CITIGROUP INC

Global Macro Perspective

• Economic Resilience:
  • Economies have managed to tolerate interest rate hikes from central banks, leading to a noticeable receding of inflation.
  • U.S. Economy: Central to this macro picture, the U.S. shows growth driven by:
    • Higher-end consumer activity.
    • A robust corporate sector with significant innovation.
• Global Growth Dynamics:
  • China: Experiencing slower-than-expected growth but potential for stimulus exists.
  • Europe: Continues to underperform relative to expectations.
  • Emerging Markets: Represent bright spots, benefiting Citi due to its expansive presence in countries such as India, the Middle East, and ASEAN.

Financial Performance Indicators

• 2024 Highlights:

  • Net income increased nearly 40% to $12.7 billion.
  • Revenues rose 5% (excluding divestitures).
  • Fee revenue surged 17% with a minimal effect from currency-related devaluations in Argentina.
  • Expenses aligned with guidance, showcasing improved operational efficiency (efficiency ratio improved by 340 bps).

• Outlook for 2025:

  • Confidence in a conducive environment supporting client activities.
  • Expected continued revenue growth seen from net interest income and fee-based services.

Portfolio Health

• Return on Tangible Common Equity (RoTCE):

  • Claimed an average RoTCE of 7% for banking in 2024 with a trajectory targeted towards mid-teens.
  • Targets for 2026 revised to between 10% and 11%, indicating a strategic shift towards sustainable growth over short-term expediency.

• Expense Strategy:

  • Intent to reduce overall expenses from 2024 to 2026, affirming commitment to operational efficiency amidst necessary investments for transformation and technology.
  • Elevated expenses recognized as temporary due to strategic investments.

• Investment Focus:

  • Continued infusion of capital into technology and transformation efforts to secure long-term growth objectives while maintaining flexible responses to regulatory requirements.

Overall Performance Health

• Positive Operating Leverage:
  • All primary business lines achieved positive operating leverage, indicating effectively managed resource allocations amidst revenue growth.
• Future Growth Expectations:
  • Anticipated growth in wealth management and personal banking sectors.
  • Strategic enhancements in service offerings and customer engagement driving top-line growth across varied portfolios.

In summary, CITIGROUP INC displays a balanced approach to navigating global economic shifts and enhancing its portfolio's resilience while preparing strategically for the future. The company's focus on expense management, ongoing investment in technology, and the adaptation of their growth narrative supports confidence in future performance despite immediate economic uncertainties.