quarter.

Speaker Change: Average loans increased 11%, largely driven by asset-backed lending and spread products.

Speaker Change: Average trading assets increased 12%, largely driven by client demand for treasuries and mortgage-backed securities.

Mark Mason: Foster Credit had a benefit of $11 million as an ACL release more than offset net credit loss. Average loans increased 11%, largely driven by asset-backed lending and spread products. Average trading assets increased 12%, largely driven by client demand for treasuries and mortgage-backed securities. Markets generated positive operating leverage and delivered net income of approximately $1.4 billion with an ROTCE of 10.7% for the quarter. On slide 15, we show the results for banking for the second quarter. Banking revenues increased 38 percent, driven by growth in investment banking and corporate lending.

Speaker Change: Markets generated positive operating leverage and delivered net income of approximately $1.4 billion with an ROTCE of 10.7% for the quarter.

Speaker Change: On slide 15 we show the results for banking for the second quarter. Banking revenues increased 38% driven by growth in investment banking and corporate lending.

Speaker Change: Investment banking revenues increased 60%, driven by strength across capital markets and advisory, given favorable market conditions.

Mark Mason: On slide 15, we show the results for banking for the second quarter. Banking revenues increased 38%, driven by growth in investment banking and corporate lending. Investment banking revenues increased 60%, driven by strength across capital markets and advisory, given favorable market conditions. DCM continued to benefit from strong issue and activities, mainly in investment grade, as issuers continued to de-risk funding plans in advance of what could be a more volatile second half and the context of a number of important global elections, as well as the macro environment. In ECM, excluding China A shares, we're seeing a pickup in IPO activity led by the US, as well as continued convertible issuance, as issuers take advantage of strong equity market performance and expectations for rates to be higher for longer.

Speaker Change: DCM continued to benefit from strong issuance activities, mainly in investment grade, as issuers continued to de-risk funding plans in advance of what could be a more volatile second half in the context of a number of important global elections, as well as the macro environment.

Mark Mason: Investment banking revenues increased 60 percent, driven by strength across capital markets and advisory given favorable market conditions. DCM continued to benefit from strong issuance activities, mainly in investment grade, as issuers continued to de-risk funding plans in advance of what could be a more volatile second half in the context of a number of important global elections, as well as the macro environment. In ECM, excluding China A shares, we're seeing a pickup in IPO activity led by the U.S. as well as continued convertible issuance as issuers take advantage of strong equity market performance and expectations for rates to be higher for longer.

Speaker Change: In ECM, excluding China A shares, we're seeing a pickup in IPO activity, led by the U.S., as well as continued convertible issuance, as issuers take advantage of strong equity market performance and expectations for rates to be higher for longer.

Speaker Change: And in advisory, we're seeing revenues from the relatively low announced activity in 2023 coming to fruition as those transactions close.

Speaker Change: Both year-to-date and in the quarter, we gained share across DCM, ECM, and advisory, particularly in technology, where we've been investing.

Mark Mason: And in advisory, we're seeing revenues from the relatively low announced activity in 2023, coming to fruition as those transactions close. Both the year to date and in the quarter, we gain share across DCM, ECM, and advisory, particularly in technology where we've been investing. Corporate lending revenues, excluding market to market on loan hedges, increased 7% largely driven by higher revenue share. We generated positive operating leverage again this quarter, as expenses decrease 10%, primarily driven by actions taken to right size the expense base. Costa Credit was a benefit of $32 million, driven by the ACL reliefs, reflecting an improvement in the macroeconomic outlook, partially offset by net credit law.

Mark Mason: And in advisory, we're seeing revenues from the relatively low announced activity in 2023 coming to fruition as those transactions close. Both year-to-date and in the quarter, we gained share across DCM, ECM, and advisory, particularly in technology, where we've been investing. Corporate lending revenues, excluding mark-to-market on loan hedges, increased 7 percent, largely driven by higher revenue share.

Speaker Change: Corporate lending revenues, excluding mark-to-market on loan hedges, increased 7%, largely driven by higher revenue share.

Speaker Change: We generated positive operating leverage again this quarter as expenses decreased 10%, primarily driven by actions taken to right-size the expense base.

Speaker Change: Foster Credit was a benefit of $32 million, driven by an ACL release reflecting an improvement in the macroeconomic outlook, partially offset by net credit loss.

Mark Mason: We generated positive operating leverage again this quarter as expenses decreased 10 percent, primarily driven by actions taken to right-size the expense base. Cluster credit was a benefit of $32 million, driven by the ACL release, reflecting an improvement in the macroeconomic outlook, partially offset by a net credit loss. Average loans decreased 4% as we maintain strict discipline around returns combined with lower overall demand for credit.

Speaker Change: Average loans decreased 4% as we maintain strict discipline around returns combined with lower overall demand for credit. Net income was $406 million and ROTCE was 7.5% for the quarter.

Mark Mason: Average loans decreased 4%, as we maintain strict discipline around returns, combined with lower overall demand for credit. Net income was $406 million and ROTCE was 7.5% for the quarter.

Speaker Change: On slide 16, we show the results for wealth for the second quarter. Wealth revenues increased 2 percent, driven by a 13 percent increase in NIR from higher investment fee revenues, partially offset by a 4 percent decrease in NII from higher mortgage funding costs.

Mark Mason: Net income was $406 million, and ROTCE was 7.5% for the quarter. On slide 16, we show the results for wealth for the second quarter. Wealth revenues increased 2% driven by a 13% increase in NIR from higher investment fee revenue, partially offset by a 4% decrease in NII from higher mortgage funding costs. We continue to see good momentum in non-interest revenue as we benefited from double-digit client investment asset growth, both in North America and internationally, driven by net new client investment assets as well as market valuation.

Mark Mason: On slide 16, we showed the results for wealth for the second quarter. Wealth revenues increased 2%, driven by a 13% increase in NIR from higher investment fee revenues, partially offset by a 4% decrease in NII from higher mortgage funding cost. We continue to see good momentum in non-interest revenue as we benefited from double-digit client investment asset growth both in North America and internationally, driven by net new client investment assets as well as market valuation. Expenses were down 4%, driven by the initial benefit of expense reduction as we right size the workforce and expense base. Costa Credit was a benefit of $9 million as an ACL reliefs more than offset net credit law.

Speaker Change: We continue to see good momentum in non-interest revenue as we benefited from double-digit client investment asset growth, both in North America and internationally, driven by net new client investment assets as well as market valuation.

Speaker Change: Expenses were down 4% given by the initial benefit of expense reductions as we right-sized the workforce and expense base. Foster credit was a benefit of $9 million as an ACL released more-than-offset net credit law.

Mark Mason: Expenses were down 4% given the initial benefit of expense reduction as we right-sized the workforce and expense base. Foster Credit was a benefit of $9 million as an ACL release more than offset net credit loss. Preliminary end-of-period client balances increased 9%, driven by higher client investment assets as well as higher deposits. Average loans were flat as we continue to optimize capital use.

Speaker Change: Preliminary end-of-period client balances increased 9% driven by higher client investment assets as well as higher deposits.

Speaker Change: Average loans were flat as we continue to optimize capital usage.

Mark Mason: Preliminary end-to-period client balance is increased 9%, driven by higher client investment assets as well as higher deposits. Average loans were flat as we continue to optimize capital usage. Average deposits increased 2%, largely reflecting the transfer of relationships and associated deposits from USPB, partially offset by a shift in deposits to higher yielding investment. On city Client investment assets were up 15% during by net new investment assets closed and the benefit of higher market valuation. Well generated positive operating leverage this quarter and delivered net income of 210 million dollars with an ROTCE of 6.4% for the quarter.

Speaker Change: Average deposits increased 2%, largely reflecting the transfer of relationships and associated deposits from USPB, partially offset by a shift in deposits to higher yielding investments on Citi's platform.

Mark Mason: Average deposits increased 2%, largely reflecting the transfer of relationships and associated deposits from USPB, partially offset by a shift in deposits to higher-yielding investments on Citi's platform. Client investment assets were up 15% driven by net new investment asset flows and the benefit of higher market valuation. Wealth Generated Positive Operating Leverage this quarter and delivered net income of $210 million with an ROTCE of 6.4% for the quarter.

Speaker Change: Client investment assets were up 15% driven by net new investment asset flows and the benefit of higher market valuation.

Speaker Change: Wealth generated positive operating leverage this quarter and delivered net income of $210 million with an ROTCE of 6.4% for the quarter.

Speaker Change: On slide 17, we show the results for U.S. personal banking for the second quarter. U.S. personal banking revenues increased 6%, driven by NII growth of 5%, and lower partner payments.

Mark Mason: On slide 17, we show the results for US personal banking for the second quarter. US personal banking revenues increased 6% during by NII growth of 5% and lower partner payment. Brandy Cards revenues increased 8% during by interest earning balance growth of 9% as payment rates continue to moderate, and we continue to see growth in spend volume of 3% primarily driven by customers with bike scores of 740 or higher. Retail services revenues increased 6% primarily driven by lower payments from city to our partners due to higher net credit losses, and interest earning balances grew 8%. Retail banking revenues increased 3% during by higher deposits spread as well as mortgage and installment loan growth.

Mark Mason: On slide 17, we show the results for U.S. personal banking for the second quarter. U.S. personal banking revenues increased 6 percent, driven by NII growth of 5 percent and lower partner payments. Branded cards revenues increased 8%, driven by interest earning balance growth of 9% as payment rates continue to moderate.

Speaker Change: Branded cards revenues increased 8%, driven by interest earning balance growth of 9% as payment rates continue to moderate, and we continue to see growth in spend volumes of 3%, primarily driven by customers with FICO scores of 740 or higher.

Speaker Change: Retail services revenues increased 6%, primarily driven by lower payments from Citi to our partners due to higher net credit losses, and interest earning balances grew 8%.

Mark Mason: And we continue to see growth in spend volumes of 3%, primarily driven by customers with FICO scores of 740 or higher. Retail services revenues increased 6%, primarily driven by lower payments from Citi to our partners due to higher net credit losses, and Interest Earnings Balances grew 8%. Retail banking revenues increased 3%, driven by higher deposit spread as well as mortgage and installment loan growth.

Speaker Change: Retail banking revenues increased 3%, driven by higher deposit spread, as well as mortgage and installment loan growth.

Speaker Change: USPB also generated positive operating leverage this quarter, with expenses down 2%, driven by lower technology and compensation costs, partially offset by higher volume related expenses.

Speaker Change: Foster credit increased to $2.3 billion, largely driven by higher-end CLs of $1.9 billion and an ACL bill of approximately $400 million, reflecting volume growth in the core.

Mark Mason: USPB also generated positive operating leverage this quarter, with expenses down 2%, driven by lower technology and compensation costs, partially offset by higher volume-related expenses. Foster credit increased to $2.3 billion, largely driven by higher NCLs of $1.9 billion and an ACL bill of approximately $400 million, reflecting volume growth in the court. But let me remind you of the three things driving our NCL this quarter. Card Loan Vintages that were originated over the last few years are all maturing at the same time. These vintages were delayed in their maturation due to the unprecedented levels of government stimulus during the pandemic.

Mark Mason: USPB also generated positive operating leverage this quarter, with expenses down 2% driven by lower technology and compensation costs, partially offset by higher volume-related expenses. Fossil credit increased to 2.3 billion dollars, largely driven by higher NCLs of 1.9 billion dollars and an ACL build of approximately 400 million dollars, reflecting volume growth in the quarter. But let me remind you of the three things driving our NCLs this quarter. First, card loan vignettes that were originated over the last few years are all maturing at the same time. These vignages were delayed in their maturation due to the unprecedented levels of government stimulus during the pandemic.

Speaker Change: But let me remind you of the three things driving our NCL this quarter.

Speaker Change: First, card loan vintages that were originated over the last few years are all maturing at the same time.

Speaker Change: These vintages were delayed in their maturation due to the unprecedented levels of government stimulus during the pandemic.

Speaker Change: Second, we continue to see seasonally higher NPLs in the second quarter. Third, certain pockets of customers continue to be impacted by persistent inflation and higher interest rates resulting in higher losses.

Mark Mason: Second, we continue to see seasonally higher NCLs in the second quarter. Third, certain pockets of customers continue to be impacted by persistent inflation and higher interest rates, resulting in higher losses. However, across both portfolios, we are seeing signs of stabilization in delinquency performance, but we will continue to watch the impact of persistent inflation and high interest rates as the year progresses. Despite these factors, we still expect branded cards to be in the 3.5% to 4% NCL range for the full year, and retail services to be at the high end of the range of 5.75% to 6.25%.

Mark Mason: Second, we continue to see seasonally higher NCLs in the second quarter. Third, certain pockets of customers continue to be impacted by persistent inflation and higher interest rates, resulting in higher losses. However, across both portfolios, we are seeing signs of stabilization in delinquency performance, but we will continue to watch the impact of persistent inflation and high interest rates as the year progresses. Despite these factors, we still expect branded cards to be in the 3.5% to 4% NCL range for the full year and retail services to be at the high end of the range of 5.75% to 6.25%. Average deposits decreased 18% as the transfer of relationships and the associated deposits to our wealth business more than offset the underlying growth. Net income was $121 million, and ROTCE for the quarter was 1.9%.

Speaker Change: However, across both portfolios, we are seeing signs of stabilization in delinquency performance, but we will continue to watch the impact of persistent inflation and high interest rates as the year progresses.

Speaker Change: Despite these factors, we still expect branded cards to be in the 3.5% to 4% NCL range for the full year, and retail services to be at the high end of the range of 5.75% to 6.25%.

Speaker Change: Average deposits decreased 18% as the transfer of relationships and the associated deposits to our wealth business more than offset the underlying growth.

Speaker Change: Net income was $121 million, and ROTCE for the quarter was 1.9%.

Mark Mason: Average deposits decreased 18% as the transfer of relationships and the associated deposits to our wealth business more than offset the underlying growth. Net income was $121 million, and ROTCE for the quarter was 1.9%. As we said before, we will continue to take actions to manage through the regulatory headwind, lap the credit cycle, and grow revenue while improving the overall operating efficiency of the business to ultimately get to a high teens return over the medium term.

Speaker Change: As we've said before, we will continue to take actions to manage through the regulatory headwind, lap the credit cycle, and grow revenue while improving the overall operating efficiency of the business to ultimately get to a high team's return over the medium term.

Mark Mason: As we've said before, we will continue to take actions to manage through the regulatory headwinds, lap the credit cycle, and grow revenue while improving the overall operating efficiency of the business to ultimately get to a high teens return over the medium term. On slide 18, we show results for all other on a managed basis, which includes corporate other and legacy franchises and excludes divestiture-related items. Revenues decreased 22%, primarily driven by the closed exit and wind-down and higher funding costs, partially offset by growth in Mexico, as well as the impact of the Vis-a-Vis exchange offer, and expenses decreased 7%, primarily driven by closed exits and wind-ups.

Speaker Change: On slide 18, we show results for all other on a managed basis, which includes corporate other and legacy franchises, and excludes divestiture-related items.

Speaker Change: Revenues decreased 22%, primarily driven by the closed exit and wind-down and higher funding costs, partially offset by growth in Mexico, as well as the impact from the Vis-a-Vis exchange offer.

Mark Mason: On Slide 18, we show results for all other on a managed basis, which includes corporate other and legacy franchises and excludes the vestige-related item. Revenue's decreased 22%, primarily driven by the closed exit and wind down and higher funding costs, partially offset by growth in Mexico, as well as the impact from the visa to be exchange offer, and expenses decreased 7% from early driven by closed exit and wind down.

Speaker Change: And expenses decreased 7%, primarily driven by closed exits and wind-ups.

Speaker Change: Slide 19 shows our full year 2024 outlook and medium-term guidance, both of which remain unchanged.

Speaker Change: We continue to remain laser-focused on executing on our transformation and enhancing the business's performance.

Mark Mason: Slide 19 shows our full year 2024 outlook and medium-term guidance, both of which remain unchanged. We continue to remain laser-focused on executing on our transformation and enhancing the business's performance. And while we recognize there's a lot more to do on transformation, we are pleased with the progress that we're making towards our 2024 and medium-term target, and remain committed to these targets.

