Citigroup Stock

Hello, and welcome to Citi's Second Quarter 2026 Earnings Call. Today's call will be hosted by Jenn Landis, Head of Citi Investor Relations.

[Operator Instructions]

Also as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Ms. Landis, you may begin.

Thank you, operator. Good morning, and thank you all for joining our second quarter 2026 earnings call. I'm joined today by our Chair and Chief Executive Officer; Jane Fraser and our Chief Financial Officer, Gonzalo Luchetti. I'd like to remind you that today's presentation, which is available for download on our website, citigroup.com, may contain forward-looking statements which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these statements due to a variety of factors, including those described in our earnings materials as well as in our SEC filings. And with that, I'll turn it over to Jane.

Thank you, Jenn, and good morning to everyone. Our momentum continued and the second quarter capped a very good first half of the year. This morning, we reported net income of $5.8 billion for the second quarter with an EPS of $3.15 and an RoTCE of 13%. This was Citi's best quarterly revenue in a decade, which we delivered with over 9% positive operating leverage. Once again, we saw double-digit revenue growth for the firm and in 4 of our 5 businesses. We improved our RoTCE for the firm by 430 basis points and had significant improvement in the returns of every single business.

The combination of our investments, disciplined execution and focus on clients is delivering improved returns and more durable results. Let me take you through our 5 businesses. Services delivered its highest ever quarterly revenue and a return of over 30%. Clients continue to lean on our global network more and more. We saw a 13% increase in cross-border transactions and a 19% increase in deposits. Our assets under custody and administration were up over 20% as we onboarded funds and deepened existing relationships. This is the power of our network. And it's a franchise that is very hard to replicate.

Markets revenues were up 17% and crossed $7 billion again, as sentiment stay positive throughout the quarter. Equities was up over 40%, with prime balances up nearly 60%. Underneath fixed 7% growth, FX and spread products continued to shine and yet another example of our global network doing exactly what it is built to do for clients. This offset rates lower performance. Banking revenues climbed 34%, led by a sharp increase in financing activity amidst an overall strong wallet. Investment Banking was up 44% as we gained share in equity capital markets.

We played a role in the majority of the top equity and debt issuances in the quarter, including lead roles on the high-profile IPOs, such as SpaceX and Cerebras. As we enter the second half, the pipeline looks healthy, and we are continuing to invest in talent to fill the gaps in our coverage to gain share, including in M&A. Wealth revenues increased for the ninth straight quarter, up 13% with growth across all 3 businesses, while returns improved to over 14%. Client investment assets were up 14% and net new investment assets have reached $30 billion so far this year. Almost 2/3s of that NNIA growth came from deepening relationships with our existing clients and referrals from the retail bank to Citigold were up 23%.

So you are now starting to see the tangible benefits of integrating our retail branches into wealth. In U.S. consumer cards, investments in our products and partners, which shows up in both revenues and expenses impacted our operating leverage this quarter. But it's these investments, such as our acquisition of the AA Barclays portfolio in April that will drive future growth in our general purpose portfolio. Furthermore, our resilient customer base kept fueling underlying drivers.

Loan growth higher spend and better credit performance than expected. This resulted in the RoTCE increasing to 22%. During the quarter, we completed the sale of our consumer business in Poland. We also closed on the sale of an additional 22.6% equity stake of Banamex and we remain on track to close on an additional 1.4% this summer, which will bring the total amount to 49%. Simplifying Citi through these international consumer divestitures along with higher PPNR and lower stress losses contributed directly to our strongest showing in the Fed stress test last month, and we plan to increase our dividend by 12%. We launched $30 billion common stock repurchase commitment by buying back $4 billion during the quarter.

Our CET1 ratio stood at 12.8% and remains about 120 basis points above our current regulatory minimum. We continued to make progress in our transformation with a large body of work passing internal audit validation. As much of the transformation work winds down, we are not only taking down expenses, but we're applying what we learned about large-scale implementation to integrate AI into our businesses and functions wherever it makes sense. Nearly 9 of 10 of our people are using our AI tools. That's not only driving productivity and client experience but also growth, helping us bring products to market significantly faster as we're doing with payment Express in services and with our Citi Wealth Advisor Insights platform.

