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Remarks to Investors on Citi’s First Quarter Performance

April 15, 2020
Michael Corbat, CEO, Citi

Thank you, Liz, and good morning everyone.

Today we reported earnings for the first quarter of 2020. With net income of $2.5 billion, we had earnings per share of $1.05.

Our earnings were significantly impacted by the COVID-19 pandemic. We had strong revenue performance as the economic shocks caused by the pandemic weren’t felt until late in the quarter, and we continued to show expense discipline. However, as you would expect, credit costs reduced our net income. The significant loan loss reserves we took also reflected the “day two” impact of the new CECL accounting standard.

In our Institutional Clients Group, we had strong performance in our Markets business, as we helped clients navigate severe volatility. That led to trading revenues that were higher than last year, in what is typically a strong quarter for that business as it is. Treasury and Trade Solutions was impacted by the cuts to interest rates but client engagement stayed very strong throughout the quarter. Investment Banking matched last year’s solid performance as we continued to gain share among our target clients.

Global Consumer Banking also fared well from a revenue perspective, considering the environment. In the U.S, we had strong revenue growth in cards, with Branded and Retail Services up 7% and 4% respectively. We grew average deposits 8% with another solid portion acquired digitally.

In Asia, we saw a slight revenue decline as the economic impacts of COVID-19 first materialized in that region.

In Mexico, revenues rose modestly, excluding a one-time gain from 2019, as the virus had limited impact on that country’s economy during the quarter.

Our Tangible Book Value per share increased to $71.52 at quarter-end, up 9% from one year ago. We ended the quarter with a CET 1 ratio of 11.2% as our Risk Weighted Assets increased significantly due to increased client demand.

As I have said, this isn’t a financial crisis. It is a public health crisis with severe economic ramifications. Although we did have good revenue performance this quarter, we exited the quarter into a dramatically different environment. While, we have built significant loan loss reserves, no one knows what the severity or longevity of the virus’ impact on the global economy will be.

That said, we entered this crisis in a very strong position, from a capital, liquidity and balance sheet perspective. We have the resources we need to serve our clients without jeopardizing our safety and soundness.

Now, I’d like to take a moment to highlight some of the things that we are doing today to help our people, clients and communities, which you can see on slide 3.

I am proud of how our people have responded to this fast-moving situation. We have been very aggressive in shifting to remote working to reduce our people’s chances of becoming infected. Where spread of the virus dictates it, we only have people going to our sites if there is no possible way they can perform their roles remotely. For example, last week in North America Markets and Security Services, 98% of our people worked remotely. And globally, our people have adapted well to this new way of working, with 80% of our colleagues working remotely.

The investments we have made in our technology have allowed us to operate very smoothly in a set of circumstances that would have been hard to imagine, with such a large share of our workforce working remotely at the same time. Those investments are also helping us serve our clients through digital and mobile channels—whether it is a consumer depositing a check or a corporate treasurer managing liquidity.

Our investments in risk management and controls, while never complete, are also serving us well in the face of a severe economic downturn and large swings across markets, whether in equities, fixed income or commodities.

We have tried to help keep our people financially healthy as well and reduce the stress they are facing. We decided last month to make a one-time payment of $1,000 to employees who make $60,000 or less per year in the U.S. and are making equivalent payments in our international markets. And we have halted new reductions in our workforce for the time being.

From a consumer and institutional perspective, we are well positioned to serve the clients and the customer segments we have been focusing on. We know many consumers are facing real struggles and we are doing our best to support them. We were quick to implement ways to reduce the burden on our consumer clients and announced additional accommodations last week in the U.S.

While we haven’t been a large player in small business lending, we are ramping up our efforts so we can support clients who want to participate in the Payroll Protection Plan. And we have additional consumer relief programs in place in our International Consumer franchise.

We are working hard to support our corporate clients, many of whom are facing financial pressure. We have been able to support them while keeping within our risk and liquidity limits.

We have also been helping the communities we serve during this extraordinarily difficult time. Partnering with groups like the World Health Organizations, Citi’s foundations have already committed $30 million to date to support those impacted and we will make additional announcements in the coming days. We have donated Personal Protective Equipment to hospital workers and last week we started using our cafeteria in our headquarters to make meals for food banks. Our people keep coming up with new ways to help and I couldn’t be prouder.

And, as a bank, we will do everything we can to support the broader economy. We serve as a transmission mechanism for policy makers, both fiscal and monetary, which they can use as a bridge to the real economy.

Looking forward, there are too many unknowns to count. The path the virus will chart, whether there will be successful interventions, the actions government leaders will take to either re-open the economy or put in place measures, which will further restrict it. We also have to bear in mind COVID-19 is a new disease and the medical guidance continues to evolve, as you would expect.

But I feel confident in our ability to manage through whatever scenario comes to pass.

With that, Mark will go through our presentation, and then we would be happy to answer your questions.