Citigroup Inc 8-K, filed Oct 16, 2020
Citigroup Inc (C)
About this 8-K
Citigroup Inc filed this 8-K on October 16, 2020.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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CITIGROUP INC.
Current Report on Form 8-K
Item 2.02 Results of Operations and Financial Condition.
On October 13, 2020, Citigroup Inc. held a conference call to discuss its results for the quarter ended September 30, 2020. Copies of the transcript of the conference call and related investor presentation are being furnished as Exhibits 99.1 and 99.2 to this Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
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99.1 | | Citigroup Inc. Third Quarter 2020 Earnings Review dated October 13, 2020. |
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99.2 | | Citigroup Inc. transcript of October 13, 2020 earnings conference call. |
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99.3 | | |
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104.1 | | See the cover page of this Current Report on Form 8-K, formatted in Inline XBRL. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | CITIGROUP INC. |
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Dated: October 16, 2020 | | |
| By: | /s/ Jeffrey R. Walsh |
| | Jeffrey R. Walsh |
| | Interim Controller and Chief Accounting Officer |
| | (Principal Accounting Officer) |
Exhibit 99.1
| Citi | Investor Relations Third Quarter 2020 Earnings Review October 13, 2020 |
| Overview Solid performance despite macro environment – Robust deposit growth across both Consumer and Institutional franchises – Revenue growth in ICG reflects strong performance in Markets and Investment Banking – Sequential improvement in spend activity and solid digital engagement across Consumer – Supporting clients while maintaining credit discipline and balance sheet strength Strong capital and liquidity position – Common Equity Tier 1 Capital Ratio of 11.8%(1) – Liquidity Coverage Ratio of 118%(2) – Tangible Book Value per Share increased 4% year-over-year to $71.95(3) Strategic execution priorities – Committed to strengthening risk and control environment and achieving operational excellence – Maintaining resources to support investments, clients, employees and broader economy – Demonstrating operational resiliency as we manage through COVID-19 pandemic – Focus on building a stronger company for the future Note: (1) (2) (3) Preliminary. For additional information, please refer to Slide 32. Preliminary. Tangible Book Value per Share is a non-GAAP financial measures. For additional information, please refer to Slide 33. 2 |
| Citigroup – Summary Financial Results ($MM, except EPS) Note: Totals may not sum due to rounding. NM: Not meaningful. ACL: Allowance for Credit Losses. Constant dollar excludes the impact of foreign exchange translation into U.S. dollars for reporting purposes and, as used throughout this presentation, is a non-GAAP financial measure. For a reconciliation of constant dollars to reported results, please refer to Slide 34. Includes credit reserve build for loans and provision for credit losses on unfunded lending commitments. Includes provisions for benefits and claims, HTM debt securities and other assets. Return on Tangible Common Equity (RoTCE) is a non-GAAP financial measure. For a reconciliation to reported results, please refer to Slides 33 and 34. (1) (2) (3) 3 3Q'20 2Q'20 % r3Q'19 % rYTD'20 % r Revenues $17,302 $19,766 (12)% $18,574 (7)% Operating Expenses 10,964 10,415 5% 10,464 5% Efficiency Ratio 63.4% 52.7% 56.3% Operating Margin 6,338 9,351 (32)% 8,110 (22)% Net Credit Losses 1,919 2,206 (13)% 1,913 0% Net ACL Build / (Release)(1) 314 5,603 (94)% 158 99% Other Provisions(2) 29 94 (69)% 17 71% Credit Costs 2,262 7,903 (71)% 2,088 8% EBT 4,076 1,448 NM 6,022 (32)% Income Taxes 815 131 NM 1,079 (24)% Effective Tax Rate 20% 9% 18% Net Income $3,230 $1,316 NM $4,913 (34)% Return on Assets 0.57% 0.23% 0.97% Return on Tangible Common Equity (3)7.9% 2.9% 12.2% EPS $1.40 $0.50 NM $2.07 (32)% Average Diluted Shares 2,094 2,084 0% 2,237 (6)% $57,799 3% 31,973 1% 55.3% 25,826 6% 6,233 7% 10,810 NM 149 NM 17,192 NM 8,634 (53)% 1,522 (59)% 18% $7,068 (51)% 0.43% 5.6% $2.96 (50)% 2,100 (9)% Average Assets ($B) $2,259 $2,267 (0)% $2,000 13% EOP Assets (Constant $B) 2,234 2,257 (1)% 2,026 10% EOP Loans (Constant $B) 667 690 (3)% 693 (4)% EOP Deposits (Constant $B) 1,263 1,243 2% 1,090 16% $2,202 12% 2,234 10% 667 (4)% 1,263 16% |
| CECL Details ($B) Loans 9/30/20 Cards $8.4 $4.5 $2.4 $15.1 $1.6 $16.7 $(0.0) $16.7 11.42% All other GCB 1.2 0.6 0.4 2.0 0.4 2.4 (0.1) 2.4 Global Consumer Banking $9.6 $5.0 $2.8 $17.0 $2.0 $19.1 $(0.1) $19.1 7.01% Institutional Clients Group 2.9 (0.7) 1.3 3.5 3.4 6.8 0.1 6.9 1.82% Corp / Other 0.3 (0.1) 0.2 0.3 0.2 0.5 (0.1) 0.4 Allowance for Credit Losses on Loans (ACLL) Allowance for Credit Losses on Unfunded Lending Commitments Other(2) $12.8 $4.2 $4.3 $20.8 $5.5 $26.4 $(0.1) $26.4 4.00% 1.5 (0.2) 0.6 1.8 0.1 1.9 0.4 2.3 0.0 0.1 0.0 0.1 0.1 0.2 0.0 0.2 Citigroup Allowance for Credit Losses $14.2 $4.1 $4.9 $22.8 $5.7 $28.5 $0.3 $28.9 Management Adjustment • $3.1B of ACL balance of $28.9B • Downside Scenario incorporates more adverse economic variables including higher unemployment rates, slower GDP recovery, etc. Note: (1) Totals may not sum due to rounding. Includes the impact of foreign exchange translation, as well as other adjustments, on the opening balance and, in 1Q’20, the transition impact of the allowance for credit losses, substantially all of which flows through OCI. Includes the allowance for held-to-maturity debt securities and other assets. Represents average unemployment rate for the rolling, forward-looking 13 quarters in forecast horizon. 4 (2) (3) YoY Growth Rate U.S. Real GDP FY’20 FY’21 FY’22 1Q’20 Forecast 2Q’20 Forecast 3Q’20 Forecast (1.3)% (5.1)% (5.1)% 1.5% 5.5% 3.3% 1.9% 3.3% 2.8% U.S. Unemployment Quarterly Average 4Q’20 2Q’21 4Q’21 13Qtr Avg(3) 1Q’20 Forecast 2Q’20 Forecast 3Q’20 Forecast 7.1% 8.9% 8.7% 6.7% 7.2% 7.6% 6.5% 5.9% 6.4% 6.1% 7.2% 6.6% Economic Uncertainty Base Macroeconomic Variables North America: • Branded Cards: 10.4% • Retail Services: 14.2% Balance as of 12/31/19 CECL Transition Impact 1Q'20 Build Balance as of 3/31/20(1) 2Q'20 Build Balance as of 6/30/20(1) 3Q'20 Build Balance as of 9/30/20(1) ACLL / as of Allowance for Credit Losses |
| Global Consumer Banking (Constant $MM) • Revenues – Down 12% YoY, driven by lower card volumes and lower interest rates across all regions, partially offset by strong deposit growth Expenses – Down 2% YoY, driven by lower volume-related expenses, reductions in marketing and other discretionary spending, as well as efficiency savings, partially offset by higher COVID-19 related expenses 14,493 8,193 12,598 7,326 5,272 10,088 10,276 (188) $(92) $22,686 8,798 13,888 (4)% (8)% (3)% (5)% (1)% (9)% 77% NM NM (6)% (3)% (7)% • • Credit Costs – Down 19% YoY, primarily reflecting lower NCLs and a net ACL release of $83MM 5 Note: Totals may not sum due to rounding. NM: Not meaningful. ACL: Allowance for Credit Losses. Constant dollar excludes the impact of foreign exchange translation into U.S. dollars for reporting purposes. For a reconciliation of constant dollars to reported results, please refer to Slide 34. 3Q'20QoQ % rYoY % rYTD'20% r Revenues$7,173(3)%(12)% North America4,527(5)%(13)% International2,646(1)%(12)% Expenses4,2174%(2)% North America2,4444%(3)% International1,7734%(1)% Operating Margin 2,956 (12)% (24)% Credit Costs 1,560 (60)% (19)% EBT 1,396 NM (28)% Net Income $1,058 NM (29)% Revenues$7,173(3)%(12)% Retail Banking2,9161%(4)% Cards4,257(6)%(17)% $22,686(6)% Key Indicators (in Constant $B, except branches) Branches 2,321 (0)% (3)% RB Average Deposits $320 5% 16% RB Average Loans 126 1% 6% Investment AUMs 199 5% 6% Cards Average Loans 147 (2)% (10)% Cards Purchase Sales 127 17% (10)% 2,321(3)% $30412% 1236% 1996% 155(5)% 363(11)% |
| North America Consumer Banking ($MM) • Revenues – Down 13% YoY – Branded Cards: Down 12% YoY, driven by lower purchase sales and lower loan volumes – Retail Services: Down 21% YoY, reflecting lower average loans and higher partner payments – Retail Banking: Down 2% YoY, as lower deposit spreads more than offset strong deposit growth and higher mortgage revenues Expenses – Down 3% YoY, driven by lower volume-related expenses, reductions in marketing and other discretionary spending, as well as efficiency savings, partially offset by higher COVID-19 related expenses • • Credit Costs – NCLs down 12% YoY, primarily reflecting lower loan volumes in cards – Net ACL release of $8MM Note: (1) (2) Totals may not sum due to rounding. NM: Not meaningful. ACL: Allowance for Credit Losses. 6 Customers of all online and/or mobile services within the last 90 days through August 2020. For additional information, please refer to Slide 27. Customers of all mobile services (mobile apps or via mobile browser) within the last 90 days through August 2020. For additi onal information, please refer to Slide 27. 3Q'20 QoQ % r YoY % rYTD'20 % r Revenues $4,527 (5)% (13)% Branded Cards 2,061 (7)% (12)% Retail Services 1,353 (3)% (21)% Retail Banking 1,113 (1)% (2)% Expenses 2,444 4% (3)% Operating Margin 2,083 (13)% (22)% Credit Costs 1,168 (61)% (23)% EBT 915 NM (21)% Net Income $693 NM (22)% $14,493 (4)% 6,626 (1)% 4,502 (10)% 3,365 (2)% 7,326 (5)% 7,167 (4)% 8,062 77% (895) NM $(676) NM Key Indicators ($B, except branches, and as otherwise noted) Branches 687 0% 0% RB Average Deposits $182 6% 19% RB Average Loans 53 2% 10% Investment AUMs 73 6% 7% Branded Cards Average Loans 81 (2)% (10)% Branded Cards Purchase Sales 86 16% (9)% Retail Services Average Loans 45 (4)% (10)% Retail Services Purchase Sales 20 18% (8)% Active Digital Customers (MM)(1) 20 (0)% 3% Active Mobile Customers (MM)(2) 13 0% 4% 687 0% $172 13% 52 8% 73 7% 85 (4)% 245 (9)% 47 (5)% 55 (13)% |
| International Consumer Banking (Constant $MM) • Revenues – Latin America: Down 10% YoY, driven by lower loan volumes and lower deposit spreads, partially offset by deposit growth – Asia: Down 13% YoY, reflecting lower cards purchase sales and lower deposit spreads, partially offset by strong investments performance • Expenses – Down 1% YoY, driven by efficiency savings and lower volume-related expenses • Credit Costs – NCL rate of 1.77% vs. 1.79% in 3Q’19 – Net credit losses of $416MM down 2% YoY, primarily reflecting lower loan volumes in Latin America – Net ACL release of $75MM, primarily driven by the impact of a change in accounting for third party collection fees Key Indicators (in Constant $B, except branches, and as otherwise noted) Branches RB Average Deposits RB Average Loans Investment AUMs Cards Average Loans Cards Purchase Sales 1,634 $138 72 126 21 22 14 12 (0)% 4% 1% 5% (2)% 19% 3% 4% (4)% 13% 3% 6% (11)% (18)% 10% 17% 1,634 $132 71 126 22 63 (4)% 10% 4% 6% (6)% (17)% (2) Active Digital Customers (MM) (3) Active Mobile Customers (MM) Note: Totals may not sum due to rounding. NM: Not meaningful. ACL: Allowance for Credit Losses. Constant dollar excludes the impact of foreign exchange translation into U.S. dollars for reporting purposes. For a reconciliation of constant dollars to reported results, please refer to Slide 34. Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented. Customers of all online and/or mobile services within the last 90 days through August 2020. For additional information, please refer to Slide 27. Customers of all mobile services (mobile apps or via mobile browser) within the last 90 days through August 2020. For additi onal information, please refer to Slide 27. (1) (2) (3) 7 3Q'20 QoQ % r YoY % rYTD'20 % r Revenues $2,646 (1)% (12)% Latin America 1,027 (6)% (10)% Asia(1) 1,619 3% (13)% Expenses 1,773 4% (1)% Latin America 655 5% 0% Asia(1) 1,118 3% (2)% Operating Margin 873 (9)% (27)% Credit Costs 392 (57)% (3)% EBT 481 NM (40)% Latin America 213 NM (19)% Asia(1) 268 NM (50)% Net Income $365 NM (39)% $8,193 (8)% 3,276 (6)% 4,917 (10)% 5,272 (1)% 1,958 3% 3,314 (3)% 2,921 (19)% 2,214 78% 707 (70)% 175 (79)% 532 (66)% $584 (68)% |
| Global Consumer Banking – Credit Trends (EOP Loans in Constant $B) NCL 90+ DPD 3.30% 3.18% 3.08% 3.07% 2.90% 2.84% 2.80% 2.75% 2.72% 2.70% 2.68% 2.63% 2.52% 2.51% 2.45% 2.33% 1.07% 1.02% 1.04% 0.99% 0.97% 0.98% 0.89% 0.91% 0.93% 0.94% 0.90% 0.91% 0.85% 0.86% 0.75% 0.73% 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 6.98% 6.67% 6.78% 6.54% 6.42% 6.67% 6.27% 5.91% 1.01% 0.94% 0.90% 0.90% 0.90% 0.85% 0.86% 0.84% 2.13% 1.63% 1.62% 1.54% 1.53% 1.54% 1.49% 1.56% 0.52% 0.53% 0.48% 0.49% 0.47% 0.48% 0.46% 0.48% 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 8 Note: (1) Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented. EOP Loans 3Q'19 2Q'20 3Q'20 $80.7 $79.6 $80.3 EOP Loans 3Q'19 2Q'20 3Q'20 $14.9 $13.8 $13.5 Asia(1) Latin America EOP Loans 3Q'19 2Q'20 3Q'20 $190.6 $181.1 $178.6 EOP Loans 3Q'19 2Q'20 3Q'20 $286.2 $274.5 $272.4 Global Consumer Banking North America |