On the macro front, the conflict in the Middle East has weighed a bit on global growth, whilst giving inflation a second wind. In the U.S., growth is roughly where it was a year ago and the labor market remains stable. But it's a nuanced story because that growth is not lifting all boats. The extraordinary investment in AI and its supporting cost of semiconductors, data centers and related infrastructure is providing a tailwind in the U.S. and parts of Asia, while a more vulnerable Europe, faces yet another competitive headwind.

Above all these dynamics, we see real resiliency in our corporate clients who bring strong balance sheets and a proven adeptness of managing the complex environment. You've heard me say many times that Citi's success won't follow a straight line that the rigor and consistency with which we have executed the strategy we first laid out for you in 2022 and reinforce at our Investor Day in May, has put Citi back in the game. And our people deserve enormous credit for getting us to this position. We have elevated Citi into a new growth mode. Our returns are improving, and the conversation around this firm has changed.

We continue to do the things we said we would do such as investing in the businesses, whilst we take down our transformation and stranded costs. Despite the usual seasonality in the second half of the year, we feel very good about our ability to hit our 2026 return target. And then to reach the targets we shared with you in May. And to be clear, if conditions stay constructive, we intend to take advantage of that. We'll lean in with additional investments and other actions to create value for our shareholders over the medium term. A stronger environment isn't just upside to report. It's an opportunity we will put to work.

And finally, as you are all aware, this is Jenn Landis' final earnings call before she becomes our Chief Financial Officer for markets. Jenn came to Citi almost 5 years ago, just after I became CEO. Over that time, she has reestablished trust and credibility with the investor community and rebuilt our Investor Relations team, which is now recognized as one of the best on the Street. You can see her fingerprints on our disclosures, our financial communications and events such as our recent Investor Day. She has worked tirelessly to make sure you understand where we are going and how we will get there. So Jenn, thank you very much indeed.

Before I turn it over to Gonzalo, I would like to thank FIFA for scheduling Argentina's semifinal match in Atlanta for tomorrow and not for today. I shudder to think what Joyce Gonzalo would have made in that situation. Gonzalo, over to you, and then we will be delighted, as always, to take your questions.

Thank you, Jane, and good morning, everyone. First, I can neither confirm nor deny what decision I would have made in that situation. And second, I would like to echo James sentiment regarding Jenn's final earnings call as Head of Investor Relations. Jenn has been a great partner to me to Jane and to the broader leadership team. Since taking over Investor Relations in 2021, she has built strong relationships across the investor and analyst community and help ensure that Citi strategy is communicated with clarity, credibility and consistency. And we look forward to seeing her continue to make an impact in her new role. On behalf of the entire management team, thank you, Jenn, for your leadership, your counsel and your many contributions.

I'm also very pleased to have Marco Pillage stepping into the role of Head of Strategy, M&A and Investor Relations. Margo comes to this role after 5 years as Jane's Chief of Staff and brings deep knowledge of our strategy, priorities and organization after more than 2 decades at the firm. I look forward to working with Margo in her new role, and I know she will do a tremendous job.

Now getting to the quarter, I'll start with a firm-wide financial results, focusing on year-on-year comparisons, unless I indicate otherwise, then review the performance of our businesses in greater detail. On Slide 4, we show financial results for the full firm, which demonstrate the progress we've made and the momentum of our strategy. This quarter, we reported net income of $5.8 billion, EPS of $3.15 and an RoTCE of 13% on $24.8 billion of revenues, generating positive operating leverage. Total revenues were up 14% with growth driven by each of our businesses and legacy franchises, including the impact of FX translation, partially offset by a decline in corporate other.

Net interest income, excluding markets, which you can see on the bottom left side of the slide, was up 6%, driven by growth across all businesses and legacy franchises, partially offset by a decline in corporate other. Noninterest revenues, excluding markets, were up 39%, driven by growth in all other, banking, services and wealth, partially offset by a decline in U.S. consumer cards. Excluding all other as well as markets, noninterest revenues were up 18%, and total market revenues were up 17%. Expenses of $14.2 billion were up 5% with an efficiency ratio of below 58%, which I'll provide details on shortly.

