Hello, and welcome to Citi's fourth quarter 2020 earnings review with Chief Executive Officer Mike Corbat, incoming Chief Executive Officer Jane Fraser, and Chief Financial Officer Mark Mason. Today's call will be hosted by Elizabeth Lynn, Head of Citi Investor Relations. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Ms. Lynn, you may begin.

Thank you, Operator. Good morning, and thank you all for joining us. Before we get started, 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, capital and other financial conditions may differ materially from these statements due to a variety of factors, including the precautionary statements referenced in our discussion today and those included in our SEC filings, including, without limitation, the Risk Factors section of our 2019 Form 10-K. With that said, let me turn it over to Mike.

Thank you, Liz, and good morning, everyone. Given this is my last earnings call with you, we're going to do things a little bit differently today. After I'm done speaking, I'll turn it over to Mark and, before we open up to Q&A, Jane will make some comments on the transformation she's been leading and how she sees our strategy evolving. So, with that, let's go ahead and get started. We had a strong finish to a tumultuous year with net income of $4.6 billion and earnings per share of $2.08 in the fourth quarter. We ended 2020 with over $11 billion in net income despite the doubling of credit reserves as a result of the pandemic and the impact of CECL. Overall, we increased our ACL by $10 billion over the course of the year. As a sign of the strength and durability of our diversified franchise, our revenues were flat to 2019 despite the massive economic impacts of COVID-19 globally. Our deposits were up nearly 20% as we supported our clients throughout the year, and we see significant franchise value in the growth that we're seeing in the deposit base. Turning to the fourth quarter, our Institutional Clients Group performed well as they have throughout the year, highlighted by our markets businesses which saw revenues up 14% from the fourth quarter of 2019. Banking saw a 7% revenue decline as Investment Banking activity slowed and low rates continued to impact Treasury and Trade Solutions, although the Private Bank was a standout with a 6% increase. Our Consumer Banking revenues continued to be impacted by the pandemic, although we did see deposit growth in every region. In the U.S., our retail business did benefit from exceptionally high mortgage refinancing as homeowners saw opportunities in this ultra-low-rate environment. And we saw continued momentum in digital deposits. In Mexico, lower loan volumes pressured our revenues. In Asia, card spending was down again, but we continue to see strong performance in wealth management. We remain very well capitalized with robust liquidity to serve our clients. Our common equity Tier 1 ratio increased to 11.8%, well above our regulatory minimum of 10%. Our tangible book value per share increased to $73.83, up 5% from a year ago, and we welcome the Federal Reserve's decision regarding share repurchases as we have excess capital we can return to shareholders, and we plan to resume buybacks during the current quarter. Given my upcoming retirement from Citi at the end of February, I recently looked through some of the challenges we faced when I became CEO. And while there's always more work to do, I'm very proud of what the firm has accomplished. We're in a fundamentally different place than we were in October 2012. We've streamlined our consumer business and embraced the shift to digital, so we could serve our clients the way they want to be served. We've reestablished Citi as a go-to bank for our institutional clients throughout our global network. No matter what part of the world you're in, our bankers have a seat at the table during the most significant transactions. We've optimized our capital base, working through our legacy assets and reducing our DTA by more than half, generating $7 billion of regulatory capital in the process. We dramatically increased the return of our capital to our shareholders. We went from a $0.01 dividend to returning over $85 billion in capital since 2013, and we've reduced our share count by 30%. Before the pandemic, we had significantly improved the quality and consistency of our earnings, our return on assets, and return on our equity. As a result of the pandemic, while the financial results this year aren't what I would have wanted them to be for my last year as CEO, in many ways, I couldn't be prouder. All the work we did to strengthen our firm helped us get through this extraordinary year, and I'm proud of the fact that we've shown we can go through a crisis and emerge even stronger unlike the events of more than a decade ago. Just for context, let's compare 2012 to 2020. In 2020, the year of a pandemic, we had nearly $4 billion more in net income, a 12-basis-point higher return on assets and 180 basis points higher return on tangible common equity than we had in 2012. That shows you just how far Citi has come. And we also showed what our firm is about by serving our customers, our clients, and our communities. We were the first bank to launch an accommodation program for consumers when the pandemic hit. We stood up a small business program for lending in just a matter of weeks. We donated these profits to COVID relief efforts, part of $100 million in such grants we made throughout the year. And in the aftermath of the murder of George Floyd, we announced $1 billion in strategic actions to help close the racial wealth gap and increase economic mobility in the United States. As I said, there's always more to do. But I feel really good about the firm as Jane prepares to take over. She's thrown herself into the transformation we've launched to strengthen our risk and control environment and ensured the firm operates with excellence in every area. I know she'll do everything she can to maximize returns and move Citi forward for the benefit of all of our stakeholders. With that, Mark is going to go through the presentation.

