Hello and welcome to Citi’s Third Quarter 2022 Earnings Call with the Chief Executive Officer, Jane Fraser, and Chief Financial Officer, Mark Mason. Today’s call will be hosted by Jen Landis, Head of Citi Investor Relations. Please hold all questions until the formal remarks are complete, at which point you will receive instructions for the question-and-answer session. Additionally, this call is being recorded today. Ms. Landis, you may begin.

Thank you, Operator. Good morning and thank you all for joining us. 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 SEC filings. With that, I will turn it over to Jane.

Thank you, Jen, and thanks everyone for joining us today. We are certainly still living through interesting times, and overall, I am pleased with how our Bank is navigating through them. As you will hear from me shortly, we continue to focus intensely on executing our strategy and our transformation as we outlined at Investor Day, whilst supporting our clients in this complex environment. So before I get into the quarter, let me highlight some observations about what we see going on around the world, given our unique vantage point. The global macro outlook that we shared with you over the last couple of quarters has been borne out. There is accumulating evidence of slowing global growth and we now expect to experience rolling country-level recessions starting this quarter. The severity and timing of these recessions depend on where in the world you are, although persistently high inflation is driving a global softening of consumer demand for goods. In the Eurozone and the U.K., the supply shocks are most severe. Growth prospects have deteriorated sharply and headline inflation is running at nearly 10%. All eyes are on this winter’s weather forecast and the energy supply. The U.S. economy, however, remains relatively resilient. So while we are seeing signs of economic slowing, consumers and corporates remain healthy, as our very low net credit losses demonstrate. Supply chain constraints are easing, the labor market remains strong, so it is all a question of what it takes to truly tame persistently high core inflation. Now, history would suggest that it will be quite a lot and for some time. Therefore, we could well see a mild recession in the second half of 2023. We believe the U.S. economy is well positioned to withstand it, all else being equal in the geopolitical arena, that is. Finally, in Asia, we continue to be concerned with China’s COVID lockdowns, which took a bigger bite out of economic activity than anticipated, exacerbated by a lack of intensified macro stimulus. It is geopolitical risks and rates that dominate discussions with our corporate clients worldwide, and we are more focused on market liquidity generally, and counterparty risk than on our credit risk in the near-term. Nonetheless, we are planning conservatively and we are prepared for all environments. Against this backdrop, today, we reported net income of $3.5 billion, EPS of $1.63, and an RoTCE of 8.2%. We grew revenues by 6%, including a gain on sale of our consumer business in the Philippines. While we had excellent performance in some areas, our results could have been better in a few others. Services delivered another very strong quarter. TTS saw revenues up 40% year-over-year, with growth in each business and in fees. Key drivers of our strategy such as wallet share, trade loan originations, and cross-border transactions are all trending strongly in the right direction and are ahead of our plan. Securities Services was up 15%, despite assets under custody being impacted by declines in equity markets. We have onboarded over $1 trillion in AUC and AUA since the beginning of the year and we are seeing good momentum in issuer services in particular. The Markets, on the other hand, came in lower, with revenues down 7%. In Fixed Income, we matched last year’s particularly good showing through our longstanding strength in FX, offsetting a weaker quarter in spread products. In Equities, reduced activity in derivatives, which is a core part of our platform, led to lower revenues compared to last year’s exceptional performance, and we continued to optimize RWA in markets consistent with our strategy. Banking was the business most adversely impacted by the macro environment across the industry, with