Thank you, Mr. Chair. And good morning to all my fellow shareholders joining us today, in New York and by audio cast.
We are pleased to be holding this meeting for the first time at our Global Headquarters in Lower Manhattan, only a short walk away from where our firm was founded on Wall Street over 200 years ago. This building is over 30 years old, but we are in the midst of rebuilding it from the ground up.
The open-plan spaces we work in express a culture that is more collaborative, creative, diverse and inclusive.
Not just at our Headquarters but at many Citi sites worldwide, we have reimagined our internal environment as we constantly adjust to the external environment. That environment is composed of a confluence of economic, political, social and technological forces. The future of this firm depends, in large part, on our ability to keep pace with—and capture—the many opportunities embodied in these changes.
That environment certainly impacted our 2018 financial results, as we swung from a January marked by positive sentiment driven by tax reform and synchronized global growth, to a December when markets declined with a velocity rarely seen.
Throughout the year, we drove steady, meaningful progress toward the overarching goal we laid out at our Investor Day in 2017:
That is to improve the returns we generate on capital and increase the return of capital to our shareholders.
Across Citi, we recognize that expectations of our institutional and consumer clients are becoming more alike and we have been working hard to meet them.
We know that consumers often compare their experiences with us to those with our competitors and those from companies in different industries.
Throughout our Global Consumer Bank, we are providing more personalized offers to consumers and creating more intuitive, convenient self-service platforms.
In the U.S., our largest consumer market, we are continuing to enhance our digital capabilities, making it easier for us to deliver for our clients no matter where or how they want to interact with us.
We are growing mobile users at the fastest pace among our peers, and using digital channels to deepen our client relationships—both in and outside our core retail banking markets.
We also made structural changes in our U.S. consumer franchise. We unified the leadership of our Branded Cards and Retail Banking products to create a more effective client-centric structure, as we have in other regions.
This realignment is designed to attract new clients and convert a larger proportion of our more than 28 million Branded Cards clients into multi-relationship customers.
In Mexico, we’re also increasing our digital capabilities, where our new mobile app is driving double-digit user growth.
We are leveraging our success in Asia, where we have high digital engagement and a fast-growing digital lending platform.
Our institutional clients also expect easy and simple experiences when they engage with us on mobile and digital channels.
That’s why we are doing things like streamlining client onboarding and increasing the capabilities of corporate treasurers to manage their funds through our global network no matter where they are that day.
We also made structural changes in our Institutional Clients Group to improve our client experience and outcomes. We combined our corporate, investment banking and capital-markets origination divisions into a new unit, Banking, Capital Markets and Advisory.
Now, clients gain access to a broader range of creative solutions across our institutional platform. And our bankers take an even more holistic view of those clients and their evolving needs.
Doing all these things supported the execution of our strategy and contributed to our performance. Across our consumer and institutional franchises, we generated 3 percent underlying revenue growth.
In our Global Consumer Bank, we realized the benefits of the investments we made in areas including U.S. Branded Cards and Retail Services, which was aided by the acquisition of the L.L. Bean portfolio. In Mexico, we continued to grow revenues and improve efficiency, as we accelerated our digital transformation.
In Asia, we saw healthy inflows of assets under management and good growth in the number of Citigold clients, despite an uncertain macro environment.
In our Institutional Clients Group, year-end volatility and uncertainty impacted our market-sensitive businesses, including Fixed Income and Investment Banking. However, we did grow share and revenue in both M&A and Equities.
Our steady accrual-like businesses, including Treasury and Trade Solutions, Securities Services, the Private Bank and Corporate Lending, grew revenues by an aggregate 9 percent for the year.
Despite widespread concerns about trade tensions, our global network again showed that it is uniquely positioned to capture trade flows, no matter how or where they shift.
The performance of our businesses drove our $18 billion of net income last year, which was 14 percent higher than in 2017, excluding the one-time impact of tax reform in both periods.
On this basis, our earnings per share increased 25 percent to $6.65 per share, driven by a combination of higher net income and share repurchases.
We continued to make progress on our Efficiency Ratio, driving it down to approximately 57 percent for the year, after lowering our expense base to just under $42 billion.
We increased our Return on Tangible Common Equity to 10.9 percent, surpassing our target of at least 10.5 percent for the year as we work toward our goal of at least 13.5 percent for 2020.