Thank you, Mike, and good morning, everyone. Starting on Slide 3. Citigroup reported fourth quarter net income of $4.6 billion. Revenues declined 10% from the prior year. While trading remained strong, this was more than offset by the combined impact of lower interest rates and lower levels of consumer activity. Expenses were up 2% year-over-year, reflecting continued investment in our transformation, including infrastructures supporting our risk and control environment, along with higher repositioning costs as we look to adjust capacity in targeted areas. Credit performance remained strong with credit losses of $1.5 billion, down sequentially as well as year-over-year. And cost of credit was roughly neutral for the quarter as these losses were offset by an ACL release of $1.5 billion, driven primarily by an improvement in our base macro scenario. EPS was $2.08 and ROTCE was 11.4%. In constant dollars, end-of-period loans declined 4% year-over-year, reflecting lower spending activity in consumer as well as higher repayments across institutional and consumer. Deposits grew 19%, reflecting consistent client engagement with corporate clients building liquidity, along with higher savings rates and reduced spending in consumer. Turning to full year results. In 2020, we delivered solid performance despite the pricing with net income of over $11 billion, even as we increased reserves by roughly $10 billion. We ended the year with strong capital and liquidity and grew tangible book value throughout the year. On the top line, while the pandemic had a significant impact, we held full year revenues flat in 2019, with the decline in net interest revenues fully offset by higher noninterest revenues. Expenses increased 2%, in line with guidance as we invested in our transformation. Results also included COVID-19-related expenses and the civil money penalty in the third quarter offset by lower discretionary spending and continued efficiency savings. Full year EPS also includes a $0.16 impact related to revising the previously determined accounting for third-party collection fees, reversing the benefit to net income with a corresponding increase to opening retained earnings, capital neutral as of year-end. On Slide 4, we provide additional detail on reserving actions. As a reminder, these reserves include our estimate of lifetime credit losses tied to a specific base scenario as well as a management adjustment for economic uncertainty, which provides for the possibility for a more adverse outcome. Our reserve release this quarter primarily reflects our improving macroeconomic outlook, although I would note, we did add to our management adjustment for economic uncertainty as the pace and shape of the recovery is still evolving. Overall, looking at the reserves we hold today, we believe that we are well positioned with nearly $28 billion in reserves, which represents an allowance for credit losses of roughly 4% on funded loan. Turning now to each business. Slide 5 shows the results for the Institutional Clients Group. For the quarter, ICG delivered EBIT of $4.8 billion, up 30% from last year. Operating margin declined 5% on lower revenues and a 2% increase in expenses, primarily reflecting investments in infrastructure and controls, while credit costs were down considerably given a $1.3 billion ACL release. The release this quarter primarily reflected improvement in the outlook for global GDP as well as fewer downgrades in the portfolio. As of quarter end, our overall funded reserve ratio was 1.4%, including 4.4% on the noninvestment-grade portion. Total net credit losses were $210 million. Looking at full year results, the ICG business has performed well this year with 13% revenue growth, positive operating leverage and operating margin growth of 24%. But given the ACL build this year, ICG EBIT declined 6%. And for the full year, ICG delivered a 13.8% return on allocated capital. Slide 6 shows revenues for the Institutional Clients Group in more detail. Revenues decreased 1% in the fourth quarter as strong trading performance was offset by lower revenues in TTS, Investment Banking and Corporate Lending. On the banking side, revenues declined 7%. Treasury and Trade Solutions revenues were down 8% as reported and 6% in constant dollars as strong client engagement and solid growth in deposits were more than offset by the impact of lower interest rates and lower commercial cards revenue. Average deposits were up 22% in constant dollars, and we had solid growth in our underlying drivers despite the significant macro slowdown, with increased digital adoption, cross-border transaction volumes growing over 10% and a record quarter in clearing. Investment Banking revenues were down 5% from last year, as solid growth in equity underwriting was more than offset by lower revenues in M&A and debt underwriting. Private Bank revenues grew 6%, driven by capital market strength as well as improved managed investment revenues and higher lending. Corporate Lending revenues were down 25%, driven by lower spreads, higher hedging costs and lower average volume. Total Markets and Securities Services revenues increased 13% from last year. Fixed Income revenues grew 7% as higher revenues across spread products and commodities were partially offset by lower revenues in rates and currency, although I would note that we saw solid performance in FX and global rates and good client engagement across the entire business. Equity revenues were up 57% versus last year, driven by strong performance in cash equities, derivatives and prime finance, reflecting higher client volumes and more favorable market conditions. And finally, in Securities Services, revenues were unchanged on a reported basis, but up 2% in constant dollars as higher volumes from new and existing clients with broken deposits, settlement volumes and assets under custody were partially offset by lower spreads. For full year 2020, revenues increased 13% driven by the significant strength in markets this year, along with a solid contribution from Investment Banking and the Private Bank. Throughout the year, we continue to see strong client engagement across all of our institutional businesses as we actively helped our clients navigate through this uncertain environment, given our global platform, our progress in creating new digital solutions and our full-service model, which allows us to capture natural linkages that exist across the franchise. And given the momentum we've seen this year in key drivers, including digital adoption, deposit growth and client engagement, we're even better positioned to ensure additional share gains in 2021 as these clients more fully recognize the benefits of using Citi as their platform of choice. Turning now to the results for Global Consumer Banking in constant dollars on Slide 7. GCB delivered EBIT of $1.7 billion. Revenues declined 13% as continued strong deposit growth and momentum in Wealth Management were more than offset by lower card volume and lower interest rates across all regions. That said, we did see signs of stabilization sequentially this quarter. Expenses increased 4% across both North America and international consumers, driven mostly by higher repositioning. Excluding repositioning costs, total GCB expenses were flat as COVID-related costs were largely offset by efficiency savings. Credit cost decreased 45% as lower volumes and improved delinquencies led to lower net credit loss, coupled with an ACL reserve release in all 3 regions. And looking at full year results, GCB delivered EBIT of $1.1 billion, down significantly from last year, reflecting the impact of the pandemic and higher reserve builds