geopolitics and fears of recession significantly reducing deal flows and the appetite for M&A. We continue to invest in building out our teams for long-term growth opportunities including healthcare, technology, and energy, and I am really pleased with the high-caliber bankers who are attracted to both our platform and our culture. The environment for Wealth Management continued to be less than ideal. Our revenues were down only slightly and meaningfully up outside of Asia. Our strategy to capture the synergies of our businesses such as the Wealth referral initiatives between Commercial Banking, Retail Banking, and Investment Banking is progressing well. We also continued to steadily attract new clients and increase the ranks of our client advisors as you will see in our KPIs. Nonetheless, we are slowing the pace of some of the investments in this business, given the environment. U.S. Personal Banking further solidified its growth trajectory. Card sales, A&R, interest-earning balances, and customer acquisition all saw good growth, and we continued to increase digital uptake. Retail Services joined Branded Cards in having double-digit revenue growth this quarter. Retail Banking also grew, contributing to a 10% overall revenue increase to the business. As you can see in the presentation, our cost of credit reflects the quality of our loan portfolio in both ICG and PBWM. There were effectively no credit losses in ICG, and U.S. Consumer NCLs remain well below the pre-COVID levels. Consumer loan growth, together with the worsening of our macroeconomic assumptions, drove a modest ACL build this quarter. While our expenses are elevated as we continue to invest in our businesses and in our transformation, we are managing them closely and we remain on track to meet the full year guidance. As you know, the transformation is a multiyear effort and we are committed to meeting the expectations of our regulators, given the paramount importance of safety and soundness. We continue to be in constructive dialogs with them and are updating our execution plans as appropriate. Stepping back, I am generally pleased with the advances we are making and the key drivers of the strategy we laid out for you in March and these are laid out on page three. We are seeing good momentum in realizing client synergies and in attracting talent to grow the franchise. In terms of simplification, we continue to make progress on the divestitures of our international consumer businesses and the elimination of their associated stranded costs. We closed the sale of the Philippines during the third quarter and are on track to close Bahrain, Malaysia, and Thailand during the fourth quarter. We also announced the wind-down of our consumer franchise in the U.K. to focus fully on the Wealth franchise there. I would also note we are ahead of our plan in our Korean consumer wind-down. We continue to shrink our operations in and exposure to Russia. To be clear, our intention is to wind down our presence in that country. In August, we announced the wind-down of our consumer and local Commercial Banking businesses. While we have been supporting our multinational clients in Russia, we are now informing them that we will be ending nearly all of the institutional banking services we offer by the end of the first quarter of next year. At that point, our only operations in Russia will be those necessary to fulfill our remaining legal and regulatory obligations. Turning to Capital, we returned $1 billion to our shareholders through common dividends during the quarter, while buybacks continue to be on hold. We will keep evaluating that decision on a quarterly basis, as due to increasing regulatory requirements we build our CET1 ratio to 13% or so by mid-next year, and that includes a management buffer of 100 basis points. We ended the quarter at a CET1 ratio of 12.2%, as we actively managed our RWA usage throughout our lines of business. Lastly, our tangible book value per share increased to $80.34. So, the bottomline is that while the environment is a challenging one and we expect it will remain so, we continue to focus relentlessly on executing the strategy we presented to you at our Investor Day and on making steady progress. Now I’d like to turn it over to Mark, and then we would be delighted, as always, to take your questions.

