The 500.321.998.101 are calls to publish which failed because of transient , [ : (, )] If you'd prefer to hide your profile for now, simply: Go to your DiceProfileorPersonalizedDashboardand locate theVisibletoggle. Sadly, that didn't help. *As of December 31,2022.Data provided by PitchBook,January 18,2023All in all,dealmaking in the Americas has slowed back to historical averages after the record-breaking run across 2021 and the first half of 2022.Caution is on the rise across the board as economic prospects and global uncertainty.although figures are still healthy compared to even 2020 levels,2022 saw softening in the pace of dealmaking overall,back to quarterly tallies reminiscent of the late 2010s.Global|US Americas Europe|Asia$21.9$22.6$23.6$21.6$22.2$27.5$19.5$17.8$19.4$24.2$26.6$24.4$32.6$33.7$36.4$50.3$42.4$40.3$41.4$36.1$40.9$39.7$51.0$48.8$83.0$93.0$98.3$102.0$88.7$80.4$49.6$39.201,0002,0003,0004,0005,0006,0007,000$0$20$40$60$80$100$120Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q420152016201720182019202020212022Deal value($B)Deal countAngel&seedEarly VCLater VCVenture growth38 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.#Q4VCMedian deal size($M)by stage in the Americas20152022*Up,flat or down rounds in the Americas20152022*Global|US Americas Europe|Asia$2.0$8.4$10.0$18.6$0$5$10$15$20$25$30$3520152016201720182019202020212022*Angel&seedEarly VCLater VCVenture growth0 0Pp0 152016201720182019202020212022*UpFlatDownSource:Venture Pulse,Q422,Global Analysis of Venture Funding,KPMG Private Enterprise. *As of December 31,2022.Data provided by PitchBook,January 18,202342 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.#Q4VCVenture financing of VC-backed companies by sector in the Americas20152022*,#of closed dealsVenture financing of VC-backed companies by sector in the Americas20152022*,VC invested($B)Source:Venture Pulse,Q422,Global Analysis of Venture Funding,KPMG Private Enterprise. Writable: Go to your builds folder/file and make sure it hasn't been set to read-only. I=yki! Toggle this button from ON to OFF . Komenda na legalnego aimbota CS:GO. What was the opening scene in The Mandalorian S03E06 refrencing? I want to know how to make my Tweets private. Mobile Legends should now work over Data. *As of December 31,2022.Data provided by PitchBook,January 18,202330 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.#Q4VCVenture-backed exit activity(#)by type in the US20152022*Venture-backed exit activity($B)by type in the US20152022*GlobalUS Americas|Europe|Asia$0$100$200$300$400$500$600$700$80020152016201720182019202020212022*AcquisitionBuyoutPublic Listing05001,0001,5002,0002,50020152016201720182019202020212022*AcquisitionBuyoutPublic ListingSource:Venture Pulse,Q422,Global Analysis of Venture Funding,KPMG Private Enterprise. 6. The OP doesn't want to delete the info on their resume. *As of December 31,2022.Data provided by PitchBook,January 18,202368 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.#Q4VCVenture financing in Paris2015Q422Global|US|Americas EuropeAsia$133.9$277.0$367.2$106.0$285.2$324.3$375.9$505.9$658.0$479.8$481.8$284.7$704.7$901.8$460.7$676.5$812.5$882.1$650.0$924.1$1,071.6$1,176.6$1,899.3$918.0$957.5$3,243.7$2,221.3$1,583.7$3,383.7$2,222.5$2,211.6$797.4020406080100120140160180200$0$500$1,000$1,500$2,000$2,500$3,000$3,500$4,000Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q420152016201720182019202020212022Deal value($M)Deal countSource:Venture Pulse,Q422,Global Analysis of Venture Funding,KPMG Private Enterprise. <>/ExtGState<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 18 0 R] /MediaBox[ 0 0 595.32 841.92] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> Is a Masterbrand strategy the right choice for my business?Brand Finance United States 42Brand Evaluation Services.How are brands perceived in my category?Brand Finance tracks brand fame and perceptions across 30 markets in 10 consumer categories.Clear,insightful signals of brand performance,with data mining options for those who want to dig deeper all at an accessible price.What if I need more depth or coverage of a more specialised sector?Our bespoke brand scorecards help with market planning and can be designed to track multiple brands over time,against competitors,between market segments and against budgets.Our 30-country database of brand KPIs enables us to benchmark performance appropriately.Do I have the right brand architecture or strategy in place?Research is conducted in addition to strategic analysis to provide a robust understanding of the current positioning.The effectiveness of alternative architectures is tested through drivers analysis,to determine which option(s)will 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branding,including supporting nation brands and brands with a geographical indication(GI).Brand Dialogue Limited is a member of the Brand Finance Plc GroupResearch,Strategy&Measurement Brand&Communications StrategyCampaign PlanningMarket Research&InsightsMedia AnalysisPublic Relations&CommunicationsMedia RelationsPress Trips&EventsStrategic Partnerships&Influencer OutreachSocial Media ManagementMarketing&EventsPromotional EventsConference ManagementNative AdvertisingRetail MarketingContent CreationBespoke Publications,Blogs&NewslettersPress ReleasesMarketing Collateral DesignSocial Media ContentStrategic Communications Crisis CommunicationsBrand Positioning&ReputationGeographic BrandingCorporate Social Responsibility(CSR)Brand Finance United States 44Brand Finance Network.For further information on our services and valuation experience,please contact your local representative:Market ContactEmailAfricaJeremy Sampsonj.sampsonbrandfi Asia Pacifi cAlex Haigha.haighbrandfi AustraliaMark Crowem.crowebrandfi BrazilEduardo Chavese.chavesbrandfi CanadaAlexandre St-Amoura.amourbrandfi China Scott Chens.chenbrandfi East Africa Walter Seremw.serembrandfi FranceBertrand Chovetb.chovetbrandfi Germany/Austria/SwitzerlandUlf-Brun Drechselu.drechselbrandfi IndiaAjimon Francisa.francisbrandfi IndonesiaSutan Banuaras.banuarabrandfi IrelandDeclan Ahernd.ahernbrandfi ItalyMassimo Pizzom.pizzobrandfi MexicoLaurence Newelll.newellbrandfi Middle EastAndrew Campbella.campbellbrandfi NigeriaTunde Odumerut.odumerubrandfi PolandKonrad Jagodzinskik.jagodzinskibrandfi PortugalPilar Alonso Ulloap.alonsobrandfi RomaniaMihai Bogdanm.bogdanbrandfi South AmericaPilar Alonso Ulloap.alonsobrandfi SpainPilar Alonso Ulloap.alonsobrandfi Sri LankaAliakber Alihussaina.hussainbrandfi SwedenAnna Brolina.brolinbrandfi TurkeyMuhterem Ilgnerm.ilgunerbrandfi United KingdomAnnie Browna.brownbrandfi USALaurence Newelll.newellbrandfi VietnamAlex Haigha.haighbrandfi Contact us.The Worlds Leading Brand Valuation ConsultancyT: 1(214)803 3424E: T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.1 Host Jennifer Landis,Citi Head of Investor Relations Speakers Jane Fraser,Citi Chief Executive Officer Mark Mason,Citi Chief Financial Officer _ PRESENTATION OPERATOR:Hello,and welcome to Citis Third Quarter 2022 Earnings Call with the Chief Executive Officer,Jane Fraser;and Chief Financial Officer,Mark Mason.Todays call will be hosted by Jenn Landis,Head of Citi Investor Relations.We ask that you please hold all questions until the completion of the formal remarks,at which time you will be given instructions for the question-and-answer session.Also as a reminder,this call is being recorded today.If you have any objections,please disconnect at this time.Ms.Landis,you may begin.JENNIFER LANDIS:Thank you,operator.Good morning,and thank you all for joining us.Id like to remind you that todays presentation,which is available for download on our website,may contain forward-looking statements,which are based on managements current expectations and are subject to uncertainty and changes in circumstances.Actual results may differ materially from these statements due to a variety of factors,including those described in our SEC filings.With that,Ill turn it over to Jane.JANE FRASER:Thank you,Jenn,and thanks everyone for joining us today.Well,we are certainly still living through interesting times.And overall,I am pleased with how our bank is navigating through them.As youll hear from me shortly,we continue to focus intensely on executing our strategy and our transformation as we outlined at Investor Day,whilst supporting our clients in this complex environment.So before I get into the quarter,let me highlight some observations about what we see going on around the world,given our unique vantage point.The global macro outlook that we shared with you over the last couple of quarters has been borne out.There is accumulating evidence of slowing global growth,and we now expect to experience rolling country level recession starting this quarter.The severity and timing of these recessions depend where in the world you are.Although persistently high inflation is driving a global softening of consumer demand for goods.In the Eurozone and the U.K.,the supply shocks are most severe.Growth prospects have deteriorated sharply,and headline inflation is running at nearly 10%.All eyes are on this winters weather forecast and the energy supply.The U.S.economy,however,remains relatively resilient.So while we are seeing signs of economic slowing,consumers and corporates remain healthy as our very low net credit losses demonstrate.Supply chain constraints are easing,the labor market remains strong,so it is all a question of what it takes to truly tame persistently high core inflation.Now history would suggest that,that will be quite a lot and for some time.Therefore,we could well see a mild recession in the second half of 23.We believe the U.S.economy is well positioned to withstand it all else being equal in the geopolitical arena,that is.Finally,in Asia,we continue to be concerned with Chinas COVID lockdowns,which took a bigger bite out of economic activity than anticipated,exacerbated by a lack of intensified macro stimulus.It is geopolitical risks and rates that dominate discussions with our corporate clients worldwide.And Id say were more focused on market liquidity generally and counterparty risk than our credit risk in the near term.Nonetheless,we are planning conservatively,and we are prepared for all environments.T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.2 Against this backdrop,today,we reported net income of$3.5 billion,EPS of$1.63 and an RoTCE of 8.2%.We grew revenues by 6%,including a gain on sale of our consumer business in the Philippines.While we had excellent performance in some areas,our results could have been better in a few others.Services delivered another very strong quarter.TTS saw revenues up 40%year-over-year with growth in each business and in fees.Key drivers of our strategy such as wallet share,trade loan originations and cross-border transactions are all trending strongly in the right direction and are ahead of our plan.Securities Services was up 15%,despite assets under custody being impacted by the declines in equity markets.We have onboarded over$1 trillion in AUC and AUA since the beginning of the year and were seeing good momentum in issuer services,in particular.Markets,on the other hand,came in lower with revenues down 7%.In fixed income,we matched last years particularly good showing through our long-standing strength in FX,offsetting a weaker quarter in spread products.In equities,reduced activity in derivatives,which is a core part of our platform,led to lower revenues compared to last years exceptional performance.And we continued to optimize RWA in markets,consistent with our strategy.Banking was the business most adversely impacted by the macro environment across the industry,with geopolitics and fears of recession significantly reducing deal flows and the appetite for M&A.We continue to invest in building out our teams for long-term growth opportunities,including health care,technology and energy.And Im really pleased with the high caliber of bankers who are attracted to both our platform and our culture.The environment for wealth management continued to be less than ideal.Our revenues were down only slightly and meaningfully up outside of Asia.Our strategy to capture the synergies with our businesses,such as the wealth referral initiatives between Commercial Banking,Retail Banking and Investment Banking is progressing well.We also continue to steadily attract new clients and increase the ranks of our client advisers,as you will see in our KPIs.Nonetheless,we are slowing the pace of some of the investments in this business given the environment.U.S.Personal Banking further solidified its growth trajectory.Card sales,ANR,interest-earning balances and customer acquisition all saw good growth and we continued to increase digital uptake.Retail Services joined Branded Cards in having double-digit revenue growth this quarter.Retail Banking also grew contributing to a 10%overall revenue increase for the business.As you can see in the presentation,our cost of credit reflects the quality of our loan portfolio in both ICG and PBWM.There were effectively no credit losses in ICG,and U.S.consumer NCLs remain well below the pre-COVID levels.Consumer loan growth together with the worsening of our macroeconomic assumptions drove a modest ACL build this quarter.While our expenses are elevated as we continue to invest in our businesses,and in our transformation,we are managing them closely,and we remain on track to meet the full year guidance.As you know,the transformation is a multiyear effort,and were committed to meeting the expectations of our regulators given the paramount importance of safety and soundness.We continue to be in constructive dialogues with them and are updating our execution plans as appropriate.Stepping back,Im generally pleased with the advances were making in the key drivers of the strategy we laid out for you in March,and these are laid out on Page 3.Were seeing good momentum in realizing client synergies and in attracting talent to grow the franchise.In terms of simplification,we continue to make progress on the divestitures of our international consumer businesses and the elimination of their associated stranded costs.We closed the sale of the Philippines during the third quarter and are on track to close Bahrain,Malaysia and Thailand during the fourth quarter.We also announced the wind down of our consumer franchise in the U.K.to focus fully on the wealth franchise there.I would also note,were ahead of our plan in our Korean consumer wind down.We continue to shrink our operations in and exposure to Russia.To be clear,our intention is to wind down our presence in that country.T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.3 In August,we announced the wind down of our consumer and local commercial banking businesses.While we have been supporting our multinational clients in Russia,we are now informing them that we will be ending nearly all of the institutional banking services we offer by the end of the first quarter of next year.At that point,our only operations in Russia will be those necessary to fulfill our remaining legal and regulatory obligations.Turning to capital,we returned$1 billion to our shareholders through common dividends during the quarter,while buybacks continue to be on hold.We will keep evaluating that decision on a quarterly basis as,due to increasing regulatory requirements,we build our CET1 ratio to 13%or so by mid next year,and that includes a management buffer of 100 basis points.We ended the quarter at a CET1 ratio of 12.2%as we actively managed our RWA usage throughout our lines of business.Lastly,our tangible book value per share increased to$80.34.So,the bottom line is that while the environment is a challenging one,and we expect it will remain so,we continue to focus relentlessly on executing the strategy we presented to you at our Investor Day and on making steady progress.Now Id like to turn it over to Mark.And then wed be delighted,as always,to take your questions.MARK MASON:Thank you,Jane,and good morning,everyone.Im going to start with the firm-wide financial results,focusing on year-over-year comparisons for the third quarter,unless I indicate otherwise,and spend a little more time on expenses,credit and capital.Then I will turn to the results of each segment and end with full year 2022 guidance.On Slide 4,we show financial results for the full firm.In the third quarter,we reported net income of$3.5 billion and EPS of$1.63,with an RoTCE of 8.2%on$18.5 billion of revenues.Embedded in these results are pretax divestiture-related impacts of approximately$520 million,largely driven by a gain on the sale of the Philippines consumer business.Excluding divestiture-related impacts,EPS and RoTCE would have been$1.50 and 7.5%,respectively.In the quarter,total revenues increased 6%on a reported basis.Excluding divestiture-related impacts,revenues were down 1%,as growth in net interest income was more than offset by lower noninterest revenues.Net interest income grew 18%,driven by the impact of higher interest rates across the firm and strong loan growth in PBWM.Noninterest revenues were down 12%on a reported basis and 28%excluding divestiture-related impacts,largely reflecting declines in investment banking,markets,and investment revenues in wealth.Total expenses of$12.7 billion increased 8%and 7%,excluding divestiture-related impacts,largely driven by transformation,inflation and other risk and control initiatives.Cost of credit was$1.4 billion,driven by net credit losses of approximately$900 million and an ACL build of approximately$500 million,primarily driven by loan growth in PBWM.At the end of the quarter,we had$18.7 billion in total reserves with a reserve to funded loan ratio of approximately 2.5%.On Slide 5,we show net interest income,loans and deposits.In the third quarter,total net interest income increased by approximately$600 million on a sequential basis and approximately$1.9 billion on a year-over-year basis across the firm,driven by higher interest rates,management of deposit repricing and loan growth in PBWM.Average loans were down by approximately 2%,largely driven by the impact of foreign exchange translation and lower balances in Legacy Franchises.Excluding FX,loans were largely flat.And average deposits were down by approximately 2%,largely driven by declines in Legacy Franchises and the impact of foreign exchange translation,partially offset by the issuance of institutional CDs as we continue to diversify the funding profile of the bank.Excluding FX,deposits were up roughly 1%.And sequentially,our net interest