under CECL. Slide 8 shows the results for North America consumer in more detail. Total fourth quarter revenues were down 11% from last year, but we did see positive momentum in our drivers this quarter. And on a sequential basis, revenues grew 3%. Branded cards revenues were down 13%, reflecting lower purchase sales and lower average loans. Purchase sales grew 9% sequentially on both seasonal activity as well as the continued recovery in consumer spending but were still down year-over-year. At the same time, we're seeing an increase in payment rates as consumers remain liquid, and we have not yet seen stress in their overall ability to pay. So while purchase activity has improved, our clients are also paying down more quickly, resulting in continued pressure on our loan balance. Retail services revenues were down 16% year-over-year, reflecting lower average loans as well as higher partner payments. Net interest revenues were down 12% as average loans declined by 11% on lower purchase sales activities and higher payment rates. Similar to branded cards, purchase sales grew 18% sequentially but remained down year-over-year. Higher partner payments drove the remainder of the revenue decline versus last year, reflecting the impact of lower losses in 2020 and, therefore, higher income share. Retail Banking revenues were down 1% year-over-year as strong deposit growth and higher mortgage revenues were more than offset by lower deposit spread. Average deposits were up 21%, including 29% growth in checking. We saw continued momentum in digital deposit sales with digital deposits increasing $2 billion quarter-over-quarter. We saw continued underlying growth in our wealth management drivers with 18% year-over-year growth in Citigold client and 11% growth in assets under management. Overall, we feel good about our client engagement as we exit the year, with spend activity continuing to recover, underlying strength in wealth management drivers and significant deposit growth giving us the opportunity to grow and deepen these relationships going forward as we continue to invest in our products and digital capability. On Slide 9, we show results for International Consumer Banking in constant dollars. In Asia, revenues declined 16% year-over-year in the fourth quarter. We continue to see good momentum in wealth management as investment revenues grew 16%, with a 7% increase in Citigold client and 13% growth in net new money. And average deposit growth remained strong at 14%, albeit at lower deposit spreads. Card revenues remained under pressure year-over-year with purchase sales down 13%, given a continued significant impact on travel in the region. However, we did see sequential improvement in purchase sales this quarter, in line with our expectations. Turning to Latin America. Total revenues declined 16% year-over-year. Similar to other regions, we saw good growth in deposits in Mexico this quarter with average balances up 13% and purchase sales improved sequentially. However, deposit spreads remained under pressure and lending volumes continue to decline given the macro environment. Slide 10 provides additional detail on global consumer credit trends. Credit loss rates generally trended downward this quarter, given high levels of liquidity in the U.S., lower spending and the benefits of relief programs. However, in Asia, credit loss rates increased, mostly driven by those accounts that exited relief programs in line with our expectations. The year-over-year rise in delinquencies outside the U.S. is concentrated in accounts rolling off relief programs and reflects more modest levels of stimulus in these regions relative to the U.S. Given these trends, we continue to expect peak losses to occur in Asia and Mexico during the first half of 2021 and should begin to recover thereafter. Meanwhile, in the U.S., while we do expect losses to begin to rise in 2021, given today's delinquency trend and the expected impact of recent stimulus, we now expect peak loss rates to be pushed out to the first half of 2022. Whether continuing to push out these losses is simply a matter of timing or if it will ultimately result in lower aggregate losses remains to be seen, and it's something we are watching closely. Slide 11 shows the results for Corporate/Other. Revenues declined significantly from last year, reflecting the impact of lower rates, the wind-down of legacy assets and the absence of episodic gains. Expenses were roughly flat as the wind-down of legacy assets offset investments in infrastructure, risk management and control. And the pretax loss was $690 million this quarter, roughly in line with our prior outlook. Slide 12 shows our net interest revenue and margin trend. In constant dollars, total net interest revenue of $10.5 billion in the quarter declined $1.3 billion year-over-year, reflecting the impact of lower rates and lower loan balances, partially offset by higher trading-related NIR. Sequentially, net interest revenue continued to stabilize and excluding market was roughly flat to the third quarter. And net interest margin declined 3 basis points, reflecting lower net interest revenue and balance sheet expansion due to strong deposit growth. Turning to noninterest revenues in the fourth quarter, non-NIR declined 6% to just over $6 billion, given lower levels of consumer activity year-over-year. Turning to full year results. Revenues were flat with the decline in net interest revenues fully offset by higher noninterest revenue driven by continued strong performance in markets throughout the year as well as strength in investment banking. On Slide 13, we show our key capital metrics. Our CET1 capital ratio increased to 11.8% or 180 basis points above our regulatory minimum. Our supplementary leverage ratio was 7%, and our tangible book value per share grew by 5% to $73.83 driven by net income. Before I hand it back to Mike, let me spend a few minutes on our outlook for 2021. On the top line, we saw an extraordinary year in market performance in 2020 and would expect some degree of normalization this year. And subject to how that plays out, we can see revenues down in the mid to high single-digit range this year, largely driven by market. This outlook assumes industry wallets more similar to 2019 levels. And for net interest revenue specifically, it assumes continued stabilization in the first half of the year with an improvement in the back half to our base case, which assumes loan growth by this point in the recovery. On a full year basis, the decline in net interest revenues is somewhere between $1 billion to $2 billion versus 2020. On the expense side, we expect full year expenses to increase in the range of 2% to 3%, mostly driven by investments related to our transformation. Our cost of credit should be meaningfully lower than 2020. And we expect a tax rate of roughly 21% for the year. So pulling this together, we expect operating margin pressure this year. But given lower credit costs, we should still see significant improvement in profitability relative to 2020. And finally, as Mike mentioned earlier, we look forward to repurchasing shares through the balance of 2021, subject to Board approval, starting this quarter. To wrap up, as I look at how we performed in 2020, we demonstrated the significant earnings power and resilience of the franchise. We sit here today with strong capital and liquidity position. Overall client engagement remains strong. We grew book value every quarter, and we remain focused on supporting colleagues, customers, clients, and community, all of which give me a great deal of confidence as we move into 2021. With that, let me hand it back to Mike.