Thank you, Jane, and good morning everyone. I am going to start with the firm-wide financial results, focusing on year-over-year comparisons for the third quarter unless I indicate otherwise, and spend a little more time on expenses, credit, and capital. In the third quarter, we reported net income of $3.5 billion and EPS of $1.63, with an RoTCE of 8.2% on $18.5 billion of revenues. Embedded in these results are pretax divestiture-related impacts of approximately $520 million, largely driven by a gain on the sale of the Philippines consumer business. Excluding divestiture-related impacts, EPS and RoTCE would have been $1.50 and 7.5%, respectively. In the quarter, total revenues increased 6% on a reported basis; excluding divestiture-related impacts, revenues were down 1% as growth in net interest income was more than offset by lower non-interest revenues. Net interest income grew 18% driven by the impact of higher interest rates across the firm and strong loan growth in PBWM. Non-interest revenues were down 12% on a reported basis and 28% excluding divestiture-related impacts, largely reflecting declines in Investment Banking, Markets, and Investment Revenues in Wealth. Total expenses of $12.7 billion increased 8% and 7% excluding divestiture-related impacts, largely driven by transformation, inflation, and other risk and control initiatives. Cost of credit was $1.4 billion, driven by net credit losses of approximately $900 million and an ACL build of approximately $500 million, primarily driven by loan growth in PBWM. At the end of the quarter, we had $18.7 billion in total reserves with a reserve-to-funded loan ratio of approximately 2.5%. In the third quarter, total net interest income increased by approximately $600 million on a sequential basis and approximately $1.9 billion on a year-over-year basis across the firm, driven by higher interest rates, management of deposit re-pricing and loan growth in PBWM. Average loans were down by approximately 2%, largely driven by the impact of foreign exchange translation and lower balances in Legacy Franchises. Excluding FX, loans were largely flat and average deposits were down by approximately 2%, largely driven by declines in Legacy Franchises and the impact of foreign exchange translation, partially offset by the issuance of institutional CDs as we continue to diversify the funding profile of the Bank. Excluding FX, deposits were up roughly 1%, and sequentially, our net interest margin increased by 7 basis points. As I mentioned earlier, expenses increased by 8% and 7% excluding the impact of divestitures, 2% of the increase was driven by transformation investments, with about two-thirds related to the risk, controls, data and finance programs, and approximately 25% of the investments in those programs are related to technology. As of today, we have over 10,000 people dedicated to the transformation. About 1% of the expense increase was driven by business-led investments, as we continue to hire commercial and investment bankers, as well as client advisers in Wealth, and we continue to invest in the client experience, as well as front-office onboarding and platforms. Across all these buckets, we continue to invest in technology, including systems and hiring people, resulting in our technology-related spend being up approximately 16% for the quarter. We have been disciplined with our loan growth and consistent with our risk appetite framework. This framework includes credit risk limits that consider concentrations including country, industry, credit rating, and in the case of consumer, FICO scores, and importantly, these limits apply across the firm in aggregate and we continuously analyze our portfolios and concentrations under a range of stress scenarios. As a result, we feel very good about our asset quality and reserve levels. As mentioned earlier, our reserve-to-funded loan ratio is approximately 2.5%, and within that PBWM and U.S. Cards is 3.7% and 7.5%, respectively, both right around day one CECL levels. In PBWM, the majority of our card portfolios skew towards higher FICO customers and while we have started to see signs of normalization in both portfolios, NCL rates continue to be less than half of pre-COVID levels. In our ICG portfolio, over 80% of our total exposure is investment grade, and non-accrual loans remain low and are in line with pre-pandemic levels at about 40 basis points of total loans. So, we are well reserved for a variety of scenarios and we continuously evaluate our scenarios to reflect the evolving macro environment. We maintained a very strong balance sheet, of our $2.4 trillion of assets, about 23% or $557 billion are high quality liquid assets or HQLA and we maintained total liquidity resources of approximately $967 billion. We will give guidance for 2023 next quarter. But I think if you think back to the Investor Day and you think about some of the things that we just commented on with regard to our Services business, we would expect to see continued tailwinds as it relates to net interest income. Our Services business continues to show strong client activity with U.S. dollar clearing volumes up 2%, cross-border flows up 10%, commercial card volumes up roughly 50% and average loans up 19%.

