Citi(US:C)2024-01-12 22:58Financial Data and Key Metrics Changes - In Q4 2023, Citigroup reported a net loss of $1.8 billion and a diluted EPS of -$1.16, primarily due to a $1.3 billion reserve build related to transfer risk and a nearly $900 million negative revenue impact from the Argentine currency devaluation [10][20] - For the full year 2023, total revenues were $77.1 billion, below the guidance of $78 billion to $79 billion, largely due to the Argentine devaluation and softer market performance [24][14] - The CET1 capital ratio increased to 13.3%, approximately 100 basis points above the regulatory requirement [30] Business Line Data and Key Metrics Changes - Services revenues increased by 16% for the full year to $18.1 billion, despite the impact of the Argentine devaluation [22][11] - Markets revenues decreased by 6% to $18.9 billion, primarily due to lower volatility and a significant slowdown in December [23] - Banking revenues decreased by 15% to $4.6 billion, while investment banking revenues were relatively flat, gaining share amidst a declining wallet [23][12] - Wealth revenues decreased by 5% to $7.1 billion, primarily due to a shift in deposit mix towards higher-yielding products [23] Market Data and Key Metrics Changes - In the US Personal Banking segment, revenues increased by 12%, driven by higher net interest margins and interest-earning balances growth [39] - Investment banking activity in Asia rebounded with quarterly revenues up 21% [12] - The overall banking revenue continued to be impacted by a weak wallet globally [12] Company Strategy and Development Direction - Citigroup is focused on simplifying its organization and executing its transformation strategy, with a goal of achieving over $2 billion in run rate savings through the elimination of 20,000 positions [7][45] - The company aims to enhance connectivity across its five core businesses and improve client focus [7][8] - Investments in technology and digital capabilities are prioritized to support growth and improve operational efficiency [26][9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2024 is a critical year for the company, emphasizing the need to deliver on medium-term targets [15][16] - The macro environment is expected to remain challenging, with moderating rates and inflation, but Citigroup is well-positioned to support clients [15][16] - Management expressed confidence in achieving a revenue growth target of 4% to 5% over the medium term [16][46] Other Important Information - Citigroup has completed divestitures of nine of its 14 international consumer franchises and is winding down nearly 70% of its total retail loans and deposits in certain countries [8] - The company has invested over $12 billion in technology in 2023, focusing on digital innovation and client experience enhancements [26] Q&A Session Summary Question: Why is this restructuring different from previous attempts? - Management highlighted that the current restructuring focuses on simplifying the organization and increasing accountability, with a commitment to long-term transformation and addressing past issues [50] Question: How will the company balance near-term profitability with necessary investments? - Management acknowledged the balancing act and emphasized the need for disciplined investments in growth areas while managing expenses effectively [55] Question: What is the outlook for Services growth in the next two years? - Management indicated that Services has strong core business momentum and a healthy pipeline, suggesting potential for continued growth despite rate changes [56]