| Institutional Clients Group ($MM) • Revenues – Total Banking(2): Down 2% YoY: • TTS down 6% YoY(1), driven by the impact of lower interest rates and lower commercial cards revenues • Investment Banking up 13% YoY, reflecting strength in equity and debt underwriting – Total Markets & Securities Services up 16% YoY: • Fixed Income up 18% YoY, with strong performance in spread products and commodities • Equity Markets up 15% YoY, driven by cash equities and derivatives, partially offset by prime finance - Treasury & Trade Solutions 2,394 4% (6)% - Corporate Lending 538 (17)% (25)% - Securities Services 631 2% (5)% • Expenses – Up 3% YoY, driven by higher compensation costs and investments in infrastructure, risk management and controls Credit Costs – Up YoY, reflecting an increase in NCLs, as well as a net ACL build of $529MM driven by the impact of changes in economic outlook • Note: (1) Totals may not sum due to rounding. NM: Not meaningful. ACL: Allowance for Credit Losses. Constant dollar excludes the impact of foreign exchange translation into U.S. dollars for reporting purposes. Excluding the impact of foreign exchange translation into U.S. dollars for reporting purposes, Treasury and Trade Solutions (TTS) decreased 4% YoY in 3Q’20 and 5% YoY in YTD’20 and Securities Services decreased 4% YoY in 3Q’20 and 2% YoY in YTD’20. For a reconciliation of constant dollars to reported results, please refer to Slide 34. Private Bank and Corporate Lending revenues exclude the impact of gains / (losses) on loan hedges and are non-GAAP financial measures. Gains / (losses) on loan hedges includes the mark-to-market on credit derivatives and the mark-to-market on loans in the portfolio that are at fair value. In the third quarter 2020, gains / (losses) on loan hedges included $(117) million related to Corporate Lending and $(8) million related to the Private Bank, compared to $(33) million related to Corporate Lending in the prior-year period. The fixed premium costs of these hedges are netted against the Private Bank and Corporate Lending revenues to reflect the cost of credit protection. (2) 9 3Q'20QoQ % rYoY % rYTD'20% r Product Revenues Total Banking $5,257 (7)% (2)% (1) - Investment Banking1,387(21)%13% - Private Bank(2)938(2)%8% (2) Total Markets & Securities Services $5,220 (24)% 16% - Fixed Income Markets3,788(32)%18% - Equity Markets87514%15% (1) - Other(74) 12%38% Product Revenues(2)10,477(17)% 6% Gain / (Loss) on Loan Hedges(2) (124)71%NM Total Revenues$10,353(15)% 5% Expenses 5,778 (3)% 3% Operating Margin 4,575 (26)% 8% Credit Costs 838 (78)% NM EBT 3,737 59% (9)% Net Income $2,895 54% (10)% $16,099(2)% 7,124(7)% 4,50016% 2,8439% 1,632(25)% $18,61434% 14,16942% 2,81418% 1,895(4)% (264)41% 34,71315% 261NM $34,97417% 17,5214% 17,45333% 6,696NM 10,757(16)% $8,397(16)% Key Indicators (in Constant $B) Average Deposits$9371%21% Average Loans 397(7)% 2% $88919% 4056% |
| Corporate / Other ($MM) • Revenues – Down YoY, reflecting the wind-down of legacy assets, the lower rate environment and marks on securities Expenses – Up YoY, reflecting the civil money penalty, investments in infrastructure, risk management and controls, as well as higher COVID-19 related expenses, partially offset by the wind-down of legacy assets • 10 Note: Totals may not sum due to rounding. NM: Not meaningful. 3Q'20 QoQ % r YoY % rYTD'20 % r Revenues $(224) NM NM Expenses 969 NM 100% Credit Costs (136) NM NM EBT (1,057) NM NM Income Taxes (341) (92)% (38)% Net Income $(723) NM NM $139 (91)% 1,854 22% 220 NM (1,935) NM (717) NM $(1,237) NM |
| Citigroup – Net Interest Revenue & Markets Revenue (Constant $B) 2.72% 2.67% 2.63% 2.56% 2.48% Citigroup NIM 3Q'20 QoQ r 3Q'20 YoY r YTD'20 YoY r 2.17% 2.03% $11.71 $11.79 $11.49 $(0.67) $(0.15) $(0.93) $0.56 $(1.62) $1.01 $11.42 $11.43 $11.16 $10.49 Markets(1) Ex-Markets $(0.52) $(1.49) $(2.63) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 3Q'20 QoQ r 3Q'20 YoY r YTD'20 YoY r (Reported $B) $6.37 $(1.70) $(0.11) $0.69 $0.52 $4.61 $1.00 $5.96 $3.41 NIR Non-NIR 0.90 $(1.59) $0.18 $3.60 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 Note: Totals may not sum due to rounding. Excludes discontinued operations. Constant dollar excludes the impact of foreign exchange translation into U.S. dollars for reporting purposes. For a reconciliation of constant dollars to reported results, please refer to Slide 34. NIM (%) includes the taxable equivalent adjustment (based on the U.S. federal statutory tax rate of 21% in all periods). Markets is defined as Fixed Income Markets and Equity Markets. 11 (1) 1.47 $4.66 $4.29$4.11$3.97 1.14 4.90 1.35 4.82 1.22 0.84 3.40 3.31 1.21 3.13 2.89 2.21 Markets(1) Revenue 1.30 1.15 0.88 1.13 1.50 10.61 10.49 10.63 10.57 10.30 1.35 9.66 9.14 Net Interest Revenue (NIR) |
| Citigroup – Key Capital Metrics ($B, except TBV) Common Equity Tier 1 Capital Ratio(1) Supplementary Leverage Ratio(1) Tangible Book Value / Share(2) 11.9% 11.9% 11.9% 11.8% 11.8% 11.7% 11.6% 11.6% 11.2% 6.8% 6.7% 6.5% 6.4% 6.4% 6.4% 6.3% 6.2% 6.0% 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 Note: (1) All information for 3Q’20 is preliminary. Citi’s reportable CET1 Capital ratios were derived under the U.S. Basel III Advanced Approaches framework as of March 31, 2020 and all subsequent periods and the U.S. Basel III Standardized Approach framework for all prior periods presented. For additional information on Citi’s CET1 Capital ratio and Supplementary Leverage ratio, please refer to Slides 32 and 33. Citi’s Tangible Book Value per Share is a non-GAAP financial measure. For additional information, please refer to Slide 33. 12 (2) Risk-Weighted Assets (Basel III Advanced Approaches) $1,155$1,132$1,122$1,134$1,145$1,136$1,224$1,205$1,210 Risk-Weighted Assets (Basel III Standardized Approach) $1,197$1,174$1,179$1,187$1,197$1,167$1,218$1,187$1,177 Total Leverage Exposure $2,460$2,465$2,464$2,500$2,520$2,508$2,586$2,368$2,356 $71.52 $71.15 $71.95 $70.39 $69.03 $67.64 $65.55 $63.79 $61.91 |
| Conclusions Managing well through this crisis year-to-date – Significant earnings power with ~$7B of net income, despite ~$11B increase in reserves – Solid client engagement across ICG and robust performance in Markets and Inv. Banking – Strong growth in GCB deposits and Asia wealth, albeit with lower rates and spend activity – Supported clients while maintaining credit discipline and balance sheet strength Maintaining strong capital and liquidity position – Common Equity Tier 1 Capital Ratio of 11.8%(1) – Supplementary Leverage Ratio of 6.8%(1) – Liquidity Coverage Ratio of 118%, with available liquidity of over $950 billion(2) – Tangible Book Value per share increased 4% year-over-year to $71.95(3) Key execution priorities – Continue to invest in infrastructure supporting our risk and control environment – Remain committed to serving clients, protecting employees and supporting economy – Demonstrate financial strength and operational resiliency – Focus on building a stronger company for the future Note: (1) (2) Preliminary. For additional information on these measures, please refer to Slides 32 and 33. Preliminary. Over $950 billion of available liquidity resources including HQLA, additional unencumbered securities and available borrowing capacity at the F HLBs and Federal Reserve Discount W indow. Citi’s Tangible Book Value per Share is a non-GAAP financial measure. For additional information, please refer to Slide 33. 13 (3) |
| Certain statements in this document are “forward-looking statements” within the meaning of the rules and regulations of the U.S. Securities and Exchange Commission (SEC). These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. These statements are not guarantees of future results or occurrences. Actual results and capital and other financial condition may differ materially from those included in these statements due to a variety of factors. These factors include, among others, macroeconomic and other challenges and uncertainties related to the COVID-19 pandemic, such as the duration and severity of the impact on public health, the U.S. and global economies, financial markets and consumer and corporate customers and clients, including economic activity and employment, as well as the various actions taken in response by governments, central banks and others, including Citi, and the precautionary statements included in this document. These factors also consist of those contained in Citigroup’s filings with the SEC, including without limitation the “Risk Factors” section of Citigroup’s Second Quarter 2020 Form 10-Q and Citigroup’s 2019 Form 10-K. Any forward-looking statements made by or on behalf of Citigroup speak only as to the date they are made, and Citi does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made. 14 |
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| Appendix Table of Contents 17. 18. Citigroup Returns Supporting our Employees, Clients & Communities 26. 27. Regional Credit Portfolio Consumer Drivers 28. Consumer Drivers (continued) 19. Risk & Control Environment is a Strategic Priority 29. Institutional Drivers 30. Equity & CET1 Capital Drivers (QoQ) 20. Citigroup – LTM Efficiency Ratio and Expenses 31. Equity & CET1 Capital Drivers (YoY) 21. Estimated FX Impact on Key P&L Metrics 32. Common Equity Tier 1 Capital Ratio and Components 22. Consumer Credit 33. Supplementary Leverage Ratio; TCE Reconciliation 23. ICG – Corporate Credit Exposure 24. ICG – Corporate Energy Exposure 34. Adjusted Results and FX Impact Reconciliation 25. ICG – Unfunded Corporate Energy Exposure 16 |
| Citigroup Returns ($B) GCB ICG Corp / Other $(0.1) 8.4 $419 1,689 93 (3) 66 (178) $34 87 27 (0.4)% 12.8% (10.1)% (1) (2.1) (1) Citigroup $6.2 $2,202 43 $149 5.6% Note: Totals may not sum due to rounding. (1) 3Q’20 represents 3Q’20 net income less 3Q’20 preferred dividends of $284 million. YTD’20 represents YTD’20 net income less YTD’20 preferred dividends of $828 million. Return on Assets (ROA) defined as annualized net income (before preferred dividends) divided by average assets. Tangible common equity (TCE) allocated to GCB and ICG based on estimated full year 2020 capital allocations. TCE is a non-GAAP financial measure. For additional information on this measure, please refer to Slide 33. (2) 17 (3) AverageAverage Net IncomeGAAPROA(2)Allocated to CommonAssets(bps)TCE(3)RoTCE YTD’20 Returns AverageAverage Net IncomeGAAPROA(2)Allocated to CommonAssets(bps)TCE(3)RoTCE GCB$1.1 ICG2.9 (1) Corp / Other(1.0) (1) Citigroup$2.9 $43497 1,73266 93(309) $2,25957 $3412.3% 8713.2% 27(14.7)% $1497.9% 3Q’20 Returns |
| Supporting our Employees, Clients & Communities Areas of Focus • $350MM in procurement opportunities for Black-owned business suppliers $50MM in impact investing capital for Black entrepreneurs $100MM to support Minority Depository Institutions growth and revenue generation • $550MM to support homeownership for people of color and affordable housing by minority developers • $100MM in Citi Foundation grants to support community change agents addressing issues including jobs and financial capability • • • Slow and measured re-entry ― In Tri-State area (NY, NJ, CT) and parts of Canada - gradual re-entry of up to 30% of employees in office Delivered virtual summer internship program globally with guaranteed full-time offers to those meeting minimum requirements in hub locations In 1Q’20, provided >75,000 colleagues globally with special compensation Enhanced flexibility and paid time off for colleagues impacted by COVID-19 Extra cleaning and protective measures put in place at sites, branches and ATMs, and educating our staff on preventive actions • In the U.S. - comprehensive suite of customer relief treatments across products: ― Credit Cards: provided assistance to >2MM accounts, representing ~7% of balances Mortgage: provided relief to ~6% of customers, representing ~7% of balances Small Business: issued ~30K loans totaling over $3.4B through SBA’s Paycheck Protection Program • ― • ― • • Prudently extending credit and facilitating issuance in debt and equity markets for corporate clients to support their liquidity objectives and business needs • 18 Support for Clients Support for Employees Social Justice Affordable Housing Business Growth Announced More Than $1B in Strategic Initiatives to Close Racial Wealth Gap and Increase Economic Mobility in the U.S. |
| Risk & Control Environment is a Strategic Priority • New governance design with centralized program management and regulatory affairs under newly created Chief Administrative Officer position • Deepening culture of risk management across all businesses, regions and functions $1B+ in Additional Investments in 2020 • Proactive approach to control environment with a focus on coordination to ensure tight linkages across all areas of the company • Remediation programs tagged to key issues and deliverables to strengthen our controls, infrastructure and governance Strengthening infrastructure, risk management and controls to better serve clients 19 Controls • Expansion of compliance guidelines and governance • Enhanced risk management capabilities and transparency to drive decision making • Horizontal alignment of organization and process Infrastructure • Unified data architecture throughout organization • Using quality data to build innovative solutions / products for clients and employees • Upgrading operations platform with focus on straight-through-processing Organizational Changes Investments in Infrastructure and Controls |
| Citigroup – LTM Efficiency Ratio and Expenses ($B) 59.8% 59.3% 59.2% 58.5% 58.3% 58.2% 57.9% 57.7% 57.4% 57.2% 56.7% 56.7% 56.5% 55.7% 55.0% 54.1% $42.34 $42.32 $42.47 $42.24 $42.23 $42.43 $42.39 $42.28 $41.84 $41.50 $41.29 $41.44 $42.00 $42.01 $41.93 $42.43 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 20 Note: LTM: Last Twelve Months. 3Q’20YTD’20LTM’20 Operating Efficiency 63.4% 55.3% 55.7% YoY r (bps) 703 (111) (105) YoY r ex FX (bps) 673 (112) (109) LTM Efficiency Ratio and Expenses |
| Estimated FX(1) Impact on Key P&L Metrics ($B) $(0.2) $(0.4) $(0.3) $0.0 $(0.2) Revenues Expenses (0.0) (0.3) (0.2) 0.0 (0.2) Credit Costs (0.0) (0.1) (0.0) 0.0 (0.0) Earnings Before Taxes $(0.1) $(0.1) $(0.1) $(0.0) $(0.1) 21 Note: Totals may not sum due to rounding. (1) Impact of foreign exchange translation into U.S. dollars. Please also refer to Slide 34. Year-over-Year Impact3Q’202Q’201Q’204Q’193Q’19 |