And cost of credit was $2.5 billion, primarily consisting of net credit losses in U.S. consumer cards as well as a firm-wide net ACL build of $118 million. Looking at the firm on a year-to-date basis, we generated positive operating leverage with total revenues up 14%, driven by growth across all businesses and legacy franchises, including the impact of FX translation, partially offset by a decline in corporate other and expenses, which have also been impacted by FX translation, up 6% as we reported an RoTCE of 13.1%.

On Slide 5, we show the expense and efficiency trend over the past 5 quarters. As I just mentioned, expenses increased 5%, primarily driven by our continued investments in the front office as well as higher volume and revenue-related expenses. This increase is reflected in compensation and transactional and product servicing costs. And we also saw an impact from FX translation across our expense base.

The benefits of our past investments and productivity efforts have allowed us to gain efficiencies across our expense base and reduce our headcount to 219,000 with over $800 million of severance incurred year-to-date. We continue to invest in areas such as technology, including AI, and we would expect an increase in productivity saves over time. And it is worth noting that this expense increase was against 14% revenue growth, resulting in an improvement in our operating efficiency of over 500 basis points.

On Slide 6, we show U.S. cards and corporate credit metrics. As I mentioned, the firm's cost of credit was $2.5 billion, primarily consisting of net credit losses in U.S. consumer cards as well as a firm-wide net ACL build. Our reserves incorporate an 8-quarter weighted average unemployment rate of 5.3%, which includes a downside scenario average unemployment rate of nearly 7%. At the end of the quarter, we had over $22 billion in total reserves with a reserve to funded loans ratio of 2.5%. We continue to maintain a high credit quality card portfolio with approximately 86% of balances extended to consumers with FICO scores of 660 or higher and a reserve to funding loan ratio in our U.S. cards portfolio of 7.6%.

Looking at the right-hand side of the slide, you can see that our corporate exposure is 79% investment grade and in the quarter, corporate non-accruing loans as well as corporate net credit losses remain low. We are confident in the high-quality nature of our portfolios, which reflect our robust risk appetite framework rigorous client selection and our focus on using the balance sheet in the context of the overall client relationship.

Turning to capital and the balance sheet on Slide 7, where I will speak to sequential variances. Our total assets of $2.9 trillion increased 4%, driven by growth in trading-related assets. Net end-of-period loans increased 4%, primarily driven by growth in markets and U.S. cards. Our $1.5 trillion deposit base remains well diversified and increased 3% driven by growth in services as we continue to deepen with clients with a focus on high-quality operating deposits. We maintained a 114% average LCR and over $1 trillion of available liquidity resources.

In the second quarter, we continued to deploy capital to support client-driven growth while at the same time, prioritizing the return of capital to common shareholders, as evidenced by the $4 billion in buybacks. We ended the quarter at 12.8% CET1 ratio under the binding standardized approach, approximately 120 basis points above the 11.6% regulatory capital requirement as we continue to target a CET1 ratio around 12.6% under the existing rules and requirements.

While our LCV remains at 3.6% as we announced in June, we were pleased to see the continued improvement in our DFAST results and the corresponding implied SUV of 3.3%, which marks a reduction for the third consecutive year, demonstrating the execution of our strategy and improved business performance, which has resulted in growth in PPNR and greater resilience in stress. And as a reminder, we plan to increase our quarterly common stock dividend by 12% beginning in the third quarter, subject to quarterly board approval.

Turning to the businesses on Slide 8. We show the results for services in the second quarter. Revenues were up 18%, driven by growth across both TTS and Securities Services, reflecting the benefits of our continued investments in the business. NII increased 18%, primarily driven by higher average deposit balances. NIR increased 16% as we continue to see strong activity and engagement with both corporate and commercial clients and across key high-growth segments, including e-commerce and fintech, driving momentum across underlying drivers with cross-border transaction value up 13% and assets under custody and administration up 22%, which includes the impact of market valuations as well as new assets onboarded.