Speaker Change: And while we recognize there's a lot more to do on transformation, we are pleased with the progress that we're making towards our 2024 and medium-term targets and remain committed to these targets.

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

Speaker Change: At this time, we will open the floor for questions. If you'd like to ask a question, please press star 5 on your telephone keypad. You may remove yourself at any time by pressing star 5 again. Please limit to one question and one follow-up. We'll pause for just a moment.

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

Unknown Executive: Slide 19 shows our full year 2024 outlook and medium-term guidance, both of which remain unchanged. We continue to remain laser focused on executing on our transformation and enhancing the business's performance. And while we recognize there's a lot more to do on transformation, we are pleased with the progress that we're making towards our 2024 and medium-term targets and remain committed to these targets. With that, Jane and I will be happy to take your questions. At this time, we will open the floor for questions. If you'd like to ask a question, please press star 5 on your telephone keypad. You may remove yourself at any time by pressing star 5 again.

Operator: At this time, we will open the floor for questions. If you'd like to ask a question, please press star 5 on your telephone keypad. You may remove yourself at any time by pressing star 5 again.

Speaker Change: Okay, our first question will come from Mike Mayo with Wells Fargo. Your line is now open, please go ahead.

Operator: Please limit to one question and one follow-up. We'll pause for just a moment.

Michael Lawrence Mayo: Hi, could you elaborate more on the amended consent order, Jane? You said it was disappointing.

Mike Mayo: Okay, our first question will come from Mike Mayo with Wells Fargo. Your line is not open. Please go ahead.

Unknown Executive: Please limit to one question and one follow-up. We'll pause for just a moment. Okay, our first question will come from Mike Mayo with Wells Fargo. Your line is now open. Please go ahead. Hi. Could you elaborate more on the amended consent order, Jane? You said it was disappointing to have gotten that this week.

Jane Nind Fraser: To have gotten that this week, it's almost four years into the consent order.

Michael Lawrence Mayo: And a little bit, you know, why it hasn't been resolved and what's on, that's the loss column and maybe a little bit more on the win column too. I mean, you have what, 12,000 people thrown at the problem, billions of dollars.

Jane Fraser: Hi, could you elaborate more on the amended consent order, Jane? We said it was disappointing to have gotten that this week. It's almost four years into the consent order, and a little bit why it hasn't been resolved and what's on that's the lost column and maybe a little bit more in the win column, too. I mean, you have what 12,000 people thrown at the problem, billions of dollars. Is it not enough people? Is it not about money? Is it you need to look at it in a different way? Are you not talking the same language?

Jane Nind Fraser: It's almost four years into the consent order, and a little bit about why it hasn't been resolved and what's in the... That's the loss column and maybe a little bit more in the win column too. I mean, you have, what, 12,000 people thrown at the problem, billions of dollars. Is it not enough people? Is it not enough money?

Speaker Change: Is it not enough people? Is it not enough money? Do you need to look at it in a different way? Are you not talking the same language? I mean, you have John Dugan as your lead independent director, ex-head of the OCC, and it seems like...

Speaker Change: You got your report card. I guess you passed overall. They went out of their way to say some nice things, but it looks like you got failing grades and data and regulatory management. So your confidence is going to be

Jane Nind Fraser: Do you need to look at it in a different way? Are you not talking the same language? I mean, you have John Dugan as your lead independent director, ex-head of the OCC, and it seems like, you know, you got your report card. I guess you passed overall.

Jane Fraser: I mean, you have John Dugan as your lead independent director, extent of the OCC, and it seems like you got your report card, I guess you passed over all. They went out of the way to say some nice things, but it looks like you got failing grades in data and regulatory management. So, you're confident it's going to be resolved, but it's already been four years, and it hasn't been resolved.

Speaker Change: Resolved, but it's already been four years and it hasn't been resolved, so what is it going to take from here, and how can you...

Jane Nind Fraser: They went out of their way to say some nice things, but it looks like you got failing grades in data and regulatory management. So your confidence is going to be restored, but it's already been four years, and it hasn't been resolved. So, what is it going to take from here, and how can you resolve the regulatory concerns while continuing or serving shareholders better? And then, in the win column, since it's so nebulous, this back office? What are you achieving? You mentioned some items, but you can put more meat on those bones.

Speaker Change: Resolve the regulatory concerns while continuing or serving.

Speaker Change: Shareholders better. And then in the win column, since it's so nebulous, this back office, what are you achieving? You mentioned some items, but you can put more meat on those bones. Thanks.

Jane Fraser: So, what is it going to take from here, and how can you resolve the regulatory concerns while continuing to serve shareholders better? And then in the win column, since it's so nebulous, this back office, what are you achieving? You mentioned some items, but you could put more meat on those bones.

Speaker Change: Yes. Thank you, Mike. That's a few different parts of that. So let's start by just taking a step back. Our transformation.

Jane Fraser: Thanks.

Speaker Change: is addressing decades of underinvestment in large parts of cities infrastructure and in our risk and control environment.

Jane Fraser: Yes.

Jane Nind Fraser: Thanks. Yeah, thank you, Mike. There are a few different parts to that. So let's start by just taking a step back. Our transformation is addressing decades of underinvestment in large parts of cities' infrastructure and in our risk and control environment. And when you unpack that, there are areas where we've had an absence of enforced enterprise-wide standards and governance. We've had a siloed organization that's prevented scale, a culture where a lot of groups are allowed to solve the same problem in different ways. Fragmented tech platforms, manual processes, and controls, and a weak first line of defense with too few subject matter experts. So this is a massive body of work that goes well beyond the consent order.

Mark Mason: Thank you, Mike. That's a few different parts of that, so let's start by just taking a step back. Our transformation is addressing decades of underinvestment in large parts of cities, infrastructure, and in our risk and control environment, and when you unpack that, there are areas where we've had an absence of enforced enterprise-wide standards and governance. We've had a siloed organization that prevented scale or a culture where a lot of groups are allowed to solve problem, the same problem in different ways, fragmented tech platforms, manual processes and controls, and a weak first line of defense, two-fuse subject matter experts.

Speaker Change: And when you unpack that, there's areas where we've had an absence of enforced enterprise-wide standards and governance. We've had a siloed organization that's prevented scale, a culture where a lot of groups are allowed to solve the same problem in different ways.

Speaker Change: Fragmented Tech Platforms, Manual Processes and Controls, and a weak first line of defense, too few subject matter experts. So, this is a massive body of work.

Speaker Change: That goes well beyond the consent order, and this is not Old City putting in Band-Aids.

Speaker Change: This is Citi tackling the root issues head on.

Mark Mason: So this is a massive body of work that goes well beyond the consent order. And this is not old city putting in band-aid. This is city tackling the root issues head on. It's a multiyear undertaking, as we've talked about, and you saw the statement by one of our regulators this week. We have made meaningful progress on our transformation. Excuse me, and on our simplification. And so what, as Jane says, the progress that we that we've made, it spans multiple parts of the consent order and transformation work. Remember that consent order and transformation work includes risk.

Speaker Change: It's a multi-year undertaking, as we've talked about, and you saw the statement by one of our regulators this week. We have made meaningful progress on our transformation, excuse me, and on our simplification.

Mark Mason: And this is not an old city putting in band-aids. This is a city tackling the root issues head on. It's a multi-year undertaking, as we've talked about, and you saw the statement by one of our regulators this week. We have made meaningful progress on our transformation, Excuse me, and on our simplification. And so, as Jane says, the progress that we've made spans multiple parts of the consent order and transformation work. Remember, that consent order and transformation work includes risk, it includes controls, it includes compliance, it includes data, and data related to regulatory reporting. And we've got evidence and proof points of progress against all of those things. Thank you, Mark.

Mark Mason: It includes controls. It includes compliance. It includes data and data related to the regulatory reporting. And we've got evidence and proof points of progress against all of those things.

Speaker Change: So transforming to answer your question about how do we fix it and serve our investors at the same time.

Jane Fraser: Thank you, Mark. So transforming to answer your question about how do we fix it and serve our investors at the same time. Transforming city will drive benefits for our shareholders, our clients, and our regulators.

Speaker Change: Transforming City will drive benefits for our shareholders, our clients, and our regulators. This is not mutually exclusive.

Jane Nind Fraser: Transforming to answer your question about how we fix it and serve our investors at the same time. Transforming City will drive benefits for our shareholders, our clients, and our regulators. This is not mutually exclusive.

Speaker Change: At the beginning of the year, we honed in on two priorities, the transformation and improving our business performance. And we were able to do so.

Jane Fraser: This is not mutually exclusive. At the beginning of the year, we honed in on two priorities. The transformation and improving our business performance, and we've able to do so because we've largely cleared the decks. We have a clear focus strategy. We've executed the investors. We've got a much simpler organization, so we can focus on these two priorities, and we are able to do both. You can see that in our results. Again, this quarter, multiple solid proof points on the execution of the strategy, and we know what we need to do on both fronts. We have plans in place on the transformation and on the strategy, and we're executing against them.

Speaker Change: because we've largely cleared the decks. We have a clear focus strategy. We've executed the divestitures. We've got a much simpler organization, so we can focus on these two priorities. We are able to do both.

Jane Nind Fraser: At the beginning of the year, we honed in on two priorities, the transformation and improving our business performance. And we were able to do so because we've largely cleared the decks. We have a clear focus strategy. We've executed the divestitures. We've got a much simpler organization so we can focus on these two priorities. We are able to do both.

Speaker Change: You can see that in our results. Again, this quarter, multiple solid proof points on the execution of the strategy. And we know what we need to do on both fronts.

Speaker Change: We have plans in place on the transformation and on the strategy, and we're executing against them. We have been, and we will be transparent when we have issues and how we're addressing them.

Jane Nind Fraser: You can see that in our results. Again, this quarter, we have multiple solid proof points on the execution of the strategy, and we know what we need to do on both fronts. We have plans in place for the transformation and for the strategy, and we're executing against them. We have been, and we will be transparent when we have issues and how we're addressing them. And just to add a couple of data points to that, Mike, you've heard us mention some of these before, but we've retired, you know, platforms; we've reduced the number of data centers; platforms are down some 300.

Speaker Change: And just to add a couple of data points to that, Mike, you've heard us mention some of these before, but we've retired, you know, platforms, we've reduced the number of data centers, platforms are down some 300. We've moved from 39 corporate loan platforms down to south of 20. We've got 20 cash equity execution platforms down to one.

Mark Mason: We have been and we will be transparent when we have issues and how we're addressing them. Just to add a couple of data points to that, Mike, you've heard us mention some of these before, but we've retired platforms. We've reduced the number of data centers platforms down some 300. We've moved from 39 corporate loan platforms down to south of 20. We've got 20 cash x with cash equity execution platforms down to one. We've reduced the six reporting ledgers down to one; 11 sanction platforms down to one. So we've been making considerable progress over the past couple of years.

Jane Nind Fraser: We've moved from 39 corporate loan platforms down to south of 20. We've got 20 cash equity, cash equities execution platforms down to one; we've reduced the six reporting ledgers down to one, and 11 sanctioned platforms down to one.

Speaker Change: We've reduced the six reporting ledgers down to one, 11 sanctioned platforms down to one. So we've been making considerable progress over the past couple of years. With that said, there's a lot more work to be done around the data regulatory reporting work. If you think about Citi, we've got 11,000 global total reg reports.

Speaker Change: All right, so we've got to make sure that the data that's going into those reports

Mark Mason: So we've been making considerable progress over the past couple of years. With that said, there's a lot more work to be done around the data regulatory reporting work. If you think about Citi, we've got 11,000 global total regulatory reports.

Mark Mason: With that said, there's a lot more work to be done around the data regulatory reporting work. If you think about city, we've got 11,000 global total right reports. So we've got to make sure that the data that's going into those reports is the quality of the data that we want it to be, but more importantly, that we're doing it efficiently, that it doesn't take thousands of people to reconcile that information. And so this is an end-to-end process in the way we're approaching it. One example is the 2052 A liquidity report that we have. It has 750,000 lines of data.

Speaker Change: is the quality of the data that we want it to be, but more importantly, that we're doing it efficiently, that it doesn't take thousands of people to reconcile that information. And so this is an end-to-end process in the way we're approaching it.

Mark Mason: All right, so we've got to make sure that the data that's going into those reports is the quality of the data that we want it to be, but more importantly, that we're doing it efficiently, that it doesn't take thousands of people to reconcile that information. And so this is an end-to-end process in the way we're approaching it. One example is the 2052A liquidity report that we have. It has 750,000 lines of data.

Speaker Change: One example is the 2052A liquidity report that we have. It has 750,000 lines of data.

Speaker Change: And that data is, it's important, again, that we're efficiently collecting it from multiple systems with standards and governance that ensures that it's of the quality that we want it to be without, again, having to have manual activity supporting it.

Mark Mason: And that data is it's important again that we're efficiently collecting it from multiple systems, which standards and governance that ensures that it's of the quality that we want it to be without again having to have manual activity supporting it.

Unknown Executive: And that data is important, again, that we're efficiently collecting it from multiple systems with standards and governance that ensures that it's of the quality that we want it to be without, again, having to have manual activity supporting it. The next question comes from Glenn Schorr with Evercore. Your line is now open.

Speaker Change: The next question comes from Glenn Schorr with Evercore. Your line is now open. Please go ahead.

Glenn Paul Schorr: Hi, thank you.

Glenn Paul Schorr: Mark, I heard your comments on credit this year. I'm talking U.S. personal banking. I heard your comments for credit the rest of this year, and I think in a position that you're very conservative reserve.

Glenn Shore: The next question comes from Glenn Shore with Evercore. Your line is now open. Please go ahead.

Mark Mason: Hi, thank you. Mark, I heard your comments on credit this year. I'm talking to US personal banking. I heard your comments for credit the rest of this year. And I think when a position that you're very conservative reserve, but right now you put up a 3% margin, credit costs are almost half of what revenues are in the space. It's my question as we roll forward. and in a slow in economy with likely a little bit lower, some rate cuts. How does the P&L evolve? How does it improve from here? Can we be expecting credit across to come in in a slow in economy?

Unknown Executive: Please go ahead. Hi, thank you. So Mark, I heard your comments on credit this year. I'm talking about US private personal banking. I heard your comments for credit the rest of this year, and I think a position that you're very conservative reserve, but right now, you put up a 3% margin, and credit costs are almost half of what revenues are in the space. I guess my question is, as we roll forward, in a slowing economy with, likely, a little bit lower, some rate cuts, how does the P&L evolve?

Glenn Paul Schorr: Right now, you put up a 3% margin, credit costs are almost half of what revenues are in the space. I guess my question is, as we roll forward,

Glenn Paul Schorr: In a slowing economy with likely a little bit lower some rate cuts.

Speaker Change: How does the P&L evolve? How does it improve from here? Because can we be expecting credit costs to come in and a slowing economy? I'm just trying to figure out the path forward because it could be impactful if USPB obviously marches to where you need it to be.

Unknown Executive: How does it improve from here? Because can we be expecting credit costs to come in in a slowing economy? I'm just trying to figure out the path forward because it could be impactful if USPB obviously marches to where you need it to be. Yeah, look, like I said, we do think that there is certainly upside to USPB. We're looking for that upside in the medium-term targets that we've set for ourselves.

Speaker Change: Yeah, look, like I said, we do think that there is certainly upside to USPB. We're looking for that upside in the medium term.

Mark Mason: I'm just trying to figure out the path forward, because it could be impactful if USPB obviously marches to where you needed to be. Yeah, look, like I said, we do think that there is certainly upside down. We've got two USPB; we're looking for that upside in the medium term, a target that we've set for ourselves. You got to remember that when you look at the quarter and you look at the half, frankly, that we're still in a period where we're seeing the normalization of the cost of credit. And, as I mentioned in the prepared remarks, you have kind of a compounding effect of multiple advantages, now maturing at the same time that's playing through the P&L.

Speaker Change: targets that we've set for ourselves. You've got to remember that when you look at the quarter and you look at the half, frankly, that we're still in a period where we're seeing the normalization of the cost of credit.