margin increased by 7 basis points.T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.4 On Slide 6,we show an expense walk for the third quarter with the key underlying drivers.As I mentioned earlier,expenses increased by 8%,and 7%excluding the impact of divestitures.2%of the increase was driven by transformation investments with about 2/3 related to the risk,controls,data and finance programs and approximately 25%of the investments in those programs are related to technology.As of today,we have over 10,000 people dedicated to the transformation.About 1%of the expense increase was driven by business-led investments as we continue to hire commercial and investment bankers as well as client advisers in wealth,and we continue to invest in the client experience as well as front-office onboarding and platforms.1%was due to higher volume-related expenses across both PBWM and ICG,and approximately 3%was driven by other risk and control investments and inflation,partially offset by productivity savings and the impact of foreign exchange translation.Across all these buckets,we continue to invest in technology,including systems and hiring people,resulting in our technology-related spend of approximately 16%for the quarter.On Slide 7,we show key consumer and corporate credit metrics.Over the last several years,we have been disciplined with our loan growth and consistent with our risk appetite framework.This framework includes credit risk limits that consider concentrations including country,industry,credit rating and in the case of consumer,FICO scores.And importantly,these limits apply across the firm in aggregate and we continuously analyze our portfolios and concentrations under a range of stress scenarios.As a result,we feel very good about our asset quality and reserve levels.As I mentioned earlier,our reserves to funded loan ratio was approximately 2.5%.And within that,PBWM and U.S.Cards is 3.7%and 7.5%,respectively,both right around day 1 CECL levels.In PBWM,the majority of our card portfolios skew towards higher FICO customers.And while we have started to see signs of normalization in both portfolios,NCL rates continue to be less than half of pre-COVID levels.In our ICG portfolio,of our total exposure,over 80%is investment grade and nonaccrual loans remain low and are in line with pre-pandemic levels at about 40 basis points of total loans.So we are well reserved for a variety of scenarios and we continuously evaluate our scenarios to reflect the evolving macro environment.On Slide 8,we show our summary balance sheet and key capital and liquidity metrics.We maintained a very strong balance sheet.Of our$2.4 trillion of assets about 23%or$557 billion are high-quality liquid assets,or HQLA,and we maintained total liquidity resources of approximately$967 billion.The combination of earnings generation,capital from exits and RWA optimization drove our CET1 ratio up by about 25 basis points to approximately 12.2%on a standardized basis,which remains our binding constraint.And our tangible book value per share was$80.34,up 2%from a year ago.On Slide 9,we show a sequential CET1 walk to provide more detail on the drivers this quarter and our target over the next few quarters.First,we generated$3.2 billion of net income to common,which added 27 basis points.Second,we returned$1 billion in the form of common dividends,which drove a reduction of about 8 basis points.Third,the interest rate impact on AOCI through our AFS investment portfolio drove a 5 basis point reduction.Fourth,changes in the DTA drove a 3 basis point reduction.And finally,the remaining 14 basis point increase was largely driven by net RWA optimization.In light of our increasing regulatory capital requirement,we ended the quarter with a 12.2T1 ratio,25 basis points higher than last quarter.Importantly,12.2%is above our current regulatory requirement of 11.5%as of October 1 and above 12%,which will be our regulatory requirement as of January 1 of next year.As we said last quarter,we continue to gradually build to a CET1 target of approximately 13%by midyear 2023,which includes the current 4%SCB and a 100 basis point management buffer.On Slide 10,we show the results for our Institutional Clients Group.Revenues were down 5%as strong growth in services was more than offset by lower revenues across markets and banking.Expenses T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.5 increased 10%driven by transformation,business-led investments and volume-related expenses,partially offset by productivity and foreign exchange translation.Cost of credit was driven by a reserve build of$86 million.While deterioration in certain macro variables did lead to a build,it was mostly offset by the release of a COVID-19 related uncertainty reserve and a release related to direct exposures in Russia.This resulted in net income of approximately$2.2 billion,down 30%.Average loans were up 1%,driven by 9%growth in TTS loans,partially offset by the impact of foreign exchange translation.Average deposits were down 2%,also largely driven by foreign exchange translation.And ICG delivered an RoTCE of 9%.On Slide 11,we show revenue performance by business and the key drivers we laid out at Investor Day,which we will show you each quarter.In services,we continue to see a very strong new client pipeline and deepening with our existing clients and expect that momentum to continue.In Treasury and Trade Solutions,revenues were up 40%,driven by 61%growth in net interest income as well as 8%growth in NIR across all client segments.We continue to see healthy underlying drivers in TTS that indicate consistently strong client activity,with U.S.dollar clearing volumes up 2%,cross-border flows up 10%,commercial card volumes up roughly 50%and average loans up 9%.So while the rate environment drove about 40%of the growth this quarter,business actions drove the remaining 60%.This includes continuing to manage deposit repricing and deepening with existing clients and significant new client wins across all client segments.Through the first half of the year,based on the industry data that we see,we estimate that we gained over 60 basis points of share with large corporate clients.And client wins are up approximately 20ross all segments,including wins with financial institutions,which are up almost 50%.These include marquee transactions where we are serving as the clients primary operating bank.In addition,so far this year,we have onboarded approximately 5,800 suppliers,and we recently launched our innovative suite product in the in the U.S.and Asia which allows clients to connect their liquidity and funding to their operating flows 7 days a week.In Securities Services,revenues grew 15%as net interest income grew 73%,driven by higher interest rates across currencies,partly offset by a 6crease in noninterest revenue due to the impact of market valuations.We continue to be pleased with the execution in Securities Services as we onboarded approximately$1 trillion of assets under custody and administration so far this year from significant client wins,and we feel very good about the pipeline of new deals.And we estimate that we have gained about 60 basis points of share in Securities Services through the first half of this year,including in our home market.As a reminder,the services businesses are central to our strategy and are two of our higher returning businesses with strong linkages across the firm.Markets revenues were down 7%,largely driven by spread products,equities and RWA actions as we continue to focus on returns.Fixed Income Markets revenues were up 1%as strength in rates and FX was largely offset by continued headwinds in spread products.And through the first half of the year,we gained approximately 40 basis points of share.Equity markets revenues were down 25%,primarily reflecting reduced client activity in equity derivatives relative to a very strong quarter last year.The actions we took to optimize RWA in markets are in line with the strategy we discussed at Investor Day,and we are making solid progress on our revenue to RWA targets so far this year.And finally,banking revenues,excluding gains and losses on loan hedges,were down 49%,driven by investment banking,as heightened macro uncertainty and volatility continue to impact client activity.Also embedded in the results is an impact of approximately$110 million related to marks on loan commitments and losses on loan sales.So overall,while the market environment remains challenging,we feel good about the progress we are making as we continue to deepen existing client relationships as well as acquire new clients.T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.6 Now turning to Slide 12.We show the results for our Personal Banking&Wealth Management business.Revenues were up 6%as net interest income grow was partially offset by a decline in noninterest revenue,driven by lower investment fee revenue in wealth and higher partner payments in Retail Services.Expenses were up 13%,driven by transformation,other risk and control initiatives business-led investments and volume-driven expenses,partially offset by productivity savings.Cost of credit was$1.1 billion which included a reserve build primarily driven by card volume growth.NCLs were 13%higher year-over-year from near historically low levels,reflecting normalization,particularly in Retail Services.Overall,we continue to see strong credit performance across portfolios.Average loans grew 5%,driven by strong growth across Branded Cards,Retail Services and Retail Banking.Average deposits grew 1%,driven by growth across retail and wealth,partially offset by foreign exchange translation.PBWM delivered an RoTCE of 9.7%.On Slide 13,we show PBWM revenues by product as well as key business drivers and metrics.Branded Cards revenues were up 10%,driven by higher net interest income.We continue to see strong underlying drivers with new account acquisitions up 10%,card spend volumes up 14%and average loans up 12%.Retail Services revenues were up 12%,also driven by higher net interest income,partially offset by higher partner payments.So despite payment rates remaining elevated,the investments weve been making contributed to growth in interest-earning balances of 9%in Branded Cards and 7%in Retail Services,and we expect to continue to grow these balances in the fourth quarter.Retail Banking revenues were up 2%,primarily driven by interest rates and deposit growth.Wealth revenues were down 2%,as investment fee headwinds,particularly in Asia,more than offset net interest income growth.Excluding Asia,revenues were up 4%.Client advisers were up 5%,and we are seeing net new investment inflows and strong new client acquisitions across our wealth business with new clients in ultra-high net worth and Wealth at Work up 7%and 27%,respectively,for the quarter.And we are also leveraging our retail network,which has driven almost 50,000 wealth referrals so far this year.While the environment continues to remain challenging,we are seeing strong underlying business drivers as we execute against our strategy.On Slide 14,we show results for Legacy Franchises.Revenues increased 66%,primarily driven by the Philippines gain on sale in the quarter and the absence of the Australia loss on sale in the prior year period.Excluding these items,revenues were down about 12%largely due to the loss of revenues from the Australia and Philippines closing as well as the impact of the Korea wind down.Expenses increased 6%,driven by divestiture impacts in Asia and Mexico.Loans and deposits decreased as a result of the reclassification of signed exits to other assets and other liabilities,the closing of the Philippine sale and the impact of the Korea wind down.On Slide 15,we show results for Corporate/Other.Revenues increased,largely driven by higher net revenue from the investment portfolio,partially offset by the mark-to-market on certain derivative transactions and expenses were down.On Slide 16,Ill briefly touch on our full year 2022 outlook.With one quarter remaining in the year,we continue to expect full year revenues to be up in the low single-digit range,excluding divestiture-related impacts.And within that,we continue to see a shift with higher net interest income,offset by lower noninterest revenue.So for the fourth quarter,we expect net interest income,excluding markets to be up in the range of$1.5 billion to$1.8 billion year-over-year.Clearly,where we land within that range will be a function of a number of factors,including rates,loans and deposit volumes,deposit betas and currency impacts.T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.7 Regarding full year expenses,we continue to expect expenses to grow by 7%to 8%,excluding divestiture-related impacts.In terms of cost of credit,it will be a function of the evolution of the macro environment,normalization that we continue to expect in the cards businesses and loan growth.And keep in mind that loan growth tends to be higher in the fourth quarter versus the third given typical holiday spending.Before we move to Q&A,Id like to end with a few key points.We continue to execute on the strategy that we laid out at Investor Day.We are seeing solid momentum in the underlying drivers of the majority of our businesses.And as we said at Investor Day,the financial path will not be linear,but we are confident we can achieve our medium-term targets in a variety of scenarios.And with that,Jane and I would be happy to take your questions.QUESTION AND ANSWER OPERATOR:Our first question will come from Glenn Schorr with Evercore.GLENN SCHORR:So definitely a good performance out of TTS,rates helped a ton,but I see loan growth and fees,and I heard your comments about growth across all client segments.I wonder if we could pull back the onion a drop and talk about those two in separate pieces.One is 61%year-on-year NII,how do betas factor in and go forward over the next year in terms of higher rates and how that factors through?And then two,what specifically is growing within TTS across those client segments to drive that high single-digit growth?MARK MASON:Glenn,why dont I take that and kind of take it in the 2 pieces that you laid out.So as you know,Glenn,when we think about our business just in aggregate,theres obviously a split between the institutional and the consumer side.Our TTS business,which is on the Institutional side,and these corporate clients,they tend to have higher betas in general than obviously,the Retail Banking side.What weve seen is that the betas have been increasing.They are still running lower than what we had expected.But again,they have been increasing.And with continued expected rate increases,I would expect that those betas will continue to rise in the coming quarters.We have been actively managing deposit pricing and repricing with our clients on an ongoing basis.You know that this is more than just a deposit-taking business.This is a business where we are looking to manage the operating accounts of our clients and bring the breadth of what we offer in our franchise to them.And so thats the type of conversation weve been having with them,and well continue to do that with an eye towards growing the volume of deposits with both the existing as well as with new clients.And so we,again,expect to see betas rise but also expect to see continued contribution to the NII.The other aspect of your question is what else has been driving the activity.I mentioned a couple of those things.So its not just deepening with existing clients,but its also onboarding new clients.Weve seen cross-border transaction value up about 10%.The commercial card spend is up meaningfully.Trade originations are up 27%.And so a lot of active engagement with our clients.Weve been winning new mandates.Weve seen an uptick in client wins,up about 20%,and weve been gaining share across those client segments.And so hopefully,that gives you a little bit of examples of where the benefits or momentum is coming from on the NIR side.The NIR growth of 8%is driven really by the cards,the payments and receivables as well as trade.JANE FRASER:And Id just jump in and say,I think theres a bit of a miss at the moment that the global environment is detrimental to activity.We see quite the opposite.Volatility is something in which were very active in helping our multinational clients around the world manage the local footprint we have and the global network we have is a tremendous asset right now,so were seeing a lot of positive momentum,which may not always be intuitive to everyone,but I think its what makes the network,the crown jewel of Citi.T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.8 GLENN SCHORR:No doubt.I appreciate all that.A quick one on Markets.Not quite as good as peers,but that comes and goes,I know thats a function of last year was really strong.Its a function of mix in any given quarter.What I really want to focus on is your comments on RWA optimization,what specifically are you doing?I know its the banking book,but I did see you taking down your capital,call it redemption facility line.But in markets,what are you pulling back on RWA,just which pieces of that business?Id find that interesting.MARK MASON:Sure.So Glenn,youll remember at Investor Day,we talked not only about RWA optimization broadly,but specifically as it relates to Markets.And we talked about the idea of increasing our revenue to RWA ratio for markets to about 5.5%over the course of that Investor Day period.So weve been actively working across the Markets business in equities,in fixed income and spread products and looking for opportunities where there are low returning uses of RWA to either increase the returns on that or to actually kind of exit it.And that includes a host of different structures.It includes working with clients to post additional collateral in some instances and other types of structures like that,that improved the RWA,including hedging and like I said,posting collateral and taking a look at margin that we have and ensuring that we are,in fact,getting the most for that use of RWA.OPERATOR:Our next question will come from John McDonald with Autonomous Research.JOHN McDONALD:Mark,I wanted to just clarify what I think the expense guide is for fourth quarter.It seems like the guidance for the full year implies a fourth quarter step-up to maybe$12.8B and change from$12.75B this quarter.Is that the right read,a little bit of a step-up in the fourth quarter?And is that just a pull-through of investments?And what would be driving that?MARK MASON:So again,the guidance on full year expenses hasnt changed.Its