Our performance on the Federal Reserve’s Comprehensive Capital Analysis and Review, or CCAR, is allowing us to return $22 billion of capital for the 2018-19 cycle.
1Q 2019 Results
Yesterday, we announced our first quarter results for 2019. We reported net income of $4.7 billion, or $1.87 per share. Our earnings per share were 11 percent higher than a year ago. And we continued to make progress toward our goal of improving our returns on and of capital.
We drove our Return on Tangible Common Equity to 11.9 percent, 50 basis points higher than in the first quarter of 2018. We generated positive operating leverage and improved our efficiency for the tenth quarter in a row. We also drove growth in loans and deposits in our core businesses.
In our Global Consumer Bank, we drove 4 percent underlying revenue growth, with contributions from every region. In particular, our North America franchise performed well, growing underlying revenues by 5 percent in Branded Cards and 3 percent in Retail Services.
Our Institutional Clients Group also delivered a good quarter. Total Banking revenues were up 8 percent overall, driven by Treasury and Trade Solutions and Investment Banking. Fixed Income rebounded from a rough fourth quarter, and achieved modest growth compared to a year ago.
We returned over $5 billion through a combination of share buybacks and dividends. We have reduced our shares outstanding by 9 percent from a year ago and almost 25 percent since I became CEO.
We recently submitted our capital plan to the Federal Reserve, and we are working toward our Investor Day commitment of returning at least $60 billion to shareholders over the three-year period ending in mid-2020, subject to regulatory approval.
Mission and Value Proposition
I began my remarks today talking about the culture we have built at Citi to be more collaborative, creative, diverse and inclusive.
Earlier this year, after disclosing our adjusted pay gap in 2018, we reaffirmed our commitment to transparency by disclosing our unadjusted pay gap, which showed that women at Citi earn 71 percent median pay versus men.
The size of that gap underscored the importance of the firm-wide representation goals we announced in August, aimed at advancing more women and minorities at Citi by increasing the number of black colleagues in the U.S. and female colleagues globally in senior positions in our firm.
One way to reach our representation goals is to focus on our hiring pipeline through our summer analyst and associate program.
For this summer’s class, we are currently on track to improve our female representation from 39 percent two years ago to 47 percent, and to improve our black and Hispanic representation from 15 percent to 26 percent. Our stated goal for upcoming classes is an even 50-50 balance of men and women, and 30 percent minorities.
While we clearly have more work to do, these numbers are very encouraging as we try to meet the firm-wide representation goals we laid out last summer.
Throughout the year, thousands of Citi colleagues demonstrated their commitment to the communities we serve.
In June, we brought more than 100,000 Citi volunteers, in more than 450 cities in 90 countries and territories, to work on more than 1,400 community service projects. It was our largest Global Community Day ever.
From feeding hungry people to revitalizing schools, our people showed the positive impact our company has on our communities, not just on Global Community Day but every day.
Right here in this building, we have incorporated a series of sustainability features for which we are hoping to achieve a LEED Platinum certification from the U.S. Green Building Council. They include a cogeneration plant that will produce heat and electricity on-site, and help to reduce the building’s carbon footprint by 30 percent. We have also announced a commitment to source 100 percent of our global energy needs from renewable sources by 2020.
And our commitment goes deeper than our own operations. In 2018, we recorded $38 billion of transactions toward our ten-year, $100 billion environmental finance goal, which we will reach several years ahead of schedule.
We also partner with state and local governments across the country as they meet critical infrastructure needs. In 2018, Citi catalyzed the investment of more than $26 billion in U.S. infrastructure capital projects, including bridges, hospitals, airports, water, and public power, up from $22 billion in 2017.
We provided $6 billion to finance the construction and preservation of more than 36,000 affordable housing units across the U.S. That level of investment not only set a new record for Citi, it maintained our ranking as the leading financier of affordable housing for the ninth year in a row.
And while we do pride ourselves in having a global network that is scaled to serve some of our country’s best known multinational corporations, we also take pride in helping small businesses grow and succeed. We have doubled the amount of small business lending in the U.S. since the financial crisis. Last year we provided nearly $12 billion across various products to small businesses.
In closing, now that we have closed out the first quarter of 2019, I want to note that we believe our financial targets are achievable and that we are committed to continuing to make steady progress toward them, every day throughout this and the coming years.
Thank you for this opportunity to share these thoughts with you today