Speaker Change: And as I mentioned in the prepared remarks, you have kind of a compounding effect.

Unknown Executive: You've got to remember that when you look at the quarter and you look at the half, frankly, that we're still in a period where we're seeing the normalization of the cost of credit. And as I mentioned in the prepared remarks, you have kind of a compounding effect of multiple vintages now maturing at the same time. That's playing through the P&L. That's not just true for us. That's true for others as well.

Speaker Change: of multiple vintages now maturing at the same time.

Speaker Change: That's playing through the P&L. That's not just true for us, that's true for others as well. And so we'd expect, and we do believe we're seeing some signs of a cresting when you look at delinquencies now. And so we would expect that those losses start to normalize and loss rates start to come down.

Mark Mason: That's not just true for us; that's true for others as well. And so we'd expect, and we do believe we're seeing some signs of accresting when you look at the lengthensies now. And so we would expect that those losses start to normalize and loss rates start to come down, you know, as we go towards the medium term. At the same time, we're investing in the business, and we're looking to see continued growth in volume. And on the top line, and the combination of those things, as we've drive towards the medium term, will help us to deliver both the top line growth and certainly improve returns from where we sit today and in line with what we've guided to.

Mark Mason: And so we'd expect, and we do believe we're seeing some signs of a cresting when you look at delinquencies now. And so we would expect that those losses start to normalize, and loss rates start to come down as we go towards the medium term. At the same time, we're investing in the business, and we're looking to see continued growth in volume and on the top line. And the combination of those things as we drive towards the medium term will help us to deliver both top line growth and certainly improve returns from where we sit today and in line with what we've guided to. So it's a combination of top line performance from volume, and obviously, the environment plays into that.

Speaker Change: You know, as we go towards the medium term. At the same time, we're investing in the business and we're looking to see continued growth in volume and on the top line.

Speaker Change: And the combination of those things, as we drive towards the medium term, will help us to deliver both the top-line growth and certainly improve returns from where we sit today and in line with what we've guided to. So it's a combination of...

Speaker Change: Top-line performance from volume, and obviously the environment plays into that, but we feel like we've got a reasonable assumption around top-line growth there. Cost of credit normalizing, continued discipline on the expense line, allowing for us to get improved returns across that USPB business.

Mark Mason: So it's a combination of top line performance from volume. And obviously, the environment plays into that, but we feel like we've got a reasonable assumption around top line growth there, cost of credit normalizing, continued discipline on the expense line, allowing for us to get improved returns across that USB business.

Speaker Change: Okay, I appreciate all that. One quickie on DCM, you had amazingly good performance.

Mark Mason: But we feel like we've got a reasonable assumption around top-line growth there. Cost of credit normalizing, continued discipline on the expense line, allowing for us to get improved returns across that USPB business. Okay, I appreciate all that. One quickie on DCM. You had an amazingly good performance.

Speaker Change: There's been plenty of conversation about pull forward this year on just refi driving like three quarters of the activity. Could you just help us think through the second half when thinking about DCM just to make sure that we don't like...

Mark Mason: Okay, I appreciate all of that. One quicky on DCM: he had amazingly good performance. There's plenty of conversation about pull forward this year on just refi driving like three quarters of the activity. Could you just help us think through the second half when thinking about DCM and just to make sure that we don't like, you know, start modeling lessons into perpetuity. So I think when we think about the back half of 24, we're going to see a different mix of activity in banking. We do still expect demand to be quite strong across our capital market products, because you've got a wall of maturing debt securities coming up in the second half that carry on, you know, for a couple of years.

Jane Nind Fraser: There's been plenty of conversation about pulling forward this year on just refi driving like three quarters of the activity. Could you just help us think through the second half when thinking about DCM and just to make sure that we don't, you know, start modeling lists into perpetuity? Look, I think when we think about the back half of 2024, we're going to see a different mix of activity in banking. But we do still expect demand to be quite strong across our capital market products because you've got a wall of maturing debt securities coming up in the second half that will carry on for a couple of years.

Speaker Change: You know, start modeling the list into perpetuity.

Speaker Change: Look, I think when we think about the back half of 24, we're going to see a different mix of activity in banking. We do still expect demand to be quite strong across our capital market products, because you've got a wall of maturing debt securities coming up in the second half that carry on, you know, for a couple of years.

Speaker Change: But we did see some clients accelerating issuances into the first half, getting ahead of potential market volatility.

Speaker Change: So if you put it all together, I think we expect the rate environment and the financing markets

Mark Mason: But we did see some clients accelerating issuances into the first half, getting ahead of potential market volatility. So if you put it all together, I think we expect the rate environment and the financing markets to continue to be accommodative as well as to continue deal making with emanate being a bit larger in the overall mix, although some of the regulars re elements have put a damper. On part of that. The only thing I'd add to that is look the wallet for the year is obviously going to depend on a couple of things. So, you know, one, the return of a more normalized IPO market to the direction and volatility of interest rate.

Speaker Change: to continue to be accommodative as well as to continue deal-making, with M&A being a bit larger in the overall mix, although some of the regulatory elements have put a damper on part of that.

Jane Nind Fraser: But we did see some clients accelerating issuances into the first half, getting ahead of potential market volatility. So, if you put it all together, I think we expect the rate environment and the financing markets to continue to be accommodative, as well as deal-making, with M&A being a bit larger in the overall mix, although some of the regulatory elements have put a damper on part of that. The only thing I'd add to that is, look, the budget for the year is obviously going to depend on a couple of things.

Speaker Change: The only thing I'd add to that is, look, the wallet for the year is obviously going to depend on a couple things. So, you know, one, the return of a more normalized IPO market, two, the direction and volatility of interest rates.

Speaker Change: The ongoing global conflicts that we're all kind of seeing and witnessing. And then finally, as Jane mentioned, in her remarks, the elections and what those outcomes look like, not just in the US, but abroad. And so there are a number of factors there that will will play to the wallet. But as we said, we think we believe we're well positioned to be there to serve our clients and to do so in a way that makes good economic sense.

Jane Nind Fraser: So, one, the return of a more normalized IPO market, two, the direction and volatility of interest rates, the ongoing global conflicts that we're all kind of seeing and witnessing, and then finally, as Jane mentioned in her remarks, the elections and what those outcomes look like, not just in the U.S. but abroad.

Mark Mason: The ongoing global conflicts that we're all kind of seeing and witnessing. And then finally, as Jane mentioned in her remarks, the elections and what those outcomes look like, not just in the US, but abroad. And so there are a number of factors there that will play to the wallet, but as we said, we believe we're well positioned to be there to serve our clients in a do so in a way that makes good economic sense.

Mark Mason: And so there are a number of factors there that will play to the wallet, but as we said, we believe we're well-positioned to be there to serve our clients and to do so in a way that makes good economic sense. The next question is from Jim Mitchell with Seaport Global. Your line is now open. Please go ahead. Hey, good morning.

Speaker Change: The next question is from Jim Mitchell with Seaport Global. Your line is now open. Please go ahead.

Speaker Change: Hey, good morning. Just, Mark, maybe on NII, down almost 4% year-over-year. It seems a little bit more than the guidance, but down modestly for the year. So can you discuss sort of the puts and takes this quarter and how we should think about the quarterly trajectory for the rest of the year?

Jim Mitchell: The next question is from Jim Mitchell with C-Pore Global. Your line is now open. Please go ahead.

Unknown Executive: Just, Mark, maybe on NII, down almost 4% year-over-year. It seems a little bit more than the guidance of down modestly for the year. So can you discuss sort of the puts and takes this quarter and how we should think about the quarterly trajectory for the rest of the year? Yeah, you know, so I'd say a couple of things. So one, as I mentioned, you know, in the quarter, and if you see it on slide nine, X markets, we're down about 3%. That's largely driven by, you know, some FX translation that played through, but also some seasonally lower revolving card balances, and then lower interest rates in Argentina.

Mark Mason: Hey, good morning. Just Mark, maybe on NII down almost 4% every year. It seemed a little bit more than the guidance, with down modestly for the year.

Speaker Change: Yeah, so I'd say a couple of things. So one, as I mentioned, you know, in the quarter, and if you see it on slide nine, X markets,

Mark Mason: So can you discuss sort of the puts and takes this quarter and how we should think about the quarterly trajectory for the rest of the year? Yeah, so I'd say a couple of things. So one, as I mentioned, in the quarter, and if you see it on slide 9, X markets, we're down about 3%. That's largely driven by some FX translation that played through, but also some seasonally lower revolving card balances, and then lower interest rates in Argentina. And what that is, is in Argentina, we have capital there. The policy rate was adjusted downward. And as that happened, we obviously earned less on that capital that flows through the NII line.

Speaker Change: We're down about 3%. That's largely driven by, you know, some FX translation that played through, but also some seasonally lower revolving card balances.

Speaker Change: And then lower interest rates in Argentina, and what that is, is in Argentina we have capital there, the policy rate was adjusted downward.

Speaker Change: And as that happened, we obviously earned less on that capital that flows through the NII line. As I think about the back half of the year and the guidance we have of...

Mark Mason: And what that is, is in Argentina, we have capital there; the policy rate was adjusted downward. And as that happened, we obviously earn less on that capital that flows through the NII line. As I think about the back half of the year and the guidance we have of modestly down, there are a couple of puts and takes to keep in mind. So one is going to be rates, right? So as I think about the higher yield that we can earn on reinvestment, that'll be a tailwind that plays through from an NII point of view.

Speaker Change: of Modestly Down, there are a couple of puts and takes to keep in mind. So one is going to be rates, right? So as I think about the higher yield that we can earn on reinvestment, that'll be a tailwind that plays through

Mark Mason: As I think about the back half of the year and the guidance we have of modestly down, there are a couple of puts and takes to keep in mind. So one is going to be rates, right? So as I think about the higher yield that we can earn on reinvestment, that'll be a tailwind that plays through from an NII point of view. The second would be volume growth, particularly in our card loans portfolio. And we do expect to see continued volume growth across the, certainly the branded portfolio. And so that'll be another tailwind for us on the NII line.

Speaker Change: From an NII point of view.

Speaker Change: The second would be volume growth, particularly in our card loans portfolio, and we do expect to see continued volume growth across certainly the branded portfolio, and so that'll be another tailwind for us.

Mark Mason: The second would be volume growth, particularly in our card loans portfolio. And we do expect to see continued volume growth across the, certainly the branded portfolio. And so that'll be another tailwind for us on the NII line. In terms of the headwinds, you've got the lower NII earned in Argentina from rates, that'll continue to play through. We've got assumed higher average betas in 2024, specifically on the non-US side. We still have in our forecast the impact of CFPB late fees, so assuming that that goes into effect for this year, that will have an impact, and it's in the forecast.

Speaker Change: On the NII line, in terms of the headwinds, you've got the lower NII earned in Argentina from rates. That'll continue to play through. We've got assumed higher average betas in 2024, specifically on the non-U.S. side.

Mark Mason: In terms of the headwinds, you've got the lower NII earned in Argentina from rates. That'll continue to play through. We've got assumed higher average betas in 2024, specifically on the non-US side. We still have in our forecast the impact of CFPB lately. So assuming that that goes into effect for this year, that will have an impact, and it's in the forecast. And then the impact of loss NII from the exits that we have. And so the combination of those things will probably mean that NII on the back half of the year is a little bit higher than the first half.

Speaker Change: We still have in our forecast the impact of CFPB late fees.

Speaker Change: So assuming that that goes into effect for this year, that will have an impact and it's in the forecast. And then the impact of lost NII from the exits that we have. And so the combination of those things will probably mean that NII on the back half of the year is a little bit higher than the first half.

Speaker Change: But, again, consistent with the guidance that we gave of Modestly Down.

Mark Mason: And then the impact of lost NII from the exits that we have. And so the combination of those things will probably mean that NII in the back half of the year is a little bit higher than the first half, but again, consistent with the guidance that we gave in Modestly Down. That's helpful. And maybe just quickly, kind of a similar question on expenses, better than expected this quarter, but there were no restructuring or repositioning charges. I think to get to the high end of your range, you'd have to be up a little bit in the back half from the 2Q run rate.

Speaker Change: That's helpful. And maybe just quickly, kind of a similar question on expenses.

Speaker Change: Better than expected this quarter, but there was no restructuring or repositioning charges. I think to get to the high end of your range, you'd have to be up a little bit in the back half from 2Q run rate. Is that because you expect more repositioning, restructuring in the second half, or maybe just talk through expense trajectory from here?

Mark Mason: But again, consistent with the guidance that we gave of modestly that.

Mark Mason: That's helpful.

Mark Mason: And maybe just quickly, some kind of a similar question on expenses, better than expected this quarter, but there was no restructuring or reposition charges. I think to get to the high end of your range, you'd have to be up a little bit in the back half from 2Q run rate. Is that because you expect more reposition restructuring in the second half, or maybe just talk through expense trajectory from here? Yes, so that's right. When I talked about it at the first quarter, I talked about kind of a downward trend for each of the quarters after Q1.

Speaker Change: Yes, so that's right. You know, I when I talked about at the first quarter, I talked about kind of a downward trend for each of the quarters after Q1. The second quarter came in a bit lower than we were expecting. I'm sticking with the guidance. And that does mean that the back half of the year,

Mark Mason: Is that because you expect more repositioning, and restructuring in the second half, or maybe just talk through the expense trajectory from here? Yes, so that's right. You know, when I talked about the first quarter, I talked about a kind of downward trend for each of the quarters after Q1. The second quarter came in a bit lower than we were expecting. I'm sticking with the guidance, and that does mean that the back half of the year will likely come in higher than the second quarter.

Mark Mason: That's a combination of a couple of things, including the pace of hiring and investment that we will do in the transformation work that has to be done. It also includes repositioning charges that we might take or need to take as we continue to work through our businesses across the firm and the franchise. And then the second quarter did, or the second quarter did have, a one-time or so delay in some delayed spending that will pick up in the third and fourth quarter around advertising and marketing and some of the other line items.

Speaker Change: will likely come in, will come in higher than the second quarter. That's a combination of a couple of things, including, you know, the pace of hiring and investment that we will do, you know, in the transformation work that has to

Mark Mason: The second quarter came in a bit lower than we were expecting. I'm sticking with the guidance. And that does mean that the back half of the year will likely come in, will come in higher than the second quarter. That's a combination of a couple of things, including the pace of hiring and investment that we will do in the transformation work that has to be done. It also includes repositioning charges that we might take or need to take as we continue to work through our businesses across the firm and the franchise. And then the second quarter did have a one time or so in some delay spending that will pick up in the third and fourth quarter around advertising and marketing and some of the other line items. So yes, the second quarter will, the third and fourth quarter, the back half will be higher than the second quarter, but consistent with the guidance that I give.

Speaker Change: to be done. It also includes repositioning charges that we might take or need to take as we continue to work through our businesses across the firm and the franchise.

Speaker Change: And then the second quarter did have a one-time or so in some delayed spending that will pick up in the third and fourth quarter around advertising and marketing and some of the other line items. So, yes, the third and fourth quarter, the back half will be higher than the second quarter, but consistent with the guidance that I've given.

Mark Mason: So yes, the second quarter will be the third and fourth quarters; the back half will be higher than the second quarter, but consistent with the guidance that I've given you. All right. The next question is from Erika Najarian with UBS. Your line is now open.

Speaker Change: The next question is from Erica Najarian with UBS. Your line is now open. Please go ahead.

Erika Najarian: Hi, I had two questions and I'll ask the first one on expenses first since it's a good follow-up to the previous.

Erika Najarian: The next question is from Erika Najarian, with UBS. Your line is not open. Please go ahead.

Mark Mason: Mark, just to clarify, you know, let's just say take the highest end of your range at 53.8.

Erika Najarian: Hi, I had two questions, and I'll ask the first one on expenses first since it's a good follow-up to the previous. Mark, just to clarify, you know, let's just say, take the highest end of your range at 53.8. Just trying to think about how consensus will move. So we take that 53.8. And then add the 285 of FDIC expenses here to date so far and add the civil money penalties of 136. So that gets us to 54.2 billion for the year, and any other repositioning charges in the second half of the year would already be included in the 53.8.