the 7%to 8%ex the impact of divestitures that would imply a bit of an uptick there.It is on the heels of the continued investments that were making and thats flowing through as well as how revenues kind of play out and the associated compensation activity that goes along with that.So nothing extraordinary and consistent with the guidance given.JOHN McDONALD:Okay.And I know its too early to give formal guidance for next year.But if we look at the Investor Day slides,it seems to imply that expenses go up for a few years until you get to the medium term.Is that the right read?And when I annualize where youll be exiting the fourth quarter here,implies that at$51 billion or so next year as a starting point.I mean is it fair when I read the Investor Day slides and think about your investments that directionally expenses probably do go up next year?MARK MASON:John,Id say,as you know,right,well give guidance for 2023 next quarter.But I think if you think back to the Investor Day and you think about some of the things that,that we just commented on with regard to our services business,wed expect to see continued tailwinds as it relates to net interest income.We would expect to get to the heart of your question that we will continue to invest in the franchise in the transformation,that would obviously peak and then we would start to see the benefits start to play out from that in that medium-term period.And so yes,you can probably expect some type of a tick up,but Ill give you more details on that when we talk about the 23 outlook in the next quarter.OPERATOR:Our next question will come from Erika Najarian with UBS.ERIKA NAJARIAN:I just wanted to take a step back.Your 11%to 12%medium-term RoTCE target had contemplated an 11.5%to 12T1 versus the 13%that youre targeting to by midyear next year,also that you laid out on that same slide that youre targeting 2d funds over the medium term,which seems kind of cute right now.T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.9 So I guess Im wondering,your confidence and you said youre confident you could hit medium-term targets even with this creep in capital.Is it really that shift in the rate environment thats helping you get there despite the higher denominator?MARK MASON:So thank you for the question.Look,I think there are a couple of things to kind of think back on that still hold true,which is the strategy that weve built,I think,is a resilient strategy and it really spoke to top line momentum that we expected not just through rate increases,but also through share gains and also through the business-led investments that were making and better leveraging the synergies and linkages across the franchise.All of those things still hold true to the top line.Youre right,the Fed funds assumption has changed.Back in March,I think we all were looking at a Fed funds rate at the end of the year that was closer to 1.5%or so.And so now here we are with the hikes that weve seen and looking at something certainly north of 4%or 4.5%.And so thats changed meaningfully.But there are a number of other drivers that contribute to achieving that return.Its the medium term,so call it 3 to 5 years,I think,is how we characterized it and starting to see some of the benefits from the transformation investments that were making.To your point on capital,we are building to the 13%.Remember,that is a by-product of a 4%SCB for this particular CCAR cycle and the strategy that we described includes a mix in our shift of revenues and earnings over time,a mix towards more stable PPNR and more fee revenues that will contribute to,I think,a balance sheet and a mix that generates fewer losses,stress losses,than our balance sheet might today.So the contribution of those things,we think,will drive that return target that weve set,and we still remain confident about that.Now with that said,there are unknowns that are out there.I just spoke to many of the knowns.And so what happens with further capital requirements and the current regulatory regime and what have you,its hard to predict.But well manage to that as we learn and know more about it.ERIKA NAJARIAN:Got it.And my follow-up question is given Citis valuation on book,I think your current and prospective shareholders are waiting for buybacks to potentially return.I guess a two-part question here.Number one,especially if you think you think you could stabilize your PPNR in the stress test,why 100 basis point management buffer versus one of your peers at 50 that reported today?And secondarily,as we think about the return of buybacks,I imagine that once you hit that 13%,the buybacks could return.But how does the Banamex sale potentially impact the timing,as I recall,theres a currency translation adjustment that could be negative upfront at announcement to CET1,but you get that all back during close.So I guess the real big question here is how should we think about,what are the mile markers for the return of buyback activity at Citi?MARK MASON:Thank you,Erika.Theres a lot there to unpack,so if I forget anything,just please remind me.But Ill start at the beginning,which is I know where we trade in terms of book value.And Id love to be in a position where we were buying back given that valuation.With that said,were going to take it quarter by quarter,as I think youve heard us say and evaluate what buyback decisions and capital actions make the most sense in light of the environment that were managing through,were clearly managing through an uncertain environment.As I just said and as you kind of mentioned as well,we do see our business mix shifting over time on the heels of our strategy.I do think that over time,that will contribute,as I said,to the capital requirements that we have,but thats over the medium term.And we do still see a fair amount of volatility in the stress capital buffer.And part of the reason that we have the management buffer is to deal not only with that uncertainty in the SCB,but also in interest rates.And were seeing volatility in both,frankly.And so well continue to evaluate the management buffer as well to see what makes sense as we move towards that medium term.In terms of the Mexico transaction,youre T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.10 right in terms of we have mentioned before,the CTA component to that.That is a timing difference.We have factored that in to the path to our 13%by middle of next year and factor that into achieving the longer-term targets that we set for ourselves.OPERATOR:Our next question will come from Mike Mayo with Wells Fargo Securities.MIKE MAYO:Look,I look at the global network as a curse and a blessing.I guess the curse part is simply the complexity and the expenses.And Mark,you said expenses should go up higher next year.Youre not going to tell us for a few more months,but Im just wondering when you think you can grow revenues faster than expenses.Again its not new news,the revenues and expenses.You guided it and youre within that range.Its just do we have to wait a year or 3 years or how long for that complexity to get more simplified so revenues can catch up to that expense growth?And then on the blessing side,Mark,you mentioned,you said gain share in those clients segments,I thought that was little vague.I mean you talked about trade,you talked about other activities connecting multinational corporations in the spirit of volatility,so if you could a little more meat on the bone as far when you talk about market share and those tailwinds on the revenues while you have the headwinds on the expenses from the global network.JANE FRASER:Hey,Mike,its Jane,jumping in because I do want to talk a bit about your point on the global network here.I have to tell you,Im hard pressed to find a negative to the global network.We start off with the vision for the bank that we laid out in March.It is to be the preeminent banking partner for clients with cross-border needs.Who are those clients?It is 5,000 multinationals and their subsidiaries,its institutional investors and the ultra-high net worth clients with a heavy tilt to family offices.And we serve them on FX,on liquidity management,on their payroll,on their supply chain as well as strategic advice,financing,et cetera.Thats$4 trillion in daily volume,80%of that credit portfolio is investment grade.So when were looking at it,its the multinationals.To take a higher risk country,the client base were serving there are the global multinationals much more than the local players.And so this is a relatively simple,high returning,very well growing as were seeing at the moment,capability that is exceedingly hard to replicate.So let me pass over to Mark in terms of what are some of the examples of different areas of the drivers of growth?This is,as I said at the beginning,this is a crown jewel.Its not a source of complexity for the bank.MARK MASON:So Mike,Id say a couple of things.One,what I said was that we continue to gain share,and I referenced specifically about 60 basis points of share with large corporate clients.And were also winning mandates and gaining share with other client segments as well.You know that the Commercial Banking client segment is one that we are focused on,given the strength of our platform and its applicability to those sized clients as well.I mentioned that our wins are up and specifically,theyre up 20%,the mandates that were winning across all client segments.And that specifically with FIs,theyre up almost 50%.So hopefully,that gives you some sense of where the revenue growth is coming from.The takeaway there is its both existing as well as new clients as we kind of continue to build out the platform and build out our capabilities to reach them.So the second part of your question was around expenses and expenses growing and when will we have top line growth that exceeds the expense growth.And Id remind you that the work were doing on the transformation as well as the business-led investments are multiyear almost by definition and important in order to derive savings in our structural cost base over time.And at Investor Day,I think I pointed to by the time we got to that medium-term period,we would see our operating efficiency go down to less than 60%.I think weve been very deliberate about trying to give you guidance and update you on guidance for the full year and along the way and well be consistent in that discipline.And I can certainly give you more color on 23,as I mentioned earlier to John,in the next quarter.T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.11 MIKE MAYO:I guess one clarification.When you say youve gained 60 basis points of share with large corporate clients,what do you mean by share,share of what?MARK MASON:Yes,of wallet,60 basis points,not 50,60.So market share with them.OPERATOR:Our next question will come from Ebrahim Poonawala with Bank of America.EBRAHIM POONAWALA:I guess one,just,Mark,I wanted to clarify your NII guide for$1.5B to$1.8B,is just total NII,right?Its not ex Markets or anything?MARK MASON:It is ex Markets.EBRAHIM POONAWALA:It is ex Markets.Any perspective or view on where you see Markets heading in fourth quarter,just given whats happened with the rate backdrop?MARK MASON:I very intentionally dont forecast Markets NII in a rising rate environment,you would normally see the markets NII come down.It tends to be liability sensitive.But we tend to focus on,as you probably heard me say a number of times,total revenues for this business.And I guess what Id highlight is that in periods of uncertainty and lots of market volatility,our businesses tend to perform well.And so well see how the fourth quarter plays out.Theres obviously some seasonality to it that has taken place historically.And so we have to kind of factor all those things in,but well have to see how it further evolves.OPERATOR:Our next question will come from Betsy Graseck with Morgan Stanley.BETSY GRASECK:Just two things.One,just another question on the expense side.I just wanted to follow up with regard to,Mark,the stranded costs that you had talked about at the Barclays conference.And Im wondering if I got the message right there,which is when you exit the consumer businesses,theres 25%that is generally managed through a TSA,so its a service agreement and that expense will come off over time.And then theres another 25%,which is likely not to come off.Is that fair?Or is there a different message that Im missing on that?MARK MASON:Yeah,thats not fair.But I appreciate the add more clarity.So I bucket into 3 buckets.So one is when we do these transactions,both Jane and I have deep experience in this.We tend to see about half of the costs go away to the buyer,so when we do the transaction,when we do the sale.As you pointed out,about 25%is often in place as part of a transition service agreement.And so theres revenues that we get paid to offset that expense until things have totally transitioned and then that goes away.And then the third bucket is what I call potentially stranded cost and what Jane calls not stranded cost,right?And I say potentially because they are regional expenses that get allocated to countries,for example,theyre global expenses that get allocated to the region and to the countries,for example,and what we have to do and what were doing is were attacking what would otherwise be stranded cost.And were attacking that by telling each of the functions in the business,and heres your portion of that 25%and come back and tell me how youre going to rethink your org structure,simplify your processes in order to drive that cost out of the company,right?And so thats what weve been doing.Remember,the expense base here is probably$7 billion.So you can break down kind of the population that were talking about.Weve already stood up a team to work with each of the businesses and each of the functions around getting in front of that cost,so that we can drive that down over the near-term period of time.JANE FRASER:And as a Scotswoman,I just cant help myself but jump in here.I think as Mark and I are T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.12 both pretty maniacally focused around this.But Id say at the moment,weve had a couple of the divestitures close.We have another 3 next quarter,and this continues on.We already started on Australia and the Philippines and getting those expenses down,as Mark said.There is going to be,and we will not be shy in capturing as an opportunity to simplify our organization further next year when we have more of the divestitures close and streamlining more of our regional management structures,more of the expenses at the global level.So there is more to come on that,and well be looking to do that as I indicated at Investor Day that will be an important part once more of the divestitures are closed,starting in 23,going into 24.BETSY GRASECK:Right.So you were,Marks potentially stranded costs,and Jane,you are no stranded cost.The no stranded cost is in the guide medium term?MARK MASON:In terms of the time to get it out yes.JANE FRASER:Yes.And I think as Mark talks about expenses,youve got to look at the various different dynamics that are going on.So yes,weve got investments into the transformation at the moment.Many of those translate into better efficiency as well as a safer,stronger firm the divestitures translate into lower cost,but also we eliminate the stranded costs,and we simplify the organization.Youve got a number of different factors that we will make completely transparent to you at play in our expense base from a more structural dimension in the quarters ahead.OPERATOR:Our next question will come from Matt OConnor with Deutsche Bank.MATT OCONNOR:Can you guys talk about the pace of addressing some of the regulatory issues out there?On the one hand,you got out of the AML consent order earlier this year,which I think was a very big positive.But on the other hand,there was an article last month,suggesting regulators want you to go faster.And I think we all know regulators always want things to go faster on these issues,but I did want to ask the question.JANE FRASER:Yes.We all want things to go faster,both our clients,our shareholders,the management team,regulators,the Board,all.So I think were fully aligned there.Maybe if I take a step back on this one.Transformation is our#1 priority.It will be a multiyear journey and prioritizing safety and soundness is a very important global bank is a nonnegotiable for all of us.Where are we?I think we were delighted to see the AML consent order get closed with the OCC.We continue to work on the regulatory orders we have.I have to say we have constant and constructive engagement with our regulators that personally,I find them to be very helpful and essential to our success.We have got a lot to get done.As you can see from the hiring numbers,weve been investing heavily in the talent and the resources that we need.As weve also said,this is not only going to benefit our safety and soundness,but also in terms of our client,excellence in delivery and ultimately,for our shareholders as well.I think the foundation that we need for this is largely in place.And so Mark and I and frankly,the whole management team,were very focused on continuing to execute on the various plans we submitted and the overall transformation of Citi from a strategic and another dimension.We obviously cant give more details than that because this is confidential supervisory information,but I hope that gives you a good feel.MATT OCONNOR:And I guess when you say the foundation is largely in place,like what are some of the things that are missing?Or is it just a matter of,say,executing on the divestitures?JANE FRASER:Its timing.So some of the areas,for example,where were making technology investments,those ones where weve had fragmented technology platforms,were migrating them into a T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.13 single platform or into an industry standard where weve not been on one that we want for the future.Those things take some time to put in place.But you can see from the investments weve made,both headcount and the shift from consulting to much more of our own people.Youll see the technology increase in that shift as well.So some of that is just a natural progression youd expect over time.OPERATOR:Our next question will come from Jim Mitchell with Seaport Global.JIM MITCHELL:Maybe just on deposits and behavior.You guys clearly have a different mix by geography and by business.Deposits ex currency were up 1%.Your peers were down close to 3%.So how do we think about deposit behavior going forward given your mix of geography and business?Is