| Consumer Credit (Constant $B) 0.7% 0.4% 0.3% 0.6% 0.4% 1.6% (0.2)% 1.6% 2.8% 8.4% 5.2% 0.8% 0.8% 6.3% 3.5% 6.8% 3.2% 0.7% 0.3% 0.3% 0.9% 0.4% 2.9% 0.9% 1.2% 3.5% 6.4% 1.2% 0.9% 1.3% 7.0% 2.4% 7.7% 3.5% 0.6% 0.3% 0.2% 1.3% 0.3% 1.9% 0.5% 0.8% 2.3% 5.8% 3.0% 0.8% 1.5% 4.3% 1.9% 3.8% 2.6% Taiwan India Malaysia China Thailand Indonesia All Other Asia Poland UAE Russia All Other EMEA 8.0 4.2 3.8 3.5 2.6 0.7 1.6 76.2 1.9 1.3 0.8 0.2 4.1 2.9% 1.5% 1.4% 1.3% 1.0% 0.2% 0.6% 28.0% 0.7% 0.5% 0.3% 0.1% 1.5% (1.5)% (8.1)% (7.5)% 12.8% 2.7% (14.8)% (6.5)% (0.1)% (0.4)% (14.8)% 15.8% (50.4)% (6.8)% 0.2% 0.8% 0.7% 0.5% 1.7% 5.2% 5.3% 0.5% 0.3% 2.0% 0.9% 1.8% 1.0% 0.2% 1.5% 0.8% 0.5% 1.7% 2.8% 1.9% 0.5% 0.5% 2.5% 0.9% 2.0% 1.2% 0.2% 1.2% 1.2% 0.3% 1.5% 2.1% 1.4% 0.4% 0.5% 1.5% 0.7% 0.9% 0.9% Latin America 13.5 5.0% (9.5)% 1.6% 2.1% 1.4% 6.7% 6.2% 6.5% Total International North America 93.8 178.6 34.4% 65.6% (1.9)% (6.3)% 0.7% 0.8% 0.8% 1.0% 0.6% 1.0% 1.8% 2.6% 1.8% 3.3% 1.8% 2.8% 22 Note: Totals may not sum due to rounding. 2.3%2.8%2.5% 0.7%0.9%0.9% 272.4100.0%(4.8)% Global Consumer Banking NCL Ratio 3Q'202Q'203Q'19 3Q'20 Loans Growth 90+ DPD Ratio ($B)(% ) YoY % 3Q'20 2Q'203Q'19 Korea 16.96.2% 6.9%0.2%0.2%0.2% Singapore Hong Kong Australia 13.24.8%2.9%0.1%0.1%0.1% 13.04.8%1.9%0.1%0.1%0.0% 8.73.2%(12.3)%0.7%0.7%0.7% |
| ICG – Corporate Credit Exposure (EOP in $B) Transportation & industrials Autos Transportation Industrials Private Bank Consumer retail Health Technology, media and telecom Power, chemicals, metals & mining Real estate Banks and finance companies Energy and commodities Public sector Insurance Asset managers and funds Financial markets infrastructure Securities firms Other industries 19 % 7 4 9 14 11 4 10 8 8 7 7 3 3 3 2 0 1 19 % 7 4 9 13 11 4 10 8 8 7 7 3 3 3 2 0 2 $344 430 $364 420 Direct outstandings(1) Unfunded lending commitments(2) $774 $784 Total North America EMEA Asia Latin America 57% 25 12 6 58 % 24 12 6 Total 100% 100 % BB / B CCC or below 17 4 16 4 Total 100 % 100 % Total 100 % 100 % Note: (1) (2) 3Q’20 data is preliminary. Totals may not sum due to rounding. Data includes ICG excluding Private Bank delinquency managed portfolio in all periods. 23 Includes drawn loans, overdrafts, bankers’ acceptances and leases. Includes unused commitments to lend, letters of credit and financial guarantees. Ratings Detail – % of Portfolio 3Q’202Q’20 AAA / AA / A48 %49 % BBB3131 Region3Q’202Q’20 Geographic Distribution – % of Portfolio Industry3Q’202Q’20 Exposure Type3Q’202Q’20 Industry Composition – % of Portfolio Exposures |
| ICG – Corporate Energy Exposure (EOP in $B) AT M UK 15% EMEA Energy Energy-Related(1) Total $16.2 3.2 $18.7 3.4 $51.0 5.5 $55.4 5.8 North America 56% Asia 9% $19.4 $22.1 $56.5 $61.2 Oil and Gas E&P(3) Memo: NA RBL(3) Services and Drilling(3) Refining Midstream / Oil & Gas Storage & Transportation Integrated Oil and Gas Other Total $5.5 2.5 2.7 3.0 $6.0 2.9 2.8 4.6 $14.9 4.5 7.6 7.4 $15.2 4.9 8.0 9.0 BB / B CCC or below Total 29 22 33 20 23 10 21 10 2.3 2.4 8.6 8.5 100 % 100 % 100 % 100 % 4.4 1.5 5.1 1.2 14.8 3.1 17.9 2.6 $19.4 $22.1 $56.5 $61.2 Note: (1) (2) (3) 3Q’20 data is preliminary. Totals may not sum due to rounding. ICG: Institutional Clients Group. Reflects corporate credit exposures in the ICG. Includes energy-related exposures classified in other industries, primarily Public Sector and Transportation. Total exposure includes direct outstandings and unfunded commitments. E&P: Exploration and Production. RBL: Reserve-Based Lending. Services & Drilling includes Oil and Gas Equipment and Services, Oil and Gas Drilling and Offshore Drilling. 24 ~75% of unfunded exposures as of 3Q’20 are investment grade 2 Total FundedExposure(2) 3Q’202Q’203Q’202Q’20 2 FundedTotal Exposure(2) 3Q’202Q’203Q’202Q’20 AAA / AA / A18 %16 %34 %36 % BBB31313334 Ratings Detail Energy(1) Subsector Exposures 4.9% Funded Reserve Ratio FundedTotal Exposure(2) 3Q’202Q’203Q’202Q’20 Geographic Distribution as of 3Q’20(2) Energy / Energy-Related Exposure |
| Energy Exposure(1) ICG – Unfunded Corporate (3Q’20 EOP in $B) A• Fronting exposure represents advances to borrowers on behalf of participating banks below A B B• Letters of credit are generally short term and trade-related C• Exposures rated A or higher include, as an example, commercial paper backstops D• Generally protected by maintenance covenants; 37% of exposures are secured BBB BB / B or Total AA / A Note: (1) (2) 3Q’20 data is preliminary. Totals may not sum due to rounding. ICG: Institutional Clients Group. 25 Represents unfunded commitments. Includes energy-related exposures classified in other industries, primarily Public Sector and Transportation. E&P: Exploration and Production. Services & Drilling includes Oil and Gas Equipment and Services, Oil and Gas Drilling and Offshore Drilling. AAA /CCC below Oil and Gas E&P(2) Services and Drilling(2) Refining Midstream / Oil & Gas Storage & Transportation Integrated Oil and Gas Other Total $3.2$2.7$3.1$0.5 2.01.90.40.6 1.11.71.50.1 1.93.30.80.2 7.02.11.3– 0.20.90.5– $9.5 4.9 4.4 6.3 10.4 1.6 $15.5$12.7$7.5$1.4 $37.1 Subsector Ratings Detail AAA /CCC AA / ABBBBB / BorTotal Fronting Exposure Letters of Credit Revolving Facility & Other Total $5.10.00.00.0 2.02.41.00.1 C 8.410.3D6.51.2 $5.2 5.5 26.4 $15.5$12.7$7.5$1.4 $37.1 Key Takeaways 3Q’20 Facility Structure Ratings Detail |
| Regional Credit Portfolio (3Q’20 EOP in $B) Mortgages Personal, Small Business & Other Mexico 5% Singapore 5% Korea 6% $187 Hong Kong 5% Taiwan 3% Cards Other 8% North America 66% Developed Asia 3% DM EM Private Bank Markets Hong Kong 5% $268 Mexico 4% Singapore 4% Brazil 3% Treasury and Trade Solutions Corporate Lending Western Europe 17% Other EM 15% 3% North America 50% Developed Asia 2% DM EM 26 Note: Totals may not sum due to rounding. DM: Developed Markets. EM: Emerging Markets. ICG GCB 36% $119 20% 14% 27% 31% 58% 29% $85 68% 39% 40% 22% Loan Composition Geographic Loan Distribution |
| Consumer Drivers (Constant $B) Cards Purchase Sales Cards Average Loans Cards EOP Loans RB Average Loans RB EOP Loans RB Average Deposits RB Investment Sales RB Investment AUMs 18.4 16.8 16.8 62.9 63.5 115.2 15.8 66.8 15.5 17.1 17.0 62.1 62.6 111.2 11.7 63.0 20.5 19.1 18.2 62.3 62.7 107.1 13.7 57.3 23.5 19.3 19.8 61.9 62.7 104.0 9.3 68.8 22.2 18.9 19.1 60.3 61.6 101.7 11.0 66.2 (17)% (11)% (12)% 4% 3% 13% 43% 1% 19% (2)% (1)% 1% 1% 4% 35% 6% Note: 27 (1)Excludes Citi mortgage. North America also excludes Citi Retail Services. (2) Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented. Asia GCB(2)3Q'202Q'201Q'204Q'193Q'19YoYQoQ Latin America GCB 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 YoY QoQ (Constant $B) Cards Purchase Sales 3.3 2.7 3.8 4.7 4.2 Cards Average Loans 4.3 4.5 5.0 5.1 4.9 Cards EOP Loans 4.3 4.4 4.8 5.1 4.9 RB Average Loans 9.3 9.7 10.0 10.1 10.0 RB EOP Loans 9.2 9.4 9.8 9.9 10.0 RB Average Deposits 22.5 21.7 20.7 20.1 19.9 RB Investment Sales 3.5 3.3 3.4 3.2 3.0 RB Investment AUMs 59.3 57.5 52.2 54.3 52.9 (21)% 21% (12)% (4)% (13)% (2)% (7)% (4)% (8)% (2)% 13% 4% 15% 7% 12% 3% GCB Digital Metrics(1)3Q'202Q'201Q'204Q'193Q'19YoYQoQ (MM) North America: Active Digital Customers19.920.020.019.719.3 Active Mobile Customers12.712.712.712.512.2 International: Active Digital Customers13.913.513.513.112.6 Active Mobile Customers11.711.211.110.610.0 3%(0)% 4%0% 10%3% 17%4% |
| Consumer Drivers (continued) (MM) Digital Customers Mobile Customers 33.8 31.9 24.4 28.5 22.2 1.31 3Q'18 3Q'19 3Q'20 3Q'18 3Q'19 3Q'20 LTM'18 LTM'19 LTM'20 79% 75% 73% 54% 51% 48% LTM'18 LTM: Last Twelve Months. LTM'19 LTM'20 LTM'18 LTM'19 LTM'20 Note: (1) For additional information, please refer to footnote 1 on Slide 27. Agent contact rate defined as total agent handled calls divided by average total active accounts. E-statement penetration defined as total electronic statements divided by total statements (paper statements plus electronic statements). E-payment penetration defined as total electronic payments divided by total payments (paper payments plus electronic payments). (2) 28 (3) (4) ~600 bps ~600 bps E-Statement Penetration(3) E-Payment Penetration(4) 1.22 0.98 17.8 (25)% 37% 19% Digital / Mobile Customers(1) Agent Contact Rate(2) |
| Institutional Drivers 29 Note: Totals may not sum due to rounding. ICG3Q'202Q'201Q'204Q'193Q'19YoYQoQ (Constant $B) Average Deposits:937929813794774 NA488482402392374 EMEA218217198196199 Latin America4340343332 Asia188190179173169 EOP Deposits:925915890764798 NA476472445374393 EMEA218216216190199 Latin America4340363231 Asia188187193168175 Average Loans:397427395390389 NA198215196191189 EMEA8894899090 Latin America4043373637 Asia7174747373 EOP Loans:387407438387395 NA195203224191191 EMEA8690978794 Latin America3742423636 Asia6972767374 21%1% 30%1% 9%0% 33%6% 12%(1)% 16%1% 21%1% 10%1% 40%9% 7%0% 2%(7)% 5%(8)% (2)%(6)% 9%(8)% (3)%(4)% (2)%(5)% 2%(4)% (8)%(4)% 2%(14)% (7)%(4)% |
| Equity & CET1 Capital Drivers (QoQ) ($B, except basis points (bps)) Common Capital Equity Capital(2) 2Q’20 Impact of: $173.6 $148.1 $139.6 11.6% CECL 25% Provision Deferral(3) Net Income Preferred Stock Dividends Common Dividends DTA(4) Unrealized AFS Gains / (Losses) FX Translation(5) Other(6) RWA 3Q’20 N/A 3.2 (0.3) (1.1) N/A (0.3) 0.9 (0.1) N/A N/A 3.2 (0.3) (1.1) N/A (0.3) 0.7 (0.5) N/A 0.1 3.2 (0.3) (1.1) 0.3 (0.3) 0.7 (0.0) N/A 1 27 (2) (9) 2 (2) 1 - (2) $175.9 $149.8 $142.2 11.8% Note: (1) (2) (3) (4) (5) (6) Totals may not sum due to rounding. All information for 3Q’20 is preliminary. For additional information, please refer to Slide 33. For additional information, please refer to Slide 32. For additional information, please refer to footnote 4 on Slide 32. DTA utilization is $0.3 billion this quarter due to higher forecasted current year U.S. taxable income. Citigroup’s CET1 Capital ratio (bps) also reflects changes in risk-weighted assets due to foreign currency movements. Includes changes in goodwill and intangible assets, net of tax and changes in other OCI (including changes in cash flow hedges, net of tax, DVA on Citi’s fair value option liabilities, net of tax and defined benefit plans liability). 30 CommonTangibleCET1CET1 Equity(1) Ratio(2) (bps) |
| Equity & CET1 Capital Drivers (YoY) ($B, except basis points (bps)) Common Capital Equity Capital(2) 3Q’19 Impact of: $176.9 $150.7 $138.6 11.6% CECL Transition Impact(3) CECL 25% Provision Deferral(4) Net Income Preferred Stock Dividends Common Share Repurchases & Dividends DTA(5) Unrealized AFS Gains / (Losses) FX Translation(6) Other(7) RWA(8) 3Q’20 (3.1) N/A 12.0 (1.1) (12.4) N/A 3.5 (1.7) 1.8 N/A (3.1) N/A 12.0 (1.1) (12.4) N/A 3.5 (1.5) 1.7 N/A - 2.6 12.0 (1.1) (12.4) (0.6) 3.5 (1.5) 1.1 N/A - 22 100 (9) (103) (5) 29 (8) 8 (17) $175.9 $149.8 $142.2 11.8% Note: (1) (2) (3) (4) (5) (6) (7) Totals may not sum due to rounding. All information for 3Q’20 is preliminary. For additional information, please refer to Slide 33. For additional information, please refer to Slide 32. Common Equity and Tangible Common Equity reflect the CECL transition adjustment to retained earnings from the adoption of CECL on January 1, 2020. For additional information, please refer to footnote 4 on Slide 32. Current YoY DTA utilization of $0.6 billion was more than offset by valuation allowance releases and prior year adjustments i n 2019. Citigroup’s CET1 Capital ratio (bps) also reflects changes in risk-weighted assets due to foreign currency movements. Includes changes in goodwill and intangible assets, net of tax and changes in other OCI (including changes in cash flow hedges, net of tax, DVA on Citi’s fair value option liabilities, net of tax and defined benefit plans liability). For additional information, please refer to footnote 1 on Slide 32. 31 (8) CommonTangibleCET1CET1 Equity(1) Ratio(2) (bps) |
| Common Equity Tier 1 Capital Ratio and Components ($MM) 3Q'20(2) 2Q'20 1Q'20 4Q'19 3Q'19 Citigroup Common Stockholders' Equity(3) Add: Qualifying noncontrolling interests Regulatory Capital Adjustments and Deductions: Add: CECL transition and 25% provision deferral(4) Less: Accumulated net unrealized gains (losses) on cash flow hedges, net of tax(5) Cumulative unrealized net gain (loss) related to changes in fair value of financial liabilities attributable to own creditworthiness, net of tax(6) Intangible Assets: Goodwill, net of related deferred tax liabilities (DTLs)(7) Identifiable intangible assets other than mortgage servicing rights (MSRs), net of related DTLs Defined benefit pension plan net assets Deferred tax assets (DTAs) arising from net operating loss, foreign tax credit and general business credit carry-forwards $176,047 141 $173,793 145 $174,502 138 $175,414 154 $177,052 145 5,710 5,606 4,300 - - 1,859 2,094 2,020 123 328 29 393 2,838 (679) 181 20,522 20,275 20,123 21,066 21,498 4,248 949 3,866 960 3,953 1,052 4,087 803 4,132 990 12,057 12,313 12,259 12,370 11,487 Common Equity Tier 1 Capital (CET1) $142,234 $139,643 $136,695 $137,798 $138,581 Risk-Weighted Assets (RWA)(4)(8) $1,210,439 $1,205,123 $1,224,136 $1,166,523 $1,197,050 Common Equity Tier 1 Capital Ratio (CET1 / RWA) 11.8% 11.6% 11.2% 11.8% 11.6% Note: (1) Citi’s reportable CET1 Capital ratios were derived under the U.S. Basel III Advanced Approaches framework as of March 31, 2020 and all subsequent periods, and the U.S. Basel III Standardized Approach framework for all prior periods presented. This reflects the lower of the CET1 Capital ratios under both the Standardized Approach and the Advanced Approaches under the Collins Amendment. Preliminary. Excludes issuance costs related to outstanding preferred stock in accordance with Federal Reserve Board regulatory reporting requirements. Citi has elected to apply the modified transition provision related to the impact of the CECL accounting standard on regulatory capital, as provided by the US banking agencies’ September 2020 final rule (which is substantively unchanged from the March 2020 interim final rule). For additional information, please refer to the “Capital Resources” section of Citigroup’s First Quarter 2020 Form 10-Q. Common Equity Tier 1 Capital is adjusted for accumulated net unrealized gains (losses) on cash flow hedges included in accumulated other comprehensive income that relate to the hedging of items not recognized at fair value on the balance sheet. The cumulative impact of changes in Citigroup’s own creditworthiness in valuing liabilities for which the fair value option h as been elected, and own-credit valuation adjustments on derivatives, are excluded from Common Equity Tier 1 Capital, in accordance with the U.S. Basel III rules. Includes goodwill “embedded” in the valuation of significant common stock investments in unconsolidated financial institutions. RW A excludes assets acquired pursuant to a non-recourse loan provided under the Money Market Mutual Fund Liquidity Facility. Additionally, loans originated under the Paycheck Protection Program receive a 0% risk weight. (2) (3) (4) (5) (6) (7) 32 (8) Common Equity Tier 1 Capital Ratio and Components(1) |