Thank you, Mark. Now I'd like to turn it over to Jane, so you can hear from her for a few minutes.

Thank you, Mike, and good morning to everyone. I want to thank Mike for his support and for working so closely with me during this transition. It was important to him to ensure Citi has a seamless CEO transition and has obviously been tremendously helpful to me as I prepare to step into the role at the end of February. I am extremely excited by the opportunities ahead for our firm, and I am equally determined to address the deficiencies in our risk and control environment that have been raised by our regulators. We've embarked on a transformation program that will clearly benefit our clients and investors as well as meeting the regulators' expectations of one of the world's most globally significant financial institutions. And of course, we still have to get through this pandemic. While we hope the end is in sight, this virus has surprised us and taught us the folly of best-laid plans, so we will remain vigilant and adaptable. My two major priorities as I transition with Mike are our transformation effort and refreshing our strategy so we ultimately achieved 3 things: best position Citi to win, to improve our returns significantly, and to address the issues raised by our regulators. While it's early days, our work on these priorities is well underway. So on the transformation, we're taking the time to step back to tackle the root cause issues, to define our target end state and develop the detailed plans to get us there. We put in place specific work streams against risk and controls, data and compliance, but we also have work streams on creating a culture of excellence and accountability and on strengthening our critical business processes. Each stream is led by a member of the executive management team. Together, we are accountable for simplifying and modernizing the bank. In February, we will deliver our gap analysis to the target state; and in May, the detailed implementation plan. This effort will take time and it will require significant investment in technology and talent. You have my commitment that we will invest your capital wisely, and that you, our clients, and our regulators will all see and benefit from the results. At the end of the day, we want to achieve a state of excellence in our risk and controls, in our operations, and in our service to clients. Switching back to the strategy. I have the benefit of having worked in a number of businesses and regions in Citi over the last 16 years. Nonetheless, this transition is giving me valuable time to step back and to take a dispassionate look at our strategy and businesses. You wouldn't expect me to come out with specifics at this rather early stage, but I can talk about how we are looking at this. We have a wonderful franchise, first-class capabilities and a terrific brand name. We are the world's most global bank with a network no one can match. And this means we are uniquely able to help clients grow and succeed globally. Our capital and balance sheet is strong. We have a deep talent bench around the world. So while we have work to do, this is a pretty good hand to play. A few principles will guide how we refresh our strategy. We're taking a clinical look at our strategic positioning, assessing which businesses can attain leading market positions in a much more digitized world. Similarly, I believe in the value of focus and directing our investments and resources to the businesses that will drive stronger growth and improve returns over the long run. I also believe in ensuring the businesses we're in fit well together. So collectively, they are competitively advantaged and generate synergies. And finally, like any true Scot, I believe there is value to unlock by simplifying the firm. As you know, on Wednesday, we announced that we will integrate Consumer Wealth Management and our Private Bank into one business line. It's a growth opportunity I'm particularly excited about in Asia as well as the U.S. Earlier in the week, we also announced the new head of our TTS franchise and our U.S. consumer leadership. And I look forward to sharing new opportunities and moves with you as we go. I want to end as I began by thanking Mike. He has spent his 38-year career at Citi. No one has been more dedicated. He always put Citi first. And he took over at a very difficult time. He had to make tough calls, steering the company through the post-crisis restructuring. He made Citi a simpler, smaller, safer and far stronger institution, returning it to growth, closing the gap with our peers and returning a significant amount of capital to our shareholders just as he promised he would. His steady leadership this year helped us through this very difficult period for all of us, but this last year showed how the work he led has strengthened our firm as we supported our people, clients and communities through this pandemic. He leaves us with a tremendous foundation, and I am committed to building on his success. We are very grateful to him and proud of him. And all of us at Citi wish him the very best in the next chapter. Mike, would you like to say something to close?