it just the overseas rate hikes have been behind the curve versus the U.S.,but well start to see more deposit outflows over there?Or do you think your deposits can hold up a little better.MARK MASON:Yes,its a great question,and so why dont I take that,so a couple of things,and you started to allude to it.The first is that when you think about our business,youve got about between ICG and our PBWM business of 65%,35%split in terms of the deposits.You also have a U.S.dollar-denominated versus non-U.S.dollar-denominated split that is pretty meaningful as well.And then to your point,weve got different currencies and different rate hikes by different central banks around the world.And that then is juxtaposed against different beta behavior from customers.And so on the ICG side,we tend to see higher betas.And obviously,with rates increasing at a more rapid pace,we expect those to get closer to our expectations in the near term.Were starting to see many more hikes around the globe or outside of the U.S.And so again,we expect to see betas which operate at a much lower pace level outside of the U.S.but start to tick up.And so over time,I think we will see continued tailwinds from an NII as the differences between U.S.and non U.S.activity play out.And so that has played to our benefit,I think,and should continue to play to our benefit.If you think about what Ive talked about before in terms of our IRE,our interest rate exposure,and the cash flow approach that we are moving towards taking,in some ways it captures exactly that point.And so if you see a 100 basis point move in the curve cross currencies,were looking at as much as a$2.2 billion increase.And when you look at that increase,it skews more heavily towards the non-U.S.dollar than the U.S.dollar.And that is in part because of the different moves in rate curves by currency as well as the different betas by client type in U.S.versus non-U.S.JIM MITCHELL:Okay.Thats really helpful.And then maybe just a second question just on the impact in the fourth quarter.Youre closing on 3 divestitures,how do we think about the P&L and capital impact of that in the fourth quarter?MARK MASON:I think I talked about the idea of the divestitures contributing close to$3 billion for the full year,$3.1 or so billion in terms of the capital impact for the full year 2022.The combination of Australia and the Philippines gets us to about$2.1 billion or so.And so the balance of the divestitures that weve scoped out for the fourth quarter should close that gap,Thailand,Malaysia,Bahrain,the signing of China,et cetera,should close that gap to getting us to that$3.1 billion.With most of that is skewing towards the first 3,Thailand,Malaysia,Bahrain.OPERATOR:Our next question will come from Gerard Cassidy with RBC.GERARD CASSIDY:Jane,you talked about your global footprint and the strength that gives you as an organization.And so maybe this question is very appropriate for Citigroup,which is the following.You guys have a real good window into the global financial markets.And theres been some disruption out there,we all know about whats going on in the U.K.pension funds.You had the Swiss National Bank come into the New York Fed this week for$6.3 billion of currency swaps.We know theres a large broker having T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.14 challenges over there.So can you guys give us a flavor,what are you seeing from a stress standpoint.What are the liquidity metrics that youre watching to see if some other stresses pop up how the global financial markets will handle that?JANE FRASER:Yes.Its a very good question.Its one we spend a lot of time on.And I think as Mark alluded,were constantly doing different stress tests on the market,on clients on different areas.And as I said in the opening remarks,were more focused on the liquidity in the market at the moment and the impact on some counterparties much more than we are on our credit risk,that could change over time,depending particularly what happens from a tail risk on the geopolitics here.What are we seeing going on?I think a lot of the focus is in Europe.Right now,which is sort of at the center of the storm.Were seeing some areas where there could be energy supply constraints impacting some clients.So were watching industrial production moved to the U.S.,for example,which are the places where the cost of production is lower,a potential buffer for some of the slowdown in U.S.manufacturing and the like because the demand for goods softened,for example.Were seeing areas where clients on the collateral front,where theres a situation of intense volatility that hits or a surprise drop as we saw in gilts is having an impact on liquidity and therefore,margining,which is what happens and has been happening with the U.K.pension funds with the derivatives.So a lot of the areas we look at is whats the collateral behind different institutions as we have done with the commodity players earlier on in the year,weve been looking at some of the LDIs at the moment.And as we see different stresses,were jumping on it.I think the central banks are also ready to jump in as needed and certainly attuned to the importance of agility in these situations as well.As our large global institutions like ourselves as to how do we help support the market,the benefit for our bank is because were in a strong position on all of our capital,on liquidity,on balance sheet and the credit portfolio,as you can see,is extraordinary at the moment,zero losses in ICG this quarter.Again,were in a position to be able to jump in and play an important role.But its a bit of whack-a-mole,I would say.GERARD CASSIDY:Very good.And then,Mark,just as a follow-up.You touched on your investment banking numbers and your markets numbers.And yes,investment banking for everybody has been a struggle,obviously,this year.Your advisory numbers actually were better than your peers on a year-over-year basis in terms of growth,but DCM was quite a bit weaker.Can you kind of give us a little more color there?And also,how do the pipelines look going into the fourth quarter?MARK MASON:Yes,sure.So look,as weve all seen,the wallets have been under meaningful pressure year-over-year down more than 50%.We did show some strong performance in parts of the business.Weve been hiring,frankly,as Jane has mentioned before and filling in gaps that we have across the portfolio in health care,tech,energy,et cetera,and feel good about that and are seeing benefits from having made those hires.DCM is really more of a function of low deal volume pretty much across the board.And there really isnt a whole lot more to it than that.But as you know,investment banking is part of the strategy that we discussed at Investor Day and a key part at that and well continue to invest in it and ensure were getting the productivity out of it that the investment warrants,but really not a whole lot more in DCM beyond the low deal volume across the board.OPERATOR:Our next question will come from Vivek Juneja with JPMorgan.VIVEK JUNEJA:Couple of questions for you.Firstly,Mark,I just want to clarify,you said NII ex Markets to be up$1.5 to$1.8 billion year-on-year in the fourth quarter.You were up$1.9 billion year-on-year in the third quarter.Given that there have been more rate hikes during the quarter and even later in the quarter,any color on whats driving that slightly lower NII accretion rather than actually being up at a faster pace?T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.15 MARK MASON:Yes.Again,the important factors here include volume,what we see in both the loan volume,the deposit volume and obviously,betas and how betas play out,and we talked about the idea that with the higher frequency and level of rate increases,thats going to put pressure on the beta in terms of seeing it increase across the board.And then the third factor is rates and what happens with the rates and the timing for which that happens,right?When that happens,matters in the quarter in terms of whether you see that benefit in it or in subsequent quarters.And so those are the factors that drive that range that Ive given you.And its across both the PBWM portfolio as well as how it plays out in TTS.And given the world were managing through,quantitative tightening and the like,and I think the other factor is obviously FX and how that plays out.So those are the main drivers,Vivek,and the range reflects any variety of ways that they could play out in the quarter.VIVEK JUNEJA:Okay.Completely different question for both of you.Securities Services,you talked about$1 trillion in new business wins seems to be doing really well.Any color,if you can remind us on which client segments youre seeing this in?And I remember youre saying on the call that its domestic also,but any more color into where youre growing and where youre seeing all this?JANE FRASER:Were seeing this in a number of different areas,the one that is most material was the win we had with BlackRock in a particularly sizable percentage of business there here in the States and in a particularly important and attractive part of the Securities Services business as well.But we have been winning some sizable business across the board.And a part of this,I think,comes from the fact that were able to link the pre and post trade together to drive a lot of efficiencies for our clients and bring some insights that some of the other players are not able to do in helping them manage and get competitive advantage in their businesses.So were an attractive one from that.Mark,anything else to add?MARK MASON:I mean were very pleased with the growth here and the win mandates that weve been seeing across the board,but particularly in the U.S.,as Jane highlights.And some of it is a rate benefit,but a good portion of it is again,those new mandates,those new additional assets that were bringing in.The final point that Id make on it is that,and Id reiterate it,I guess,is that this is not only one of our businesses thats growing quite rapidly,but its also a high returning business for us as well.And so consistent with the strategy that we talked about at Investor Day and one that reflects linkages across the franchise,and so we feel very good about that.OPERATOR:Our next question will come from Ken Usdin with Jefferies.KEN USDIN:Just two quick ones.Mark,you talked about the capital impact of the legacy exits.Is there a way you can dimension how much in the fourth quarter from revenues and NII perspective comes out from the legacy?MARK MASON:I do not have that in front of me,Ken.Ive got a page in here,page 22 reflects some of the size of the exit markets,but I do not have that in front of me.Id have to circle back with you,Ken.KEN USDIN:Okay.I would assume thats been a part of the prior question about NII trajectory,right?Theres a negative impact embedded in that in the fourth quarter as well,right?Thats just part of the movement forward.MARK MASON:Yes,that is reflected in the NII guidance,but the major drivers are largely what I referenced.But yes,it would be reflected in it.T R A N S C R I P T Citi Third Quarter 2022 Earnings Review October 14,2022 Copyright 2022 Citigroup Inc.16 OPERATOR:Our next question will come from Mike Mayo with Wells Fargo Securities.MIKE MAYO:As a follow-up,why is Citi still banking in Russia when seemingly every other major American company or most of them are out of Russia?JANE FRASER:Mike,as I mentioned in my earlier remarks,we are now informing our multinational clients who are operating in Russia,so these are the U.S.,European and Asian core multinationals or the franchise that we are ending nearly all of the institutional banking services.We offer them by the end of the first quarter of 2023,the cost of which I would add is not material.And so at that point,our only operations in Russia will be those necessary to fulfill our remaining legal and regulatory operations there.Its been very important for those multinationals that weve helped support them as they look at exiting the country and their payroll and other elements as they do so,so theyve been able to wind down or exit and a few of those who have remained.But we will be,as I said at the very beginning,our intention here is to wind down our operation in the country.MIKE MAYO:And then just if you could remind us,you mentioned more dispositions in the fourth quarter.So after 2022,whats left as far as the dispositions that you had mentioned?And how are you tracking with your plan?MARK MASON:We feel very good about how we track with the plan.Obviously,Mexico is left.Weve got Vietnam,India,Taiwan.And theres one I missed,Indonesia,I think,is what Im missing.So those are the ones that are left and then China,so those are the ones that are left in the balance beyond 2022.JANE FRASER:And I think those ones again,a couple of them have been rather than ones that you have a legal day 1,legal day 2 on.Its all close in one go on both,which is why a couple of them are later than we had originally thought.But theyre going well.And the work around them and around the stranded costs that relate to them,as we talked earlier,is also going nicely.So were pleased with the pace,and we are acting on these with urgency,Mike,as you would expect.OPERATOR:Thank you.There are no further questions at this time.I will now turn the call back over to Jenn Landis for closing remarks.JENNIFER LANDIS:Thank you,everyone,for joining us today.If you have any follow-up questions,please reach out to the IR team.Thank you.OPERATOR:Thank you.This concludes Citis Third Quarter 2022 Earnings Call.You may now disconnect.Certain statements in this document areforward-looking statementswithin the meaning of the rules and regulations of the U.S.Securities and Exchange Commission.These statements are based on managements 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 Citigroups filings with the U.S.Securities and Exchange Commission,including without limitation theRisk Factorssection of Citigroups 2021 Annual Report on Form 10-K. T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.1 Host Jennifer Landis,Citi Head of Investor Relations Speakers Jane Fraser,Citi Chief Executive Officer Mark Mason,Citi Chief Financial Officer PRESENTATION OPERATOR:Hello,and welcome to Citis Fourth Quarter 2022 Earnings Review with the Chief Executive Officer,Jane Fraser,and Chief Financial Officer,Mark Mason.Todays call will be hosted by Jenn Landis,Head of Citi Investor Relations.We ask that you please hold all questions until the completion of the formal remarks,at which time you will be given instructions for the question-and-answer session.Also,as a reminder,this conference is being recorded today.If you have any objections,please disconnect at this time.Ms.Landis,you may begin.JENNIFER LANDIS:Thank you,operator.Good morning and thank you all for joining us.Id like to remind you that todays presentation,which is available for download on our website,may contain forward-looking statements,which are based on managements current expectations and are subject to uncertainty and changes in circumstances.Actual results may differ materially from these statements due to a variety of factors,including those described in our SEC filings.With that,Ill turn it over to Jane.JANE FRASER:Thank you,Jenn,and happy new year to everyone joining us today.We are very much off and running as we start 2023.Today,Ill share our perspective on the macro environment before recapping our performance in the fourth quarter.And then I will take a few minutes to reflect on our progress in 2022 and our strategic priorities for the coming year.The global macro environment played out largely as we anticipated during the second half of last year.As we enter 2023,the environment is a tad better than we all expected,for the time being at least,despite the aggressive tightening by central banks.In Europe,a warmer December reduced the stress on energy supplies and inflation is beginning to ease off its peak.That said,we still expect softening of economic conditions across the Eurozone this year given some of the structural challenges it is grappling with.In Asia,while the public health impacts in China are unfortunately likely to be severe,the abrupt end of COVID zero should begin to drive growth and improve sentiment generally.And here at home,the labor market remains strong and holiday spending was better than expected,in part because consumers have been dipping into their savings.The Fed remains resolute in tackling core inflation;however,and therefore we continue to see the U.S.entering into a mild recession in the second half of the year.Now turning to how we performed.For the fourth quarter,we reported net income of$2.5 billion and EPS of$1.16.Our full-year revenue growth of 3%ex-divestitures was in line with the guidance we gave you at Investor Day,as was the case with our expenses.We delivered an RoTCE of nearly 9%and a CET1 ratio of 13%.This quarter,our businesses performed similarly to how they did throughout the year.We are quite pleased with some,and less happy with the performance of others.T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.2 Services continues to deliver cracking revenue growth;our Markets businesses are navigating the environment very well,and we are seeing good momentum in U.S.Personal Banking.On the flip side,Investment Banking is feeling the pain of a drastically smaller wallet in 22 and the environment for Wealth remains a challenging one.Unpacking that a bit,Services delivered another excellent quarter and we have gained significant share in both Treasury and Trade Solutions,and Securities Services.TTS,the business most emblematic of the power of our global network,had revenues up 36%year over year,as we execute on the strategy we laid out at Investor Day.Thanks to strong business drivers,coupled with higher rates,TTS is performing ahead of our expectations.Likewise,Securities Services was up a strong 22%.We ended the year having onboarded$1.2 trillion of new assets under administration and custody.Markets had the best fourth quarter in recent memory,with revenues up 18%from 2021.We had the#1 FICC franchise(1)on the street during the first three quarters of the year and Fixed Income was up 31%in the final quarter.Equities was down,as the mix of client activity again did not play to our strength in derivatives.With the wallet down significantly,our Investment Banking revenues were off by about 60%this quarter.While the pipeline looks more promising and client sentiment is improving,it would be hard to predict precisely when the tide will turn in 23.Wealth Managements performance