| Supplementary Leverage Ratio; TCE Reconciliation ($MM, except per share amounts) 3Q'20(1) 2Q'20 1Q'20 4Q'19 3Q'19 Common Equity Tier 1 Capital (CET1)(2) Additional Tier 1 Capital (AT1)(3) $142,234 $139,643 $136,695 $137,798 $138,581 18,155 17,988 17,609 18,007 19,452 Total Tier 1 Capital (T1C) (CET1 + AT1) $160,389 $157,631 $154,304 $155,805 $158,033 Total Leverage Exposure (TLE)(2)(4) $2,356,351 $2,367,578 $2,585,730 $2,507,891 $2,520,352 Supplementary Leverage Ratio (T1C / TLE) 6.8% 6.7% 6.0% 6.2% 6.3% 3Q'20(1) 2Q'20 1Q'20 4Q'19 3Q'19 Common Stockholders' Equity Less: Goodwill Intangible Assets (other than Mortgage Servicing Rights) $175,896 $173,642 $174,351 $175,262 $176,893 21,624 4,470 21,399 4,106 21,264 4,193 22,126 4,327 21,822 4,372 Tangible Common Equity (TCE) $149,802 $148,137 $148,894 $148,809 $150,699 Common Shares Outstanding (CSO) 2,082 2,082 2,082 2,114 2,183 Tangible Book Value Per Share (TCE / CSO) $71.95 $71.15 $71.52 $70.39 $69.03 Note: (1) (2) Preliminary. Citi has elected to apply the modified transition provision related to the impact of the CECL accounting standard on regulatory capital, as provided by the US banking agencies’ September 2020 final rule (which is substantively unchanged from the March 2020 interim final rule). For additional information, please refer to the “Capital Resources” section of Citigroup’s First Quarter 2020 Form 10-Q. Additional Tier 1 Capital primarily includes qualifying noncumulative perpetual preferred stock and qualifying trust preferred securities. Commencing with the second quarter of 2020, Citigroup’s TLE reflects the benefit of the temporary exclusion of U.S. Treasuries and deposits at Federal Reserve banks under the FRB interim final rule. Additionally, TLE excludes assets acquired pursuant to a non-recourse loan provided under the Money Market Mutual Fund Liquidity Facility, as well as exposures pledged as collateral pursuant to a non-recourse loan that is provided as part of the Paycheck Protection Program Lending Facility. (3) (4) 33 Tangible Common Equity and Tangible Book Value Per Share Supplementary Leverage Ratio and Components |
| Adjusted Results and FX Impact Reconciliation ($MM, except balance sheet items in $B) Reported Net Income Less: Preferred Dividends Net Income to Common Shareholders Average TCE $3,230 $1,316 $4,913 $7,068 $14,422 Reported Revenues Impact of FX Translation Revenues in Constant Dollars Reported Expenses Impact of FX Translation Expenses in Constant Dollars Reported EBT Impact of FX Translation EBT in Constant Dollars $1,027 $1,050 $1,269 $3,276 $3,861 284 253 254 828 812 - 38 (128) - (394) $2,946 $148,970 7.9% $1,063 $148,516 2.9% $4,659 $151,748 12.2% $6,240 $148,911 5.6% $13,610 $151,541 12.0% $1,027 $655 $1,088 $604 $1,141 $724 $3,276 $1,958 $3,467 $2,101 - 21 (70) - (202) (1) RoTCE $655 $213 $625 $19 $654 $291 (29) $1,958 $175 $1,899 $911 - (2) - (93) Reported EOP Assets Impact of FX Translation EOP Assets in Constant Dollars Reported EOP Loans Impact of FX Translation EOP Loans in Constant Dollars Reported EOP Deposits Impact of FX Translation EOP Deposits in Constant Dollars $2,234 - $2,233 25 $2,015 11 $2,234 - $2,015 11 $213 $17 $262 $175 $818 $2,234 $667 $2,257 $685 $2,026 $692 $2,234 $667 $2,026 $692 Reported Revenues Impact of FX Translation Revenues in Constant Dollars Reported Expenses Impact of FX Translation Expenses in Constant Dollars Reported EBT Impact of FX Translation EBT in Constant Dollars $1,619 $1,547 $1,841 $4,917 $5,506 - 5 1 - 1 - 31 15 - (62) $667 $1,263 $690 $1,234 $693 $1,088 $667 $1,263 $693 $1,088 $1,619 $1,118 $1,578 $1,063 $1,856 $1,133 $4,917 $3,314 $5,444 $3,450 - 9 3 - 3 - 21 8 - (46) $1,263 $1,243 $1,090 $1,263 $1,090 $1,118 $268 - $1,084 $28 1 $1,141 $529 6 $3,314 $532 - $3,404 $1,549 (4) Reported Retail Banking Revenues Impact of FX Translation Retail Banking Revenues in Constant Dollars Reported Cards Revenues Impact of FX Translation Cards Revenues in Constant Dollars $2,916 - $2,836 43 $3,117 (82) $8,798 - $9,425 (310) $268 $29 $535 $532 $1,545 $2,916 $4,257 - $2,879 $4,503 27 $3,035 $5,172 (31) $8,798 $13,888 - $9,115 $15,087 (144) Reported Revenues Impact of FX Translation Revenues in Constant Dollars $2,394 - $2,307 12 $2,559 (59) $7,124 - $7,685 (224) $4,257 $4,530 $5,141 $13,888 $14,943 $2,394 $2,319 $2,500 $7,124 $7,461 Reported Revenues Impact of FX Translation Revenues in Constant Dollars Reported Expenses Impact of FX Translation Expenses in Constant Dollars Reported Credit Costs Impact of FX Translation Credit Costs in Constant Dollars Reported Net Income Impact of FX Translation Net Income in Constant Dollars $2,646 - $2,597 69 $3,110 (113) $8,193 - $9,367 (456) Reported Revenues Impact of FX Translation Revenues in Constant Dollars $631 - $619 11 $664 (8) $1,895 - $1,984 (57) $2,646 $1,773 $2,666 $1,667 $2,997 $1,857 $8,193 $5,272 $8,911 $5,551 $631 $630 $656 $1,895 $1,927 - 42 (62) - (248) $1,773 $392 $1,709 $883 $1,795 $433 $5,272 $2,214 $5,303 $1,356 - 28 (28) - (111) $392 $365 $911 $63 $405 $617 (15) $2,214 $584 $1,245 $1,867 - (2) - (64) $365 $61 $602 $584 $1,803 Reported Net Interest Revenue Impact of FX Translation Net Interest Revenue in Constant Dollars $10,493 $11,080 $11,492 $11,997 $11,641 $11,950 $11,759 $33,065 $35,350 - 83 (64) (283) (222) (163) (266) 18 (650) $10,493 $11,163 $11,428 $11,714 $11,419 $11,787 $11,493 $33,083 $34,700 Note: 34 (1) (2) Totals may not sum due to rounding. RoTCE represents annualized net income available to common shareholders as a percentage of average TCE. Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented. Citigroup 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 YTD'20 YTD'19 Securities Services 3Q'20 2Q'20 3Q'19 YT D'20 YT D'19 International Consumer Banking 3Q'20 2Q'20 3Q'19 YT D'20 YT D'19 T reasury and T rade Solutions 3Q'20 2Q'20 3Q'19 YT D'20 YT D'19 Global Consumer Banking 3Q'20 2Q'20 3Q'19 YT D'20 YT D'19 Asia Consumer Banking(2) 3Q'20 2Q'20 3Q'19 YT D'20 YT D'19 Citigroup 3Q'20 2Q'20 3Q'19 YT D'20 YT D'19 Citigroup 3Q'20 2Q'20 3Q'19 YT D'20 YT D'19 Latin America Consumer Banking 3Q'20 2Q'20 3Q'19 YT D'20 YT D'19 |
Exhibit 99.2
TRANSCRIPT Citi Third Quarter 2020 Earnings Review Tuesday, October 13, 2020 |
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Host
Elizabeth Lynn, Head of Investor Relations
Speakers
Michael Corbat, Citi Chief Executive Officer
Mark Mason, Citi Chief Financial Officer
PRESENTATION
OPERATOR: Hello and welcome to Citi's Third Quarter 2020 Earnings Review with the Chief Executive Officer, Mike Corbat; and Chief Financial Officer, Mark Mason. Today's call will be hosted by Elizabeth Lynn, Head of Citi Investor Relations.
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.
Ms. Lynn, you may begin.
ELIZABETH LYNN: Thank you, operator. Good morning and thank you all for joining us. On our call today, our CEO, Mike Corbat will speak first; then Mark Mason, our CFO, will take you through the earnings presentation, which is available for download on our website, citigroup.com. Afterwards, we will be happy to take questions.
Before we get started, I'd like to remind you that today's presentation 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.
MIKE CORBAT: Thank you, Liz, and good morning, everyone. Today, we reported earnings for the third quarter of 2020. We had net income of $3.2 billion and earnings per share of $1.40. We continue to navigate the COVID-19 pandemic extremely well. Credit costs have stabilized, deposits continued to increase, and revenues are up 3% year-to-date.
As you know, last week we entered into consent orders with the Federal Reserve and the OCC, and I will discuss how we are approaching those after I go through our business and financial performance.
Our Institutional Clients Group continues to perform extremely well. Investment Banking had another strong quarter accessing the capital markets for our clients and Private Bank revenues are now up 9% year-to-date. Treasury and Trade Solutions, the backbone of our global network is down only 4% for the quarter and 5% for the year in constant dollars despite significantly lower interest rates.
Trading performance was strong as well, with fixed income and equities up 42% and 18%, respectively year-to-date. Global Consumer Banking revenues remain under pressure due to the economic impact of the pandemic, predominantly driven by the decline in credit card spending.
At the same time, deposits continued to increase significantly, credit costs decreased, and we saw more investment activity from our wealth management clients. On balance, our Global Consumer Banking franchise has shown resilience in light of the challenges we're facing.
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TRANSCRIPT Citi Third Quarter 2020 Earnings Review Tuesday, October 13, 2020 |
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Our capital position strengthened during the quarter with our Common Equity Tier 1 ratio increasing to 11.8%, well above our regulatory minimum of 10%. Our tangible book value per share increased to $71.95, up 4% from a year ago. And we remain committed to returning capital to our shareholders over time.
Turning to the consent orders. They focus on four areas that impact our risk and control environment: risk management, data governance, controls and compliance. What ties these areas together is the need to modernize our infrastructure, governance and processes.
We've had remediation programs in place. And while we've been making progress in these areas, we're simply not where we need to be. While this is disappointing, we're committed to thoroughly addressing the issues identified in the orders and modernizing our bank.
As many of you know, we've been making structural changes in accelerating investments. We've centralized program management and learned from unsparing root cause analysis from outside firms. We're laser-focused on reducing manual touch points, automating processes and ensuring accurate data can be accessed quickly when we're producing management and regulatory reports.
More importantly, we're making strengthening our risk and control environment and achieving operational excellence a strategic priority for the firm going forward. This won't be a quick or easy fix. We need to conduct an in-depth gap analysis to ensure our solutions are tailored to the issues we face and get us to the necessary end state. While we can't fully scope out the costs yet for a multiyear transformation, I can tell you with certainty that we're committing all the necessary resources while continuing to serve our clients.
Importantly, we're aligned with our regulators as far as timelines are concerned, so we'll not jeopardize the quality or completeness for speed. Collectively, these investments will not only further enhance our safety and soundness. They'll also create a digital infrastructure that will make us more efficient, more competitive and significantly improve our ability to serve our clients and customers. So these are investments we need to make.
In hindsight, we should have done them faster and prevented it from coming to this. But our firm has made tremendous progress in recent years, whether it's de-risking our balance sheet or improving our efficiency and business performance to close the gap in returns with our competitors. Our foundation is sound, stable and secure. Our performance during this pandemic shows the progress we've made. Achieving excellence in our risk and control environment and our operations is necessary for Citi to take the next step forward.
Our franchise is made up of committed and capable people who make us proud every day. They've done everything asked of them, and I know they'll continue to do so in the times ahead. Ahead of the transition in February, Jane is driving this transformation, and the entire management team is committed to getting Citi to where it needs to be and doing it the right way.
With that, Mark will go through the presentation, and then we'd be happy to take your questions.
MARK MASON: Thank you, Mike, and good morning, everyone. Starting on slide 3. Citigroup reported third quarter net income of $3.2 billion, which included a modest increase in credit reserves of roughly $300 million this quarter. Reported results also include the $400 million civil money penalty in connection with the consent orders that Mike just mentioned, which negatively impacted EPS by $0.19.
For the quarter, revenues of $17.3 billion declined 7% from the prior year. While Trading and Investment Banking remained strong, this was more than offset by the combined impact of lower interest rates and lower levels of activity in consumer. Expenses were up 5% year-over-year, as we continue to invest in infrastructure supporting our risk and control environment. Credit costs of $2.3 billion were meaningfully lower relative to the first half of the year. Our effective tax rate was 20% for the third quarter.
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TRANSCRIPT Citi Third Quarter 2020 Earnings Review Tuesday, October 13, 2020 |
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Looking at year-to-date results, we delivered net income of over $7 billion, even as we increased credit reserves by roughly $11 billion. We grew revenues by 3%, predominantly reflecting continued strength in our Markets and Investment Banking businesses, while expenses increased 1% year-over-year, allowing us to deliver positive operating leverage and a 6% increase in operating margin.