Unknown Executive: Please go ahead. I had two questions, and I'll ask the first one on expenses first since it's a good follow-up to the previous. Mark, just to clarify, you know, let's just say take the highest end of your range at 53.8, just trying to think about how consensus will move. So we take that 53.8 and then add the 285 of FDIC expenses year to date so far and add the civil money penalties of 136, so that gets us to 54.2 billion for the year, and any other repositioning charges in the second half of the year would already be included in the 5

Mark Mason: Just trying to think about how consensus will move, so we take that $53.8 and then add the $285 of FDIC expenses year-to-date so far and add the civil money penalties of $136

Unknown Executive: So yes, the answer to the last part of your question is yes. So in the range that I've given, 53.5 to 53.8, that includes our estimate for the full year of repositioning and any restructuring charges. That range excludes the FDIC special assessment that we saw earlier in the year, and it excludes the CMP of 136.

Speaker Change: So that gets us to $54.2 billion for the year, and any other repositioning charges in the second half of the year would already be included in the $53.8?

Speaker Change: So yes, the answer to the last part of your question is yes. So in the range that I've given, 53.5 to 53.8, that includes our estimate for the full year of repositioning and any restructuring charges.

Mark Mason: So yes, the answer, the answer to you, the last part of your question is yes. So in the range that I've given 53.8. That includes our estimate for the full year of repositioning and any restructuring charges. That range excludes the FDIC special assessment that we saw earlier in the year, and it excludes the CNP of 136. Got it.

Speaker Change: That range excludes the FDIC special assessment that we saw earlier in the year and it excludes the CMP of 136.

Speaker Change: Got it. And my second question is for Jane.

Speaker Change: And I'm sure you're getting tired of the question on capital return. So you're buying back a billion, you plan to buy back a billion this quarter. It looks like you didn't buy back any in the second quarter.

Jane Nind Fraser: And my second question is for Jane. And I'm sure you're getting tired of the question on capital return. So you're buying back a billion, you plan to buy back a billion this quarter. But it looks like you didn't buy back any in the second quarter.

Jane Fraser: And my second question is for Jane.

Jane Fraser: And I'm sure you're getting tired of the question on capital return. So you're buying back a billion; you plan to buy back a billion this quarter. It looks like you didn't buy back any in the second quarter. And I'm asking this question in this context because, you know, Consensus has a buyback of nearly a billion in the fourth quarter. And staying at this rate for the first half of next year and ramping higher.

Speaker Change: And I'm asking this question in this context because, you know, consensus has a buyback of nearly a billion in the fourth quarter.

Speaker Change: and staying at this rate for the first half of next year and ramping higher. And I guess, is the billion-dollar number a catch-up pace because you didn't buy back any in the second quarter?

Jane Nind Fraser: And I'm asking this question in this context because, you know, consensus has a buyback of nearly a billion in the fourth quarter and staying at this rate for the first half of next year and ramping higher. And I guess the billion dollar number is a catch-up pace because you didn't buy back any in the second quarter. And I fully appreciate that you also have, you know, the Banamex IPO coming, which is different from peers that are also waiting for Basel clarification.

Speaker Change: And I fully appreciate that you also have the Banamex IPO coming, which is different from peers that are also waiting for Basel clarification. But I'm just wondering, do we need to wait for that Banamex IPO for the company to feel comfortable moving away from that quarter-to-quarter guidance? And also, of course, I just want to readdress.

Jane Fraser: And I guess is the billion dollar number a patch up pace because you didn't buy back any in the second quarter. And I'm fully appreciate it. I fully appreciate that you also have, you know, the BNMX IPO coming, which is different from peers that are also waiting for Basel clarification.

Jane Fraser: But I'm just wondering, do we need to wait for that bot for that BNMX IPO for the company to feel comfortable moving away from that quarter-to-quarter guidance. And also, of course, I just want to re-address the beginning of the question when I asked specifically about the piece. Okay.

Speaker Change: The beginning of the question when I asked specifically about the PACE.

Speaker Change: Okay, so, um, we, we are...

Speaker Change: We're not going to be giving guidance going forward around our buybacks. We are going to continue to give quarterly, make a quarterly determination as to the level. And a lot of that is to do with the uncertainty about the forthcoming regulatory changes. I think we were delighted.

Jane Nind Fraser: But I'm just wondering, do we need to wait for that Banamex IPO for the company to feel comfortable moving away from that quarterly guidance? And also, of course, I just want to address the beginning of the question when I asked specifically about the pace.

Jane Nind Fraser: Okay, so we are not going to be giving guidance going forward around our buybacks. We are going to continue to give quarterly guidance and make a quarterly determination as to the level. And a lot of that has to do with the uncertainty about the forthcoming regulatory changes. I think we were delighted to see a slight reduction in our stress capital buffer, reflecting the financial strength and resiliency of our business model, and also good to see the benefits of our strategy playing out. But with the regulatory changes uncertain, that's one of the major factors for us to continue with the quarterly guidance. Yeah, that's right.

Jane Fraser: So we are not going to be giving guidance going forward around our buybacks. We are going to continue to give quarterly; make it a quarterly determination as to the level. And a lot of that is to do with the uncertainty about the forthcoming regulatory changes. I think we were delighted to see a slight reduction in our stress capital buffer, reflecting the financial strength and resiliency of our business model, and also good to see the benefits of our strategy playing out. But with the regulatory changes, uncertain that we are, that's one of the major factors for us to continue with the quarterly guidance.

Speaker Change: to see a slight reduction in our stress capital buffer reflecting the financial strength and resiliency of our business model.

Speaker Change: It's also good to see the benefits of our strategy playing out, but with the regulatory changes uncertain.

Speaker Change: That's one of the major factors for us to continue with the quarterly guidance.

Speaker Change: Yeah, that's right. And on the first part of your question, Erika, I'd say, look, we were in discussions, you know, with our regulators, and we made a prudent call.

Speaker Change: As it relates to buybacks in the quarter for Q2, so Q3, as we talked about, would be at a billion dollars, and that should not be necessarily viewed as a run rate level. As Jane mentioned, we'll take it quarter by quarter from here.

Mark Mason: Yeah, that's right. On the first part of your question, Erica, I'd say look, we were in discussions, you know, with our regulators, and we made a proven call as it relates to buybacks in the quarter for Q2. So Q3, as we talked about, would be at a billion dollars and that should not be necessarily viewed as a run rate level. As Jane mentioned, will take it quarter by quarter from here.

Mark Mason: And on the first part of your question, Erika, I'd say, look, we were in discussions with our regulators, and we made a prudent call as it relates to buybacks in the quarter for Q2. So Q3, as we talked about, would be at a billion dollars, and that should not be necessarily viewed as a run rate level. As Jane mentioned, we'll take it quarter by quarter from here. The next question is from Gerard Cassidy with RBC. Your line is not open.

Speaker Change: The next question is from Gerard Cassidy with RBC. Your line is now open. Please go ahead.

Gerard Sean Cassidy: Thank you. Hi, Jane. Hi, Mark. Good morning. Mark, regarding the comments you made about, you know, the higher credit losses, the three factors that you gave us,

Trudard Cassidy: The next question is from Trudard Cassidy with RBC; your line is now open. Please go ahead.

Unknown Executive: Please go ahead. Thank you. Hi Jane. Hi Mark. Good morning. Mark, regarding the comments you made about the higher credit losses, the three factors that you gave us, can you also talk about if this was a factor at all for you folks? Was there any FICO score inflation back during the pandemic that might be playing into these kinds of credit losses?

Mark Mason: Thank you.

Mark Mason: Jane, hi, Mark. Mark.

Gerard Sean Cassidy: Can you also talk about if this was a factor at all for you folks, was there any FICO score inflation back during the pandemic that might be playing into these kind of credit losses and as part of the credit

Mark Mason: We're granting the comments you made about the higher credit losses, the three factors that you gave us.

Mark Mason: Can you also talk about if this was a factor at all for you folks? Was there any psychoscore inflation back during the pandemic that might be playing into these kinds of credit losses?

Gerard Sean Cassidy: Card question. You mentioned the CFPB, you know, the fees that you have factored them, you know, the lower fees, you factored that into your forward look. Where do we stand on that? Do you guys have any color on that as well?

Mark Mason: And as part of the credit card question, you mentioned the CFPB, you know, the fees that you have factored in, you know, the lower fees you factored into your forward look. Where do we stand on that? Do you guys have any color on that as well?

Mark Mason: And as part of the credit card question, you mentioned the CFPB. You know, the fees that you have affected them, you know, the lower fees you factor that into your forward look. Where do we stand on that? Do you guys have any color on that as well? Yeah, so on the first part of the question, look, we all kind of have talked about in the past the prospect of FICO inflation back there in the COVID period of time. You know, we've been very, very focused on ensuring that the acquisitions that we've made. You know, have been appropriately kind of analyzed in the underwriting of that to get comfortable with the quality of new customers that we've been bringing on.

Speaker Change: Yeah, so on the on the first part of the question, look, we all kind of talked about in the past the prospect of FICO inflation back during the COVID period of time.

Speaker Change: You know, we've been very, very focused on ensuring that acquisitions that we've made, you know, have been appropriately kind of analyzed in the underwriting of that to get comfortable with the quality.

Mark Mason: Yeah, so on the first part of the question, look, we all kind of talked about in the past the prospect of FICO inflation back there in the COVID period of time. You know, we've been very, very focused on ensuring that acquisitions that we've made have been appropriately kind of analyzed in the underwriting of that to get comfortable with the quality of new customers that we've been bringing on.

Speaker Change: of new customers that we've been bringing on, in light of the environment, we have, you know, looked at moving towards higher FICO scores for new account acquisitions.

Speaker Change: But as I think about what we're seeing now, there is that dichotomy that I mentioned where we have the higher FICO score customers.

Mark Mason: In light of the environment, we have, you know, looked at moving towards higher FICO scores for new account acquisitions. But as I think about what we're seeing now, there is that dichotomy that I mentioned where we have the higher FICO score customers that are driving the spend growth. And that frankly have, you know, still continued strong balances and savings. And, and it's really the lower FICO band customers where we're seeing the sharper drop in payment rates and more borrowing. And so the FICO inflation has effectively kind of fizzled out when we look at the mix and dynamic of the customer portfolio that we have at this point.

Mark Mason: In light of the environment, we have, you know, looked at moving towards higher FICO scores for new account acquisitions. But as I think about what we're seeing now, there is that dichotomy that I mentioned, where we have the higher FICO score customers that are driving the spend growth and that, frankly, have, you know, still maintained strong balances and savings. And it's really the lower FICO band customers where we're seeing a sharper drop in payment rates and more borrowing. And so the FICO inflation has effectively kind of fizzled out when we look at the mix and dynamic of the customer portfolio that we have at this point.

Speaker Change: that are driving the spend growth and that frankly have, you know, still continued strong balances and savings.

Speaker Change: And it's really the lower FICO band customers where we're seeing the sharper drop in payment rates and more borrowing. And so the FICO inflation has effectively kind of fizzled out when we look at the mix and dynamic of the customer portfolio that we have at this point.

Speaker Change: And in terms of the CFPB late fees, I don't have an update on that. Like I said, we built in an assumption in our forecast, but in terms of the timing, I don't have a formal update on the certainty of it.

Mark Mason: And in terms of, I see a PB, late fees. Why don't have an update on that? We, like I said, we've built in an assumption, you know, in the, in our forecast, but in terms of the timing, I don't have a form of an update on the certainty of.

Mark Mason: And in terms of the CFPB late fees, I don't have an update on that. We, like I said, we've built in an assumption, you know, in our forecast. But in terms of the timing, I don't have a formal update on the certainty of. The next question is from Ken Ustin with Jeffries. Your line is now open.

Speaker Change: The next question is from Ken Ustin with Jeffries. Your line is now open. Please go ahead.

Kenneth Michael Usdin: Hey, thanks. Good morning. Hey, Mark, you know...

Speaker Change: Talking about the NII outlook and the fact that now we've got a little bit of a discrepancy starting between U.S. rates, maybe higher for longer, and then the beginnings of some of the non-U.S. curves starting to at least put forth their first cut. I know we've got that good chart that you have in the queues about the relative contributions. Can you just help us understand a little bit of like just generally how you're thinking through that discrepancy and how that informs the difference between U.S.-related NII and non-U.S.-related NII as you go forward?

Mark Mason: The next question is from Can you stand with Jeffries, your line is now open, please go ahead. Hey, thanks for morning. Hey, Mark, you know, talking about the NII outlook and the fact that now we've got a little bit of a discrepancy starting between US rates. Maybe higher for longer. And then the beginnings of some of the non-US curves starting to at least put forth their first cut. I know we've got that good chart. You have in the cues about the, the relative contributions.

Unknown Executive: Please go ahead. Hey, thanks. Good morning.

Mark Mason: Hey Mark, you know, talking about the NII outlook and the fact that now we've got a little bit of a discrepancy starting between U.S. rates, maybe higher for longer, and then the beginnings of some of the non-U.S. curves starting to at least put forth their first cut. I know we've got that good chart that you have in the queues about the relative contributions. Can you just help us understand a little bit of how you're thinking through that discrepancy and how that informs the difference between, you know, U.S.-related NII and non-U.S.-related NII as you go forward? Yeah, thank you.

Mark Mason: Can you just help us understand a little bit of like just generally how you're thinking through that discrepancy and how that informs the difference between, you know, US-related NII and non-US-related NII as you go forward. Yeah, thank you. So I look, I think that, you know, as we look at it out through the, certainly through the medium term. We expect to see continued NII growth at, obviously, a modest level, certainly lower than what we've seen historically. And that's in large part because, or in part, I should say, because of how we've been managing the balance sheet, and that has allowed for us to reinvest as securities that rolled off and earn a higher yield on them relative to what we were earning.

Speaker Change: Yeah, thank you. So I look, I think that, you know, as, as we look at it, out through the, certainly through the medium term, we expect to see

Speaker Change: Continued NII growth at obviously a modest level, certainly lower than what we've seen historically.

Mark Mason: So I think that, you know, as we look at it, out through the certainly through the medium term, we expect to see continued NII growth at obviously a modest level, certainly lower than what we've seen historically. And that's in large part because, or in part, I should say, because of how we've been managing the balance sheet. And that has allowed us to reinvest as securities have rolled off and earn a higher yield on them relative to what we were earning. In some instances, there were five-year terms on some of these investments.

Speaker Change: And that's in large part because, or in part, I should say, because of how we've been managing

Speaker Change: The balance sheet, and that has allowed for us to...

Speaker Change: Reinvest as securities have rolled off and earn a higher yield on them relative to what we were earning. In some instances, there were five-year terms on some of these investments. And so we still think there's some upside from a reinvestment point of view.

Mark Mason: And so we still think there's some upside from a reinvestment point of view. The point you make around the non-US dollar or US rates kind of coming off, you know, that'll play through a little bit as we think about the beta increases that we're expecting outside of the US. And so we've assumed that we have higher betas pick up outside of the US, but if rates kind of come off in a more substantive way, then we could see kind of a little less NII pressure than we're forecasting there.

Speaker Change: The point you make around kind of non-U.S. dollar or U.S. rates kind of coming off...

Mark Mason: And some instances, they were five-year terms on some of these investments. And so we still think there's some upside from a reinvestment point of view. The point you make around kind of non-US dollar or US rates kind of coming off, you know, that'll play through a little bit as we think about the beta increases that we're expecting outside of the US. And so we've assumed that we have higher beta stick up outside of the US, it rates kind of come off in a more substantive way than we could see kind of a little less NII pressure than we're forecasting there.

Speaker Change: You know, that'll play through a little bit as we think about the beta increases that we're expecting outside of the U.S. And so we've assumed that we have higher betas pick up outside of the U.S. if rates kind of come off.