Expenses increased 5%, driven by higher volume-related expenses as well as higher performance and other compensation expenses. Average loans increased 10%, primarily driven by export agency finance and working capital loans. Average deposits increased 19% with growth across both North America and international, largely driven by an increase in operating deposits as we continue to deepen relationships with existing clients and onboard new clients. Services generated positive operating leverage and delivered net income of $2.6 billion with an RoTCE of 30.9% in the quarter and 29% year-to-date.

Turning to markets on Slide 9. Revenues were up 17%, driven by growth across both equities and fixed income with strong momentum across client segments, including corporates, asset managers, hedge funds and banks. Fixed income revenues were up 7%, driven by growth in spread products and other fixed income as well as rates and currencies.

Spread Products and other fixed income was up 25%, driven by growth across both financing and credit trading and spread products as well as growth in commodities and rates and currencies was up 1%, with growth in currencies on higher volumes, reflecting strong client engagement, primarily offset by lower revenues in rates. Equities revenues were up 45% driven by continued momentum in derivatives and Prime Services as we grew prime balances by nearly 60%, with growth across both new and existing clients as well as higher market valuations. Expenses increased 8%, driven by higher performance-related compensation and volume-related expenses. Average loans increased 29%, primarily driven by financing activity in spread products. Markets generated positive operating leverage and delivered net income of $2.4 billion with an RoTCE of 17% in the quarter and 17.8% year-to-date.

Turning to banking on Slide 10. Revenues were up 34%, driven by growth in investment banking, partially offset by a decline in corporate lending, excluding mark-to-market on loan hedges. Investment banking revenues increased 44%, reflecting a strong wallet driven by growth in DCM and ECM, partially offset by a decline in M&A. DCM was up 65%, resulting in our second best quarter ever with growth across leveraged finance and investment grade. ECM was up 92% amid very strong market conditions with growth across all products led by strength in IPOs and follow-ons where we participated in 8 of the top 10 ECM deals of the quarter.

And while M&A was down 4%, we maintained a healthy pipeline and continue to have meaningful strategic dialogue with our clients. Corporate lending revenues, excluding mark-to-market on loan hedges, declined 4%. Expenses increased 7%, driven by higher performance-related compensation and investments as well as higher volume-related expenses. Cost of credit was $242 million, consisting of net credit losses of $138 million and a net ACL build of $104 million. Net credit losses were driven by loan sales, which we had previously reserved for. And the net ACL build was driven by exposure growth largely offset by reserve releases covering losses on the loan sales.

Average loans increased 5% as growth in loans associated with investment banking activity more than offset the decline in corporate lending balances. Banking generated positive operating leverage and delivered net income of $350 million with an RoTCE of 18% in the quarter and 16.9% year-to-date.

Turning to Wealth on Slide 11. Revenues were up 13%, driven by growth across all businesses with 17% growth in Citigold and the retail bank, 5% in the private bank and 3% in wealth and work. NII, which you can see on the bottom left side of the slide, increased 18%, driven by higher deposit spreads and average balances, partially offset by lower mortgage spreads. NIR was up 4% and as we continue to see growth in investment fee revenues, which were up 20%, primarily offset by the absence of the approximate $80 million gain on sale of our alternatives fund platform, which occurred in the second quarter last year and the loss of fee revenue from the sale of the trust business in 2025.

Net new investment asset flows were $15.7 billion in the quarter, contributing to over $56 billion in the last 12 months, representing 9% organic growth. Overall, client investment assets were up 14%, which also includes the impact of market valuations and was partially offset by the sale of trust business assets. Expenses increased 3% driven by higher technology costs and higher performance-related compensation. Average loans were up 5% as we continue to grow securities-based lending and deploy balance sheet to support clients and drive client investment asset growth.

Average deposits were up 4%, primarily driven by growth in the private bank. Wealth had a pretax margin of 23%, generated positive operating leverage and delivered net income of $583 million with an RoTCE of 14.4% in the quarter and 12.6% year-to-date.