In constant dollars, end-of-period loans declined 4% year-over-year to $667 billion, reflecting a higher level of repayments across institutional and consumer as well as a slowdown in draws in our institutional businesses and lower spending activity in consumer.
Deposits grew 16% with consistent client engagement, reflecting the benefits of our global platform across both the institutional and consumer franchises, which also serve to strengthen our available liquidity.
And three quarters of the way through the year, we continue to manage well through this crisis with significant capital and liquidity as well as a significant cushion in the form of credit reserves.
As of September 30, our CET1 capital ratio was 11.8%, close to 200 basis points above our regulatory minimum requirement. We have over $950 billion in available liquidity. We have more than doubled credit reserves since the end of last year. Today, they stand at nearly $29 billion. And including the modest increase taken this quarter, our reserve ratio was roughly stable at 4% on funded loans. And as we discussed last quarter, we feel good about our ability to continue to support our clients as we all manage through this crisis.
On slide 4, we provide additional detail on reserving actions so far this year. 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 some room in the event of a more adverse outcome.
In the first quarter, our base scenario reflected a short-lived downturn followed by a recovery in the back half of 2020, with unemployment falling to 7% by year-end and full-year GDP close to prior year levels.
By the end of the second quarter, our base case assumed a more severe and protracted downturn this year, but with a sharper recovery into next year. And now you can see we are expecting a somewhat more muted and slower recovery in both unemployment and GDP through 2022.
I would note, however, that our forward-looking view on a rolling 13-quarter basis in unemployment, as an example, is continuing to improve as we move further beyond the peak of the crisis. And our outlook for other variables like VIX and oil prices is also important and generally improved this quarter.
So, on a net basis, we did not see a significant impact on reserves from the change in our base macro outlook this quarter. But we did add to our management adjustment for economic uncertainty, which grew from $2.3 billion to $3.1 billion during the quarter, partially offset by lower loan volumes and other small items.
Today, we are factoring in a downside scenario that is more adverse relative to our base case. For example, we are incorporating a more significant deterioration in US GDP growth rates, which is now close to 9% lower than our base case in 2021 versus our second quarter outlook that was only 1% lower than the base case.
So all else being equal, if the management adjustment had not changed, we would have seen a reserve release of roughly $500 million in the quarter. Looking at the level of reserves we hold today, we believe that we are well prepared for expected credit losses having reserved for something worse than our base case.
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TRANSCRIPT Citi Third Quarter 2020 Earnings Review Tuesday, October 13, 2020 |
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And given the lifetime nature of the CECL methodology and the conservative nature of our management adjustment, it is now more likely than not that we'll see reserve releases and our ACL come down in 2021 to offset future losses as we continue to progress through the crisis, assuming our base case holds.
Although this may be offset somewhat as we would likely need to build additional reserves to cover future loan growth as the economy recovers and we support our clients' needs.
Turning now to each business, slide 5 shows the results for Global Consumer Banking in constant dollars. GCB delivered EBT of $1.4 billion. While revenues remained under pressure, credit costs were down considerably this quarter, reflecting a small ACL release and lower net credit losses, in particular, in the US where we're seeing a continued benefit from government stimulus and other relief.
Revenues declined 12%, as continued strong deposit growth and momentum in Asia wealth management was more than offset by lower card volumes and lower interest rates across all regions. And expenses decreased 2%, as lower volume-related expenses, reduction in marketing and other discretionary spending and efficiency savings were partially offset by increases in COVID-19-related expenses.
Slide 6 shows the results for North America consumer in more detail. Total third quarter revenues of $4.5 billion were down 13% from last year. Branded cards revenues of $2.1 billion were down 12%, reflecting lower purchase sales and lower average loans. As seen across the industry, purchase sales have continued to recover during the third quarter, up 16% sequentially, but still down 9% versus last 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 pressure on our loan balances. This is creating a revenue headwind, but it is also benefiting cost of credit, as delinquencies and losses have outperformed our initial expectations for 2020.
Retail services revenues of $1.4 billion were down 21% year-over-year, reflecting lower average loans as well as higher partner payments. Net interest revenues were down 16%, as average loans declined by 10% on lower purchase sale activity and higher payment rates.
Similar to branded cards, purchase sales recovered sequentially this quarter, up 18%, but remained down 8% year-over-year. Higher partner payments drove the remainder of the revenue decline versus last year, reflecting the impact of lower loss expectations in 2020 and, therefore, higher income sharing.
During the quarter, we launched a new digital credit card program with Wayfair. With this partnership, we further diversified our portfolio with a leading e-commerce retailer and now provide half of the top 10 US e-commerce companies in 2020, with consumer credit card programs.
Retail banking revenues of $1.1 billion were down 2% year-over-year as strong deposit growth and higher mortgage revenues were more than offset by lower deposit spreads. Average deposits were up 19%, including 26% growth in checking. We saw continued momentum in digital deposit sales with more than two-thirds coming from customers outside of our branch footprint. And we will continue to look for opportunities to deepen our relationships with these customers, including through our investments in digital wealth capabilities.
Total expenses for North America consumer were down 3% year-over-year, as we managed our marketing and other discretionary expenses while recognizing efficiency savings and lower volume-related costs, which more than offset incremental COVID-19-related expenses. Total credit cost of $1.2 billion decreased 23% from last year, reflecting lower net credit losses, as well as a modest reserve release.
On slide 7, we show results for International Consumer Banking in constant dollars. In Asia, revenues declined 13% year-over-year in the third quarter. Cards revenues declined by 23%, reflecting lower activity
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TRANSCRIPT Citi Third Quarter 2020 Earnings Review Tuesday, October 13, 2020 |
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levels with purchase sales down 17% year-over-year. We're continuing to see a disproportionate impact on Asia card revenues from the decline in travel spending, including lower travel-related interchange and foreign transaction fees. However, our strength in wealth management continued. We saw record investment revenues this quarter, up 16% reflecting continued strong client engagement with 7% growth in Citigold clients and 13% growth in net new money versus last year. And average deposit growth remained strong at 13% this quarter.
Turning to Latin America. Total consumer revenues declined 10% year-over-year. Similar to other regions, we saw good growth in deposits in Mexico this quarter, with average balances up 13%. However, deposit spreads remained under pressure and lending revenues were impacted by branch closures and a continued decline in the macro environment.
In total, operating expenses for our International Consumer Business were down 1% in the third quarter, reflecting efficiency savings and lower volume-related expenses. And cost of credit declined to $392 million with lower net credit losses and a modest reserve release this quarter, reflecting a change in accounting for third-party collection fees.
Slide 8 provides additional detail on global consumer credit trends. As I noted earlier, credit trends remain broadly stable to improving this quarter, given high levels of liquidity in the US, lower spending and the benefits of relief programs. However, we do expect losses to begin to rise next year and likely peak towards the end of 2021 as government stimulus and other programs roll off and unemployment remained elevated.
Turning now to the Institutional Clients Group on slide 9. ICG delivered EBT of $3.7 billion this quarter and $10.8 billion year-to-date. Revenues of $10.4 billion increased 5% in the third quarter, as strong performance in fixed income and equity markets, investment banking and the private bank was partially offset by lower revenues in TTS, corporate lending and security services.
In the third quarter, we continued to see strong client engagement across all of our institutional businesses, given our highly differentiated global platform, our progress in creating new digital solutions for clients and our full-service model, which allows us to capture natural linkages that exist across the franchise.
Turning now to the results for the businesses, starting with banking. Total banking revenues of $5.3 billion declined 2%. Treasury and Trade Solution revenues of $2.4 billion were down 6% as reported and 4% 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 revenues.
Our average deposits were up 26% in constant dollars, and we had solid growth in underlying drivers despite the significant macro slowdown. One example of the continued client engagement that we have seen is in instant payments, where we are now live in 26 countries and have seen significant client demand for these capabilities.
Investment Banking revenues of $1.4 billion were up 13% from last year, reflecting solid growth in capital markets and continued share gains. Capital markets continued to be extremely strong, equity underwriting in particular, which allowed us to continue to support our clients in raising liquidity through IPOs, convertibles and follow-on offerings.
Private bank revenues of $938 million grew 8%, driven by strong client engagement, particularly in capital markets, as well as improved managed investment revenues and higher lending. Corporate lending revenues of $538 million were down 25% as higher volumes were more than offset by lower spreads. And while we continue to provide new loans and facilitate additional draws, we also saw significant repayments as we helped our investment-grade clients access capital markets, which led to the decline in end-of-period loans.
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TRANSCRIPT Citi Third Quarter 2020 Earnings Review Tuesday, October 13, 2020 |
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Total Markets and Securities Services revenue of $5.2 billion increased 16% year-over-year. And as we've seen over the prior two quarters, we continue to actively make markets for both our corporate and investor clients, as we help them navigate through the continued uncertain environment.
Fixed income revenues of $3.8 billion grew 18%, driven by strong performance across spread products and commodities. Equities revenues of $875 million were up 15% versus last year as solid performance in cash equities and derivatives, reflecting strong client volumes and more favorable market conditions, were partially offset by lower revenues in prime finance.
And finally, in Securities Services, revenues were down 5% on a reported basis and 4% in constant dollars as higher deposit volumes were more than offset by lower spreads.
Total operating expenses of $5.8 billion increased 3% year-over-year, reflecting continued investments in infrastructure, risk management and controls as well as higher compensation costs.
Total credit costs of $838 million were up meaningfully from last year, although down significantly on a sequential basis. We built $529 million in reserves this quarter. The increase is largely due to continued uncertainty in the economic environment going forward. As of quarter end, our overall funded reserve ratio was 1.8%, including 5.7% on the non-investment-grade portion. Total net credit losses were $326 million. Finally, total non-accrual loans declined roughly $400 million sequentially to $3.6 billion, reflecting write-offs and repayments across the portfolio.
Slide 10 shows the results for Corporate/Other. Revenues declined significantly from last year, reflecting the wind down of legacy assets and the impact of lower rates as well as marks on securities.
Expenses were up as the wind-down of legacy assets was more than offset by investments in infrastructure, risk management and controls, incremental costs associated with COVID-19 and the $400 million civil money penalty that I mentioned earlier. Excluding the one-time impact of the penalty, the pre-tax loss for Corporate/Other was $657 million this quarter. And looking ahead to the fourth quarter, we would expect a similar quarterly pre-tax loss.
Slide 11 shows our net interest revenue and margin trends. In constant dollars, total net interest revenue of $10.5 billion this quarter, declined $930 million year-over-year, reflecting the impact of lower rates and lower loan balances, partially offset by higher trading-related NIR. On a sequential basis, net interest revenue declined by roughly $670 million, driven by lower loan balances as well as lower trading-related NIR. And net interest margin declined 14 basis points, reflecting lower net interest revenues.
Turning to non-interest revenues. In the third quarter, non-NIR declined 2% to $6.8 billion, given lower levels of consumer activity, partially offset by strong trading and investment banking revenues year-over-year.
As we look to the fourth quarter, we expect the continuation of these dynamics with both net interest revenues and non-interest revenues down year-over-year, reflecting the impact of lower rates and lower levels of activity related to COVID-19, as well as a normalization in trading and investment banking activity.
On slide 12, we show our key capital metrics. Our CET1 capital ratio improved to 11.8% driven by net income. Our supplementary leverage ratio was 6.8%, and our tangible book value per share grew by 4% to $71.95, driven by net income.
Before I conclude, let me spend a few minutes on our outlook for the fourth quarter. On the top line, we expect to see continued pressure in consumer, reflecting the impact of rates and lower levels of activity related to COVID-19.
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And we would also expect the low rate environment to continue to weigh on our accrual businesses in ICG. Our Markets and Investment Banking businesses should reflect broader industry trends.
In total, we expect this to result in full year revenues that are roughly flat, with the decline in net interest revenues more or less offset by non-interest revenues on a full year basis, consistent with prior guidance.
On the expense side, we remain focused on protecting our employees and supporting our customers. We are making targeted investments in the franchise where we see the best opportunities for the future. And we are accelerating investments to achieve excellence in our risk and control environment and enhance our operations for a fully digital world. As a result, we could see expenses that are up a couple percent or so, on a full year basis.
Turning to credit, as I mentioned already, if our macro outlook holds, we wouldn't expect additional reserve builds. But given the remaining uncertainty, we are also unlikely to see any material releases this quarter. And for the fourth quarter, we would expect the level of losses similar to those seen this quarter.
In summary, the environment remained challenging this quarter, but we continued to perform well. Year-to-date, we have demonstrated the significant earnings power of the franchise. We ended the quarter with a strong capital and liquidity position.
Overall client engagement remains strong. We grew book value this quarter, and we have remained focused on supporting employees, customers, clients and communities.
With that, Mike and I are happy to take any questions.
QUESTION AND ANSWER
OPERATOR: Your first question is from the line of John McDonald with Autonomous Research.
JOHN MCDONALD: Hi. Good morning. Mike, I just wanted to ask a question. In terms of lessons learned on the consent order and the need to invest here, I guess the question is why weren't these issues addressed earlier? Was there a misread of regulatory expectations? Or was management attention and resources just needed elsewhere and you didn't get to it yet?
MIKE CORBAT: John, over the past decade or so, I think we've done a lot of work in terms of positioning the firm from both a financial and a strategic perspective. And I think we've made a number of investments across areas that we felt were critical. And we're going to continue to make targeted investments.
At the Barclays Conference, Mark spoke about our next phase of our transformation. And I think as we kind of think about that, we have always been focused in terms of how we operate. But I would say, we haven't gone fast enough, that we feel that – again, I think if you look at COVID in the way we've come through COVID, I feel quite proud about kind of what we've done. And what we've been able to do. Obviously, not over.
And we've initiated a number of significant remediation projects along the way to strengthen our controls, our infrastructure and our governance, but that being said, we didn't do it fast enough. And we've got to move faster. And that's certainly where we're going to be focused.
I think in terms of what the expectation should be, in terms of how we're going to approach that, I think, really four pillars that we're going to be focused on. One is the organizational component. And you've seen us already go at that in terms of the establishment and hiring of our Chief Administrative Office and Officer, Karen Peetz coming in. And I think creating and putting a framework around the way we'll go at this.
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I would say the strategic component, which is really agreeing on what the end state vision for our process is. And I think being critical. As I said in my opening, we have brought people in to give us an external assessment of, what needs to be done and where we fell short. And I think it's making sure that the work that we do comes together across the institution.
So as opposed to simply addressing specific issues, solving holistic problems. I think there's an operational component behind this in terms of making sure that around things like data and technology, we're driving the proper automation, the elimination of manual touch points and other things that we've spoken about. And I think importantly, the fourth component is the cultural piece.
And making sure that all the businesses, all the regions, all the functions, understand that it's everyone's responsibility to get this right. So I would say it hasn't, John, been from lack of effort and commitment to it. But I would say that we certainly could have and should have worked smarter around getting to the end point.
JOHN MCDONALD: Okay. That's helpful and then a follow-up for Mark. Mark, obviously, with the consent orders and the work required, additional expense and investment will be needed in the coming years. Do you still think you can make progress closing the profitability gap to peers?
Will that still be a goal? And also if you can't do significant M&A or portfolio acquisitions, are there opportunities potentially to slim down and simplify the company over time that could help profitability? Thanks.
MARK MASON: Yeah. Thanks, John. So the answer is yes. I mean our intent is, over time, to continue to narrow the gap, to continue to increase profitability, improve returns over time. And so that hasn't changed.