Speaker Change: In a more substantive way, then we could see kind of a little less NII pressure than we're forecasting there. But net-net, as I think about the combination of volume growth that we're expecting between loans and deposits over that medium term,

Mark Mason: But net net, as I think about the combination of volume growth that we're expecting between loans and deposits over the medium term, the higher yield we can earn on our assets, combined with, you know, the pricing capabilities that we have across the portfolio, offsetting some of that beta, we believe we will have continued NII growth. As I think about what I often point to in terms of the IRE analysis, you have to remember that that is a shock to the current balance sheet.

Speaker Change: the higher yield we can earn on our assets combined with

Mark Mason: But net net, as I think about the combination of volume growth that we're expecting between loans and deposits over that medium term. The higher yield we can earn on our assets combined with, you know, the pricing capabilities that we have across the portfolio, offsetting some of that beta, we believe will have continued NII growth. As I think about what I often point to in terms of the IRE analysis, and you have to remember that that is a shock to the current balance sheet. And it assumes that the full curve is moving simultaneously, cross currencies. And in that case, the 100 basis point, parallel shift downward would be a negative $1.6 billion.

Speaker Change: You know the pricing

Speaker Change: capabilities that we have across the portfolio, offsetting some of that beta, we believe we'll have continued NII growth.

Speaker Change: As I think about what I often point to in terms of the IRE analysis, and you have to remember that that is a shock to the current balance sheet.

Speaker Change: And it assumes that the full curve is moving simultaneously across currencies, and in that case, the 100 basis point parallel shift downward would be a negative $1.6 billion.

Mark Mason: And it assumes that the full curve is moving simultaneously across currencies. And in that case, the 100 basis point parallel shift downward would be a negative $1.6 billion, with about $1.3 billion of that coming from non-US dollars. But again, that does assume that all of those currencies come down at the same time and doesn't account for the rebalancing of the balance sheet and things that I mentioned, like the reinvestment, and higher yields that we'd be able to earn. I got it.

Speaker Change: with about $1.3 billion of that coming from non-U.S. dollars.

Speaker Change: But again, that does assume that all of those currencies come down at the same time and doesn't account for the rebalancing of the balance sheet and things that I mentioned like the reinvestment higher yields that we'd be able to earn.

Mark Mason: Lewis, with about a billion three of that coming from non-US dollar, but again, that does assume that all of those currencies come down at the same time and doesn't account for the rebalancing of the balance sheet and things that I mentioned like the reinvestment higher yields that we'd be able to earn. Got it. Okay.

Speaker Change: got it okay and just one follow-up on the OCC amendment and that's specifically related to the resource review plan

Speaker Change: Do you have a line of sight on how long that will take you guys to finish, because it seems like, and is that what we should be thinking about in terms of just understanding like

Mark Mason: And just one follow-up on the OCC amendment, and that's specifically related to the resource review plan.

Mark Mason: Okay. And just one follow-up on the OCC amendment, and that's specifically related to the resource review plan. Do you have a line of sight on how long that'll take you guys to finish?

Speaker Change: What's the side of what you need to get done in terms of the other language that's written in the order?

Mark Mason: Jim, do you have a line of sight on how long that'll take you guys to finish? Because it seems like, and is that what we should be thinking about in terms of just understanding like, you know, what this is, what the side of what you need to get done in terms of, you know, the other language that's written in the order. You can look the resource review plan; it is just that: it's a plan to ensure that we have sufficient resources allocated towards achieving a timely and sustainable compliance with the order. Essentially, if an area is delayed or looking as if it could be, we'll determine what additional resourcing, if any, is required to get back on track.

Mark Mason: Because it seems like and is that what we should be thinking about in terms of just understanding the side of what you need to get done in terms of, you know, the other language that's written in the order? So Ken, look, the resource review plan is just that it's a plan to ensure that we have sufficient resources allocated towards achieving timely and sustainable compliance with the order.

Speaker Change: Ken, look, the resource review plan is just that. It's a plan to ensure that we have sufficient resources allocated towards achieving a timely and sustainable compliance with the order. Essentially, if an area is delayed or looking as if it could be, we'll determine what additional resourcing, if any, is required to get back on track. And then we'll share that with the OCC in a more formalized way than we do today.

Mark Mason: Essentially, if an area is delayed or looking as if it could be, we'll determine what additional resourcing, if any, is required to get back on track. And then we'll share that with the OCC in a more formalized way than we do today. We obviously review this pretty constantly ourselves.

Speaker Change: We obviously review this pretty constantly ourselves. We're already working on the plan after it's finalized with the OCC.

Mark Mason: And then we'll share that with the OCC in a more formalized way than we do today. We obviously review this pretty constantly ourselves. We're already working on the plan after it's finalized with the OCC.

Speaker Change: It will be confidential supervisory information that we can't disclose. So we won't be able to tell you that the plan is...

Mark Mason: We're already working on the plan, and when it's finalized with the OCC, it will be confidential supervisory information that we can't disclose, so we won't be able to tell you what the nature of the plan is going to be, but it won't be much more complicated than what we talked about. And we're expecting to get it, you know; we're not expecting this to take long. The next question is from Betsy Graseck with Morgan Stanley. The line is now open. Please go ahead. Hi, good afternoon. Hello. Hi Betsy.

Mark Mason: So it will be a comfort; it will be confidential supervisory information that we can't disclose. So we won't be able to tell you that the plan is whether the plan, what the nature of the plan is going to be, but it won't be much more complicated than what we talked about. And we're expecting to get it. You know, we're not expecting this to take long.

Speaker Change: What the nature of the plan is going to be, but it won't be much more complicated than what we talked about.

Speaker Change: And we're expecting to get it, you know, we're not expecting this to take long.

Speaker Change: The next question is from Betsy Graseck with Morgan Stanley . Your line is now open. Please go ahead. Hi, good afternoon. Hi, Betsy.

Betsy Lynn Graseck: Okay, so I know we talked a lot about expenses. I just have one kind of overarching question here, which is on how we should think about the path of expenses between now and the medium term as we have

Betsy Grayson: The next question is from Betsy Grayson with Morgan Stanley. Your line is not open. Please go ahead.

Unknown Executive: Okay, so I know we talked a lot about expenses. I just have one kind of overarching question here, which is how we should think about the path of expenses between now and the medium term as we have, you know, come quite a long way in the Simplification process. Maybe you could give us a sense as to how far along the simplification impact on expenses we are and, you know, overlap with the regulatory requirements, do these meet out? Or are we skewed a little bit more towards regulatory requirements being a bit heavier than what's left for simplification from here? Thanks. So, thank you, Betsy.

Betsy Grayson: Hi, good afternoon. Hi, Betsy. Okay, so I know we talked a lot about expenses. I just have one kind of overarching question here, which is on how we think about the path of expenses between now and the medium term as we have. You know, come quite a long way in the simplification process. You know, maybe you can give a sense as to how far along simplification impacts on expenses we are. And, you know, overlapping with the regulatory requirements, do these met out? Or are we skewed a little bit more towards regulate toward requirements being a bit heavier than what's left on simplification from here?

Betsy Lynn Graseck: You know, come quite a long way in the simplification process, you know, maybe if you give us a sense as to how far along simplification impacts on expenses we are, and

Betsy Lynn Graseck: Overlapping with the regulatory requirements, do these met out or are we skewed a little bit more towards regulatory requirements being a bit heavier than what's left on simplification from here? Thanks.

Betsy Lynn Graseck: So, thank you, Betsy. I guess I'd say a couple things. So, I think we've said it in the past. So, the target for the medium term, I think 2026, is somewhere around $51 to $53 billion of expenses.

Mark Mason: Thanks.

Mark Mason: I guess I'd say a couple of things. But I think we've said that in the past. So the target for the medium term, I think 2026, is somewhere around $51 to $53 billion in expenses. As we've said, we'll have about a billion and a half in savings related to the restructuring that we've done, and another $500 million to a billion related to net expense reductions from eliminating the stranded costs. As well as additional productivity over that medium-term period. And so we've made, I think, very good headway, as Jane has mentioned, in the organizational simplification and the restructuring charges associated with that. Those saves will, you know, have already started to generate.

Mark Mason: So, thank you, but I guess I'd say a couple of things. So I think we said it in the past. So the target for the medium term, but think 2026 is somewhere around 51 to 53 billion dollars of expenses. As we've said, we'll have about a billion and a half in savings related to the restructuring that we've done. And another 500 billion to a billion related to net expense reductions from eliminating the stranded costs. Ross, as well as additional productivity over that medium-term period. And so we've made, I think, very good headway, as Janice mentioned in the org simplification and the restructuring charges associated with that. Those saves will have started to generate.

Betsy Lynn Graseck: As we've said, we'll have about $1.5 billion in savings related to the restructuring that we've done, and another $500 million to $1 billion related to net expense reductions from eliminating the stranded costs.

Betsy Lynn Graseck: As well as additional productivity over that medium-term period.

Betsy Lynn Graseck: And so we've made, I think, very good headway, as Jane has mentioned, in the org simplification.

Betsy Lynn Graseck: And the restructuring charges associated with that, those saves will, you know, have started to generate some of those saves in the early part of that, meaning this year will likely be offset by continued investment that we're making in areas of the business-like transformation, but also in business-led or driven growth.

Mark Mason: Some of those saves in the early part of that, meaning this year will likely be offset by continued investment that we're making in areas of the business-like transformation, but also in business-led or driven growth. And you should expect, in terms of the trend, that we would have a downward trend towards 2026 and achieving that range. And I just want to reiterate, we remain confident that we will meet our 11 to 12 percent ROTCE target over the medium term. And we've got the, we have the ability to manage the different elements we've been talking about today, making sure that we're investing sufficient resources into the transformation, so we can be on track with that, as well as in our businesses, as well as the return of capital to our shareholders.

Jane Nind Fraser: Some of those savings in the early part of that, meaning this year, will likely be offset by continued investment that we're making in areas of business-like transformation but also in business-led or driven growth. And you should expect, in terms of the trend, that we would have a downward trend towards 2026 and achieve that rank. And I just want to reiterate that we remain confident that we will meet our 11 to 12% ROTCE target over the medium term.

Betsy Lynn Graseck: And you should expect in terms of the trend that we would have a downward trend towards 2026 and achieving that range.

Betsy Lynn Graseck: And I just want to reiterate, we remain confident that we will meet our 11 to 12% ROTCE target over the medium term. And we have the ability to manage the different elements we've been talking about today, making sure that we're investing sufficient resources into the transformation so we can be on track with that, as well as in our businesses, as well as the return of capital to our shareholders. And so we feel confident around that and good about it, we can manage this.

Jane Nind Fraser: And we've got the ability to manage the different elements we've been talking about today, making sure that we're investing sufficient resources into the transformation, so we can be on track with that, as well as in our businesses, as well as in the return of capital to our shareholders. And so we feel confident around that and good about it. We can manage this. Yeah, I think that's a great point, Jane.

Jane Nind Fraser: Yeah, I think that's a great point, Jane. Look, the reality is, as was pointed out earlier, we spent about $3 billion last year, a little bit under that, on the transformation-related work.

Mark Mason: So we feel confident around that, and good about that. We can manage this.

Speaker Change: And, you know, the plan has called for us to spend a little bit more than that this year. And frankly, in the first half of the year, as we've worked through the transformation work and some of the things that Jane and I have mentioned earlier in the year that we've been focused on, like data and data related to regulatory reporting, we've had to spend more than we had planned for in the first half, right? And we've done that.

Mark Mason: Look, the reality is, as was pointed out earlier, we spent about $3 billion last year, a little bit under that on the transformation-related work. And, you know, the plan has called for us to spend a little bit more than that this year. And frankly, in the first half of the year, as we've worked through the transformation work and some of the things that Jane and I have mentioned earlier in the year that we've been focused on, like data and data regulated, and data related to regulatory reporting, we've had to spend more than we had planned for in the first half, and we've done that.

Mark Mason: Yeah, I think that's a great point, Jan. Look, the reality is, as was pointed out earlier, we spent about $3 billion last year, a little bit under that on the transformation-related work. And the plan is called for us to spend a little bit more than that this year. And frankly, in the first half of the year, as we've worked through the transformation work, and some of the things that Jan and I have mentioned earlier in the year that we've been focused on, like data and data and data related to regulatory reporting, we've had to spend more.

Speaker Change: And we funded that. We've been able to find productivity opportunities that allow for us to still stay within the guidance that we've given for the full year. So we are managing this entire expense base.

Mark Mason: Then we had planned for in the first half, right? And we've done that, and we've funded that. We've been able to find productivity opportunities that allow for us to still stay within the guidance that we've given for the full year. So we are managing this entire expense base, right? So not the whole $53 plus billion of it, we are actively managing that with an eye towards what's required from a transformation point of view, to keep it on track, to accelerate in areas where we're behind, and to shore up areas where we're tracking in accordance to what the order requires, and where are there other inefficiencies that can allow for us to free up the expense base?

Mark Mason: And we funded that. We've been able to find productivity opportunities that allow us to still stay within the guidance that we've given for the full year. So, we are managing this entire expense base. So, not the whole 53 plus billion dollars of it; we are actively managing that with an eye towards what's required from a transformation point of view to keep it on track, to accelerate in areas where we're behind, and to shore up areas where we're tracking in accordance with what the order requires. And where are there other inefficiencies that can allow us to free up the expense base?

Speaker Change: All right, so not the whole 53 plus billion dollars of it, we are actively managing that with an eye towards what's required from a transformation point of view.

Speaker Change: to keep it on track to accelerate in areas where we're behind and to shore up areas where we're tracking in accordance to what the order requires. And where are there other inefficiencies?

Speaker Change: That can allow for us to free up the expense base. And so things like the work that Andy Sieg has done with the finance team around that expense base and finding efficiencies there are opportunities that we've been able to tease out of the business.

Speaker Change: Things that we have done in parts of USPB and that we have continued to get out there in parts of banking, which you see in the down 10%.

Mark Mason: And so things like the work that Andy SIG has done with the finance team around that expense base, and finding efficiencies there are opportunities that we've been able to tease out of the business. Things that we have done in parts of USPB, and that we have continued to get up, they're in parts of banking, which you see in the down 10 percent this quarter are areas where we've been keenly focused on, where are their duplicative roles, where are their inefficient processes that we can actually drive greater efficiency out of. So long-winded way of saying, we understand the expense guidance that we've given. We also understand and stress the importance of funding the transformation with what's required, and we're doing both.

Mark Mason: So things like the work that Andy Sieg has done with the finance team around that expense base and finding efficiencies are opportunities that we've been able to tease out of the business. Things that we have done in parts of USPB and that we have continued to get up there in parts of banking, which you see in the down 10% this quarter, are areas where we've been keenly focused on where there are duplicative roles and where there are inefficient processes that we can actually drive greater efficiency out of. So, a long-winded way of saying we understand the expense guidance that we've given. We also understand and stress the importance of funding the transformation with what's required, and we're doing both. Okay, great. Thank you very much.

Speaker Change: This court are areas where we've been keenly focused on where there are duplicative roles.

Speaker Change: Where are there inefficient processes that we can actually drive greater efficiency out of? So long-winded way of saying we understand the expense guidance that we've given. We also understand and stress the importance of funding the transformation with what's required and we're doing both.

Speaker Change: Okay, great. Thank you very much. Appreciate that.

Speaker Change: The next question is from Vivek Juneja with J.P. Morgan. Your line is now open. Please go ahead.

Mark Mason: Okay, great.

Mark Mason: Thanks very much. Appreciate that.

Vivek Juneja: Hi, let me just clarify this, Mark and Jane, just to make sure that we all have it right.

Vivek Juneja: The next question is from Vivek Juneja with JP Morgan. Your line is not open.

Unknown Executive: I appreciate that. The next question is from Vivek Juneja with J.P. Morgan. Your line is now open.

Speaker Change: 53.5 to 53.8.

Vivek Juneja: Please go ahead. Okay.

Unknown Executive: Please go ahead. Hi, let me just clarify this, Mark and Jane, just to make sure that we all have it right. 53.5 to 53.8 does not include anything thus far on what you think you may need to spend on the resource review plan, meaning what additional resources you would have to put in to fix the consent order. Am I right there? No, you're not right.

Vivek Juneja: Does not include anything thus far on what you think you may need to spend on the resource review plan, meaning what additional resources you would have to put to fix the consent order. Am I right there?