Turning to U.S. consumer cards on Slide 12. As Jane mentioned, this quarter, we completed the acquisition of the additional American Airlines co-branded card portfolio, and our results reflect the impact of the over $6 billion in loans for more than 2 million accounts onboarding in April. In the quarter, revenues were up 1%, driven by growth in NII, primarily offset by a decline in NIR. NII was up 5%, driven by higher interest-earning balances. NIR was down 47%, driven by higher accruals for partner payments and new account acquisition costs, reflecting increased investments, partially offset by higher annual fees and net interchange. Including the additional American Airlines portfolio acquisition and momentum across underlying drivers, we saw general purpose cards acquisitions up 135%, spend volume up 12% and average loans up 8% partially offset by declines in private label cards.

Expenses increased 10%, driven by higher severance, customer engagement costs legal expenses and increased marketing as we invest to drive future acquisitions and continued customer engagement. Cost of credit was $1.6 billion, consisting of $1.9 billion of net credit losses and a net ACL release of $232 million, driven by improved portfolio quality, including seasonal changes, largely offset by higher volume and changes in macroeconomic variables.

U.S. consumer cards delivered net income of $852 million with an RoTCE of 22% in the quarter and 20.6% year-to-date. While we expect RoTCE to remain around our through-the-cycle target for the business, in some of the next few quarters, we do expect expense growth to outpace revenue growth as we invest in the business to drive engagement and acquisitions with some of those investments reflected as contra revenue and others as expenses.

Turning to Slide 13. We show results for all other on a managed basis, which includes corporate other and legacy franchises and excludes divestiture-related items. Revenues were up 1%, driven by growth in legacy franchises, offset by a decline in corporate other. Growth in legacy franchisees was driven by Mexico Consumer, which includes momentum in underlying business drivers and the impact of Mexican peso appreciation, partially offset by the impact of continued reduction from our exit and wind-down markets.

The decline in corporate other was driven by lower NII, which included actions taken, such as those to reduce Citi's asset sensitivity due to a lower interest rate environment, largely offset by higher NIR, reflecting episodic activity. Expenses were down 3%, driven by a decline in legacy franchises as lower expenses related to exits and wind downs were primarily offset by the impact of Mexican peso appreciation as well as a decline in corporate other, which included lower transformation expenses and severance charges.

As a reminder, we will continue to look for opportunities to drive structural efficiencies, including severance to improve productivity and actions to improve our funding profile. Cost of credit was $438 million, primarily consisting of net credit losses of $366 million driven by loans in Mexico. And we've reduced the total DTAs deducted from CET1 capital held in corporate other by over $500 million year-to-date.

To close, we've included our full year 2026 outlook on Slide 14. We've made significant progress in terms of improving returns on the back of our investments, generating a year-to-date RoTCE of 13.1%. Having said that, we continue to target an RoTCE of 10% to 11% for the full year, supported by NII ex-markets growth of approximately 5% to 6% and continued NIR ex-markets growth driven by momentum in services, banking and wealth, partially offset by USCC. We expect the USCC NIR to remain in line with the second quarter's absolute level in the third and fourth quarters of this year.

In Markets, we historically have seen revenues decline approximately 20% between the first and second half of the year. And given the strong performance year-to-date, the magnitude of that decline could be greater this year. And as we've said before, we expect our full year efficiency ratio to be around 60% as we ramp up investments across the businesses in the second half and incur additional severance as we target future efficiencies. As it relates to credit, we continue to expect a total U.S. credit card NCL rate between 4% and 4.5%, while the ACL will continue to be a function of the macroeconomic environment and business volumes.

And we remain well positioned to return capital to shareholders under our $30 billion share repurchase program. As we take a step back, the results in the second quarter and first half of this year represents significant progress towards our goal of improved firm-wide and business performance.

We remain steadfast and focused on executing our transformation and confident in delivering our RoTCE target of 10% to 11% this year with a clear path to delivering higher sustainable returns going forward as we laid out at Investor Day. With that, Jenn and I would be glad to take your questions.

[Operator Instructions]

Our first question will come from Glenn Schorr with Evercore ISI.

Thank you. So I'm a huge fan of investing back in the business during great times, and I heard your message loud and clear, and we see your guidance. But people are trying to parse through the not-oping of the of the RTC target this year, how much -- I don't know if you can quantify in numbers, that's what I'm asking, is how much of it is conservatism and not knowing what's ahead in the second half versus investments you've already made versus investments you're going to make in the second half? I'm just trying to get through the parsing of it.