With every crisis, in some ways, comes a unique opportunity, and that is a unique opportunity to take a hard look at your business model. And you see corporations around the world having to think through that as they manage through this crisis. And similarly, we will – with the benefit of a new incoming CEO and as well as managing through this crisis, we'll continue to look at our business model, continue to look at our strategy and see what makes sense as we come out of this and how we can best capture opportunities to serve our clients.
JOHN MCDONALD: Okay. Thanks. And one quick follow-up. Is it clear to you what will be deemed significant acquisitions or portfolio additions versus ordinary course, or is that something that's still to be defined?
MARK MASON: Yeah. It's still to be defined, but there are some things that are obvious in terms of BAU activity, in terms of securitizations and other types of activities that we do within different parts of the franchise. But we still have to define what significant means and get regulatory agreement on that.
JOHN MCDONALD: Okay. Thank you.
OPERATOR: Your next question is from the line of Glenn Schorr with Evercore ISI.
GLENN SCHORR: Hi, there.
MIKE CORBAT: Hey, Glenn, good morning.
GLENN SCHORR: Good morning. Just a quick follow-up on the consent. Just are the expenses going to be inside of Corporate/Other and outside of the businesses? And then related to the question - is it clear to you that if and when the group comes off capital return suspension that you will be able to act as any of the other banks will act on the capital return front?
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MARK MASON: Yeah, sure. In terms of the first question, as you heard me mention before, we're spending more than $1 billion in terms of incremental spend in 2020. That is split between Corporate as well as some of the other businesses depending on the nature of the spend. I would expect that as we go forward, it will be a similar dynamic. Again, depending on the nature of the spend, would be booked in Corporate/Other or in some of the respective – or one of the respective businesses. To give a quick example, in some of the consulting spend that we do that is meant to help scope out end state vision for a key process, for example, we'd likely book that in Corporate/Other. It would serve to benefit the entire franchise. And so, that's just one example.
In terms of capital actions going forward, there's nothing in the consent order that prevents us from making capital action decisions and taking capital action decisions going forward, and so we would expect that we'd be able to act similarly to our peers as we come out of this crisis.
GLENN SCHORR: I appreciate that. One quick one on cards, if I could. You're down double-digits, well into double-digits in Asia and Mexico, but just overall, I wonder if you could parse out how much you think that's the macro environment and some of the obvious that you've already spoken on? Because what we're trying to build back to is what takes us to the other side where we have a bottoming out and building off of bottom and that includes how you're marketing. Meaning, are promo and teasers on hold given the macro backdrop and how you're marketing into the banking base? Thanks.
MARK MASON: Yeah. So, look, there are a couple of different dynamics that I think are important. I think the key one you hit on, which is we're still in the midst of a crisis. And so, we're very much still seeing pressure on purchase sales. It's better than it was in the prior quarters, but there certainly is still pressure there. We're seeing that across the franchise.
One of the big drags this quarter you see is Retail Services. That's in part tied to the partner and revenue sharing that we have with partners where an improved forecast in loss expectations ends up resulting in us sharing more revenues with the partners. But the dynamic that's important to watch as this plays through is how unemployment, how GDP evolves and what that means in the way of purchase activity starting to pick up, and that's going to be an important factor.
We are keeping a close watch on that. We have dialed back advertising, marketing spend, BALCONs, et cetera, et cetera. And we want to be thoughtful about when we leg back in as we see signs of things turning. And so, we keep a close watch on that. We don't want to be late to that. And we'll be very proactive at getting after it where it makes sense and testing it where we think we're seeing good signals that warrant us increasing some of that spend to drive some of the future volume activity that we see. But as of right now, we're seeing the pressure on volumes that's really a direct byproduct of the crisis we're managing through.
GLENN SCHORR: Thanks, Mark.
MARK MASON: Yeah.
OPERATOR: Your next question is from the line of Jim Mitchell with Seaport Global.
JIM MITCHELL: Hey, good morning.
MARK MASON: Good morning.
JIM MITCHELL: Good morning. Maybe just a question, a follow-up on expenses. You guys have done a pretty good job over the last few years sort of investing – spending on investment and offsetting with efficiency saves. Obviously, that may not happen perfectly this year because of the incremental spend.
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How do we think about that going forward? Does this ramp-up start to stabilize next year and you can kind of get back on that path, or how do we think about beyond 4Q?
MARK MASON: Yeah. So, look, I think that, as I mentioned, we've got an incremental spend of about $1 billion this year that has gone towards infrastructure, risk and controls. We started that incremental spend path, if you will, in 2019. So, to some extent, in our run rate is more spend towards those types of activities. There will be an opportunity to look at that spend - the $1 billion - and recalibrate it or point it in a different direction or reprioritize the spend. There's some of it that is a one-year spend that we’ll have an opportunity to spend again, so to speak, as we get into 2021, and we'll take advantage of that opportunity.
The order requires, I think, a very important step, which is that we step back and come up with a target end-state vision for some of these key processes and the risk management controls and compliance around them. And I highlight that step because we need to do that in order to appropriately dimension the reprioritization of the spend we already have in our expense base and what incremental spend is necessary.
And so, we'll do that over the time period that's been allotted to us within the order. It is an investment. And I highlight that because many of the things that Mike described in terms of automation, in terms of reduced manual touch points, in terms of straight-through processing. Many of those things will yield benefits in the way we run our organization, in the way we not only improve our operations, but in the way we're able to go to market and compete and serve our clients.
And so, I do expect benefits to accrue from these investments down the line. And we will separate and away from that, because I won't compromise the dollars needed in order to make those improvements in those investments. Separate and away from that, we will continue to be responsible managers of the firm, and that means ensuring that we look across the franchise to ensure that we're spending wisely.
JIM MITCHELL: Okay. That's helpful. And maybe just pivoting to NII. I appreciate the year-over-year guidance, but where and when do you see it kind of stabilizing given where the rate picture is right now?
MARK MASON: Yeah. So, look, I mean, there are obviously a lot of factors that play through the quarter and 2020. The combination of not only rates, but the volumes that have played through are all important factors here, let alone the amount of liquidity that's in the market and the impact that has on the balance sheet. I'd expect for NIR to stabilize and stay relatively flat as we go into the remainder of the year, assuming current trends kind of play out.
We project some NIR growth on the accrual businesses as hopefully COVID diminishes a little bit. However, as I've said before, the Markets NIR could be somewhat volatile. So, a little bit hard to predict, as you well know. But we're looking at stabilization as we come through the end of the year here.
JIM MITCHELL: Okay. Thank you.
MARK MASON: Yeah.
OPERATOR: Your next question is from the line of Mike Mayo with Wells Fargo Securities.
MIKE MAYO: Hi.
MIKE CORBAT: Hey, Mike.
MIKE MAYO: My question is for Mike. Look, Mike, we've agreed a lot about Citi's improved resiliency. Since you started, Citi is simpler, stronger and safer. And you can look at the CDS spreads - they were 4 times wider than when you came in as CEO, and that's progress. But what we've disagreed on is the pace and need for more restructuring. And so the question is, where is the sense of urgency?
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Speaking on behalf of investors, people I speak with, there's a collective sense of extreme disappointment with technology, the new regulatory order in tech, the root problems were not transparent to investors. On execution, you didn't go fast enough. And you said this new tech fix will take time. On the business mix, many questions continue on why you have this global consumer footprint, which has terrible efficiency. And returns, worst-in-class - RoTCE this quarter, 8%. Even if we give you the 12% from last year, that's still below the 19% of JPMorgan this quarter alone. So, where is the sense of urgency? So, recognizing the improvement that you've had with the balance sheet, but still a long way to go with strategy, why not step aside now and have the new CEO, Jane Fraser, take over as a way to demonstrate the increased sense of urgency? Thank you.
MIKE CORBAT: Sure. Yeah. So I would start out, Mike, by saying that I think it is important to the board, it's important to the company that we have a real transition. As you recall, my transition was about five minutes. And as part of this process, I did commit to the board that I'd stay throughout the year and close out the three-year plan, which we announced in 2017. We are starting the transition now. And I think that allows Jane to be very much involved in terms of our financial plan. And if you recall, when I started, I thought it was important kind of going into the budget and planning process that the CEO own that. I think I was fortunate in terms of my timing of coming in of that being the case. And I think with Jane coming in, that will very much be the case because she will be accountable for delivering next year and into the future.
I think it's also important that Jane has taken on the transformation work and working on the gap analysis and other related things to the consent order as part of that. By the way, Jane continues to have a day job in terms of running Consumer. She's also overseeing our return to the office in terms of our North America business, and I think the orderly transition is the right thing to do.
I think in terms of the accomplishments, I appreciate what you said in terms of some of the acknowledgment. But again, kind of grounding where we started, net income increased from $7.5 billion to the end of last year, north of $19 billion. Our return on assets went from 39 basis points to right about 100 basis points. Our return on tangible common equity, yes, still behind our peers, went from 5% to 12%, but went a long way towards closing that gap. We went from returning hardly any capital in 2012 to returning nearly $80 billion over the last six years and reducing our share count by about 30%.
And so, I don't think you accomplish those things without a sense of commitment and a sense of urgency. And I feel great about the team that's in place and their commitment to that. And so, I think we have made significant progress and I think Jane's got a foundation to build on from that. And I think she and the team will be kind of focused on those things. And again, I think coming out of COVID, as Mark talked about here, or as and when we come out of COVID in the environment, I think there's things that they can take advantage of, and I think they will, and I think they'll certainly act with that sense of urgency.
MIKE MAYO: Well, as my one follow-up, what can Citi do to show more alignment with shareholders? Because despite all those improvements, the stock is still trading at about half of book value - where it was eight years ago since Citi was formed or since 2000. CEO comp is just shy of $400 million, when you have worst-in-class stock price performance. So, whether it's pay in stock or – I mean, these problems didn't come out overnight that the regulator has identified. So, it's just you're on a path, and now all of a sudden, we find out that the engine underneath the company wasn't as strong as it should be.
And we just – I think we, speaking with the investors I speak with, feel as though shareholders are a secondary consideration after all the other constituencies. And what symbolically can Citi do if you're not going to step aside and have Jane take the reins sooner, what else can Citi do to show that shareholders actually matter instead of waiting for another maybe three to four-year plan?
MIKE CORBAT: Well, shareholders absolutely do matter, Mike. And if you kind of look at throughout the firm, whether it's the pay structure, employees and in particular, more highly paid employees getting paid significantly in stock or stock-related type of instruments, of the different programs and scorecards being very linked to how we perform and the things that, hopefully, over time drive share performance.
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And again, I think there's no one thing in particular. And so, I think getting those metrics right is critical. I know the board, I know the Compensation Committee all work hard in terms of trying to create that alignment. And again, I think from a disclosure perspective, we've been very public and transparent in terms of the metrics and the scorecard process that leadership and broader management has held to at the firm.
MIKE MAYO: All right. If I can squeeze in one more just for Mark, as you – I mean, obviously, disappointed with the execution, strategy, controls, transparency. But just looking forward now with the financials. As far as the expenses, Mark, you were already asked about this, you're already spending $1 billion. You say some of this is a one-year spend. I guess, you have to do a review, so you don't really know the exact spending to fix these problems, but should we think of $1 billion, should we think of $2 billion, is it bigger than a bread box?
Again, when we hear, it's not a quick fix, it's not an easy fix, it's going to take a while. People's imaginations run wild. Is this $10 billion? Is it $5 billion? Somehow, frame this the best that you can, again, given that you're at the early stages of a more full review.
MARK MASON: Yeah, Mike, what I would say is – look, if you look back, we have been, I think, quite responsible at managing our investments over the past number of years. And what people should expect is that we'll continue to be responsible around that. The second thing I'd say is that these are investments, as I said earlier. I think they are necessary investments to improve the way we operate and our ability to compete. And these are investments that we're going to make, right? It's hard to pinpoint a number, as you've said. I would expect, as I mentioned earlier to an earlier question, that we will continue to increase our profitability, we will continue to improve our returns. But I can't dimension the number for you next year or the year after, except to say we are still running the firm. We have performed, I think, quite well through this crisis. There is still a crisis for us to manage through, and we will continue to do that with a focus on our clients and responsible management of our overall financials. And when we get more clarity on the actual spend and as we get through the budget that's here and the response to the order, I'm sure I'll be able to give you more color on that.
OPERATOR: Your next question is from the line of Matt O'Connor with Deutsche Bank.
MATT O’CONNOR: Good morning. First, thanks for taking all the questions. I guess, it doesn't sound like Jane is on the call, which is fine. It's not surprising. But when should we expect to hear from her in terms of the transition and kind of her thoughts on the regulatory issues and process forward?
MIKE CORBAT: Yeah. I think we should let her kind of get her feet under her and go through some of these processes and get educated and start to form her opinions as I described. And so, we'll probably start to introduce her on the January call in terms of maybe having more view towards a forward look. And then, obviously, the quarter after that, she'll have the reins.
MATT O’CONNOR: That makes sense. And then understanding that there could be more kind of views in the room, so to speak, but for now, just the thoughts on addressing the regulatory issues, is that a matter of spending money and fixing the processes? You did kind of allude to, there could be some strategic changes. So, is this the business model that you think Citigroup will have going forward or more structural changes potentially coming to address the regulatory issues and better position the company?
MARK MASON: Let me perhaps try and clarify the earlier comment. So, to be clear, we have, as Mike described, a consent order that we need to address. And I think importantly, when you look at that consent order, it is an opportunity for us to take a step back and look at these key processes and the infrastructure, controls and compliance activity that support them. So, that's kind of one important step that as responsible managers of the franchise, we intend to execute against, and some of that we've begun already, and that was referenced in the consent orders.
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Separate and away from that, what I was alluding to was just simply put the idea that we are in a crisis, and as you go through a crisis, you learn things about your business. And as I mentioned, we talk to clients all the time. They're learning things about their business as they manage through this crisis. We're learning things about and identifying opportunities about our business. For example, the investments that we've made in digital have turned out to be very wise investments as we manage through this crisis. What are the opportunities to accelerate that type of spend as we go forward, given the acceptance of digitization has probably been accelerated by a couple of years now.
The importance of revenue mix and growing our fee-based revenue or the traction that our wealth management business is getting in this type of environment presents opportunities for us to look at how we can expand that aspect of our business and business model. So, the crisis will create and has created an opportunity for us to take another look.
On top of that, with any new CEO, I think, you would expect an opportunity for that person to take a step back and take a look at the business that we have, take a look at the environment that we're playing into and to make an assessment as to what the right path forward is in light of where we think the growth trajectory is and where we think the return opportunities are. And so, that is the other leg that with Jane coming in, in February, I'm sure she will want to take that opportunity and see what comes of that. So, hopefully, that clarifies the point.
MATT O’CONNOR: Yes, it does. Thanks for the color.
OPERATOR: Your next question is from the line of Erika Najarian with Bank of America.
ERIKA NAJARIAN: Hi. Good morning.
MARK MASON: Good morning.
ERIKA NAJARIAN: Mark, I apologize, but I'm going to have to re-ask the question that you've been asked many times, and I'm wondering if this could be a successful attempt. But as we think about productivity savings versus investments in risk management for 2021, is $11.9 billion – or rather, $10.9 billion, a good starting point in terms of how we should think about quarterly expenses as we think about the next several quarters?
MARK MASON: Well, the expenses that we have in the quarter that you reference include, obviously, a $400 million civil money penalty that's part of that, that's booked in operating expenses. And in terms of 2021, we're in the midst of constructing our plan right now. And so, hard for me to give you an exact number or run rate number for you to forecast in 2021. So, sorry to disappoint, but I don't have much beyond the way I've answered that question already.