Mark Mason: Let me just clarify this. Mark and Jane, just to make sure that we all have it right. The 53.5 to 53.8. Does not include anything thus far on what you think you may need to spend on the resource review plan, meaning what additional resources you would have to put to fix the consent order. Am I right there?

Speaker Change: I know you're not right.

Speaker Change: So, I think as you've heard us talk about Vivek for a while now, that we knew the areas that we were behind in elements of our transformation program, and that we began addressing those and making the investments, some of that in people.

Jane Fraser: I'm no, you're not right. So I think, as you've heard us talk about the vek for a while now, that we knew the areas that we were behind in elements of our transformation program and that we began addressing those and making the investments. And some of that seems people, some of that is in technology spend using different tools and capabilities to get to get areas addressed earlier. And we began that earlier in the year, and you saw that acknowledge as well by our regulators who pointed to the fact that we've already begun addressing the areas that we're behind.

Mark Mason: So I think, as you've heard us talk about Vivek, for a while now, we knew there were areas that we were behind in elements of our transformation program, and that we began addressing those and making the investments. Some of that's in people, some of that is in technology spend, it's using different tools and capabilities to get, you know, areas addressed earlier. And we began that earlier in the year, and you saw that acknowledged as well by our regulators, who pointed to the fact that we've already begun addressing the areas that we're behind. Mark.

Speaker Change: Some of that is in technology spend. It's using different tools and capabilities to get areas addressed earlier. And we began that earlier in the year. And you saw that acknowledged as well by our regulators who

Speaker Change: pointed to the fact that we've already begun addressing the the areas that were behind, Mark. That's right, Jane. What you have heard is that despite having to spend more.

Speaker Change: Some 250 million or so more, we're not changing the guidance, right? And so we have, as Jane mentioned, we have worked on areas already that we've needed to and we have looked for ways to absorb that and are doing so within our guidance.

Jane Nind Fraser: That's right, Jane. And what you have heard is that despite having to spend more, some 250 million or so more, we're not changing the guidance, right? And so we have, as Jane mentioned, worked on areas already that we needed to. And we have looked for ways to absorb that, and are doing so under our guidance. Okay, so going forward, even though this plan is still to be sort of put together and approved by the regulators, we should not expect any change to this expense. Yeah, look, look, look, look.

Mark Mason: That's right, Jane. And what you have heard is that, despite having to spend more, some 250 million or so more, we're not changing the guidance.

Mark Mason: Right. And so we have, as Jane mentioned, we have worked on areas already that we've needed to, and we have looked for ways to absorb that and are doing so within our guide.

Speaker Change: Okay, so going forward, even though this plan is still to be sort of put together and approved by the regulators, we should not expect any change to this expense.

Speaker Change: Yeah, got it.

Mark Mason: Okay, so going forward, even though this plan is still to be sort of put together and approved by the regulators, we should not expect any change to this expense. Look, the plan, the resource review plan, as Jane mentioned, is what we're working through now with the regulators. That will be a process for demonstrating to them. That we are spending and allocating the appropriate resources to accomplishing the commitments that we have. Appropriate resources can range from people to technology to enhancing our processes and ensuring better execution. If you think about what that will entail, it will entail areas where we are delayed or behind. As we identify those areas, being able to tease out the root cause of any delay and ensure that we've got proper funding allocated to get it back on track.

Speaker Change: Look, the plan, the resource review plan, as Jane mentioned, is what we're working through now with the regulators. That will be a process for demonstrating to them.

Mark Mason: But the plan, the resource review plan, as Jane mentioned, is what we're working through now with the regulators. That will be a process for demonstrating to them that we are spending and allocating the appropriate resources to accomplish the commitments that we have. Appropriate resources can range from people to technology to enhancing our processes and ensuring better execution. If you think about what that will entail, it will entail areas where we are delayed or behind as we identify those areas, be able to tease out the root cause of any delay and ensure that we've got proper funding allocated to get it back on track. And that's just me framing out how I think about what something like this might look like.

Speaker Change: that we are spending and allocating the appropriate resources

Speaker Change: to accomplishing the commitments that we have. Appropriate resources can range from people.

Speaker Change: to technology, to enhancing our processes and ensuring better execution. If you think about what that will entail, it will entail areas where we are delayed or behind as we identify those areas.

Speaker Change: Being able to tease out the root cause of any delay and ensure that we've got proper funding allocated to get it back on track.

Speaker Change: And that's me framing out how I think about what something like this might look like. And so what we're saying is that if we identify issues.

Speaker Change: in the quarters to come that we haven't identified already.

Mark Mason: And that's me framing out how I think about what something like this might look like. And so what we're saying is that if we identify issues in the quarters to come that we haven't identified already, that's the process we're going to apply to those issues. And, as you've heard us say repeatedly, we're going to spend whatever is necessary to then get those things back on track. And as we've done thus far this year, we're going to look for opportunities to absorb those heads.

Speaker Change: That's the process we're going to apply to those issues.

Speaker Change: And as you've heard us say repeatedly, we're going to spend whatever is necessary to then get those things back on track. And as we've done thus far this year, we're going to look for opportunities to absorb those headwinds.

Mark Mason: And so what we're saying is that if we identify issues in the quarters to come that we haven't identified already, that's the process we're going to apply to those issues. And as you've heard us say repeatedly, we're going to spend whatever is necessary to then get those things back on track. And as we've done thus far this year, we're going to look for opportunities to absorb those headlines.

Speaker Change: I hope that's clear.

Speaker Change: The next question is from Matt O'Connor with Dutchess Bank. Your line is now open. Please go ahead.

Matt O'connor: Hi. Apologies if I missed it in the opening remarks, but what drove the decline in credit card revenues from 1Q to 2Q? It looks like they were down about 6% in aggregate, even though average loans went up, spending went up.

Mark Mason: with.

Mark Mason: I hope that's clear.

Matt O'connor: The next question is from Matt O'Connor with Dutch Spank. Your line is not open.

Mark Mason: I hope that's clear. The next question is from Matt O'Connor with Dutchess Bank. Your line is not open.

Mark Mason: Please go ahead. Hi.

Unknown Executive: Please go ahead. Hi. Apologies if I missed it in the opening remarks, but what drove the decline in credit card revenues from 1Q to 2Q? It looks like they're down about 6% in aggregate, even though average loans went up, and spending went up. What was the driver of that?

Mark Mason: Apologies if I missed it in the opening remarks, but what roads did decline in credit card revenues from 1Q to 2Q? It looks like they're done about 6% in aggregate even though average loans went up, spending went up. What was the driver of that? Credit card revenues, seasonality. Yeah, seasonality playing through there. Yes, sequentially. Yeah. I think if you look here over here, you'll be up to see a pretty comment trend there.

Matt O'connor: What was the driver of that?

Speaker Change: Credit Card Revenues

Speaker Change: Seasonality playing through there, yeah, sequentially, yep.

Mark Mason: Credit Card Revenues, Seasonality playing through there, yes, sequentially, yep. It's, I think if you look year over year, you'll be able to see a pretty common trend there. The consumer is slowing in some of the spenders, as Mark had referred to Matt. But a lot of the spending and the growth areas we are seeing, and the underlying numbers are being driven by the affluent customer. Yeah, I think there's also the dynamic on the CRS of the reward or across the portfolio of rewards playing through from one quarter to the next. So the combination of those things is playing through the revenue line there. But nothing that's particularly worrying us, Matt.

Speaker Change: I think if you look year over year, you'll be able to see a pretty common trend there. The consumer is slowing in the spend, as Mark had referred to, Matt, and a lot of the spending and the growth areas we are seeing in the underlying numbers is being driven by the affluent customer.

Mark Mason: The consumer is slowing in some of the spend as market referred to Matt, but a lot of the spending and the growth areas we are seeing that in the underlying numbers has been driven by the affluent customer. Yeah, I think there's also the dynamic on the CRS of the reward on bar across the portfolio of rewards playing through from 1Q to the other. So the combination of those things are playing through the revenue line there, but nothing that's particularly worrying us, Matt.

Speaker Change: Yeah, I think there's also the dynamic on the CRS of the reward, or across the portfolio of rewards playing through from one quarter to the other. So the combination of those things are playing through the revenue line there. But nothing that's particularly worrying us, Matt.

Speaker Change: Okay, and then just separately on...

Speaker Change: The very early kind of part of the prepared remarks you talked about.

Speaker Change: The dividends being capped in terms of what can be upstreamed from the bank to the holding company because of the OCC thing that came out this week.

Jane Fraser: Okay, and then I'm just separately on the very early kind of part of the prepared remarks you talked about the dividends being capped in terms of what can be up streamed from the bank to the holding company because of the OCC thing that came out this week. For all intents and purposes, is that impact how you run the company or subsidiary, or impact the query or capital? I understand the comment. No change to dividends or buybacks at the holding company, but is there any impact from that that we would notice on the outside? Thank you.

Mark Mason: Okay, and then just separately on the very early part of the prepared remarks, you talked about dividends being capped in terms of what can be upstreamed from the bank to the holding company because of the OCC thing that came out this week. But for all intents and purposes, like, does that impact how you run the company or subsidiary or impact liquidity or capital? I understood the comment, no change to dividends or buybacks at the holding company. But is there any impact from that that we would notice on the outside?

Speaker Change: For all intents and purposes, like, does that impact...

Speaker Change: How do you run the company or subsidiary or impact liquidity or capital? I understood the comment, no change to dividends or buybacks at the holding company, but is there any impact from that that we would notice on the outside? Thank you.

Speaker Change: Look, let's be clear, this action does not impact our ability to return capital to our shareholders. The dividends that are referenced are just intercompany payments from CB&A to the parents. So first of all, don't confuse what a dividend is here.

Jane Nind Fraser: Thank you. Look, let's be clear. This action does not impact our ability to return capital to our shareholders. The dividends that are referenced are just intercompany payments from CBNA to the parents.

Jane Fraser: Look, let's be clear: this action does not impact our ability to return capital to our shareholders. The dividends that are referenced are just into into company payments from CBNA to the parents. So first of all, don't confuse what a dividend is here. We will; it's not going to impact how we run the company, the subsidiary, the capital, or the liquidity at all, and the dividends are not capped. Yeah, I think the drain that's right, and I think let's not lose sight of the purpose of the orders that are there. The purpose of the orders that are there is to ensure that we're funding and allocating the effort appropriately.

Speaker Change: It's not going to impact how we run the company, the subsidiary, the capital, or the liquidity at all, and the dividends are not capped.

Jane Nind Fraser: So first of all, don't confuse what a dividend is here. It's not going to impact how we run the company, the subsidiary, the capital, or the liquidity at all. And the dividends are not capped. Yeah, yeah, I think Jane is right.

Speaker Change: Yeah, yeah, I think the Jane, that's right. And I think we let's not lose sight of the purpose of the orders that are there. And the purpose of the orders that are there are to ensure that we're

Mark Mason: And I think we should not lose sight of the purpose of the orders that are there. And the purpose of the orders that are there is to ensure that we're funding and allocating the effort appropriately, right. So the regulators want essentially the same thing we want, which is for us to get this done.

Speaker Change: Funding and allocating the effort appropriately, right, so the regulators want essentially the same thing we want, right, is for us to get this done.

Speaker Change: All right, and so that is the primary objective, the reference to the dividending from out of CBNA up to the parent.

Jane Fraser: Right? So the regulators want essentially the same thing we want, right? It's for us to get this done. Right? And so that is that is the primary objective. The reference to the dividending from out of CBNA up to the parent is certainly referenced there between now and establishing that resource review plan. But, as Jane mentioned, that does not constrain the parent from doing the things that it will need to do. And, as opposed to, it's not a cap; what it is, is that anything above the debt service of the parent or the preferred dividend and other non-discretionary obligations would require a non-objection from the OCC.

Speaker Change: is certainly referenced there between now and establishing that resource review plan. But as Jane mentioned, that does not constrain the parent from doing the things that it will need to do. And as opposed to, it's not a cap, what it is is that

Jane Nind Fraser: And so that is that is the primary objective. The reference to the dividending from CBNA out of CBNA up to the parent is certainly referenced there between now and establishing that resource review plan. But, as Jane mentioned, that does not constrain the parent from doing the things that it will need to do.

Speaker Change: Anything above the debt service of the parent or the preferred dividends and other non-discretionary obligations would require a non-objection

Speaker Change: from the OCC until the resource plan is agreed and as you'll have seen the resource plan needs to be submitted within 30 days and as I indicated um you know we're working on that one and not not anticipating that to um to be a problem.

Jane Fraser: Until the resource plan is agreed. As you have seen, the resource plan needs to be submitted within 30 days, and as I indicated, we're working on that one and not anticipating that to be a problem.

Speaker Change: The next question is from Saul Martinez with HSBC. Your line is now open. Please go ahead.

Saul Martinez: Hi, good afternoon. Thanks for taking my question. I guess I just want to follow up.

Saul Martinez: On the latter question, I just want to be very clear. So the...

Saul Martinez: The next question is from Saul Martinez with HSBC. Your line is not open. Please go ahead.

Mark Mason: And as opposed to that, it's not a cap; what it is, is that anything above the debt service of the parent, or the preferred dividend, and other non-discretionary obligations would require a non-objection from the OCC until the resource plan is agreed. As you'll have seen, the resource plan needs to be submitted within 30 days. And as I indicated, we're working on that one and not not anticipating that to be a problem. The next question is from Saul Martinez with HSBC. Your line is now open. Please go ahead. Hi, good afternoon.

Saul Martinez: What you're saying is that the requirement that CB&A receive a non-objection before dividending upstream to the parent, that does not impact how you think about your capital flexibility.

Saul Martinez: Hi, good afternoon. Thanks for taking my question. I guess I just want to follow up on the latter question. I just want to be very clear.

Unknown Executive: Thanks for taking my question. I guess I just want to follow up. On the latter question, I just want to be very clear. What you're saying is that the requirement that CB&A receive a non-objection before dividending upstream to the parent does not impact how you think about your capital flexibility, how you think about, you know, it doesn't restrict you in any way and shouldn't impact, for example, your ability to benefit from, for example, a Basel endgame rule that is softened So you don't see this impacting your ongoing level of capital flexibility and your ability to, you know, repurchase stock going forward if, you know, some of these things actually do play out.

Jane Fraser: So, the, what you're saying is that the requirement that CBNA receive a non-objects into before giving it ending upstream to the parent that does not impact how you think about your capital flexibility, how you think about, you know, it doesn't restrict you in any way, and shouldn't impact, for example, your ability to benefit from, for example, a, a bottle and game rule that is softened or some of the benefits mark that you talked about in terms of simplification, so you don't see this impacting your, your ongoing level capital flexibility and your ability to re-purchase stock going forward if, you know, some of these things actually do play out.

Saul Martinez: How you think about...

Speaker Change: It doesn't restrict you in any way and shouldn't impact, for example, your ability to benefit.

Speaker Change: For example, a Basel endgame rule that is softened, or some of the benefits, Mark, that you talked about in terms of simplification, so you don't see this impacting your ongoing level of capital flexibility and your ability to

Speaker Change: to repurchase stock going forward if some of these things actually do play out.

Speaker Change: No.

Speaker Change: Second question on, I just want to follow up on USPB. I mean, I still, you know, I get the point.

Jane Fraser: No. Is that right? Okay. No, I don't know. No, that's clear. It's going to be good. Thank you.

Jane Nind Fraser: Is that right? Okay. No, I don't think so.

Speaker Change: That, you know, you're seeing a normalization in losses and cards, but...

Jane Fraser: Now, second question on, I just want to follow up on USBB. I mean, I still, you know, I get the point that, you know, you're seeing normalization and losses and cards, but, you know, even if I adjust the reserve bills, your, your Rossi still single digits. I would think even at these NCO level, your cards business is pretty profitable. Your scale player, when you're above sort of pre-pandemic levels, but not, I don't know if I, it doesn't seem like it's that much higher by dramatic amount.

