Release Date: April 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Citigroup Inc (C, Financial) reported a strong first quarter with net income of $4.1 billion and earnings per share of $1.96.
- The company achieved a 5% year-over-year decline in expenses, demonstrating disciplined expense management.
- Citigroup Inc (C) delivered its third consecutive quarter of positive operating leverage across all five business lines.
- The Services division recorded its highest first-quarter revenue in a decade, with significant growth in TTS and Security Services.
- The company returned $2.8 billion in capital to shareholders, including $1.75 billion in buybacks, showcasing a commitment to returning capital.
Negative Points
- The macroeconomic outlook is more negative than anticipated, with prolonged uncertainty potentially impacting confidence.
- Non-interest revenues, excluding markets, were down 6%, offsetting gains in banking and wealth.
- The firm's cost of credit was $2.7 billion, reflecting uncertainty and deterioration in the macroeconomic outlook.
- Corporate lending revenues declined 1% due to lower loan balances and higher recoveries in the prior year.
- Retail services revenues declined 11%, primarily driven by higher partner payment accruals.
Q & A Highlights
Q: Can you provide insights into the opportunities and risks in Treasury and Trade Solutions amid economic shifts like retariffing and nationalization?
A: Jane Fraser, CEO, explained that Citigroup's diversified business mix is well-positioned for various scenarios. The bank's broad suite of products and services is essential for clients repositioning for new trade orders. Citigroup has played a central role in recent global events, such as the Ukraine-Russia war and COVID-related supply chain shifts, which have driven growth by deepening relationships with existing clients and acquiring new ones. The bank's local presence and expertise make it less vulnerable to geopolitical dynamics.
Q: Are you seeing increased demand from clients for liquidity and deposit flows amid current market volatility?
A: Jane Fraser noted that while deals are still happening, most clients are pausing plans and preparing for potential headwinds. Clients are bolstering already strong balance sheets, accelerating imports to stockpile inventories, and pausing significant CapEx. The trading environment is orderly, with clients taking the opportunity to de-risk. It's early days, and the situation is fluid.
Q: How do you feel about the NII outlook given strong deposit and loan growth?
A: Mark Mason, CFO, expressed confidence in the NII outlook, projecting 2% to 3% growth excluding markets. Tailwinds include deposit volumes, operating momentum in services, loan growth, and reinvestment from maturing securities into higher-yielding assets. The team is actively managing deposit repricing and beta through the current environment.
Q: How is Citigroup positioned to manage potential credit risks amid global trade tensions?
A: Jane Fraser emphasized Citigroup's strong performance in recent years despite global economic changes. The bank acts as a port in the storm for clients, offering hedging, financing, and reconfiguration of flows. Mark Mason added that Citigroup's risk framework is disciplined, skewing towards higher investment-grade clients with strong balance sheets. The bank is well-reserved to manage potential credit risks.
Q: Can you elaborate on the capital optimization levers and DTA utilization to improve RoTCE?
A: Mark Mason highlighted ongoing efforts to optimize capital use, such as improving revenue to RWA ratios and ensuring broader revenue capture from corporate lending. The bank is focused on reducing DTA by generating more US income. Improvements in business performance have led to a shift in TCE allocation, reflecting reduced stress losses and improved resiliency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