Thank you, Jane. I appreciate your comments, and I know the firm is going to be in great hands. Jane, Mark and I are now happy to take your questions.

Your first question is from Glenn Schorr with Evercore.

Jane, I think it's great that you came on, so I can't resist asking you one. So, I agree with you focusing on strong business, positioning on its own and then making sure businesses fit well together. You came for part of your tenure from the Latin American consumer side and global consumer. I'd love to get your perspective and thoughts on the question that's come up over the years of how much does global consumer fit well together. Are they individual business on their own? How much can they leverage going forward to be a true global consumer platform?

Thanks, Glenn, for your question. So, we are just beginning the work on this strategy. And as I say, we're taking a step back, and Mark and I are working on a dispassionate view of all of the businesses and looking at what are the leading franchises we want to invest behind, what are the others that we want to grow to win. And as we do that work, we will let you know what's the direction we're going to be taking, and as we have done already in the announcements this week on wealth and on the new leadership in TTS. But I would say, let us do the work and then we'll let you know how everything fitted together. And if there are pieces that end up not being part of the core, we'll let you know, but let us do the work first.

Okay. That's cool. Maybe I'll follow up with a more detailed question. On the card side, part of the plan over the last couple of years has involved converting card customers into digital banking clients. I noticed in the appendix that there has been growth in customers, but the increase in active digital and mobile users hasn't been significant in the last five quarters. So, I'm curious about what you are doing to take advantage of that opportunity and how it fits into the future plan.

Yes. So in terms of the digital customers, it's a different picture in different parts of the world. So, we saw tremendous growth in Mexico that starts with a much lower digital base. And so with COVID, we saw a pretty rapid acceleration across the industry, and we're a major leader in that. When we look at the States, we already have an extremely active card customer base on the digital front. And so, we weren't expecting to see the same levels of pickup. I'd say the other piece as well is customer acquisition across the board is lower because of COVID, and you typically do tend to see that the new customers, when they come on board anyone's platform, they tend to have a higher digital adoption rate. So, I think we're pretty optimistic that as and when we see the recovery that we'll also see growth in that digital adoption in the U.S. going forward.

Jane, I would like to add that we have noticed an increase in the use of e-statements and e-payments, with usage up about 15%. During this crisis, people have been actively engaging with our digital capabilities, which is partially due to the investments we've made in digital technology. We are feeling positive about this trend.

Your next question is from the line of John McDonald with Autonomous Research.

Mark, I was wondering if you could unpack some of the drivers of your 2021 expense outlook between investment spend, maybe the transformation spend, and where you're saving money?

We anticipate expenses to increase by approximately 2% to 3%. A significant portion of this increase will likely stem from our transformation spending as we assess the expected costs. This year alone, we have already allocated $1 billion, which is included in our ongoing expenses. We are also pursuing a broader investment strategy, aligning it with the evolution of our overall strategy as discussed by Jane. We plan to continue investing in digital capabilities on both the consumer and Institutional Client Group sides, particularly enhancing our Treasury and Trade Solutions platform where we have already seen positive outcomes from past investments. Additionally, innovation in technology will be crucial to maintaining our competitive edge in that area. We recently announced the consolidation of our wealth management business, integrating offerings from both the consumer and private banking sectors. This will be a focus for us as we seek to grow fee revenues, which is a key goal highlighted by Jane. We also expect increases in advertising and marketing efforts. In our forecast, I mentioned that net interest revenue is stabilizing but is expected to pick up in the latter half of the year, driven by loan growth. This loan growth will be supported by renewed investments in advertising and marketing, which we had reduced significantly during the crisis. These are a couple of key areas we plan to invest in, within the identified 2% to 3% increase, largely directed towards our transformation efforts. It’s important to remember that this is a strategic investment, and we expect to see returns from it in the coming years. I hope this provides a clearer understanding, John.

No, that's helpful. And just to follow up on the net interest income outlook you mentioned. I think you said it could be down $1 billion to $2 billion on a year-over-year basis. What are the swing factors that would bring you into the low end of that versus the high end of that?

Yes, the net interest revenue may decline, partly due to the pace of the recovery we are anticipating. Loan volume trends will be a key factor, as will our GDP forecast and the evolution of the rate curve. On a positive note, we have observed encouraging momentum in card purchase activity, which, while partially seasonal, reflects strong engagement from our customers that we expect to continue. Additionally, there has been existing stimulus announced, with discussions of further significant measures. We hope these efforts will support the GDP growth outlined in our forecast.

Your next question is from the line of Erika Najarian with Bank of America.