Speaker Change: You know, even if I adjust for reserve bills, your ROTC is still single-digit, I would think even at these NCO levels, your cards business is pretty profitable, your scale player, I mean, you're above sort of pre-pandemic levels, but not, I don't know if I, it doesn't seem like it's

Speaker Change: That much higher by dramatic amount. It would seem to imply that the retail bank is you know, a huge drag on profitability even

Speaker Change: You know, maybe even losing money. I don't know. But can you just...

Speaker Change: Talk about what you can do to sort of improve the retail bank profitability and just give any more color that you can in terms of the path to get to that high teen ROTC you talked about.

Jane Fraser: It would seem to imply that the retail bank is, you know, a huge drag on profitability, even, you know, maybe even losing money. I don't know, but can you just talk about what you can do to sort of improve the retail bank profitability and just give any more color. That you can, in terms of the path to get to that high, high teen, Rossi, you talked about.

Speaker Change: Yeah let me let me kick off there and and let's say look clearly we're very focused on improving the returns in USPB to get us to the the high teens level over the medium term and you've seen us generating healthy positive operating leverages quarter we've had a number of quarters of good revenue growth and as Mark said

Jane Nind Fraser: Fair enough. That's clear. It's going to be good.

Jane Fraser: Yeah, let me, let me kick off there and let's say, look, clearly, we're very focused on improving the returns in USBB to get us to the high teens level over the medium term. And you've seen us generating healthy, positive operating leverages quarter. We've had a number of quarters of good revenue growth. And as Mark said, however, we're at the low point of the credit cycle. And we knew this year, we would see the pressure on returns from the elevated NCLs and some of the industry headwinds we've talked about. But as the NCL rates approach steady state levels and the mitigating actions that all of us have been putting in place against the industry headwinds, as those take hold.

Jane Nind Fraser: Second question, I just want to follow up on USPB. I mean, I still, you know, I get the point that, you know, you're seeing normalization and losses and cards, but, you know, even if I adjust for reserve bills, your ROTC is still single digits. I would think even at these NCO levels, your card business is pretty profitable. Your scale player, when you're above sort of pre-pandemic levels, but not, I don't know if by how much, it doesn't seem like it's that much higher by a dramatic amount.

Speaker Change: We're at the low point of the credit cycle, and we knew this year we would see the pressure on returns from the elevated NCLs and some of the industry headwinds we've talked about.

Speaker Change: But, as the NCL rates approach steady state levels,

Speaker Change: And the mitigating actions that all of us have been putting in place against the industry headwinds as those take hold, we expect the returns will improve and support the firm-wide medium-term targets.

Speaker Change: in the Retail Bank.

Speaker Change: We're continuing to focus on growing share in our six core markets and we're doing that leveraging our physical and digital assets.

Jane Fraser: We expect the returns will improve and support the medium, the firm wide medium term targets. In the retail bank, we're continuing to focus on growing share in our six core markets. And we're doing that leveraging our physical and digital assets. It plays an important role in enabling the wealth continuum. And the growth that we're looking at in our wealth franchise, we're continuing to improve our operating efficiency, being very disciplined in expense management. And managing carefully the branch and digital productivity of the retail bank network. But we're at the high point of the credit cycle. It's driving the low point for USB B.

Speaker Change: It plays an important role in enabling the wealth continuum and the growth that we're looking at in our wealth franchise. We're continuing to improve our operating efficiency, being very disciplined in expense management and managing carefully the branch and digital productivity of the retail bank network.

Jane Nind Fraser: It would seem to imply that the retail bank is, you know, a huge drag on profitability, even, you know, maybe even losing money. I don't know. But can you just talk about what you can do to sort of improve the retail bank's profitability and just give any more color that you can in terms of the path to get to that high teen ROTC program you talked about? Yeah, let me kick off there.

Speaker Change: We're at the high point of the credit cycle. It's driving the low point, the USPB, and as I said in my remarks, we're expecting to see those returns improve from here.

Jane Nind Fraser: And let me say clearly, we're very focused on improving the returns in USPB to get us to the high teens level over the medium term. And you've seen us generating healthy, positive operating leverage every quarter. We've had a number of quarters of good revenue growth. And, as Mark said, however, we're at the low point of the credit cycle.

Speaker Change: The next question is from Steven Chubak with Wolfe Research. Your line is now open. Please go ahead.

Jane Nind Fraser: And we knew this year we would see pressure on returns from the elevated NCLs and some of the industry headwinds we've talked about. But as the NCL rates approach steady state levels, and the mitigating actions that all of us have been putting in place against the industry headwinds as those take hold, we expect returns will improve and support the firm-wide medium-term target. In the retail bank, we're continuing to focus on growing our share in our six core markets, and we're doing that by leveraging our physical and digital assets.

Jane Fraser: And, as I said in my remarks, we're expecting to see those returns improved from here.

Steven Joseph Chubak: Hi, good afternoon.

Steven Joseph Chubak: So, Mark, I have a fairly technical question on DTA utilization and specifically the NOLs. The deduction is still fairly significant at $12 billion. It roughly equates to about 10% of your market cap.

Steven Chubak: The next question is from Steven Chubak with Wolf Research. Your line is not open. Please go ahead.

Jane Nind Fraser: It plays an important role in enabling the wealth continuum and the growth that we're looking at in our wealth franchise. We're continuing to improve our operating efficiency, being very disciplined in expense management, and managing carefully the branch and digital productivity of the retail bank network. But we're at the high point of the credit cycle.

Jane Nind Fraser: It's driving the low point for USPB, and as I said in my remarks, we're expecting to see those returns improve from here. The next question is from Steven Chubak with Wolf Research. Your line is now open. Please go ahead. Hi, good afternoon.

Steven Chubak: Hi, good afternoon.

Unknown Executive: So, Mark, I have a fairly technical question on DTA utilization and specifically the NOLs. The deduction is still fairly significant at $12 billion. It roughly equates to about 10% of your market cap.

Mark Mason: So, Mark, I have a fairly technical question on DTTA utilization and specifically the NOLs. The deduction is still fairly significant at 12 billion. It roughly equates to about 10% of your market cap. In the good news here, I suppose, is that it should come back into capital over time, but we've seen very little utilization over the past two years, despite the firm being profitable. And so one of the better understand is what's constraining your ability to utilize those DTAs? And are there catalysts on the horizon that actually help accelerate that utilization beyond organic earnings generation?

Speaker Change: And the good news here, I suppose, is that it should come back into capital over time.

Speaker Change: But we've seen very little utilization over the past two years, despite the firm being profitable. And so one of the better understand is what's constraining your ability to utilize those DTAs? And are there catalysts on the horizon that can actually help accelerate that utilization beyond organic earnings generation?

Mark Mason: And the good news here, I suppose, is that it should come back into capital over time. But we've seen very little utilization over the past two years, despite the firm being profitable. And so I wanted to better understand what's constraining your ability to utilize those DTAs, and are there catalysts on the horizon that can actually help accelerate that utilization beyond organic earnings generation? Yes, thank you.

Speaker Change: Thank you. So I'm going to give you a very simple answer to a very complicated question. It really comes down to driving U.S. income.

Speaker Change: All right, and so we are we are focused on not just all of the things that we've mentioned, but driving higher income in the US that allows for us to utilize the disallowed DTA.

Mark Mason: Yeah, thank you. So I'm going to give you a very simple answer to a very complicated question. It really comes down to driving U.S. income. Right. And so we are focused on not just all of the things that we've mentioned, but driving higher income in the US that allows for us to utilize the disallowed DTA. We saw some of that in the quarter, and we expect to see more of it as we move through the medium term, but that is the major driver of that utilization. And we have many of our business heads very much focused around that opportunity as well.

Mark Mason: So I'm going to give you a very simple answer to a very complicated question. It really comes down to driving U.S. income. All right. And so we are focused on not just all of the things that we've mentioned but driving higher income in the U.S. that allows us to utilize the disallowed DTA. We saw some of that in the quarter, and we expect to see more of it as we move through the medium term.

Speaker Change: We saw some of that in the quarter, and we expect to see more of it as we move through the medium term. But that is the major...

Speaker Change: driver of that utilization.

Speaker Change: And we have many of our business heads very much focused around that opportunity as well.

Speaker Change: Winning in the U.S. is a very important leg, for example, of the strategy that Viz is refreshing. Similarly, we see opportunities from the commercial bank. We see it in wealth. We see it in, obviously, in U.S. personal banking and in services. So we're focused from a business strategy point of view on this, not just from the financial side.

Mark Mason: But that is the major driver of that utilization. We've got, and we have many of our business heads very much focused on that opportunity as well. So winning in the U.S. is a very important leg, for example, of the strategy that this is refreshing. Similarly, we see opportunities from the commercial bank. We see it in wealth. We see it obviously in U.S. personal banking and in services. So we're very focused from a business strategy point of view on this, not just from the financial side. Thank you both for that color.

Mark Mason: So winning in the US is a very important leg, for example, of the strategy that businesses is refreshing. Similarly, we see opportunities in from the commercial bank, we see it in wealth, we see it in obviously in the US personal banking and in services. So we're very focused from a business strategy point of view on this, not just from the financial side.

Speaker Change: Thank you both for that color and maybe just a quick follow-up just on the retail services business. We are seeing some evidence that your competitors in the space

Speaker Change: have been more aggressive, leading with price in an effort to win some new mandates. And with some of you, could you speak to what you're seeing across the competitor set and your appetite or willingness to potentially offer better economics in response to increased competition from some of your peers?

Mark Mason: Thank you both for that color, and maybe just a quick follow-up just on the retail services business. We are seeing some evidence that your competitors in the space have been more aggressive, leading with price in effort to win some new mandates. And with some of you to speak to what you're seeing across the competitors at and your appetite or willingness to potentially offer better economics in response to increased competition from some of your peers. I think you'll be delighted to hear that we're very focused on returns, rather than just on revenues. So when we enter into discussions with a partner who may be a new RFP for their portfolio or looking at new ones, such as the one we just agreed with dealers.

Jane Nind Fraser: And maybe just a quick follow-up. Just on the retail services business, we are seeing some evidence that your competitors in this space have been more aggressive, leading with price in an effort to win some new mandates. And with some of you, I could speak to what you're seeing across the competitor set and your appetite or willingness to potentially offer better economics in response to increased competition from some of your peers. I think you'll be delighted to hear that we're very focused on returns rather than just on revenues.

Speaker Change: Well, I think you'll be delighted to hear that we're very focused on returns rather than just on revenues. So, when we enter into discussions with a partner who may be a new RFP for their portfolio or looking at new ones,

Jane Nind Fraser: When we enter into discussions with a partner who may be a new RFP for their portfolio or looking at new ones, such as the one we just agreed with Dillard, it's all about the returns and the profile of the business rather than the revenue side of things. And it's probably a shift from some of the ways in the past, but I'm very pleased with how disciplined the team is being around this, and we're seeing the benefits of it. And that may be different from what you hear and see from other players in the game.

Speaker Change: such as the one we just agreed with Dillard.

Speaker Change: It's all about the returns.

Speaker Change: and the profile of the business rather than the revenue side of things and it's a shift

Jane Nind Fraser: I'm very pleased with how disciplined the team is being around this, and we're seeing the benefits of it. And that may be different from what you hear and see from other players in the space, but as Jane mentioned, we're keenly focused on ensuring that, yes, we have a good partnership, but that we're generating an appropriate return. That's part of achieving our medium-term targets.

Mark Mason: It's all about the returns and the profile of the business, rather than the revenue side of things, and it's a shift to probably from some of the ways in the past. But I'm very pleased with how disciplined the team is being around this, and we're seeing the benefits of it. And that may, that may be different from what you hear and see from other players in the space, but as Jane mentioned, we're keenly focused on ensuring that yes, we have a good partnership, but that we're generating an appropriate return. That's part of achieving our medium term targets.

Mark Mason: But, as Jane mentioned, we're keenly focused on ensuring that, yes, we have a good partnership, but that we're generating an appropriate return. That's part of achieving our medium-term targets. And as you know, since you brought up retail cards, I mean, when we think about how CECL works and the reserves you have to establish for these partnerships, we're establishing full lifetime reserves that are on the balance sheet, where, ultimately, we end up splitting those through partner sharing economics.

Jane Nind Fraser: And as you know, since you brought up retail cards, I mean, when we think about...

Jane Nind Fraser: How CECL works and the reserves you have to establish for these partnerships, we're establishing full lifetime reserves that's on the balance sheet, where ultimately we end up splitting those through the partner sharing economics. So, it's another important...

Mark Mason: And as you know, since you brought up retail cards, I mean, when we think about how Cecil works and the reserves you have to establish for these partnerships, we're establishing full lifetime reserves that's on the balance sheet where ultimately we end up splitting those through the partners sharing economics. So it's another important consideration as we think about expanding and taking on these relationships and renegotiating partnerships to make sure that returns make good sense for us. And Mark and I have no problem saying no to revenue that doesn't come at the right returns and being very disciplined around that.

Jane Nind Fraser: Consideration as we think about

Mark Mason: expanding and taking on these relationships and renegotiating partnerships to making sure that returns make good sense for us. And Mark and I have no problem saying no to revenue that doesn't come at the right returns and being very disciplined around that.

Mark Mason: So it's another important consideration as we think about expanding and taking on these relationships and renegotiating partnerships to make sure that returns make good sense for us. And Mark and I have no problem saying no to revenue that doesn't come at the right return and being very disciplined around that. The next question is from Vivek Juneja with J.P. Morgan. Your line is now open.

Speaker Change #100: The next question is from Vivek Juneja with J.P. Morgan. Your line is now open. Please go ahead.

Vivek Juneja: Hi, sorry, just to follow up on this whole consent order stuff, Jane, what do you think this does in terms of timing? How much longer?

Vivek Juneja: The next question is from Vivek Juneja, with JP Morgan. Your line is now open, please go ahead. Hi, sorry, just to follow up on this whole consent order stuff, Jane Wood. What do you think this does into the timing, how much longer?

Vivek Juneja: For you to sort of get this past you, are you talking a couple of years? Is it now longer by a year? Any sense of that? Any sense of helping us think through that?

Unknown Executive: Please go ahead. Sorry, just to follow up on this whole consent order stuff Jane, what do you think this does in terms of timing? How much longer?

Speaker Change #101: Look in terms of the consent order.

Jane Fraser: For you to sort of get this past you, is it, are you talking a couple of years, is it now longer by a year, any sense of that, any sense of helping us think through that? Look in terms of the consent order and the areas we've had delays, there are four areas to the consent order: it's risk management, it's data governance, it's around compliance, and it's around control. As we've said, we were falling behind in certain areas related to data. And we've been investing to address the areas that we were behind. We also saw an increase in the scope related to regulatory reporting.

Jane Nind Fraser: for you to sort of get this past you. Is it, are you talking a couple of years? Is it now longer by a year?

Speaker Change #102: And the areas we've had delays, there are four areas to the consent order. It is risk management, it's data governance, it's around compliance, and it's around control.

Jane Nind Fraser: Any sense of that? Any sense of helping us think through that? Look at it in terms of the consent order and the areas we've had delays. There are four areas to the consent order.

Jane Nind Fraser: It is risk management, it's data governance, it's around compliance, and it's around control. Transcribed by https://otter.ai. As we've said, we were falling behind in certain areas related to data. And we've been investing to address the areas that we were behind. We also saw an increase in the scope related to regulatory reporting. So we added some more bodies of work there, and we're well underway. So we are not expecting this to extend the original expectations that we have on when we will complete the body of work for the consent order.

Speaker Change #103: As we've said, we were falling behind in certain areas related to data.

Speaker Change #103: We've been investing to address the areas that we were behind. We also saw an increase in the scope related to regulatory reporting, so we added some more bodies of work there, and we're well underway. We are not expecting this.

Speaker Change #103: to extend the original expectations that we have on when we will complete the body of work for the consent order.

Jane Fraser: So we added some more bodies of work there, and we're well underway, so we are not expecting this to extend the original expectations that we have on when we will complete the body of work for the consent order. We have a target state for the different areas of IT, we have the plan to achieve those target states, we'll make the investments necessary to ensure that we do so. We'll try and get this done as quickly, but as robustly as possible, and we're doing this by making strategic fixes and investments rather than what I would call the old city way, which is a series of mandates that remediate but don't actually fix the underlying issue.