Glenn. Well, I have to say, with a good first half under our belt, we've shifted our focus from the '26 waypoint to the near-term and medium-term targets and the investments behind them. As you say, we've operated in a good environment so far this year. I think the whole industry has benefited from revenue growth and benign credit. What I think I'm most proud of is that we've generated real alpha, its outperformance that we created is not just a rising tide.

And you've seen us pay back with consistent expense and capital discipline whilst investing. Now as you say, how strong the second half turns out largely depends on the macro and the market backdrop. And that's true for everybody. we are deliberately investing for long-term growth and for improved returns. And a couple of weeks or a few weeks ago, we laid these out in the investment plan in detail at Investor Day.

And you see we just have a lot of opportunities here. And we're funding these investments whilst holding our efficiency ratio for the year around 60%. And there's real discipline be underneath that number. So to be clear, if conditions stay constructive, we intend to take full advantage of that. We will lean in bringing forward investments and other actions that will create value for our shareholders over the medium term. And as I said in my opening, a stronger environment isn't just upside to report, it's an opportunity that we're going to put to work. So I'm very comfortable with our 10% to 11% number.

Is the cost -- I'm good at math, 13 for half and 10% to 11% would mean significantly lower in the second half. I'm just trying to get at is -- is that conservatism based on, like you said, 20% seasonality and more this year because the first half was so good. So should we -- I just want to get our collective mindset in the right spot? Is the second half possibly a single digit to 10% return with no additional investment?

Thank you, Glenn. I'll take this one. Even though I may disappoint you not giving you the precise math on every month in the forthcoming couple of quarters. But I think it's a fair question. And just to emphasize a couple of things that I think Jane just mentioned, number one, and you alluded to them, too. Number one is there's a pocket of uncertainty that we want to make sure that we navigate and we're able to land, and we've spoken about this in the past, even for our near term and medium-term targets, and we want to be able to deliver under a variety of environments.

Secondly, the seasonality that you just mentioned and I alluded to in my remarks, especially as it relates to markets, not only, right, because other businesses also have pockets of seasonality, but markets is the more pronounced one.

And the third one is what Jane just spoke about, which is making sure that we have the flexibility to take advantage of those opportunities if the markets are constructive. And that could come in a couple of flavors. It could come -- we've spoken about the investment themes at Investor Day a couple of months ago across each of the 5 businesses. So we will consider leaning into those and accelerating more of those. We will also look at -- you will remember that I spoke about sources of structural efficiency to fund our growth over the next couple of years, we may look at accelerating some of the structural efficiency actions and in that case, take more severance in the second half. As you can see, so far to date, we're already at $800 million for for half of the year. We're already basically at the level that we were a year ago.

So if we see opportunities, we may do a bit more than we originally envisioned. And then the third piece, as Jane was mentioning actions as well, is we will also look not only at structural efficiency opportunities, but it could also be structural funding opportunities. If we see any opportunities to take actions to improve our funding profile over the long run, we will do those. You saw us do a little bit of that in the second quarter where we tendered for $1.2 billion of debt. And so we'll look at those opportunities to Jane's point, not to maximize the waypoint, but to actually look at the durability of the returns going forward.

Your next question will come from Mike Mayo with Wells Fargo.

I think, Gonzalo, you're going to be the Messi of CFOs, I think we need to understand a little bit more about your prior answer. And I think what you're saying is you'll use kind of the excess earnings above what you had expected to front load or accelerate structural changes that will improve your future funding efficiency and growth. But the problem is, again, 13% return in the first half of the year, that would imply 9% the second half of the year, efficiency, 57% in the first half of the year. To get to 60%, that would imply maybe 63%. So I think I think what the stock market saying right now, I think what we're hearing is that you're guiding for a much worse second half of the year than the first half, and that may or may not be your intention. So if you could simply clarify what you really are saying about the expenses and what areas would you like to kind of accelerate spending on when it comes to revenue growth?

Mike, let me just jump in here. What we're saying is we're focused on the near-term and the medium-term targets, not on the way point. I think that I can't imagine this investor that doesn't want us to make sure that we are taking full advantage of the market conditions, particularly if they're good in the second half to be able to make the investments and take actions that will drive growth for the next number of years. And that's where -- and that's the message that The Street should be taking from this, but Gonzalo, over to you.