Thank you. Our first question will come from Glenn Schorr with Evercore. Your line is now open.

Hello. Thanks very much. So definitely a good performance at TTS, rates help a ton, but I see loan growth and fees and I heard your comments about growth across all client segments. I wonder if we could pull back - Jane, pull back in a drop and talk about those two in separate pieces. One is 61% year-on-year NII, how do betas factor in and go forward over the next year in terms of higher rates and how that factors through? And then two, what specifically is growing within TTS across those client segments to drive that high single-digit growth?

Sure. Good morning, Glenn. Why don’t I take that and kind of take it in two pieces, the two pieces that you laid out? Our TTS business, which is on the Institutional side and these corporate clients, they tend to have higher betas in general than, obviously, the Retail Banking side. What we have seen is that the betas have been increasing. They are still running lower than what we had expected, but again, they have been increasing. And with continued expected rate increases, I would expect that those betas will continue to rise in the coming quarters. We have been actively managing deposit pricing and re-pricing with our clients on an ongoing basis. This is a business where we are looking to manage the operating accounts of our clients and bring the breadth of what we offer in our franchise to them. Regarding the other aspect of your question – activity? I mentioned a couple of those, so it’s not just deepening with existing clients, but it’s also onboarding new clients. We have seen cross-border transaction value up about 10%. The commercial card spend is up meaningfully, and trade originations are up 27%. So, a lot of active engagement with our clients. We have been winning new mandates. We estimate that we gained over 60 basis points of share with large corporate clients and that client wins are up approximately 20% across all segments, including wins with financial institutions, which are up almost 50%.

And I’d just jump in and say, I think there’s a bit of a miss at the moment that the global environment is detrimental to activity. We see quite the opposite. Volatility is something in which we are very active in helping our multinational clients around the world manage; the local footprint we have and the global network we have is a tremendous asset right now. So we are seeing a lot of positive momentum, which may not always be intuitive to everyone, but I think it’s what makes the network the crown jewel of Citi.

No doubt. I appreciate all that. A quick one on markets, not quite as good as the years, but that comes and goes. I know that’s a function of last year was really strong, it’s a function of mix in any given quarter. What I really want to focus on is your comments on RWA optimization, what specifically are you doing?

Sure. Glenn, you will remember at Investor Day, we talked not only about RWA optimization broadly but specifically as it relates to markets. So, we have been actively working across the markets business, in equities, in fixed income and spread products, and looking for opportunities where there are low returning uses of RWA to either increase the returns on that or to actually exit it. This includes working with clients to post additional collateral in some instances, and other types of structures like that, that improve the RWA.

Thank you. Our next question will come from John McDonald with Autonomous Research. Your line is now open.

Yeah. Hi. Thanks for taking my question. Mark, I wanted to just clarify what, I think the expense guide is for fourth quarter, it seems like the guidance for the full year implies a fourth quarter step-up to maybe 12.8% and change from 12, 7.5% this quarter. Is that the right read?

Yeah. So, again, the guidance on full year expenses hasn’t changed. It’s the 7% to 8% ex-fee impact of divestitures that would imply a bit of an uptick there. It is on the heels of the continued investments that we are making and that’s flowing through, as well as how revenues kind of play out and the associated compensation activity that goes along with that. So nothing extraordinary and consistent with the guidance given.

Okay. And I know it’s too early to give formal guidance for next year, but if we look at the Investor Day slides, it seems to imply that expenses go up for a few years until you get to the medium-term. Is that fair when I read the Investor Day slides and think about your investments that directionally expenses probably do go up next year?

John, I’d say, as you know, right, we will give guidance for 2023 next quarter. But I think if you think back to the Investor Day and you think about some of the things that we just commented on with regard to our Services business, we would expect to see continued tailwinds as it relates to net interest income. We would expect to get to the heart of your question that we will continue to invest in the franchise that in the transformation, excuse me, would obviously peak and then we would start to see the benefits start to play out from that in that medium-term period.

Thank you. Our next question will come from Erika Najarian with UBS. Your line is now open.

Hi. Good morning.

Good morning.

Yeah. Just wanted to take a step back, your 11% to 12% medium-term RoTCE target had contemplated an 11.5% to 12% CET1 versus the 13% that you are targeting to by midyear next year? Also that you laid out on that same slide that you are targeting 2% fed funds over the medium-term, which seems kind of cute right now. I guess I am wondering, your confidence and like you said you are confident you could hit medium-term targets even with this creep in capital, is it really that shift in the rate environment that’s helping you get there despite the higher denominator?

There are a couple of things to think back on that still hold true, which is the strategy that we have built is a resilient strategy and it speaks to topline momentum that we expected, not just through rate increases, but also through share gains and also through the business led investments that we are making and better leveraging the synergies and linkages across the franchise.

Thank you. Our next question will come from Mike Mayo with Wells Fargo Securities. Your line is now open.

Hi. Can you hear me?

Yes. We can, Mike.

Good morning.

Good morning.