Speaker Change #103: We have a target state for the different areas of it, we have the plan to achieve those target states, we'll make the investments necessary to ensure that we do so.

Jane Nind Fraser: And we have a target state for the different areas of it. And we have a plan to achieve those target states. We'll make the investments necessary to ensure that we do so, and we'll try and get this done as quickly but as robustly as possible. And we're doing this by making strategic fixes and investments, rather than what I would call the old city way, which is a series of band-aids that remediate, but don't actually fix the underlying issue. And in that way, we are delivering for our shareholders, as well as our regulators and our clients, because we're putting in strategic solutions that will benefit all. But I'm not expecting this to change the timeframes.

Jane Fraser: And that way, we are delivering for our shareholders, as well as our regulators and our clients, because we're putting in strategic solutions that will benefit all. But I'm not expecting this to change the time frame.

Mike Mayo: Thank you.

Mike Mayo: The final question comes from the line of Mike Mayo with Wells Fargo; your line is now open, please go ahead. I had just two clarifications, so this is a very high-profile amendment to the consent order, and I think what I hear you saying, but if you can confirm your risk compliance and controls are getting passing grades, it's really the data. It has relates to the data you're talking about 11,000 regulatory reports, some which have 750,000 lines of data. Is that really the scope of what you need to fix? Because people see this externally and say, hey, you're failing in terms of overall controls and resiliency.

Jane Nind Fraser: Thank you. The final question comes from the line of Mike Mayo with Wells Fargo. Your line is now open.

Unknown Executive: Please go ahead. Hi, just two clarifications. So yeah, this is a very high-profile amendment to the consent order. And I think what I hear you saying, but if you can confirm your risk compliance and controls are getting passing grades, it's really the data. And as it relates to data, you're talking about 11,000 regulatory reports, some of which have 750,000 lines of data. Is that really the scope of what you need to fix?

Speaker Change #104: Yes. This is a very high profile amendment to the consent order and I think what I hear you, saying, but if you can confirm your risk compliance and controls are getting passing grades. It's really the data as it relates to the data you're talking about 11000 regulatory reports on which had seven 750.

And lines of data is that really the scope of what you need to fix because people see this externally and say hey, you're failing in terms of overall controls and resiliency.

Unknown Executive: Because people see this externally and say, hey, you're failing in terms of overall controls and resiliency. But I think I hear you saying it's really more about just the data and the regulatory reporting, which is important, but more of a slice of a broader picture. Is that correct? Yeah, Mike, maybe you're asking a great question and it's an important question.

Jane Fraser: But I think I hear you saying it's really more about just the data and the regulatory reporting, which is important, but more of a slice of a broader picture, is that correct? Yeah, maybe I just maybe I you're asking a great and it's an important question. So maybe I try and explain what we, the data elements, because it's an area that Mark and I have pointed to. So first of all, we use data all over the firm. We use it to deliver 72 million customer statements every month. Corporate clients that you heard about at our service investor day access, you know, account data real time across multiple countries on City Direct, and we're moving five trillion, five trillion dollars roughly per day for those clients around the world.

Speaker Change #104: But I think I hear you, saying, it's really more about just the data and the regulatory reporting which is important but more of a slice of a broader picture is that correct.

Michael Lawrence Mayo: Yeah, Mike maybe I, just maybe I, you're asking a great and it's an important question. So maybe I I try and explain what we the data elements because it's an area that mark and I've pointed to so first of all we use data all over the phone where you use it to let the 72 million customer statements.

Jane Nind Fraser: So maybe I can explain the data elements because it's an area that Mark and I have pointed out. So first of all, we use data all over the firm. We use it to deliver 72 million customer statements every month. Our corporate clients, as you heard about at our service investor day, access account data in real time across multiple countries on Citi Direct.

Michael Lawrence Mayo: Separate months Ah corporate clients as you heard about and all service Investor day access it.

Michael Lawrence Mayo: Account data real time across multiple countries on city direct and were moving five trillions of five trillion dollars roughly per day for those clients around the world. We trade billions of dollars in a millisecond don't know trading platform. We can see our liquidity positions real time around the world is can only be done if you've got pretty pristine.

Jane Nind Fraser: And we're moving $5 trillion roughly per day for those clients around the world. We trade billions of dollars in a millisecond on our trading platforms. We can see our liquidity positions in real time around the world. This can only be done if you've got pretty pristine data and highly automated ecosystems.

Jane Fraser: We trade billions of dollars in a millisecond on our trading platforms. We can see our liquidity positions real time around the world. This can only be done if you've got pretty pristine data and a highly automated ecosystem. So, but what is the transformation doing? What it is doing is simplifying how data moves through the firm, and it's about upgrading the management and governance over those flows. And we, as I've said, we're doing a strategic overhaul of large parts of our infrastructure. So, what are we doing? We're making sure we're capturing data accurately using smart tools and automation.

Michael Lawrence Mayo: In data and highly automated ecosystems.

Jane Nind Fraser: So, but what is the transformation doing? What it is doing is simplifying how data moves through the firm. And it's about upgrading the management and governance over those flows. And we, as I've said, are doing a strategic overhaul of large parts of our infrastructure. So what are we doing? We're making sure we're capturing data accurately using smart tools and automation. We'll often talk about this smart system to make sure there are no errors when we book a trade.

Speaker Change #105: So Bob.

What is the transformation doing what it is doing is simplifying how data moves through the fun.

Speaker Change #105: It was about upgrading the management and governance over those flows.

Speaker Change #105: I've said, we're doing a strategic overhaul of large parts of our infrastructure. So what are we doing we're making sure. We are capturing data accurately using smart tools and automation, where well often talk about this smart system make sure. There's no errors when we book a trade we see in our era right down 85% as a result of it.

Jane Fraser: We'll often talk about this smart system. Make sure there's no errors when we're able to trade. We've seen our error rate down 85% as a result of it. We're having our upstream data in two standardized repositories. They're the golden sources and in-person data hub, which you've heard me talk about a few times. And very golden source now for all of the downstream data use, populating the thousands of regulatory reports Mark talked about and other areas. And what a single repository means is that the data models the data quality rules, the controls you put in place to govern and manage that data.

Jane Nind Fraser: We've seen our error rate down 85% as a result of it. We're housing our upstream data in two standardized repositories. They're the golden sources, Olympus and Data Hub, which you've heard me talk about a few times. And they're a golden source now for all of the downstream data use, populating the thousands of regulatory reports Mark talked about and other areas. And what a single repository means is that the data models, the data quality rules, the controls you put in place to govern and manage that data all sit in one place, rather than being distributed all over the firm as they have been historically.

Speaker Change #105: Yeah.

Warehousing, our upstream data and to standardize repository that the Golden sources, the named person data hub, which you've heard me talk about a few times.

Speaker Change #105: Barry Goldman source now for all of the downstream day to use populating the thousands of regulatory reports not talked about and other areas are more of a single repository means is that the data models. The data quality rules that controls you put in place to govern manage that data they all sit in one.

Jane Fraser: They all sit in one place rather than being distributed all over the firm as they have been historically. Mark, I've been investing in building a standardized reporting infrastructure. You've heard us talk about a single full suite reporting ledger versus the six or so reporting ledgers that we've had in the past. And we're delivering all of this through consolidated systems, through the automation and streamlining of data flows. So instead of being in multiple pipes, the flows go through single pipes. So it's a sorry to get a bit plumber on you for a moment, but I think it's important to understand what it is.

Speaker Change #105: Rather than being distributed all over the as they have been historically.

Jane Nind Fraser: Mark's been investing in building a standardized reporting infrastructure. You've heard us talk about a single full-suite reporting ledger versus the six or so reporting ledgers that we've had in the past. And we're delivering all of this through consolidated systems, through the automation and streamlining of data flows. So instead of being in multiple pipes, the flows go through single pipes.

Speaker Change #106: Mark I'm being.

Speaker Change #107: Investing in building a standardized reporting infrastructure, you've heard us talk about a single full suite reporting lecher buses. They fix also reporting ledgers that we've had in the past and we're delivering all of this will consolidate.

Consolidated systems through the automation and streamlining of data flow, so instead of being in multiple pipes. The Flyers go through single pipes.

Jane Nind Fraser: Sorry to get a bit technical on you for a moment, but I think it's important to understand what it is, because it's a lot of work. It's a strategic overhaul. It's not a series of tactical fixes where we're behind as we do the work on data; we identify specific issues we need to fix as we execute the plan that we have in place. There are some more areas to address than we knew back when we did the plan. So we've and we've also accelerated the work on improving the accuracy of our regulatory reports.

Speaker Change #108: I'm, sorry to get a bit Palmer on you for a moment, but I think it's important to understand what it is.

Jane Fraser: Because it's a lot of work. It's a strategic overhaul. It's not a series of tactical fixes. And where we're behind, as we do the work on data, we identify specific issues we need to fix as we execute the plan that we have in place. There's the more areas to address, and we knew back when we did the plan. So we've, and we've also accelerated the work on improving the accuracy of our regulatory reports, and we increase the scope of this work as well. It's more comprehensive and originally planned. So what we're doing, we're adding resources and data experts.

Speaker Change #108: So there's a lot of work on it.

Speaker Change #108: It's a strategic as a whole it's not a series of tactical fixes.

Speaker Change #108:

Speaker Change #108: We're way behind as we do the work on data we identify specific issues, we need to fix as we execute the plan that we have in place. There's some more areas to address and we knew them back when we did the plan. So we've and we've also accelerated the work on improving the accuracy of our regulatory reports.

Jane Nind Fraser: And we've increased the scope of this work as well. It's more comprehensive than originally planned. So what we're doing, we're adding resources and data experts. We're learning from best practices that we're using some great AI and other data tools that are helping to identify anomalies in data and data flows much more quickly.

Speaker Change #108: We increased the scope of this work because well it's more comprehensive than originally planned.

Speaker Change #108: So what we're doing we're adding resources and data Rx, but we're learning from best practices using some great AI and other data tools that are helping to identify anomalies and data and data plays much quickly.

Jane Fraser: We're learning from best practices that we're using some great AI and other data tools that are helping to identify anomalies in data and data flows much more quickly. We're also to the, um, to some of the culture side. We're learning from Pilot. How do we accelerate broader deployment at scale across the firm and a consistent enterprise-wide manner. So all of these things in the data side, um, are going to enable us to leap pro competitors, more revenue opportunities, better client service, fewer buffers, drive more efficiencies, um, and hope at the end of the end goal here is it becomes a competitive advantage for the firm.

Jane Nind Fraser: We're also on the culture side, learning from pilots how to accelerate broader deployment at scale across the firm in a consistent enterprise-wide manner. So all of these things in the data side are going to enable us to leapfrog competitors, create more revenue opportunities, better client service, fewer buffers, and drive more efficiencies. And I hope at the end, the end goal here is that it becomes a competitive advantage for the firm. That is the data plan.

Speaker Change #108: We're also to that.

Speaker Change #108: To some of the culture side when learning from pilot, how do we accelerate broader deployment at scale.

Speaker Change #108: Across the firm and that consistent enterprise wide manner.

Speaker Change #108: So all of these things in the data side I'm.

Speaker Change #108: Going to enable us to leapfrog competitors more revenue opportunities better client service fewer buffers drive more efficiencies.

Speaker Change #108: At the end of the angle here is it becomes a competitive advantage for the Sun that is the data plan.

Jane Fraser: That is the data plan. Clearly, there's a very important element of it related to the consent orders. We're behind in a few areas. We're investing. We've already begun that investment, as Mark and I talked about, to get it done. We'll get it done.

Jane Nind Fraser: Clearly, there's a very important element of it related to the consent orders. We're behind in a few areas. We're investing. We've already begun that investment, as Mark and I have talked about, to get it done.

Speaker Change #108: Really there isn't a very important element of it related to the consent orders we're behind in a few areas. We're investing we've already begun that investment as well.

Jane Nind Fraser: We'll get it done. A real short follow-up. Sorry, what was that, Mark? Just to say, a real, real short, real short follow-up to that, so you're doing all this great stuff. But you still fell short, just in like one sentence. Despite doing all this great stuff that you described, the regulator still said you didn't get it done. Why, after doing all that, didn't you understand why that is done in the eyes of the regulators and why it will be fixed now? Just like a one-sentence explanation for that, if you have it. I always said that a transformation of this magnitude over multiple years would not be linear.

Speaker Change #109: Mark and I have talked about to get it done we'll get it done.

Jane Fraser: Real short follow up to that. So you're doing all this great stuff, but you still fell short just in like one sentence despite doing all this great stuff that you described. The regulators still said, you didn't get it done. Why, after doing all that? Didn't you get it done in the eyes of the regulators, and why will be fixed now? Just to say, real short, real short follow up to that. So you're doing all this great stuff, but you still fell short just in like one sentence. Despite doing all this great stuff that you described, the regulators still said you didn't get it done.

Speaker Change #109: And the only thing real shortfall.

Speaker Change #110: Sorry, what was that Mark just to say real short real short follow up to that.

Speaker Change #111: You're doing all this great stuff.

Speaker Change #112: But you still fell short just like one set and despite doing all this great stuff that you described the regulators still said you didn't get it done why after doing all that then you get it.

Jane Fraser: Why, after doing all that? Didn't you get it done in the eyes of the regulators, and why will be fixed now? Just like a one sentence explanation for that, if we have it. I always said that a transformation of this magnitude over multiple years would not be linear. We have many steps forward. We have setbacks. We adjust. We learn from them. We move forward, and we get our contract. And Mike, if I could just put one number into context because you played back the 11,000, which was a number of goals. The global regulatory reports across the landscape here, there are probably 15 to 30 that are core US reports that are pivotal to our US regulators.

Speaker Change #112: Got it done in the eyes of regulators and why won't be fixed now just like a one sentence explanation for that if you have it.

Speaker Change #113: I always said that a transformation of this magnitude over multiple years would not be linear we have many steps sport. We have setbacks, we adjust we learn from them and we move forward and we get back on track.

Jane Nind Fraser: We have made many steps forward. We have also had setbacks. We adjust. We learn from them. We move forward, and we get back on track. And Mike, if I could just put one number into context, because you played back the 11,000, which was a number of global regulatory reports across the landscape here, they're probably 15 to 30 that are core US reports that are pivotal to our US regulators. And a lot of what we're discussing here is about ensuring that we're prioritizing the data that impacts those 15 to 30 reports as we work through them.

Michael Lawrence Mayo: And Mike if I could just put one number into context, because you paid back the 11000, which was a a number of global regulatory reports across the landscape here. They are probably 15 to 30 that are core U S reports that are pivotal to our.

Michael Lawrence Mayo: U S regulators and a lot of what we're discussing here is about ensuring that we're prioritizing the data that impacts those 15 to 30 reports.

Mark Mason: And a lot of what we're discussing here is about ensuring that we're prioritizing the data that impacts those 15 to 30 reports as we work through this.

Michael Lawrence Mayo: As we work through this.

Mark Mason: There are no further questions.

Mark Mason: There are no further questions. I'll now turn the call over to Jen Landis for closing remarks. Thank you all for joining us. Please let us know if you have any follow-up questions.

Speaker Change #114: There are no further questions.

Jennifer Landis: I'll now turn the call over to Jen Landis for closing remarks. Thank you all for joining us. Please let us know if you have any follow-up questions. Thank you.

Speaker Change #114: Now I'll turn the call over to Jenn Landers for closing remarks.

Jennifer Landis: Thank you all for joining US. Please let us know if you have any follow up questions.

Jennifer Landis: Thank you.

Operator: This concludes City second core of 2024 earns call. You may now disconnect. Thank you. .

Jennifer Landis: Thank you. This concludes City's 2nd Quarter 2024 Earnings Call. You may now disconnect. (inaudible) ... . .. The host has ended this call. Goodbye.

Speaker Change #116: This concludes <unk> second quarter 2024 earnings call.

Speaker Change #117: You may now disconnect.

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Operator: The host has ended this call.

Operator: Goodbye.