was disappointing.Revenues were down 6%in the quarter with the macro environment creating headwinds in investment fees and AUM globally,but most acutely in Asia.However,we have been steadily improving the business,as demonstrated by continued momentum in client acquisitions across the spectrum,and net new investment flows.Similarly,we continue to build our client advisor base,albeit at a slower pace given this environment.We would expect to see these investments pay off as the markets recover.In U.S.Personal Banking,both Cards businesses had double-digit revenue growth for the second straight quarter as purchase sales and revolving balances continued to grow strongly.Whilst in Retail Banking,we clearly have some more work to do.As you know,we have been actively managing our balance sheet and risk.Our cost of credit increased in line with our guidance.We built reserves in Personal Banking this quarter on the back of volume growth,as well as,in anticipation of a mild recession.And in the U.S.,net credit losses in Cards continue to normalize as we had expected,still well below pre-COVID levels.Corporate credit remains healthy,and our low overall cost of credit was similar to last quarter,reflecting the quality of our corporate loan portfolio.In terms of capital,we increased the CET1 ratio by about 70 basis points to 13%during the fourth quarter.Finally,our tangible book value per share increased to$81.65 and we returned$1 billion to our shareholders through our common dividend.Now let me step back and discuss what we accomplished in 2022.One of our major goals last year was to put in place a strategic plan designed to create long-term value for our shareholders,and to get that plan swiftly off the ground,I am pleased with the significant progress we have already made.We simplified the bank,closing the sales of our consumer businesses in five markets,including three in the fourth quarter,and we have made rapid progress winding down our consumer business in Korea,as well as our franchise in Russia.We continued to invest in our transformation to address our consent orders and to modernize our bank.We are streamlining our processes and making them more automated whilst improving the quality and accessibility of our data;this will make us a better bank.1 Source:Coalition Greenwich Competitor Analytics for the peer group.Based on preliminary data year to date through 3Q22.The number 1 rank is based on Citis internal taxonomy and internal revenues for Fixed Income,excluding non-addressable products and including products which may not be considered within Fixed Income for other Financial Institutions.Other companies may calculate rankings in a different manner.Peer Group includes BAC,BARC,BNPP,CS,DB,GS,HSBC,JPM,MS,SG,UBS.T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.3 We brought in very strong external talent,met our representation goals,and strengthened our culture by increasing accountability and shareholder alignment.To that end,I am pleased we delivered against our financial guidance for the year.We also released our first plan to reach net zero emissions by 2050,expanded our impact investing,and announced the findings from an external law firm which reviewed our racial equity efforts in the U.S.Finally,I am very proud of how our people handled the macro and geopolitical shocks which defined 2022 and supported our clients and our communities with excellence and compassion throughout.Before I hand over to Mark,lets turn to the next few years,and in particular the path to achieving our medium-term return targets that we laid out on page 5.At Investor Day,we talked about the path coming in three phases with Phase 1 characterized by both disciplined execution and investment.2023 is a continuation of Phase 1,laying the foundation for driving long-term shareholder value.We are focused on changing our business mix to drive revenues and returns,with the expectation that our businesses will close out 23 competitively stronger.Services enters 23 with strategic momentum and a pipeline of major new innovations and market leading product capabilities.Markets should continue to benefit from our active corporate client base,with the franchise further advancing on the back of investments and the business focus on capital productivity.Banking and Wealth are well positioned for when the cycle turns,thanks to the investments we have made in top talent and technology,as well as synergies realized across the franchise.As you saw,we felt this was the right time to make a change in Wealth and we have started a search to identify the next leader of this business.I asked Jim ODonnell to take on a new role focused on senior clients across the firm.This will leverage his deep expertise and relationships,and when combined with Sunil Gargs additional role as North American head,is designed to help us capture more of what is a significant business opportunity in our home market.U.S.Personal Banking will continue to benefit from the recovery in borrowing,taking full advantage of our market-leading digital platforms and new products,particularly in the Cards space.We will make further progress on our International Consumer exits,enabling us to simplify the firm and reduce our cost base.And we will of course focus on our clients deepening relationships and bringing on new clients in line with our strategy.We will continue making disciplined investments in our franchise including the investments in our Transformation and controls,however,we will pace some of our business investments to reflect the operating environment.Looking further out,we will begin to bend the curve of our expenses to deliver against our medium-term targets through a combination of our divestitures,realizing the financial benefits of our Transformation,and further simplification.And Mark will cover this in more detail shortly.We fully recognize this depresses our returns in the near-term,but we are deliberately taking the tough strategic actions and investments necessary to reach our medium-term return target and to create long-term shareholder value.We are carrying not just our momentum,but our determination into 2023.Despite the macro headwinds,we are very much on track to reach the medium-term return targets we shared with you on Investor Day.We intentionally designed a strategy that can deliver for our shareholders in different environments.We are running the bank differently,with a relentless focus on execution,and will continue to transparently share our proof points with you along the way.T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.4 With that,I would like to turn it over to Mark and then we would be delighted,as always,to take your questions.MARK MASON:Thank you,Jane,and good morning,everyone.We have a lot to cover on todays call I am going to start with the fourth quarter and full-year financial results,focusing on year-over-year comparisons,unless I indicate otherwise.Ill also discuss our progress against our medium-term KPI targets and end with our guidance for 2023.On slide 6,we show financial results for the full firm.In the fourth quarter,we reported net income of approximately$2.5 billion and an EPS of$1.16 and an RoTCE of 5.8%on$18 billion of revenues.Embedded in these results are pre-tax divestiture-related impacts of approximately$192 million,largely driven by gains on divestitures.Excluding these items,EPS was$1.10 with an RoTCE of approximately 5.5%.In the quarter,total revenues increased by 6%or 5%,excluding divestiture-related impacts,as strength across Services,Markets and U.S.Personal Banking was partially offset by declines in Investment Banking,Wealth,and the revenue reduction from the closed exits.Our results include expenses of$13 billion,a decrease of 4%versus the prior year.Excluding divesture-related costs from both the fourth quarter of this year and last year,expenses increased by 5%,largely driven by investments in our transformation,business-led investments,and higher volume-related expenses,partially offset by productivity savings and the expense reduction from the exits.Cost of credit was approximately$1.8 billion,primarily driven by the continued normalization in Card net credit losses,particularly in Retail Services,and an ACL build of$645 million,largely related to growth in Cards and some deterioration in macroeconomic assumptions.And on a full-year basis,we delivered$14.8 billion of net income and an RoTCE of 8.9%.Now turning to the full-year revenue walk on slide 7.In 2022,we reported revenue of approximately$75 billion,up 3%,excluding the impact of divestitures,in line with our guidance of low-single-digit growth.Treasury and Trade Solutions revenues were up 32%,driven by continued benefits from Rates,as well as business actions,such as managing deposit repricing,deepening with existing clients and winning new clients across all segments.Client wins have accelerated due to the investments we have been making in market-leading product capabilities.These products include the first 24/7 USD clearing capability in the industry,the 7-day cash sweep product that we launched earlier this year,and Instant Payments which is live in 33 markets,reaching over 60 countries.So,while the rate environment drove about half of the growth this year,business actions and investments drove the remaining half.In Securities Services,revenues grew 15%as net interest income grew 59%,driven by higher interest rates across currencies,partially offset by a 1crease in non-interest revenue due to the impact of market valuations.For the full year,we onboarded approximately$1.2 trillion dollars of assets under custody and administration from significant client wins and we continue to feel very good about the pipeline of new deals.In Markets,we grew revenues 7%mainly driven by strength in Rates and FX as we continued to serve our corporate and investor clients while optimizing capital;this was partially offset by the pressures in Equity Markets,primarily reflecting reduced client activity in Equity Derivatives.On the flip side,Banking revenues,excluding gains and losses on loan hedges,were down 39%,driven by Investment Banking,as heightened macro uncertainty and volatility continued to impact client activity.In Cards,we grew revenues 8%as we continued to see benefits from the investments that we made in 2022 along with the rebound in consumer borrowing levels.And in Wealth,revenues were down 2%largely driven by market valuations and China lockdowns;excluding Asia,revenues were up 3%.T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.5 Corporate/Other also benefitted from higher NII,in part as the shorter duration of our investment portfolio allowed us to benefit from higher short-term rates.And as you can see on the slide,in Legacy Franchises,excluding divestiture-related impacts,revenues decreased about$1.3 billion as we closed five of the exit markets and continued to wind down Russia and Korea Consumer.Going forward,we would expect Legacy Franchises to continue to be an offset to overall revenue growth as we close and wind down the remaining exit markets.On Slide 8,we show an expense walk for the full year with the key underlying drivers.In 2022,excluding divestiture-related impacts,expenses were up roughly 8%,in line with our guidance.Transformation grew 2%,with about two-thirds of the increase related to the risk,controls,data,and finance programs.And approximately 25%of the investments in those programs are related to technology.About 1%of the expense increase was driven by business-led investments,which include improving and adding scalability to our TTS and Securities Services platforms,enhancing client experiences across all businesses,and developing new product capabilities.We also continue to invest in front office talent,albeit at a more measured pace given the environment.And volume-related expenses were up 1%,largely driven by Markets and Cards.The remainder of the growth was driven by structural expenses,which include an increase to risk and control investments to support the front office,as well as macro impacts like inflation.These expenses were partially offset by productivity savings,as well as the benefit from foreign exchange translation and the expense reduction from the exit markets.Across the firm,technology-related expenses increased by 13%this year.On slide 9,we show our 2022 results versus the medium-term KPI targets we laid out at Investor Day,which we will continue to show you as we make progress along the way.Macro factors and market conditions,including those driven by monetary tightening at levels we didnt anticipate at Investor Day,impacted some KPIs positively and others negatively.However,we were able to offset some of the impacts as we executed against our strategy.In TTS,we continue to see healthy underlying drivers that indicate consistently strong activity from both new and existing clients as we roll out new product offerings and invest in the client experience which is a key part of our strategy.Client wins are up approximately 20%,across all segments,and these again include marquee transactions,where we are serving as the clients primary operating bank.Through the third quarter YTD,we estimate that we gained about 70 bps of share and maintained our number 1 position with large institutional clients.In addition,we have onboarded over 8,700 suppliers this year,helping our clients manage their supply chains to address the evolving global landscape.And in Securities Services,we onboarded new client assets,which offset some of the decline in market valuations.And we estimate that we have gained about 50 bps of share in Securities Services through the third quarter of this year including in our home market.In Markets,we strengthened our leadership position in Fixed Income by gaining share while making progress towards our Revenue-to-RWA target.In Cards,loan growth exceeded our expectations in both Branded Cards and Retail Services.Cards spend volumes were up 14%,end-of-period loans up 13%,and most importantly,interest-earning balances up 14%.That said,in areas like Investment Banking,we lost share this year,but maintained our market position.And in Wealth,while we have brought on new advisors and new client assets,given the impact of market valuations,this didnt translate into growth in client assets or top-line growth at this point.So,in summary,we made good progress against our medium-term KPI targets despite the significant changes in the macroeconomic backdrop since Investor Day.This highlights that our diversified business model is adaptable to many environments,and we have the right strategy to achieve our return targets over the medium-term.T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.6 Now turning back to the fourth quarter,on slide 10,we show net interest income,deposits,and loans.In the fourth quarter,net interest income increased by approximately$710 million on a sequential basis,largely driven by Services,Cards and Markets.Average loans were down,as growth in Cards was more than offset by declines in ICG and Legacy Franchises.Excluding foreign exchange translation,loans were flat.And average deposits were down by approximately 1%,largely driven by declines in Legacy Franchises and the impact of foreign exchange translation.Excluding foreign exchange translation,deposits were up 2%.Sequentially,average deposits were up,driven by growth in ICG and PBWM and our net interest margin increased by 8 basis points.On Slide 11,we show key consumer and corporate credit metrics.We are well reserved for the current environment with over$19 billion of reserves.Our reserves-to-funded loans ratio is approximately 2.6%.And within that,PBWM and U.S.Cards is 3.8%and 7.6%respectively,both just above day 1 CECL levels.And we feel very good about the high-quality nature of our portfolios.In PBWM,45%of our lending exposures are in US cards,and of that,Branded Cards makes up 66%and Retail Services makes up 34%.Additionally,just over 80%of our total Cards exposure is to prime customers.And NCL rates continue to be well below pre-COVID levels.In our ICG portfolio,of our total exposure,over 80%is investment grade.Of the international exposure,approximately 90%is investment grade or exposure to multinational clients or their subsidiaries.And corporate non-accrual loans remain low and are in line with pre-pandemic levels at about 39 basis points of total loans.That said,we continuously analyze our portfolios and concentrations under a range of scenarios.So,while the macro and geopolitical environment remains uncertain,we feel very good about our asset quality,exposures,and reserve levels.On Slide 12,we show our summary balance sheet and key capital and liquidity metrics.We maintain a very strong balance sheet.Of our$2.4 trillion balance sheet,about a quarter,or just under$569 billion,consists of HQLA and we maintain total liquidity resources of approximately$1 trillion.And our tangible book value per share was$81.65,up 3%from a year ago.On Slide 13,we show a sequential CET1 walk to provide more detail on the drivers this quarter and our targets over the next few quarters.Walking from the end of the third quarter:first,we generated$2.3 billion of net income to common which added 19 basis points.Second,we returned$1.0 billion in the form of common dividends,which drove a reduction of about 9 basis points.Third,the impact on AOCI through our AFS investment portfolio drove an 8 basis point increase.And finally,the remaining 56 basis point increase was largely driven by the closing of exits,RWA optimization,and market moves towards the end of the quarter.We ended the quarter with a 13T1 capital ratio,approximately 70 bps higher than the last quarter.As you can see,we hit our 13T1 target,which includes a 100 bps internal management buffer,that will allow us to absorb any temporary impacts related to the Mexico Consumer exit at signing,while continuing to have ample capacity to serve our clients.And as it relates to buybacks this quarter,we will remain on pause and continue to make that decision quarter-by-quarter.On Slide 14,we show the results for our Institutional Clients Group for the fourth quarter.Revenues increased by 3%this quarter,with TTS revenue up 36%on continued strength in NII.Securities Services revenue up 22%.Markets revenue up 18%on strength in Fixed Income,partially offset by a decline in Equities.And Investment Banking revenues down 58%,which is in the range of the overall decline in industry volumes.Expenses increased 6%,driven by transformation,business-led investments,specifically in Services,and