My first question is for Jane. Like Glenn, I can't resist. I think investors are very excited to hear about your strategic plans because the constructive criticism that I get on Citi is that I think that investors are on board with your current plan and remediation and recovery. But I think they continue to wonder whether you have a lot of breadth but not as much depth in terms of market share and businesses. And that's the long-winded way to ask this question, I'm sorry. Your peers seem to be settling on a mid-teens ROTCE or a little bit higher on a normalized level. And as you think about the wonderful franchise that you already have and the opportunities that you have to improve upon it, do you think that Citi can get to that level eventually whenever that normalized period arrives?

Yes, that’s a great question. We have been dedicating a lot of time to this topic as Mark and I consider the optimal configuration of our businesses. We are establishing principles for how we envision the future of Citi, especially in a rapidly changing digital landscape. Once we complete our analysis, we will outline the various metrics and milestones to gauge our progress and desired outcomes. I have been speaking with several of our key investors over the past few weeks, and these discussions have been very beneficial. We're gathering their input on what kinds of outcomes they find desirable, and they are an important part of our strategy and transformation efforts. As Mark mentioned, these aspects are interconnected moving forward. We look forward to sharing our insights with you when we're ready. Mark has been instrumental in all of this, so I'll hand it over to him now.

Thank you, Jane. In your prepared remarks, you rightly highlighted our strategies aimed at identifying growth opportunities, enhancing our returns, and closing the gap with our peers. I believe this strategic focus, along with our ongoing transformation and growth-oriented investments, will certainly help us move in that direction. The normalization of GDP in the credit environment should also be beneficial. Additionally, as many are aware, we have a deferred tax asset and some legacy assets that we will continue to address over time. The combination of these factors, starting with our strategy and our commitment to returning capital and improving returns, positions us well for achieving better levels of returns, especially considering the likelihood of rising rates over time as we enter a normal part of the cycle.

And my follow-up question is for you, Mark. It seems as if the stimulus plan so far and potentially the additional stimulus could build a bridge that's strong enough and long enough to perhaps not delay losses but lower actual cycle losses in card. How should we think about the stimulus related to how that could impact spending and loan volume trends as we trace that back to that NII guide?

Yes. When we consider our reserve levels and the related activity, we definitely took the impact of stimulus into account. It's important to note that the stimulus has led to high payment rates and a consistent ability to pay for consumers, which has been positive. This is reflected not only in our payment rates but also in the decreased delinquency levels and reduced losses we have experienced. There is still a need for additional stimulus, and the good news is that it should continue to support the payment rates we've observed. If it is substantial enough, it could ultimately drive greater consumption and enhance GDP and reduce unemployment. Our current forecast suggests that loan momentum will pick up in the latter part of 2021. If that occurs sooner, we could see increased loan growth volume, which would positively impact our net interest revenue forecast. While stimulus is advantageous, it may initially exert some pressure on lending volumes as people utilize it for liquidity and debt repayment. Nevertheless, I believe it will be beneficial in the long run.

Your next question is from the line of Michael Mayo with Wells Fargo Securities.

One simple question and one hard question. Mark, you get the simple one. When can Citigroup start repurchasing shares? And how much do you think you can repurchase in the first quarter? And I don't think you were allowed to purchase yet this quarter, but did you?

Sure. The Fed's guidance enabled us to resume buybacks. There was a limit for the first quarter based on the average income from the previous four quarters, which translates to approximately $1.8 billion in buybacks for that period. Subject to Board approval, we plan to authorize some level of buybacks in Q1, but we have not initiated those buybacks yet.

All right. The challenging question is for Jane: who does Citi aspire to be in 2030 when we look back 5 or 10 years from now? You mentioned Citi's global presence, but despite this, the company has consistently fallen short of expectations over the past five decades. This includes the times of Walter Wriston, the '80s, Sandy Weill and John Reed with the financial supermarket, and even during the financial crisis. Although there has been a retrenchment and derisking that has diminished the likelihood of bankruptcy, the return on capital has still been less than the cost of capital for the last decade. As the seventh CEO at Citigroup, how will your approach differ? What changes will you implement, whether in business mix, customer mix, or geographical mix? From my perspective, and I feel strongly about it, Citi has underperformed over almost any timeframe in the past 50 years. I'm trying to determine how you can leverage your 16 years at Citi and your McKinsey experience to finally transform the company into one that generates sustainable returns above the cost of capital. So, what is the ultimate goal for Citi?

Well, thank you, Mike. So I think the end game, and you asked a question in terms of what do we look like in 2030, it's pretty simple really. As you said, we're a global bank. We want to be the leading global bank. We're very well positioned from that from our businesses. That means top-tier franchises in their respective competitive sets with a strategy that has been well understood by the market over that time frame. We want to be best-in-class in serving our clients and our customers, certainly in safety and soundness. And I'd add in, we want to be seen as playing a positive role in society as I think that's a very important part of the mix these days. But all of that is with the purpose of generating the desired returns for our investors. So to be fair, while we have made demonstrable progress over the last 10 years since the crisis, equally know that there is a gap to close with our peers. You can hold me accountable for doing so along with the management team. We're a team on a mission to get this done, and we will get this done.

Your next question is from the line of Jim Mitchell with Seaport Global Securities.

I have just one quick follow-up. One of the biggest concerns for investors is their inability to see a path to achieving peer-level returns. As you examine the situation, without revealing specific strategies, do you believe it is primarily an issue of efficiency or capital, particularly due to the DTAs? How do you assess your current position and the factors contributing to the gap?