ERIKA NAJARIAN: Okay. And I guess my second question is to Mike. And I think it's always hard to call out competitors by name. But going back to Mike Mayo's set of questions, the questions that we as analysts got ever since that Journal article came out, is why isn't Citigroup the new Wells Fargo in terms of regulatory issues? And many investors pointed out that when your consent order came out last week that the asset cap and business activity limitation for Wells actually came out two years after the consent order.
And without listing the things that you've already accomplished and perhaps just looking forward, how can you reassure your current investors and prospective investors that you're not going down the same laborious regulatory remediation route as one of your peers, which could clearly be impactful in terms of business activity restrictions?
MIKE CORBAT: Sure. So, I would say one very important part of that, Erika, is what we spoke about in terms of no widespread customer harm. The company did not profit from the activities, and you can kind of go on with that. I think the second piece is that around customer harm and around some of those things,
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there were not just Wells Fargo, but there were kind of widespread industry deep dives into sales practices and other pieces in here.
I think in this, you've seen, and we've talked about the four areas of focus and where we're going to be spending our time. And we've been asked to do the gap analysis. We've obviously been at this for a while, and we will obviously do a good extensive gap analysis. But I think we've got a kind of reasonable idea. And again, we're open to the findings that come from that in terms of the things that need to be done. And I think that, as importantly, in there is kind of the understanding of the process failures that got us here. Again, no fraud, no customer harm, no benefit around that.
And if I could just go back and touch on the question that you asked Mark, I think an important way to think about it is, historically, you've heard us kind of speak to the way that we've gone at the expense side of things is really working hard to offset the costs that we've been putting out there in terms of some of this transformation work.
I think the way you're going to hear us talk about it and the way you should think about it is those are separate streams. The remediation work will cost what it will cost, but don't think as a result of that, there's still not significant work that we recognize that we can do from a business improvement process. And so, we're not linking the two as those necessarily being offsetting, but we will continue to work on those things to better the efficiencies of the company away from this.
I think the second piece is that, that while we're not speaking to it, we've referenced it, I think that this work will have – this transformation will have an ROI in terms of what this allows us to do and do differently. We talked about from the client and customer perspective, the business process in terms of the way we aggregate data, the way that we kind of move risk and controls through the firm in a more automated way, we think gives us the ability not just to improve the process, but we do think that over time it will have a return in terms of the benefits and costs that are associated with those, both directly and indirectly.
OPERATOR: Your next question is from the line of Steven Chubak with Wolfe Research.
STEVEN CHUBAK: Hi. Good morning.
MARK MASON: Good morning.
STEVEN CHUBAK: So, maybe a question for Mark pertaining to capital. One of the things that has happened recently is that the advanced CET1 has now become your binding constraint. And one of the key questions that we've been getting or – and was an expectation that we would see a significant uptick in RWAs relating to operational risk. And it looks like that generally speaking, there hasn't been much movement in terms of RWA divergence. And I was hoping you could speak to whether the impact from recent events has fully reflected in that number, or whether we could see a further upward pressure in the fourth quarter?
MARK MASON: Sure. Yeah – you're speaking to the civil money penalty. The answer is yes, we have reflected our estimates of the impact in the RWA for operational risk associated with that. And just given how it falls in terms of the level, the magnitude of the impact relative to other operational risk, there was not a material change in the RWA as a result of it.
STEVEN CHUBAK: Got it. Okay. And then, just one follow-up, Mark, relating to discussion about profitability targets and the need to – and the desire to close the gap with peers and that's still your intent. This year, you've planned to do an Investor Day. It was delayed due to, well, COVID and the consent order and a CEO transition. Does the management team intend to provide refresh targets in the coming months? And are there any plans to actually hold an Investor Day so you could provide a more fulsome update? I know it's challenging to answer without Jane on the call, but I was hoping to get some perspective as to
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how we should think about the timing for when we can get at least some updated targets to hold the management team accountable to?
MARK MASON: Yeah. No, again, that's a – as you said, that's a tough question to answer. I would like to give, obviously, Jane the opportunity to get in the seat and to work through some of the things that Mike has referenced and I've referenced earlier. Obviously, in the fourth quarter – at least historically in the fourth quarter, we've tried to give some context not only for full year performance, but in terms of what we're seeing in the market going forward. We'll see how this fourth quarter plays out. And obviously, on the fourth quarter earnings call, we'll give an updated perspective on what we think performance might look like in 2021, and also the timing for which we can give you a more comprehensive view on how we think about things going forward.
OPERATOR: Your next question is from the line of Saul Martinez with UBS.
SAUL MARTINEZ: Hey, guys. Good morning.
MARK MASON: Hey, Saul.
SAUL MARTINEZ: So, I'm sorry, I'm going to beat a dead horse even more here with the consent order and potential applications on costs. But I know it's hard to know what the time horizon is around this in terms of having more color. And it's clear you want to take this seriously and you're not going to skimp, but these processes can be expensive. And as you know, you do have to improve outcomes in the short term and that has expenses, but build more systematic solutions to operational risk efficiencies which require longer- term investments and whatnot.
So, with all of that, how – I mean, when do you think you will know what you're up against? And when I say what you're up against, I mean, meaning the – not only the incremental expenses, and I'm not just talking about 2021, but just in absolute terms, how much you're going to have to spend to fix these issues and the time horizon to fix these issues? When do you think you'll have better handle on the multitude of different dimensions to this?
MARK MASON: Yeah. So, let me try and go at this again. So, look, we have – we spend, call it, $42 billion, $43 billion a year in terms of total expenses. You've heard me reference about $9 billion of that is associated with technology and maybe half of whatever is associated with kind of compensation. But I'd highlight that to say that we obviously have a large expense base, one that we've been managing very diligently over the past number of years. And with that expense base, there are a couple of different areas that I think are useful to point out as we think about the incremental need.
So, one is the $1 billion-plus in incremental spend that we've made, and as I mentioned earlier, the opportunity to re-spend those dollars, to reprioritize those dollars. There's also a spend that we make on the current operations and infrastructure that we make every year. And that too I think will give us an opportunity to relook at that spend, that base and reprioritize that spend, right? So, there are multiple categories where we can repoint, if you will, to a better approach of addressing what's been highlighted in the order. And it's not until we kind of work through the incremental that's already in there, the base that rolls off and gives us an opportunity to re-spend that we then are faced with, okay, what more is required around the investment.
Now, a couple of percentage points of an increase is pretty significant in the way of absolute dollars that can be put to work on these types of initiatives. In terms of the when, well, let me get one of them. And then the second thing I'd highlight is, as Mike pointed out, separate and away from the required spend to address the opportunity or the investment in infrastructure, risk and controls, there also remains opportunities for us to look at our data centers, for us to – to look at that where we have – to ensure the right placement of people around the organization, so our footprint, for us to look at some of the roll-off from some of the
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COVID spend that we've had to make this year. So, there are other opportunities for us to look at dollars that we have, let alone capacity adjustments that may be warranted coming out of this COVID-19.
And so, what I'm trying to highlight is that there are many puts and takes through the budget process that we're constructing now and the process that we will use to dimension the spend associated with this order.
In terms of timing, the order actually points out that we've got some 120 days or so to identify the gap, a gap between our current state and an end state target, and then some 90 days or so to develop and have a plan approved, after which we can move towards executing or continuing to execute against.
And so, that gives you some sense for how we're thinking about the timing and the dimensioning of this. But again, I think we've got a track record now, as has been pointed out, of being very thoughtful and responsible around investment dollars and our total expense base. And you and others and shareholders should expect that we will continue to be disciplined and responsible as it relates to that. And again, as I mentioned earlier, we're looking to improve profitability and returns as we do this.
SAUL MARTINEZ: Okay. No, that's helpful. And hopefully, you'll be able to succeed on that latter point. Just a quick follow-up and a little bit more of a mundane question. I think just more of a correction or a clarification; I think you mentioned, Mark, in the fourth quarter, that Corporate/Other pre-tax losses should be similar to this quarter. Did I get that right because you obviously had the civil fee in that – in this quarter? So, can you sort of clarify that?
MARK MASON: Yeah. So, ex the $400 million. So, I said roughly the $657 million that we see, excluding the $400 million civil money penalty is likely to be the levels that we see in the fourth quarter.
OPERATOR: Your next question is from the line of Ken Usdin with Jefferies.
KEN USDIN: Thanks. Good morning. Mark, if I could go to a different topic, you mentioned that you don't really expect NCOs to start peaking until the end of next year. I was just wondering if that's just a time shift difference. And can you just kind of walk us through how you're expecting the loss curve generally to appear over the next year or so? Thanks.
MARK MASON: Yeah, sure. So, again, it's – when you look across the portfolio, we're seeing payment rates coming in higher than we expected. And consumers are proving to be quite resilient when you think about the stimulus and the forbearance programs that have been in place. And so, as we look at loss curves and delinquency buckets and what they're suggesting over the next number of quarters, it looks as though at the aggregate level, we're likely to see losses towards the fourth quarter or back-end of 2021.
Obviously, assumptions around GDP, assumptions around unemployment, all of those factors come into play, but that is, in fact, what we're seeing. That's going to vary by regions. And so, in Asia, in LATAM, we may see that earlier, but what I was referencing in the back end was kind of when you look at the aggregate portfolio.
KEN USDIN: Got it. Okay. And if I could follow up on a question on just taxes, obviously, when taxes went down, you guys had to write down the DTA. And just in terms of the outlook, at least from what we know about a potential rise to 28%, depending on the outcome of the election and the eventual plans, any ideas of what type of impact a directional change might have to the others – to the positive in terms of either tax rate and being able to write back up the DTA?
MARK MASON: Sure. So, hard to know exactly what happens, but in the event that we did see or we do see a tax rate increase to 28% or so, and it went into effect in the latter part of 2021, it would likely result in our DTA increasing by about $4 billion, so a one-time increase in our DTA of about $4 billion. It obviously would have the impact of our rate being close to that level, our tax rate being close to that level and as a result of that, less income, given the higher tax rate, less income contributing to the CET1 ratio.
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And then, in terms of the disallowed DTA, with a higher corporate tax rate, we would expect to return to our usage levels of roughly $1 billion per year. So, that gives you a little bit of a sense of a couple of the moving pieces, should that happen.
MIKE CORBAT: And Mark, I think an important nuance there is what comes out between remaining territorial, or a reversion to global taxation. I think what people are talking about today is it would likely remain territorial, which, again, with average global tax rate of about 25%, that would certainly benefit us in some of the jurisdictions that we operate in.
MARK MASON: That's a good point. Yeah.
OPERATOR: Your next question is from the line of Brian Kleinhanzl with KBW.
BRIAN KLEINHANZL: Great. Thanks. Can I just ask one quick question first on the NII? I heard you saying that it's going to be stabilizing after the fourth quarter as you look out to 2021. But can you kind of just outline some of the factors that are leading to that stability? I mean what gives you confidence that it's actually be stable off that level? Did you think about the potential for stimulus and maybe further consumer deleveraging if we get stimulus in that statement? Thanks.
MARK MASON: Yeah. And so, look, again, that is based on kind of current trends that we're seeing in terms of roughly improving unemployment and improving GDP. Obviously, there is talk of another stimulus, in terms of its impact, we've assumed that kind of a bit later in terms of in the first quarter of 2021. It does assume that we continue to see the purchase sales activity improve quarter-over-quarter.
We've seen some of that certainly in Q3. We continue to see that as we look even in the early days of October. And so, that playing out would be another important factor. And then, obviously, what happens in terms of the overall liquidity that's in the market is a factor that influences mix and the NIM as well.
BRIAN KLEINHANZL: So, maybe just second question on the NIM. I mean, if you think about the yields on the earning asset side, I mean, are you getting closer to the trough yields as you think about the repricing cycle? And where rates are, they stabilized at a low level, so are you kind of expecting earning asset yields to be closer to a bottom as well? Thanks.
MARK MASON: Yeah. So, look, in terms of the NIM, we've seen some of the, obviously, the pressure from rates. We've seen the pressure in terms of the market, in terms of the mix of assets that we have, but also pressure in terms of the deposit levels coming in quite high with, frankly, a lack of loan demand to put that to work. And so, subject to how that liquidity that's in the market evolves, and what happens with ultimate asset pricing is going to have an important factor on that.
The NIM is really an output of how those NIR revenues play out and how the balance sheet evolves. And so, a bit of continued uncertainty a little bit in terms of how some of those market factors play out, but we see that as well stabilizing towards the end of the year.
OPERATOR: Your next question is from the line of Jeff Harte with Piper Sandler.
JEFF HARTE: Good afternoon, guys. Unfortunately, I have one more consent order kind of related question. Do you have a feel for regulators' views on the adequacy of existing remediation projects that have been underway, versus just not having moved fast enough?
MIKE CORBAT: Sure. So, I would say that, not have moved fast enough and not have been holistic enough, Jeff, to use my words. And so, again, I think this gap analysis will give us a better sense of that. But again, as I said, we've brought others in to help us look at and think about these things. And so, again, we'll see what the final analysis yields. But I think we've got a sense of the right approach and direction.
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JEFF HARTE: Not necessarily you're starting over?
MIKE CORBAT: Boadly defined, no. There may be some more refined areas where it may make sense to do that, but not broadly. And again, I think if you look at kind of how, as an example, we've kind of managed through this crisis, which I think is a good real life live test, again, I think we've been able to get the data, we've been able to make the right decisions, we've been able to act in a timely manner. But again, I think this pandemic has shown us the accelerated move to digital and the ability to continue to work remotely or more remotely over time and the ability to make faster and better decisions is critical. And in particular, as I think appropriately, our regulators continue to raise the bar on the larger institutions in terms of their expectations.
JEFF HARTE: Okay. And just kind of something fundamental, Mexico is a relatively large exposure for Citigroup and a geography upon which the market has some macroeconomic concerns. Can you talk a bit about the credit-related trends you're specifically seeing down in the business in Mexico? And kind of maybe what your expectations are? Or how much things like deferrals have helped down there?
MARK MASON: Yeah, sure. So, I mean, look, Mexico, similar to other parts of the world also had forbearance as part of the program, although, unlike the US, in Mexico, customers needed to be less than 30 days past due as of the end of February to be eligible.
And so, what we saw is that when you look at our loss rates for the quarter, you see a tick-up in Latin America, largely driven by Mexico and the impact of those customers kind of playing through the delinquency buckets and into losses. That said, Mexico also comes with a higher NIM, in the way of overall performance. And we would expect for losses there to certainly come to a peak sooner than the end of 2021.
In terms of more broadly, our exposure in Mexico is about $57 billion in terms of total country exposure. And that's down a little bit since the second quarter. At the end of the third quarter, about $30 billion of loans between GCB and ICG in Mexico, $13 billion are consumer loans, about $16 billion are corporate loans. And about half of that $13 billion, a little bit more than half is in credit card and personal loans.
And remember, we tend to target a higher-quality customer segment than most of our peers there, and we price the risk accordingly. And so, we would expect for that to play out in a relatively favorable way.
And then, there's another 81% of our payroll loans in the portfolio are concentrated in sectors that have a lower risk of layoffs like government employers and pensioners. And so, that too should be helpful as we think about the quality of our book. And then, there's the portion that's in mortgages is – it weights towards LTVs less than 50%. And so, that too should – speaks to the quality of our book. So, overall, we feel as though we're appropriately reserved, and are managing reasonable levels of performance there.
OPERATOR: Your next question is from the line of Charles Peabody with Portales.