volume-related expenses,partially offset by FX translation and productivity savings.Cost of credit was$56 million,driven by net credit losses of$104 million,partially offset by an ACL release.This resulted in net income of approximately$1.9 billion,down 18%,driven by higher cost of credit and higher T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.7 expenses.ICG delivered an 7.9%RoTCE for the quarter.And average loans were down slightly largely driven by the impact of foreign exchange translation and our continued capital optimization efforts.Excluding FX,loans were up 1%.Average deposits were roughly flat.Excluding the impact of foreign exchanges translation,deposits were up 3%.And sequentially,deposits were up 4%.As for the full year,ICG grew revenues by 3%to$41 billion and delivered approximately$10.7 billion of net income with an RoTCE of 11.1%.Now turning to Slide 15,we show the results for our Personal Banking&Wealth Management business.Revenues were up 5%as net interest income growth was partially offset by a decline in non-interest revenue,driven by lower investment product revenue in Wealth and higher partner payments in Retail Services.Expenses were up 7%,driven by investments in transformation and other risk and control initiatives.Cost of credit was$1.7 billion,which included a reserve build,driven by card volume growth and a deterioration in macroeconomic assumptions.NCLs are up reflecting ongoing normalization particularly in Retail Services.Average loans increased 6%while average deposits decreased 1%,largely reflecting clients putting cash to work in fixed income investments on our platform.And PBWM delivered an RoTCE of 1.4%driven by the ACL build this quarter and higher expenses.For the full year,PBWM delivered an RoTCE of 10.2%on$24.2 billion in revenues.On Slide 16,we show results for Legacy Franchises.Revenues decreased 6%,primarily driven by the closings of 5 exit markets,as well as the impact of the wind-downs.Expenses decreased 38%,largely driven by the absence of divestiture-related impacts last year related to Korea.On Slide 17,we show results for Corporate/Other for the fourth quarter.Revenues increased,largely driven by higher net revenue from the investment portfolio.Expenses are down,driven by lower consulting expenses.On slide 19,we summarize our guidance for 2023.As Jane mentioned earlier,2023 is a continuation of Phase 1 we will continue to execute and invest laying the foundation for the future with an eye toward driving long-term shareholder value.With that as a backdrop,we expect revenue to be in the range of$78-$79 billion,excluding any potential 2023 divestiture-related impacts.Expenses to be roughly$54 billion,also excluding 2023 divestiture-related impacts.Net credit losses in Cards is expected to continue to normalize.And as we said earlier,we met our 13T1 target and we will continue to evaluate that target as we go through the next DFAST cycle and close additional exits and announce others.On slide 20,on the right side of the page,we show our revenue for 2021 and 2022 and our expectations for 2023,excluding the impact of divestitures.In 2023,we expect the revenue growth I just mentioned to be driven by NII and NIR.In TTS,we expect revenue to grow,but at a slower pace,driven by interest rates and business actions.And for Securities Services,we expect a bit of a tailwind from increased market valuations and onboarding of additional client assets.We also assume somewhat of a normalization in Wealth as lockdowns in China end and market valuations start to rebound.And we expect Investment Banking to begin to rebound as the macroeconomic backdrop becomes more conducive to client activity.As for Markets,we expect it to be relatively flat given the level of activity we saw in 2022.Now,turning to the NII guidance for 2023.We expect both ICG and PBWM to contribute to NII growth as we grow volumes,particularly in Cards,and we continue to get the benefit of US and non-US rate hikes in our Services businesses.As a reminder,the guidance for revenue includes the reduction of revenue from the exits in Legacy franchises that we closed in 2022 and we expect to close this year in 2023.Turning to slide 21,in 2023,the increase in expenses that I just mentioned reflects a number of decisions we have made to further our transformation and execute on our strategy.And the main drivers are:first,Transformation,as we continue to invest in data,risk&controls,and technology to enhance our infrastructure T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.8 and ultimately make our company more efficient.Second,business led investments as we execute against our strategy.Third,volume-related expenses in line with our revenue expectations.And fourth,elevated levels of inflation,mainly impacting compensation expense,partially offset by productivity savings and expense benefits from the exits.And we are investing in technology across the firm,with total technology-related expenses increasing by 5%.While we recognize this is a significant increase in expenses,these are investments we have to make,and these investments will make us a better,more efficient company in the future.And finally,lets talk a little bit about the medium-term targets.At Investor Day we said the medium-term was 3-5 years.That time frame represented 2024 to 2026.So,while a lot has changed in the macro environment since Investor Day,our strategy has not,and we are on a path to the 11-12%RoTCE targets in the medium-term.We continue to expect top line revenue growth,material expense reductions,and capital levels largely consistent with our medium-term CET1 target range to contribute to the achievement of our 11-12%ROTCE target.So let me walk you through where we stand today.From a revenue perspective,rates have moved much higher and at a faster pace across the globe which accelerated NII growth and that coupled with the execution of our strategy has allowed certain businesses to accelerate.At the same time other businesses,such as Wealth and Investment Banking have slowed.Despite this,consistent with Investor Day,we expect a 4-5%revenue CAGR in the medium term,including the ongoing reduction of revenue from the closing of the exits.From an expense perspective,as we showed at Investor Day,expenses will need to normalize over the medium term.And we now expect to the bend the curve on expenses towards the end of 2024.The three main drivers of the necessary expense reduction will be benefits from the exits,which will be included in Legacy Franchises,the benefits from our investments in Transformation and controls,and the simplification of the organizational structure.First,let me remind you that at this point,the ongoing expenses in Legacy Franchises are approximately$7 billion.Of the$7 billion,roughly$4 billion is transferred to the buyer upon closing or through a transition services agreement that typically lasts about a year.The remaining$3 billion relates to potentially stranded costs and the wind downs,which takes time to eliminate.Second,as our investments in Transformation and control initiatives mature,we expect to realize efficiencies as those programs transition from manually intensive processes to technology-enabled ones.And finally,we remain focused on simplifying the organization and we expect to generate further opportunities for expense reductions in the future.From a credit perspective,we still expect net credit losses to continue to normalize and any future ACL builds or releases will be a function of macro assumptions and volumes.So,to wrap up,while the world has changed significantly and the components have shifted,we remain on our path to achieve the 11-12%RoTCE in the medium term and Jane,the rest of the firm,and I are prepared to continue to show proof points along the way and demonstrate our progress.With that,Jane and I would be happy to take your questions.QUESTION AND ANSWER OPERATOR:Our first question will come from Glenn Schorr with Evercore,your line is now open.GLENN SCHORR:Definitely appreciate all these outlook slides,theyre very helpful.So,my question on the outlooks is if you take a look at the current medium-sized return on tangible and getting to your target.I heard many comments about the path to getting there is on track.Is it the expense bend at the end of 24,that is the material step-up from here to there,if you will,and/or is credit like a really big determinant in the T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.9 process?Im trying to bridge the gap just in numbers from todays return on tangible targets.Thanks.MARK MASON:Yes,sure,good morning,Glenn,thanks for the question.So,we did give you some guidance here,we gave it to you both on the top line and the middle line for 23.And then importantly,when we talk about the medium term,its both the continued revenue growth,the 4%to 5GR that I referenced,but its also bringing the expenses down from this 23 forecast.And I mentioned in the prepared remarks,the drivers of whats going to bring these expenses down,the combination of the exit of the businesses and the expenses going away associated with that,with the benefits that we start to generate from the transformation spend and then org simplification that this type of strategic restructuring,if you will,in exiting all these countries,will create an opportunity for.And so,its a combination of revenue growth,expense bending of that curve and coming down.The cost of credit is kind of as weve been talking about for some time now,which is it normalizes over the next couple of years at levels that are consistent with what weve seen kind of prior to this COVID cycle that weve been managing through.GLENN SCHORR:Okay.I appreciate that.Just one quick follow-up on and totally not my norm,but I normally try to respect this type of process.But Mark,we consider you a super important part of this transformation.Theres been news out there that youre talking to one of my other companies.But would you be able to make any comment on this?You mentioned staying on.Sorry to put you on the spot,but I think a lot of people care.MARK MASON:I appreciate that,Glenn.Citi is an important firm.Im the CFO of this firm and this strategy is something that Im focused on with Jane,ensuring that we execute on right and in a way that creates shareholder value for our investors.And so,were committed to getting that done.JANE FRASER:Together.MARK MASON:Together.OPERATOR:Our next question will come from John McDonald with Autonomous Research.JOHN MCDONALD:Mark,I wanted to dig into the revenue outlook for 2023.Youve got about the midpoint,it kind of implies about 4%revenue growth this year,kind of consistent with what you talked about for that 4%to 5%.So,for this year,the 2023 guide,it looks like the NII is guided to be up about 3.5%and the Markets youre assuming kind of flat.So,whats enabling you to get to the 4%?Where are the drivers that are above 4%?Is it some of those fee businesses?And just a little more color there would be helpful.MARK MASON:Sure.So let me make a comment first on the NII.Just keep in mind with that number that Ive given on the page is both the growth that occurs in some of our important Services businesses,and that really comes from both the annualization of rate increases that we saw in the back half of the year but also expected continued increases,particularly outside of the U.S.And given the make-up of our franchise,that will contribute to the NII growth.And then keep in mind that were growing over the Legacy Franchise reductions in NII that we would see in 2023.So,underneath that is some real momentum in the NII,notwithstanding a slower pace,the fact that it would be a slower pace than what we saw in 2022.From an NIR point of view,I did mention that we do expect to see some normalization in market valuation.And that would play out both in Banking,normalizing certainly relative to what we saw this year with wallets down 50%to 60%,as well as some normalization in Wealth and those would hit the NIR line,as you point out.JOHN MCDONALD:Okay.Sorry,if this is clear already.But just in terms of the idea of the cost curve bending at the end of 2024.Is that going to mean that for the early part of 2024,expenses kind of rise above 2023 and then they kind of peak out,plateau,towards the back half of 24,is that how we should envision it?T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.10 MARK MASON:Im not going to kind of get into 24 guidance,well kind of get through 23,and Im confident about our ability to get to that roughly 54 number that I put out for 23.Im equally confident that we will bend this curve,and well bring it down to the levels that it needs to be in order for us to get to the RoTCE target,but Im not going to kind of get into,John,the specifics of 24 except to say that by the end of 24,we will see that curve bending.OPERATOR:Our next question will come from Erika Najarian with UBS,your line is now open.ERIKA NAJARIAN:My first question is again,thank you for all the clarification on the slide.Great job,Jenn and Tom,and Mark,obviously.But as we think about what it means to bend the curve,I think your investors are appreciative that you are accelerating the investments relative to your transformation.As we think about when Citi can hit that medium-term RoTCE,how should we think about what bending the curve really means?And Im not looking for guidance necessarily,but as we think about going past that hump,whats the better way of measuring?Is it an efficiency ratio?I think you mentioned something like it is the 60%to 63ficiency ratio against that 4%to 5%revenue CAGR that you think youll be able to hit by 2025?Can we think of it that way?MARK MASON:Yes,so at Investor Day,we did talk about it,and we remain consistent and committed to that.We talked about getting to an efficiency ratio thats less than 60%in the medium-term period.And so that certainly will be part of the metric that we deliver on as we bring our costs down.I think the other thing Id mention,you mentioned the how,and I think there are a couple of important aspects to that,the exits are obvious in terms of those costs going away,at least a portion of it is.The portion thats tied to stranded costs,Jane has been very,very clear with our entire management team of the importance of rethinking the organization and ensuring that the potentially stranded costs go away,and that means rethinking the way we do business and the way we operate different parts of our operations.I think the third piece is technology,right?And so right now,a lot of what were doing is manual.And as we continue to invest in technology-and technology is up pretty significantly this year,14%or so,we expect it to be up 5%next year.That technology build-out,if you will,will allow for us to reduce a lot of that manual activity,and that will bring down the operational cost for running the firm.And so those are a couple of examples,I hope,of the how.But I think importantly,you will start to see it in an improved operating efficiency over that period of time and getting to the target that we talked about at Investor Day.JANE FRASER:And I would say you can get some confidence around the path on many of these by the urgency with which were executing the divestitures,for example,on getting those transactions closed.And weve also tried to provide you as much clarity as possible about the timing of when these will be closing and the speed of the wind downs that were executing.So that will help.As Mark said,its 3 big structural drivers of what will bend that curve.ERIKA NAJARIAN:And Mark,Im sorry,for misspeaking.I was looking at the wrong bar on efficiency.I have like 15 slides open on the computer.The second question,and maybe this is to you Jane,I think that your investors have appreciated your sense of urgency with regards to divestitures.I think the elephant in the room continues to be,I think,investors sort of expected an announcement on Banamex right now.And Im wondering if youre still considering just selling Banamex.Or are you thinking about different options on the table,such as an IPO?JANE FRASER:So,were in active dialogue at the moment,so Im obviously not going to comment in great detail here.We do continue to pursue a dual path as youd expect,because both are very viable options here.And when we are in a position to give you clarity we will do so.I think weve been fairly clear about the timing.We are also separating out the 2 franchises,our institutional franchise from the consumer franchise that were selling because we see the institutional franchise as a very important part of the global network.As you can imagine,in todays environment,Mexico is key for many of our corporate clients around the world for their supply chains and we play a very important role there.That is a lot of work in that separation.Im extremely pleased with the progress that were making in that underlying work.But we are pursuing the dual T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.11 tracks and when we have something to announce,we will be delighted to do so.OPERATOR:Our next question will come from Mike Mayo with Wells Fargo Securities.Your line is now open.MIKE MAYO:Im still trying to get over at this revenue and expense guidance,so youre implying youll have at a minimum,flat operating leverage or positive operating leverage for 2023?Am I reading that correctly?So,on the one hand,youre not bending the cost curve until late 2024.On the other hand,youre guiding for positive operating leverage in 2023.Am I reading that correctly?MARK MASON:Mike,when you do the math,I dont think it will get to the positive operating leverage in 2023.But we are,as you see on the slide,targeting a range that does reflect growth in the top line.That growth will likely be a little bit less than the growth that roughly 54 number would suggest,but we are on the right track,and we are getting there in a way thats consistent with the strategy that we talked about.And we do feel confident in our ability to deliver on the guidance that weve put out here,similar to delivering on the guidance we gave last year,recognizing there are a lot of things going on in the broader environment.MIKE MAYO:Okay.And then a second follow-up or a follow-up,and then Ill re-queue for my other question.Your CET1 ratio is 13%now and I think thats 2 quarters earlier than consensus had expected,you said it was up 70 basis points.So,doesnt that allow you to repurchase stock now?Or I understand that if you go ahead and sell Banamex,that could have a temporary negative capital hit.So,Im just thinking,like dont sell Banamex,dont