Mark and I are examining our various businesses to ensure we effectively allocate resources and invest in areas that will serve as significant growth drivers for the firm. We've already identified an important opportunity in wealth management, where we believe integrating different parts of the firm will lead to success and enhance our returns. Additionally, as Mike mentioned, there are other factors to consider, such as the value from simplification, which can improve operational efficiency and influence our business mix. We aim to ensure that our businesses complement each other to achieve synergies and competitive advantages. This will be a multifaceted approach. We will keep you updated on our decisions as we progress and look forward to sharing our strategies to establish ourselves as a leading global firm that meets the expectations of our investors. Mark, do you have anything to add?

Yes, I agree with what you said, but I want to emphasize one point you made, which is that we will get this done. It involves a combination of efforts. We will keep refining our strategy. We have strong businesses with competitive advantages that we will strengthen. We plan to invest in our franchise, as that is necessary to improve returns. While there are challenges, as I mentioned before, they do impact our returns, particularly due to the DTA and legacy assets. However, we also have excess capital, with a CET1 ratio of 11.80%, above our 11.50% target. We will continue to manage all these factors together, and I believe these actions will help us return to the improved levels of returns we experienced before this crisis.

Your next question is from the line of Matt O'Connor with Deutsche Bank.

I want to follow up on expenses. The guidance indicates approximately $44 billion in costs this year, and as you mentioned, there are significant investments involved. Looking ahead, it’s somewhat hypothetical since changes in strategy and simplification could affect the expense base. So, as we look beyond this year, should we consider this a bloated expense base with some investments operating at elevated levels that could be reduced? Or is this more aligned with a normal run rate, where efficiency will primarily stem from revenue growth?

Yes. Let me make a couple of quick comments. First, we will see expense growth. We are in the process of making progress with our transformation. We will need to submit a plan in May, get it approved, and continue investing to execute it. This will inform our outlook for future years. Regarding your concern about a bloated expense base, I would say no. It is not bloated at all. These are investments that will yield a return. The return will come from both increased revenue and a more efficient operating platform. We have established a history of demonstrating productivity across our platform, whether through automating processes, reducing data centers, or implementing low-cost location strategies. Since our Investor Day, we have continued to improve productivity, and we expect this to continue. So, we do not have a bloated expense base. That said, we will continue to invest in the business. If opportunities arise, either from the strategy refresh that Jane mentioned or otherwise, we will take advantage of those investments because that is how we will achieve the improved returns we are targeting. I hope that answers your question.

Your next question is from the line of Charles Peabody with Portales.

I have a follow-up question regarding the market commentary, specifically about your FICC trading businesses. Can you provide more insight into the fourth quarter performance, highlighting areas of strength and weakness in rates, credit, commodities, and currencies? Additionally, I understand there were challenges with the rand, and while I assume any losses were minimal due to the market's size, is there something about the current environment that could complicate positioning or trading in 2021? You mentioned a normalization process; can you draw any lessons from the rand situation?

Sure, this is Mark. Sorry, Mike, go ahead.

First off, Charles, I would say that in the rand piece that, that was more of a research recommendation than an actually a firm positioning play. And so it was our analysts going out with what they believed was a recommendation around that. And so that shouldn't be read as the firm necessarily having that position. Independent research came out with that. On your second piece, I think as you look at FICC trading, for us, if you look at the fourth quarter and the numbers that we've posted, I think you should look in there, I think relative strength in terms of credit and credit spread products, again, as we measure that against our rates and currencies business, it's not as large. It's still a meaningful business for us but not as large. Some of that other people have spoken to as having outsized, quite significant returns in the leverage lending space. We're not as large in that space. And I think as we look at our trading revenues, we tend to look at those over not just quarter but longer cycles. And if you look at The Street research today, it's indicating that the trading wallet for 2020 was up somewhere in the neighborhood of mid-20s. As you look at our trading revenues for 2020, we're probably up somewhere in the mid-30s. So again, quarter-to-quarter, less important. But again, for us continuing to take share in there and the underlying mix tends to bounce that around a little bit. But again, I think we feel pretty good about our position and the dialogues where we are. I think as we think forward, I think it's unlikely to think that we're going to see wallets up to the same degree, certainly in the trading space that we saw this year. We think seasonality will resume. But as Mark said, as we kind of started and it's early in the new year, we have seen activity remain high. And as I think we see more potential stimulus or governmental programs coming out, the Fed and others continuing to take stances on rates and trajectory and where things go, that could keep trading volumes, keep creating volumes relatively high. So again, we think we're pretty well positioned, and we're in dialogue around those, but we clearly can't escape all of the market dynamics of where the wallets go.

And Mike, the only thing I'd add is if you look at the numbers, right, FICC is up 34% for the year. Raise in currency is up 32%. Spread products, up 40%. We've had very strong performance this year. It's hard to be upset with those numbers. And so everything you said is exactly right, Mike. And I think the business has been fully engaged with clients, and we're going to continue to do that.