CHARLES PEABODY: Yeah. I just had some follow-up questions on net interest revenue guidance. You kept using the word stabilization as we enter 2021. So, my first question is, does that imply further weakness in the fourth quarter before it stabilizes?
And then the related question, on page 11, you show the mix of net interest revenue between the core bank and then the markets related. And you saw a big drop in the markets-related net interest revenue. And I was wondering if you can talk about what drove that. And is – which of those pieces do you expect to stabilize first?
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MARK MASON: Yeah. And so, just to be clear, the stabilization that I was referring to is kind of as we go into the fourth quarter. And so, I'd expect net interest revenue to stabilize in the fourth quarter for total Citi and for many of the factors that I mentioned already.
Look, the markets revenue, as you've heard me mention before, it's really important to look at total revenue. The total revenue there, in part because the nature of how transactions are structured with clients, impacts whether that revenue is coming in the form of NIR and non-NIR. And so, I think it's very important to, as I mentioned, look at total revenue there.
And our total revenue in the quarter, as I mentioned earlier, is up in terms of in total markets revenue, in light of the strong fixed income and the strong equities performance that we saw there. And so, that part is lower than the prior quarter as we see some of that normalization in markets take place, but still very strong in light of the environment that we're managing through.
And candidly, as we go into a fourth quarter, with an election and in the case of Europe, Brexit and speculation around the stimulus and uncertainty around vaccines, hard to predict exactly how customers, clients decide to reposition their books as some of those things become clearer. And so, total revenue in the way of markets revenue is the way we think about it. And a fourth quarter that I think will show NIR revenue stabilizing, but keep in mind, markets performance will likely have puts and takes.
CHARLES PEABODY: And my follow-up question, let me just ask that same question about mix between markets-related NII and core bank. Would you expect the core bank NII to actually grow in the fourth quarter sequentially?
MARK MASON: Well, again, I would expect that our fourth quarter will show net interest revenues and non-net interest revenues kind of down year-over-year but the aggregate of the two relatively stable.
OPERATOR: Your next question is from the line of Vivek Juneja with JPMorgan.
VIVEK JUNEJA: Thanks for taking my questions.
MARK MASON: Good morning.
VIVEK JUNEJA: Good morning. Mike, on the whole regulatory issue, it's quite disappointing to read in the consent orders that the incentive comp did not account for risk management and the comments about the practices that the regulators made. Given that, what changes should we expect in senior management incentive comp? And can you talk about why you didn't prioritize risk management, which is such a cornerstone since the last crisis? And what changes should we expect in the board as well as other senior executives as a result?
MIKE CORBAT: So, the notion of accountability and I think what they're speaking to goes more broad than just the executive management team. But obviously, you've got a number of work streams here. You've got a fair number of people involved in those processes. And it's kind of taking it down and kind of making sure that the people who are responsible for each of those processes have the appropriate weighting.
And I think the challenge comes that in many of the instances or in many of the work streams, you actually have people that it isn't their sole job. They are a practicing expert or a practicing practitioner in terms of the markets business or in consumer or in different functions. And we have seconded them as part of their job into doing this regulatory work because they're the expert, they're the area through which a number of these things would flow.
And the question is, how do you create the proper balance and proper accountability around that? So, I don't look at it and say that it's just the executive team. I think it's striking the right balance. And so, as an example, should someone in risk be responsible for delivering on financials of the firm, profitability,
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expenses or other pieces that are in there. And so, I think it's kind of creating the right balance to drive the right behaviors, get the right outcomes in people in both directions properly. So, again, I think that it's – the way it's written, it's – my interpretation is it's actually broader than the way you've described it.
VIVEK JUNEJA: Okay. And so, does that mean you'll be adding more people do you think as a result to be able to hold some people fully responsible for this? Or how are you thinking as you look forward?
MIKE CORBAT: Well, we have, in risk and controls, we've added thousands of people since the beginning of the year and we were adding people last year to these projects. So, without a doubt, we've been bringing those resources and getting that expertise in. And we've tried to bring in subject matter experts from other firms, from other industries to help us as we think about these things.
And I think we've made a number of very key strong external hires. I think we've made some very strong internal moves in terms of people. And I think we've also moved strongly in terms of, what I would say, single hatting people, i.e. making this remediation not just their primary, but in many case, their sole responsibility in terms of delivering on. So, again, yes, we're absolutely committed to having the right resources, the right expertise, the right talent and then having the right accountability around delivering against this.
MARK MASON: And Mike, you may have mentioned, but Karen Peetz, obviously, we brought in as the CAO and to help kind of lead in this transformation across the organization. So, as you say, we're bringing in the people that we need and getting after it.
OPERATOR: Your next question is from the line of Betsy Graseck with Morgan Stanley.
BETSY GRASECK: Hi. Good morning.
MARK MASON: Good morning.
MIKE CORBAT: Hey, Betsy.
BETSY GRASECK: Yeah. So, like you just mentioned, Karen was brought in in June. And Mike, I know you became CEO of the Citibank USA legal entity back in June timeframe. So, I guess I'm kind of looking at all this thinking, you must have expected – you've been working on this for a while and I was thinking you probably expected some kind of requirement from the regulators that you were already partially executing on. Is that fair? Like, is this consent order might be a surprise to the Street, but is it really a surprise to you?
MIKE CORBAT: Well, around these work streams, as we've acknowledged, we have been working on them for a while. So, it's not like all of a sudden, we woke up one day and said, gee, we're going to go at some of these things as de novo or new projects. So, we've been working on them for a while. And I would say that, again, what we've been focused on is really bringing these projects together.
I would say, a historic approach that we've taken is we've gone at these, in some ways, serially or individually. And I don't think that has yielded the outcomes that either I – either Citi or our regulators necessarily would want. And so, as we went down this path, it became apparent to me and, I think, the board and others that we needed to really join these processes and create a body to be able to go at it. And I think we're very fortunate to have Karen with us, who has been through some of this and have this expertise to be able to, I think, bring these work streams together.
Because when you think about data, as an example, data feeds through risk, data feeds through compliance, data feeds through lots of your controls and making sure that we're taking a holistic approach to the way that we go at and modernize our data approach is critical, such that we do it once, we do it right,
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we do it holistically. And so, again, I don't think the work or some of the work streams are new. I think the broader, more encompassing, holistic approach in some areas is newer.
MARK MASON: And Mike, just to that point, in terms of us having started this already, again, the incremental $1 billion we're spending, we started spending that at the beginning of the year, right? And we spent incremental dollars in 2019 as well. And by the way, that $1 billion wasn't something that I capped. It was what do we think is required to make as much traction as we can in the year. And we're spending that incremental $1 billion and still managing our total expenses responsibly, right?
BETSY GRASECK: Yeah. It's an interesting point, because when I look at the stock, I'm looking at a stock that's priced for effectively a 5% ROE, okay? And if you say, hey, that is right, because the expenses are going to go up that much to drive a 5% ROE, that's like a $5 billion increase in expenses. And Mark, to your point earlier, you were mentioning that you're planning on – or hoping to execute this improving profitability, which is obviously above 5% today.
So, could you help us understand what kinds of profit improvements you think you can focus on over the course of the next couple of years? I mean, I'm wondering what some big threads are. Is it better deposit, core deposits that can bring down your cost of funds? Is it greater execution with your current customer base? Is it incremental customers? I mean, help us understand what you're thinking about there.
MARK MASON: Yeah. Look, there are going to be multiple components to it, right? There are additional linkages that we try to capture across our franchises, whether it's doing more with our TTS clients. I mentioned earlier that, we are seeing a lot of traction as it relates to instant payment capabilities, whether it's doing more between our capital markets business in spread products and trade lending that we do with corporate clients in terms of unique structuring opportunities there.
And so, there are linkage opportunities across the franchise that we will continue to capture that I think will help in the way of top line performance. There are opportunities to grow in the wealth management space. We've seen 16% growth in investments in Asia this quarter. We think there's more upside. We think there's more wealth growth upside in the US as well.
But there are also operational benefits from – again, when we say manual activity, when you replace manual activity with an improved technology or an automation or straight-through processing, you remove the manual. Removing the manual improves the quality of the output in a more timely fashion. But it also, over time, is less costly, when you don't have those manual steps.
And so, I'd say, improved profitability, as we go into 2021 and 2022 and beyond, in part in getting both top line, ultimately getting expense benefits from a host of activities, including capacity adjustments that we may decide to take as we come out of this crisis, and then the other items play through as well, including cost of credit and so on and so forth.
OPERATOR: Your next question is from the line of Gerard Cassidy with RBC.
GERARD CASSIDY: Thank you. Good morning, Mark. Good morning, Mike.
MARK MASON: Good morning.
MIKE CORBAT: Good morning, Gerard.
GERARD CASSIDY: Mark, you've given us some good detail on the consumer portfolios. Can you share with us on the commercial side – when you look at your ratings that you give us in terms of investment grade to BB, B, CCC, they really haven't moved very much, since the fourth quarter of 2019. So, can you share with us, what you're seeing in these portfolios? And are the energy portfolios, and the leisure, and
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hospitality, travel portfolios, still the ones that give you the most risk or you see the most risk in terms of credit losses over the next 12 months or so?
MARK MASON: Yeah. Sure, Gerard. Let me start by saying, as you know, we have – coming out of the last crisis, we have really adjusted our risk framework, our risk appetite. We have rethought our client focus to ensure that we're focused on clients that can take best advantage of the breadth of our offering, but also on the multinational investment-grade type clients. And so we have maintained a skew in terms of ratings towards 80% or so of our portfolio being in those investment-grade names.
We've got a long history of operating in all of these sectors that you see on page 23, and we've got deep experience through cycles and expertise in each of these industries. And that includes client selection. And in many instances, we are banking many of the leaders in their respective industries. And it's important to note that because I think that speaks to not only the quality of the name, but what we can expect when you go through downturns, and it speaks to why we're so committed to staying alongside our clients and helping them manage through the uncertainty.
When I think about some of the sectors that we point to in this crisis, we've been thoughtful about the way we have dealt with these clients over time. So, you look at the aviation space, and our exposures there tend to be secured. They tend to – we have extensive experience with structuring to mitigate risk there, whether that's secured or guaranteed by export credit agencies, we've got extensive experience with valuation of collateral there.
If you look at autos, in many cases, the lending there is in securitization vehicles. So, the risk of bankruptcy is remote and with underlying consumer obligors in that case. You look at energy and a lot of that is reserve-based lending, with borrowing bases that go through a periodic re-determination. And that helps in terms of reducing exposure when oil prices fall.
And so, you look at these, you look at our activity with these clients in these sectors, our deep experience, and we think that it positions us well to manage through this with them and certainly feel good about the reserves that we have. And we have taken proactive actions in the pre-crisis, we went through exposure reductions just given where we were in the cycle, and we've aggressively downgraded names that are in impacted sectors early in the crisis and put enhanced monitoring in place. But as I mentioned, we feel good about the portfolio we have. We feel good about the reserves that we have, and we feel good about our ability to manage through this with these clients.
OPERATOR: I would now turn the call back over for any closing remarks.
ELIZABETH LYNN: Thank you all for joining today. Please feel free to reach out to Investor Relations if you have any additional questions. Thank you again, and have a nice day.
OPERATOR: This concludes today's third quarter 2020 earnings call. Thank you for your participation. You may now disconnect.
Certain statements in this document are “forward-looking statements” within the meaning of the rules and regulations of the U.S. Securities and Exchange Commission. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results and capital and other financial condition may differ materially from those included in these statements due to a variety of factors, including the precautionary statements included in this document and those contained in Citigroup’s filings with the U.S. Securities and Exchange Commission, including without limitation the “Risk Factors” section of Citigroup’s 2019 Annual Report on Form 10-K. |
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| | | Exhibit 99.3 |
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Citigroup Inc. securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: | |||
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Title of each class | Ticker | Title for iXBRL | Name of each |
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Common Stock, par value $.01 per share | |||
Depositary Shares, each representing 1/1,000th interest in a share of 7.125% Fixed/Floating Rate Noncumulative Preferred Stock, Series J | |||
Depositary Shares, each representing 1/1,000th interest in a share of 6.875% Fixed/Floating Rate Noncumulative Preferred Stock, Series K | |||
Depositary Shares, each representing 1/1,000th interest in a share of 6.300% Noncumulative Preferred Stock, Series S | |||
7.625% Trust Preferred Securities of Citigroup Capital III (and registrant’s guaranty with respect thereto) | |||
7.875% Fixed Rate / Floating Rate Trust Preferred Securities (TruPS®) of Citigroup Capital XIII (and registrant’s guaranty with respect thereto) | |||
6.829% Fixed Rate / Floating Rate Enhanced Trust Preferred Securities (Enhanced TruPS®) of Citigroup Capital XVIII (and registrant’s guaranty with respect thereto) | |||
C-Tracks Exchange-Traded Notes Based on the Performance of the Miller/Howard MLP Fundamental Index Due September 28, 2023 | |||
C-Tracks Exchange-Traded Notes Miller/Howard Strategic Dividend Reinvestor Due September 16, 2024 | |||
C-Tracks Exchange-Traded Notes on the Miller/Howard MLP Fundamental Index, Series B, Due July 13, 2026 of Citigroup Global Markets Holdings Inc. (“CGMHI”) (and registrant’s guaranty with respect thereto) | |||
Exchange-Traded Notes Based on the Performance of the VelocityShares® Daily 4X Long USD vs. JPY Index due December 15, 2032 of CGMHI (and registrant’s guaranty with respect thereto) | |||
Exchange-Traded Notes Based on the Performance of the VelocityShares® Daily 4X Long USD vs. GBP Index due December 15, 2032 of CGMHI (and registrant’s guaranty with respect thereto) | |||
Exchange-Traded Notes Based on the Performance of the VelocityShares® Daily 4X Long USD vs. EUR Index due December 15, 2032 of CGMHI (and registrant’s guaranty with respect thereto) | |||
Exchange-Traded Notes Based on the Performance of the VelocityShares® Daily 4X Long USD vs. CHF Index due December 15, 2032 of CGMHI (and registrant’s guaranty with respect thereto) | |||
Exchange-Traded Notes Based on the Performance of the VelocityShares® Daily 4X Long USD vs. AUD Index due December 15, 2032 of CGMHI (and registrant’s guaranty with respect thereto) | |||
Exchange-Traded Notes Based on the Performance of the VelocityShares® Daily 4X Long JPY vs. USD Index due December 15, 2032 of CGMHI (and registrant’s guaranty with respect thereto) | |||
Exchange-Traded Notes Based on the Performance of the VelocityShares® Daily 4X Long EUR vs. USD Index due December 15, 2032 of CGMHI (and registrant’s guaranty with respect thereto) | |||
Exchange-Traded Notes Based on the Performance of the VelocityShares® Daily 4X Long GBP vs. USD Index due December 15, 2032 of CGMHI (and registrant’s guaranty with respect thereto) | |||
Exchange-Traded Notes Based on the Performance of the VelocityShares® Daily 4X Long CHF vs. USD Index due December 15, 2032 of CGMHI (and registrant’s guaranty with respect thereto) |
Exchange-Traded Notes Based on the Performance of the VelocityShares® Daily 4X Long AUD vs. USD Index due December 15, 2032 of CGMHI (and registrant’s guaranty with respect thereto) | |||
Medium-Term Senior Notes, Series N, Callable Step-Up Coupon Notes Due March 31, 2036 of CGMHI (and registrant’s guaranty with respect thereto) | |||
Medium-Term Senior Notes, Series G, Callable Fixed Rate Notes Due January 13, 2027 |