have that temporary capital hit,start buying back stock at a fraction of your tangible book value.So,whats wrong with my logic or what part of that can you comment on?JANE FRASER:Im going to jump in on the dont sell Banamex,Mike.As you could imagine,so we are selling the consumer franchise,it does not fit with the strategy that we laid out in Investor Day.Its an emerging market consumer franchise,and we are clearly focused around the multinational clients and in institutions and high-net worth individuals with cross-border needs as we laid out very clearly and businesses that have strong connectivity between each other.So,we dont see Banamex having strategic fit in the consumer franchises in that perspective.And when we run all the math,it is in the shareholders interest that we sell that franchise and deploy that capital to our shareholders or into some of the investments at higher returns.What youre suggesting is a very short-term move.And I think as you can see from the actions were taking,were very focused on our medium and long term and not taking the short-term path that we would regret in the medium and long term.OPERATOR:Our next question will come from Ebrahim Poonawala with Bank of America.Your line is now open EBRAHIM POONAWALA:I guess just one question as a follow-up on capital.As we think about post the second half of the year,lets say,youve taken the hit from Banamex.But coming out of the stress test,any sense,Mark,if theres any reason why Citi would have an outsized negative impact from the Basel end-game reforms?Just give us a sense,Im just wondering hopefully,we dont get another disappointment as we get our hopes high for buybacks in the back half and theres something idiosyncratic about the business mix that could come back to hurt the bank?Would love any perspective there.MARK MASON:So,look,as we pointed out,weve built a significant amount of capital over the course of the year.We are ahead of the target we set for the middle of the year.We do have some exits that will have a temporary impact on that CET1 ratio.And we do obviously have a DFAST thats in front of us that well have to see what the outcome is of that work.I think the Basel end-game and final views and decisions on that are still outstanding.And I think well have to take those into consideration when they become available.That is an industry dynamic that will play out however it plays out.And similar to SACCR,well get after it in a very significant way to make sure that were able to handle whatever headwinds or tailwinds may come along with that.But it really is difficult at this point T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.12 to opine on exactly what that means for the industry in light of the fact that there arent final rules out just yet.EBRAHIM POONAWALA:Got it.And just back to your medium-term targets.I guess if we hit that bending the curve at the end of 24,it implies that this company should have an earnings power north of$10 by 25 even at the lower end of the guidance.Am I missing anything there?Or does that make sense?MARK MASON:The only thing Id point out is,what Ive described,what Janes described,is the medium-term is 2024 through 2026.And weve given you guidance for 2023.We intend to get those return targets in the medium-term.I havent given you specific guidance on any of those individual years,and well kind of take that year by year.And so just factor in,I think whats important is youve got a view on 2023,and I think weve given you additional clarity on how we intend to get to that medium-term,and I think thats important.OPERATOR:Our next question will come from Betsy Graseck with Morgan Stanley.Your line is now open.BETSY GRASECK:I did want to ask a little bit about the strategy with Personal Banking and Wealth Management.I know Jane,earlier you talked about the fact that which you have announced looking for a new head to move that business forward could you just give us a sense as to where you think the opportunity sets are greatest within that franchise for growth,because theres a bunch of different pieces,some on the advice channel,some of the more fee channels,some of the more balance sheet piece.And you already indicated U.S.as an opportunity to expand into.So,Id just like to understand,from your perspective,which pieces are the most important to execute on.And that could help us understand how youre planning on shaping this business going forward?JANE FRASER:Great question,Betsy,and Mark and I are both smiling here because I think the answer is all of the above.So,if we break it down,where do we see the various elements of upside?Theres an important recovery thats going to occur in Asia.And you can see from our results last year,and across the board with other competitors with an Asian bend,that was materially impacted by COVID in China and the lockdowns and a slower pulling out of COVID in that market compared,broadly in Asia,compared to the U.S.So,we see some exciting growth opportunities there from the pure fundamentals in Asia across the board.Youre absolutely right,in the U.S.,we start from a smaller scale there.Weve been bringing the different parts of that business together.The Wealth at Work franchise is one thats had particularly pleasing growth in it.And weve also been seeing some good growth as we pulled a comprehensive offering together for our customers.The biggest upside there is investment products.And I think weve got a strong balance sheet franchise as it were,particularly the deposits,some of the margin lending and the like,mortgages,but this is really about the investment offering in the States.Then finally,Id say theres also tremendous opportunity in the synergies,and weve been showing you this in terms of linkages between our Commercial Bank,our Banking franchise,the referrals up from the U.S.Personal Banking,weve had about 60,000 referrals this year in the U.S.alone from that,Markets also provides important referrals and even TTS.So,there are client referrals,there are business synergies between the common platforms,so we really see an opportunity for this multi-dimensional growth drivers in Wealth over and above the recovery in the investment space that everybody in the market should be able to benefit from.And well continue investing appropriately in building out that front line as well.So,this is a very important part of our strategy.Were excited about it,its the key pillar of the shift in business mix as we go forward as well,looking at the medium term.And were looking forward to the next phase of growth and focus here.BETSY GRASECK:And would you say that the investment spend required to execute on those revenue opportunities is likely to accelerate from here?Or youve already done that investment spend and the investment is more sideways as opposed to accelerating?T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.13 JANE FRASER:I think in this current environment,as weve said,Mark and I have both said since middle of last year,this is something that were pacing,but were continuing to invest behind it.And you can see that growth in our client advisers,and remember that net growth in client advisers includes the divestiture we made in Uruguay,for example,so its pretty strong.We dont have a huge amount that we need to invest because we have many pieces of the platform in place,and its more been a story of integrating them and then making sure that were putting the right digital and other investments behind it,but its not such a large one in order to achieve the upside in the business,and well pace that as appropriate with market conditions.Mark,anything to add?MARK MASON:Betsy,and you know this is,in a normal part of the cycle,this is a high margin,high-returning business and weve seen that in the past.And so,we want to be well positioned for,as the market turns,having brought on client advisers,having brought in new clients through client acquisitions,which were up 24%in 2022.And so,I think were well positioned for that.But as Jane mentioned,given where we are,we want to be smart about how we deploy the dollars.And so,well re-pace as necessary,but ensure that were ready for when things turn.JANE FRASER:And Id just add,it was a couple of years ago that we announced the strategy and started executing on it,so we have the benefit of the historic investments,were seeing the drivers playing out well.And as I say,we should be well positioned when the market turns here.OPERATOR:Our next question will come from Matt OConnor with Deutsche Bank.Your line is now open.MATT OCONNOR:I just want to follow up on the comments about expecting Markets to be relatively flat in 23.Obviously,a very good 4Q and I know at least I was concerned about some of the RWA management and FICC in recent quarters and I think that proved not to be an issue as you think about leadership and revenue.But as you think about 23,like the wallets have been strong in recent years.And to your point,your FICC leadership was strong this year.How confident are you in kind of that flat Markets?And maybe whats driving that view?MARK MASON:Its a Market business,right?And so,you know very well kind of the volatility that can come with any Markets business.With that said,weve got a very,very strong FICC franchise.We had a very good year this year.I think were well positioned with the client base,and were well positioned to maintain our#1 position as we go into 2023(1).Now how that market and market wallet moves,I think,is going to predicate on a number of things,including how the macro continues to evolve and how central bank activity continues to evolve and how currencies move and the like.But again,I feel like were well positioned to hold our position,if not gain more share as that plays out.So,I think flat relative to a year that weve had up as significantly as it is,is a reasonable call based on what we know now.JANE FRASER:Weve also seen some depression of areas of strength in this business as well.So,Equity Derivatives,for example,is a real strength,this was an Equity Derivatives year.So,theres some-and the corporate world with the volatility thats out there from a macro geopolitical environment is another real strength of ours.And for better or for worse,were expecting that strength to continue,certainly so far.OPERATOR:Our next question will come from Jim Mitchell with Seaport Global.Your line is now open.JIM MITCHELL:Mark,maybe just digging into NII a little bit.If you look at 4Q annualized,you have a decent step down,but when you take a look at your deposit franchise,your mix of business versus your peers,where theyre seeing probably lagging retail deposits in the U.S.,pricing thats going to hurt second half NII,you already have high betas,mostly institutional.You mentioned the benefit from non-U.S.rates and youre growing deposits.So why a similar trend in NII versus peers when you have a pretty different dynamic going on?Just trying to think that through because it doesnt look like the Legacy you drag is very big in your chart.1 Source:Coalition Greenwich Competitor Analytics for the peer group.Based on preliminary data year to date through 3Q22.The number 1 rank is based on Citis internal taxonomy and internal revenues for Fixed Income,excluding non-addressable products and including products which may not be considered within Fixed Income for other Financial Institutions.Other companies may calculate rankings in a different manner.Peer Group includes BAC,BARC,BNPP,CS,DB,GS,HSBC,JPM,MS,SG,UBS.T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.14 MARK MASON:Similar dynamics you say in 23 or youre talking about the fourth quarter?Im not sure I followed.JIM MITCHELL:Im just trying to talk about versus peers,some have guided similarly to down from 4Q annualized run rates,but you have a very different dynamic in terms of deposit growth,benefits from non-U.S.rates and a much higher beta.MARK MASON:I mean I think Id point to a couple of things on the NII side,just as it relates to us.One,importantly,that I mentioned in,and you point out is when you think about our mix of deposits,weve got about 65%or so in ICG and the balance,35%,in our PBWM business.We certainly skew to U.S.dollar,but weve got a 30%or so that is a non-U.S.dollar.And when I think about the potential or the forward curves and how rates will likely move next year,we will get the benefit of further rate increases on the non-U.S.side,right?And so,if I think about our international presence,the betas tend to not be as high as they are here in the U.S.with our Corporate Clients segment.And so,I think theres some repricing opportunities that well continue to actively manage as we did here in the U.S.And so,I do think its that international footprint,the globality of our franchise that plays to our strength in 2023.The other thing that is apparent to us as we forecast this out,is the continued growth from a volume point of view.And that volume growth youve seen the momentum already pick up on the Cards side with significant growth in interest-earning balances and wed expect that to continue,particularly as we see NCLs normalize and as we see payment rates start to temper.And so,I think those things will be 2 major contributors.Mix is obviously a factor.As you point out,we will be growing over some of the drag or reduction from Legacy.But its that active management of the client engagement that we have across both portfolios that I think will be important factors to us delivering the growth that I talked about.JIM MITCHELL:No and thats all fair.But I guess maybe I didnt phrase my question right,but I felt like ex-Markets,I think your forecast for 2023 would be less than the 4Q run rate ex-Markets.And you shared a bunch of reasons why you have sort of a differentiated franchise.So,Im just trying to get a sense of whats driving the decline from 4Q levels.MARK MASON:I think the thing youve got to pick up is really the Legacy franchise and the NII.A large part of the Legacy franchise revenues are NII revenues when you look at the mix of the products and the clients that we cover there.And so,I think thats the important element here that we havent quantified to a dollar amount,but that is explaining why it seems like muted growth relative to what you would have seen in the fourth quarter.Obviously,theres other factors,but thats important.OPERATOR:Our next question will come from Gerard Cassidy with RBC Capital Markets.Your line is now open.GERARD CASSIDY:Mark,can you share with us on your comments regarding,and this is true for your peers as well,the normalization of credit losses going forward since the industry has experienced incredibly low levels of credit losses.So,when you look at Branded Cards or Retail Services,how do you see that progressing through 23?One of your peers pointed out that they think that by the end of 23,they may be at that normalization rate that they look to for their numbers,but Im just trying to see what the trajectory is for what you guys are thinking.JANE FRASER:Yes,let me jump in and then Ill hand it on to Mark.I think we are expecting,under the current trajectory,to see the loss rates to reach the pre-COVID levels more at the year-end,early 24 level.If you think of Branded Cards,if I was to quantify,it is 20%of the way there now,CRS,were about 40%of the way there now.Obviously,we have the benefit in CRS of sharing of the loss sharing with our partners,that helps us.But I hope that gives you a sense around it,probably the most important driver that weve been worried about,it was very uncertain with what was happening with payment rates.And I think weve got much more clarity as they started that normalization path,so thats driving a fair amount more certainty around what the direction is happening there.Frankly,the big question is more whats happening with spending than T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.15 it is with the normalization right now.Its a bigger uncertainty.But Mark,any other observations?MARK MASON:The only thing Id add is that,Gerard,you could see just depending on how this plays out,you could see kind of NCL rates tick up above normal levels and then come back down to normal levels in the timeline that Jane described,again,just depending on how the macro factors continue to play out.But again,as we sit here and talk about these NCL rates,its important to point out as well that were very well reserved across all of these portfolios,and so to some extent,if you put macro assumptions aside and volumes aside,the NCLs kind of get funded by the reserves that have been established.But the trend line is exactly as Jane described,just recognizing that you could see a tick-up above normal levels and then it come back down.JANE FRASER:Also,this is such an unusual market in the sense that youve got such strong labor market,driven by,frankly,supply shortage almost as much as demand.And weve also got the consumers with still very high savings that theyre dipping into,and were seeing a bit more of the movements happening at the bottom end of all of this.But this is not going to be like a normal recession,thats why you hear us and others talking about the manageability and the mildness thats likely if we do have one.GERARD CASSIDY:And what kind of unemployment rates are you guys assuming going into that kind of trajectory?Is it we get to 5%unemployment by first quarter 24?MARK MASON:I think a couple of things.So,one,our base case scenario,if you think about what we just talked about includes kind of a mild recession in it,just as we forecasted it.The downside would be something a bit more severe than that.Id say were reserved for approximately a 5%unemployment rate just kind of overall when you average across the different scenarios that we have.OPERATOR:Our next question will come from Ken Usdin with Jefferies.Your line is now open.KEN USDIN:Just 2 quick questions.First one,just on Cards,Card NIM has been kind of flattish and I know that obviously has to do with just how you internally allocate the funding towards it.But can you just kind of talk us through whats happening either with rewards or either incremental teaser rates on some of the new relationships and should we see the Card NIM expand from here?MARK MASON:Im not going to get into,Ken,kind of guidance on NIM.What I will say is that we have seen good traction in the early part of the year as it relates to acquisitions on the Card side.Weve made very good traction,and Jane,you may want to comment on kind of the relationships that we have with some of the partners,and with American.And weve also launched a number of new products that