As a follow-up, I acknowledge it was an exceptionally strong year, especially in FICC, which was encouraging to observe. Looking ahead to 2021, do you anticipate FICC being less strong and equities making up for that? Or do you see a blend of FICC and equities in your considerations?

Our equities are up 25% this year. The wallets for equities have also increased. We expect to see a normalization across the board next year or at some point.

And I would also say, Charles, we need to look at the new issued calendar. And clearly, the calendar on both the debt and the equity side was strong. We saw the seasonality, and we saw clearly debt issuance slow in the fourth quarter. There are recommendations, and the uptake around our clients was to go ahead and to build lots of liquidity and to shore up the balance sheet. And so probably less debt financing needs in terms of 2021. But at the same time, I've got to say, and I reviewed it last evening, that the equity calendar remains very strong. And again, we'll see what the markets afford, but we've got to be able to have a market that's welcoming to new issues and in particular the SPAC space, which we've excelled and has been strong. And so again, that will also, I think, then dictate some of the secondary activity as we go forward in the year.

Your next question is from the line of Gerard Cassidy with RBC.

Mark, coming back to share repurchases, obviously, there's limitations based on income, and you explained it very clearly, for you and also your peers. If those limitations are lifted possibly after this year's stress test and we go back to the more traditional or the regulations that are in place that went into effect October 1 with the stress capital buffer, where as long as you pass your CET1 requirement, you're free to do whatever you'd like. That as the backdrop, would you guys consider an accelerated share repurchase program if you got the green light rather than doing it every quarter like it was done in the past because that's what the regulations required in the past?

Yes. We need to consider the stress capital buffer, which is a key element in this process. Following the recent resubmission, you will see that the projected stress capital must increase by 10 basis points, although this adjustment has not yet been implemented. We remain under the 2.5% stress capital buffer, and that will be a factor to consider in future quarters starting from 2021. After that period, there will be another CCAR submission, and the results from that will help guide our actions moving forward. Each quarter, we will assess our projected performance in relation to the stress capital buffer compared to our targets. This analysis will enable us to make informed capital decisions based on what the results suggest. Therefore, we will approach this with quarterly evaluations to ensure that our outlook aligns with the capital actions we wish to pursue.

Very good. And Jane, you pointed out that a lot of work is going to be done about looking at the opportunities to drive growth for Citigroup so that you can narrow the gap between your peers in terms of profitability. And I don't expect you to give us the answers, obviously, on this call. But one of the differences between Citigroup and 2 of its biggest peers that are more profitable is your U.S. consumer banking franchise. And those 2 peers, which announced their numbers today, have ROEs in that business of over 25%, whereas when we look at your global consumer business based on your fourth quarter numbers, the ROE was about 15%. Is there an opportunity for depository acquisitions in the United States? Is there an opportunity to grow the Consumer Banking business in the U.S.?

We certainly believe there is a strong opportunity. And the strategy we have as we put all of the U.S. consumer business together over the last year or so has been to make sure that we capitalize on that by building out and deepening our customer relationships in the U.S. And we've had a number of important thrusts digitally and digital acquisition, as Mark referred to. So yes, we do see important growth opportunities, and our home market is an important one for us. The specifics of that, as we said, more to come.

Your next question is from the line of Andrew Lim with Societe Generale.

For the system as a whole, we've noticed that excess deposits at banks have significantly increased. A competitor has mentioned that this is putting pressure on certain ratios, including the supplementary leverage ratio. If we exclude the temporary removal of cash and treasuries from the denominator of that ratio, the situation appears quite tight. I'm interested to know how this affects Citi and if you're experiencing similar pressure. Additionally, could you clarify what you mentioned about LatAm NCLs decreasing? I'm a bit surprised that this is happening.

Sure. Let me address your first question regarding the effect of deposits. We have indeed experienced a substantial rise in deposits, which affects several key metrics. From the perspective of the SLR, without the regulatory relief that will expire at the end of the first quarter, our SLR would be 109 basis points lower. The relief currently provides that 109 basis points. We are mindful of the SLR relief ending and are managing accordingly. Additionally, this situation has influenced our GCIB score, which has now moved into the next tier, the 3.5% range. A significant part of the increase in the GCIB score can also be attributed to the rise in deposits. We recognize the need to carefully manage these metrics, especially given the Fed's stance that there is adequate capital within the system. We remain hopeful that as circumstances evolve, our considerations will be taken into account. Meanwhile, we are managing our balance sheet, deposits, and capital with a clear understanding of how the SLR relief may change. Regarding your question about credit risk in Latin America, the point I was making is that since we had customers participating in a relief program, the NCLs we've observed have been lower than they might have been without that program. While we reported lower NCL this quarter, we are starting to see an increase in delinquencies as those customers exit the relief program and begin to stop making payments, which leads to higher delinquency rates. Thus, we expect the NCLs to rise as some customers become more than 90 days past due and fall into losses. Hopefully, that clarifies things.

There are no further questions. Are there any closing remarks?

Thank you all for joining us today. If you have any questions, please feel free to reach out to us in IR. Thank you again, and have a nice day.

This concludes today's earnings call. Thank you for your participation. You may now disconnect.