Look, I look at the global network as a curse and a blessing. I guess the curse part is simply the complexity and the expenses, and Mark, you said expenses should go up higher next year. You are not going to tell us for a few more months, but I am just wondering when you think you can grow revenues faster than expenses.

It’s Jane. I am jumping in because I do want to talk a bit about your point on the global network here. I am hard-pressed to find a negative to the global network. We start off with the vision for the Bank that we laid out in March. It is to be the preeminent banking partner for clients with cross-border needs. Who are those clients? It is 5,000 multinationals on their subsidiaries, it’s institutional investors and the ultra-high net worth clients with a heavy tilt to family offices.

I’d say a couple of things. One, what I said was that we continue to gain share, and I referenced specifically about 60 basis points of share with large corporate clients, and we are also winning mandates and gaining share with other client segments as well. I mentioned that our wins are up and specifically, they are up 20%, the mandates that we are winning across all client segments.

Thank you. Our next question will come from Ebrahim Poonawala with Bank of America. Your line is now open.

Good morning. I guess, one, just Mark, I wanted to clarify your NII guide for $1.5 billion to $1.8 billion is just total NII, right? It’s not ex-markets or anything?

It is ex-markets.

Any perspective or view on where you see markets heading in the fourth quarter, just given what’s happened with the rate backdrop?

I don’t – I very intentionally don’t forecast markets NII in a rising rate environment. You would normally see the markets NII come down. It tends to be liability sensitive. But we tend to focus on total revenues for this business. I guess I'd highlight is that in periods of uncertainty and lots of market volatility, our businesses tend to perform well.

Thank you. Our next question will come from Betsy Graseck with Morgan Stanley. Your line is now open.

Hi. Good morning.

Good morning.

Just two things, one, just another question on the expense side, I just wanted to follow up with regard to, Mark, I think, the stranded costs that you had talked about at the Barclays Conference and I am wondering if I got the message right there, which is when you exit the consumer businesses, there’s 25% that is generally managed through a TSA. So it’s a service agreement and that expense will come off over time and then there’s another 25%, which is likely not to come off. Is that fair?

Yeah. That’s not fair. I appreciate the answer clarity. So I bucket into three buckets. So one, when we do these transactions, we tend to see about half of the costs go away to the buyer. As you pointed out, about 25% is often in place as part of a transition service agreement, and then the third bucket is what I call potentially stranded costs. What we have to do, and what we are doing is we are attacking what would otherwise be stranded cost.

And I think as Mark - I am spotting at Mark here. Mark and I are both pretty maniacally focused around this. But I’d say, at the moment, we have had a couple of the divestitures closed, and we have another three next quarter, and this continues on.

Thank you. Our next question will come from Matt O'Connor with Deutsche Bank. Your line is now open.

Hi. Can you guys talk about the pace of addressing some of the regulatory issues out there? On the one hand, you got out of the AML consent order earlier this year, which I think was a very big positive.

Yeah. We all want things to go faster, both our clients, our shareholders, the management team, regulators, the Board, all. Transformation is our number one priority. It will be a multiyear journey, and prioritizing safety and soundness is a very important global bank is a non-negotiable for all of us.

Good afternoon. Regarding deposits and behavior, it's clear that you have a different mix by geography and business. Excluding currency, deposits increased by 1% while your peers saw a decrease of nearly 3%. How should we consider the future of deposit behavior?

You have got to think about our business, you have got about between ICG and our PBWM business of 65%, 35% split in terms of the deposits. In terms of rates increasing at a more rapid pace, we expect those to get closer to our expectations in the near-term. We are starting to see many more hikes around the globe outside of the U.S., and so, again, we expect to see betas rise, but also expect to see continued contribution to the NII. Thank you. I talked about the idea of the divestitures contributing close to $3 billion for the full year, and the balance of the divestitures that we have scoped out for the fourth quarter should close that gap.

Thank you. There are no further questions at this time. I will now turn the call back over to Jen Landis for closing remarks.

Thank you everyone for joining us today. If you have any follow-up questions, please reach out to the IR team. Thank you.

Thank you. This concludes Citi’s third quarter 2022 earnings call. You may now disconnect.