I think is helping to fuel the growth that weve seen on the heels of those investments and some of the increase that weve seen in spend rates as well as some of the average interest-earning balance and loan growth that weve seen.But I really dont want to get into the NIM guidance at the Card level or the aggregate at this point.JANE FRASER:I mean we have a fabulous Cards franchise.And when we look at strong track record in the digital,the other innovations that are driving growth,driving the profitability,driving the returns both in our proprietary products as well as with our partners.And were really seeing all of those drivers performing very,very strongly at the moment.From Custom Cash,that was 28%of new account acquisitions.So,an important new product refresh thats driving things,80%of customers engaging digitally.Innovations like American,is just a fantastic partner of ours,really taking that to the next level.And you can see that with the growth in spend in the category.So,I think theres a lot of reasons to be pretty excited about the growth in the returns and the margins and the other trajectories here.And as I say,a prime portfolio,which is always a good thing.KEN USDIN:Great,thanks.And my second question was,there was an article about changing management up in the Wealth Management business this week.And I just wonder if you can talk about that,but also just about the progress that youre making inside the Wealth Management relative to your,the KPIs and the goals that you discussed at Analyst Day.T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.16 JANE FRASER:Well,sure.I mean,2 years ago,I asked Jim ODonnell to put the Wealth business together from the various components that we had around the firm.And now,as we move to the next phase,but as weve said,a strategically important business,I thought it was the right time to change the leadership also because Jim is going to play an important role moving forward,supporting Paco with the ICG strategy that we laid out at Investor Day.Hes got a lot of relationships with investors,family offices,private equity,sovereign wealth funds,and hes going to be helping drive those along with other investors to make sure we bring the firms full capabilities to these clients.So,I felt the time was right to make the move.And we will be,as indicated,swiftly moving to go out and have a look for our next leader of that business.And in the meantime,its business as usual as we grow out and follow the strategy that we have,and were looking forward to the market turning,as Im sure everyone is,and feel that were well positioned to do so.OPERATOR:Our next question will come from Steven Chubak with Wolfe.Your line is now open.SHARON LEUNG:This is actually Sharon Leung filling in for Steven.Just on the topic of credit,one of your peers noted this morning that they would expect to see an incremental$6 billion or so of reserves if they assume 6%unemployment under CECL.Just wondering if you could provide some similar sensitivity to reserve levels,and how should we think about the provision trajectory versus the 4Q base based on your macro outlook and potential growth mass headwinds?MARK MASON:Im not going to kind of do sensitivity scenarios with you here on the fly.What I will say is that as we build these reserves,we are building them against 3 scenarios,that base scenario that I mentioned,the downside scenario,and upside scenario,and we weight those scenarios.And the base that we used this quarter built in a mild recession.And in that baseline,unemployment was,call it 4.4%or so in terms of the unemployment assumption.We also had a downside scenario.Unemployment in the downside scenario got to a 6.9%or so.And then we had an upside scenario.The weighted average across the quarters was about the 5.1%that I mentioned.And those were factors that went into the reserve that we established in the quarter.And largely,when you think about the weightings we put on those scenarios,the weighting skewed towards that base and that downside.The reserve we built this quarter was largely in the consumer business,PBWM and specifically around Cards.And that really had to do the change quarter-over-quarter with the change in HPI.But what I would say is that it also reflects,as I mentioned earlier,a Cards portfolio that remains of a very good quality and with loss rates that are well below what they would be in a normal cycle.And it does pick up the fact that theres volume growth that we saw in the quarter there.So,Im not going to kind of run scenarios for you,but hopefully that gives you some perspective as to whats underneath the models that weve used to establish these reserves.And obviously,we do that on a quarter-by-quarter basis.JANE FRASER:Id also just jump in,one of the areas that sometimes gets misthought of about the firm,is on the corporate credit side.When we look at our corporate client portfolio,dont equate where we take credit risk with the global footprint.When I look internationally,90%of our international exposure are with multinational firms and their subsidiaries,and these,all this is investment grade.I think thats another area whereas we look at the quality of the corporate loan portfolio,as you saw with Russia and others,we will be conservative in the reserving we take.But I think important to understand the nature of where we take that corporate credit risk.SHARON LEUNG:Thats really helpful,thanks.And then as a follow-up,it seems like a part of your revenue targets for 2023 depends on some improvement in the environment.For example,stabilizing equity markets,IB rebound.And Jane,you also noted that the medium-term targets are designed to be achievable in different environments.So,if the revenue backdrop continues to be challenged like we saw in 2022,can you just talk about some of the levers you might be able to pull that might provide an offset?MARK MASON:Well,it kind of depends on what the drivers are of a different environment,right?Because you could have,I dont anticipate this,but you could have continued pressure in Investment Banking,but you could also have continued volatility in rates or currencies and that could mean more upside than flat for the Markets business.So,there are a lot of puts and takes that one can scenario out.I think whats really T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.17 important is that we have a diversified portfolio of businesses that have strategic connectivity to them.And so what that allows for is that as the environment shifts in some way that we may not have predicted that we were often able to still drive significant performance as we did this year and so,without calling exactly how it might vary from whats here,thats what gives us the confidence around the guidance and really to remain steadfast on the strategy that weve talked about and really push execution,and thats exactly what were doing.JANE FRASER:And an important part of 23,its not just the impact of the cycle,but also,youll see the impact of the different investments that weve been making.And youve certainly seen that,for example,in Services this year,and weve been very transparent around the 70 basis point increase weve seen in wallet share in the 12 months leading up to the third quarter.So,youve not only got drivers here in terms of whats happening in the market,but youve also got the strategic drivers,also kicking in more and more together as Mark referred to the synergies.MARK MASON:Thats a great point,Jane,because it may not always show up in the top line,which is why we put those KPIs out there.There are often indicators of some of the upside thats on the come as the market evolves.OPERATOR:Our last question will come from Mike Mayo with Wells Fargo Securities.Your line is now open.MIKE MAYO:So,one question,one follow-up.So,your slide says you have a CET1 target of 13%by mid-year,but youre already there.And I guess,if we go back to the Banamex thing,is that kind of assuming potential capital impact from divestitures or why would you have a target 6 months out when youve already met it?MARK MASON:Yes,Mike,I have to tell you Im surprised that youre asking about Mexico,just given our history together,but I understand it.And what I would say is that a couple of things.One,we clearly see where we trade,right?And were not happy about where we trade.And we think our strategy warrants us trading better than where we trade today.So,if we could buy back,right,if we could do buybacks,as soon as were able to do buybacks,we will,right?I mean that is part of the way we deliver value for our shareholders.The second thing Id say is we did get to the 13%sooner.And that was,again,in accordance with executing against our strategy.And our parts of our business,particularly the Markets business,has done a really good job at delivering against the metric we put out of revenue to RWA,and weve been able to get there without damaging the franchise,which is what you see in the continued strength and performance in that business,particularly in Fixed Income.Whats ahead of us,as you rightfully pointed out,is that weve got a number of exits that have to take place,theres puts and takes across many of them.But Mexico,in particular,will have a temporary,temporary impact on our CET1 ratio.And so,we want to be mindful of that as we manage over the next 2 quarters so that we can absorb that.And we also want to make sure that were positioned to continue to serve our clients over the next couple of quarters and always,but certainly over the next couple of quarters,while we manage the temporary headwind from that exit.So hopefully,that gives you a better sense for it,but were actively managing this,and we have not lost focus on the importance of returning capital to shareholders.JANE FRASER:I want to reiterate that as well.I mean its very important to us.And as Mark said,we know where we trade.Weve made a number of moves to align ourselves to our shareholders interest in compensation and management interest,all these various dimensions.And we just want to make sure that we hit what we say were going to do and continue delivering against what we say were going to be delivering.And with the CTA impact essentially in Mexico,we want to make sure that were taking that into T R A N S C R I P T Citi Fourth Quarter 2022 Earnings Review January 13,2023 Copyright 2022 Citigroup Inc.18 account.MIKE MAYO:All right,thats very clear.And then lastly,your NII guide,excluding Markets related,is higher for 2023,but I think that implies a little step down from the fourth quarter level,not as much as JPMorgan was guiding down 10%from the fourth quarter level.I was thinking there might be some delayed benefits from being outside the U.S.What are some of the ins and outs there?MARK MASON:Yes.Youve got a couple of points here.So one is,we wont see NII momentum as weve seen in 2022,just as betas start to increase on the ICG side and get to terminal levels,thats obviously going to slow or put pressure on the pricing as we go into 23.But some of the other important drivers of the growth will be the annualization of the rate hikes that happened late in the year,and so that will be a plus in 2023.And youll also see,as I mentioned earlier,some of the rate increases that we anticipate outside of the U.S.and given our mix,that will benefit us in 2023.And then therell be volume that will contribute to that NII growth,particularly as we continue to see good momentum,which we anticipate on the Card side.The offset will be the Legacy franchise,right?And so,as those exits occur,as the wind downs continue,as I mentioned earlier,that revenue mix does skew towards NII and so well have to grow over that,and we will grow over that to kind of get to the target that weve set.So those are the puts and takes.OPERATOR:There are no further questions at this time.I will now turn the call over to Jenn Landis for closing remarks.JENNIFER LANDIS:Thank you everyone for joining us today.If you have any follow-up questions,please reach out to IR.Thank you.OPERATOR:This does conclude Citis Fourth Quarter 2022 Earnings Review Call.You may now disconnect.Certain statements in this document areforward-looking statementswithin the meaning of the rules and regulations of the U.S.Securities and Exchange Commission.These statements are based on managements 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 Citigroups filings with the U.S.Securities and Exchange Commission,including without limitation theRisk Factorssection of Citigroups 2021 Annual Report on Form 10-K. 11th Global Family Business SurveyTransform to build trustFamily businesses need to adopt new priorities to secure their legacyPwCs 11th Global Family Business Survey2Peter EnglischGlobal Family Business and EMEA Entrepreneurial and Private Business Leader,Partner,PwC GermanyForewordPwCs Family Business Survey 2023 comes at a time of great change.The optimism of a post-covid world has been sorely tested by the geopolitical turmoil caused by the war in Ukraine and its effect on economies around the globe.We live in a world of uncertainty.Thats why we focused our survey on trust.As family business owners,you understand that your success and your advantage over the competition is,first and foremost,built on trust.But today,the very nature of trust has changed.What you told us in our survey is that you need to be trusted not only by your customers but also by your employees,family members and the general public.Digging deeper,we also see that you are struggling to prioritise the things that are fundamental to building trust with all stakeholder groupsincluding the general publicand you may be missing the opportunity to explain your companys mission,values and impact.There is a new formula for building trust,and the stakeholder groups you need to be trusted by have expanded.The good news is that trust can be built systematically.In this first report,we present the results of the survey and describe what constitutes the new trust formula.In subsequent articles,we will look more closely at the three foundational groups that you need to have on your sideyour customers,your employees and your family membersand explain how to bridge the trust gap that you have identified,by prioritising what matters most to all your stakeholders.Our message:transform to build trust.Do that,and theres every reason to believe in a bright future.PwCs 11th Global Family Business Survey3A message from the chairman of the Family Business Network InternationalThe Family Business Network(FBN)is thrilled to collaborate with PwC on the 11th annual Global Family Business Survey,which focuses on transparency,an essential ingredient to build trust within and around business families.This years survey provides tips and tools for family businesses to strengthen that trust,which is one of their unique competitive advantages.In an increasingly polarised world,family businesses need to adopt new strategies to reinforce the trust premium they have relied on for generations,and they need to play a proactive role in building bridges.At the heart of any family businesss DNA is the ability to reconcile family with business,emotions with entrepreneurship.The study provides key insights on how to pursue this important journey:.The survey findings show the need to work closely with new generations of future owners and establish family governance structures and practices to professionalise the family business.This includes conflict resolution mechanisms to deal with disputes.The survey also highlights the importance of reigniting trust with external stakeholders and employees by walking the talk on purpose and values,commitment to ESG,and accountability.Transparency is key to this,as it has become an increasingly important tool for fighting unethical behaviours and fostering trust.Collectively,family businesses represent 70%of the global economy.They can play a unique role in restoring trust and promoting a more sustainable business model.We invite you to share the key learnings from this survey widelywith family members,executives and customersand hope youll commit to engage in this vital transformation.Farhad ForbesChairman,Family Business Network International PwCs 11th Global Family Business Survey4 Transform to build trustFamily businesses need to adopt new priorities to secure their legacy.The notion of how to build trust in business is changingfundamentally and rapidly.For everyoneincluding customers and employeesissues like environmental,social and governance(ESG)and diversity,equity and inclusion(DEI)have become litmus tests for trustworthiness.Due to powerful demographic shifts,most of todays customers and employees hail from generationsmillennials and gen Zwhose values differ from those of baby boomers.Family businesses,which for years have relied on a trust premium,built up over generations,have been slow to get the message.At a basic level,the formula for building trust is expanding.Businesses will need to take into account new groups of stakeholders who have different expectations around what builds trust,and who consume information in entirely different ways.When it comes to these new measures for earning trust,family businesses will need to do a much better job of both showing and telling:increasing the visibility of their efforts and communicating them consistently to stakeholders.These are among the key findings of PwCs Family Business Survey 2023.Trust has beenand remainsa vital competitive advantage that sets family businesses apart from other companies.The Edelman Trust Barometer confirms that family businesses are trusted more than other businesses:their trust score is 12 percentage points higher than that of businesses in general.Higher levels of trust can result in better performance,as demonstrated by recent PwC research showing a strong correlation between trust and profitability.PwCs 11th Global Family Business Survey5Finding ways to protect and nurture that trust premium is essential to achieving the ambitious long-term goals that the surveys participants say theyre pursuing:.77%expect to grow in the coming two years;14%expect to grow quickly and aggressively.51%say expanding into new markets is their top priority.This years survey of 2,043 family business owners in 82 territories uses a model developed by Sandra J.Sucher,a Harvard Business School professor of management and the author,with Shalene Gupta,of The Power of Trust,to assess whether family businesses are doing the right things in todays world to build trust.The model identifies four pillars of trust:competence(is the company good at what it does?