I think that's 100% in sync with what we're saying, right? We're not saying, Mike, that we're expecting a worse second half, there is seasonality to it, right? If you look at the historicals, you will be able to see it. And that plays through not only on the revenues that I highlighted in my remarks as it relates to markets, you'll see that playing through generally in returns and operating efficiency over a reasonable period of time in the past. But what we're looking forward to is to Jane's point, making sure that we put the opportunity to work where we see a chance in order to really solidify that path to near-term and medium-term returns, which is the ultimate goal, right? It's really driving the durability and the improvement that we want to know that we want to drive in order to close the gap with our peers. As we said, we intend to do.

Yes. We're playing the long game.

And a separate question related to your remediation efforts. Last quarter, you said you were 90% plus done and do you expect it to be 100% on sometime in the near term, I think you said that at Investor Day, are you at 93%, 99%. When do you think you get to 100% and you turn it over to the regulators to make their decision?

I'm not going to get -- I'm not going to get into the game of whether we're at 95%, 96%, 97%. We are largely now operating at the Citi target state. The important piece I mentioned in my opening remarks, is a large amount of our work on the consent order, successfully passed through audit validation this past quarter. and therefore, can get handed over to our regulators. And as you know, we've still got remaining work that relates to enhancing data governance, particularly for regulatory reporting, and we continue to make steady progress on it.

In terms of the timing of the removal of the consent orders, that is fully at the discretion of our regulators, both in terms of reviewing the work that we've done, as we hand it over and then going through their closure process and that takes time. But I do reemphasize for our investors. Whenever we complete each body of work, we begin taking down the remediation expenses, and you can see that in our expense line. It's creating the capacity to further invest in the businesses. That's the additional $5 billion of investments that we talked about in May, and we don't need to wait for the orders to close to do this, that is happening already.

Your next question will come from Ken Usdin with Autonomous Research.

I have a question on the NII side, on the ex-markets basis. Strong start also here in the first half of the year where you're already above the 5% to 6% in the first half and deposit growth continues the pace, obviously, as you discussed, especially in services. I want to understand also do you have any conservatism in terms of that outlook in terms of why you may not be able to do better than that 5% to 6% on the core NII ex-markets given the trends that we're already seeing so far?

Thank you very much, Ken, for the question. I think we can see in -- through NII ex markets, I think, is a good window into: number one, our strategy working; number two, I think the operating rigor and yes, we continue to be constructive on our progress forward, and we're comfortable with the guidance that we provided would be the short answer. But just to unpack that for a bit, so just to recap the guidance for everyone, the guidance on NII ex-markets for the year is 5% to 6% revenue growth, that's anchored by mid-single-digit growth in the underlying drivers.

In the second quarter, our NII ex-market growth was 6%. So it's within the range of the guidance that we provided for the second quarter. And that's in line with seeing deposits growing at about 12% on average. As you mentioned, services really good momentum and 19%, wealth, 4%, most of it coming from the private bank and loans growing in that mid-single-digit range at around 6% for the quarter year-on-year supported by services, cards and wealth. And so when we step back and we look at the picture of NII ex-markets, we're comfortable with our guidance.

I think [indiscernible] alluded to this in our Investor Day as it relates to not expecting that deposit growth that we've seen on 19% will not normalize over a period of time. And so we expect that normalization to play through, but we're pleased with the trajectory that we're seeing. Of course, Services had a very strong quarter. We reached $1 trillion in deposits for the first time ever. The good news about that, I think, is that those deposits are coming from operating deposits. We're not chasing low-value deposits. The team has been very disciplined on pricing, and that's what you see in the NII pop up there.

Okay. And then just one follow-up. You mentioned on potentially some additional severance in the second half. Can you remind us just the severance you took your quarter-to-date in the first half? And then what -- maybe you can help us with the type of magnitude of severance that you might book in the second, so we can kind of understand also some of that future like you said, to get future efficiencies, right? Is it -- help us understand like how bulky that might be in terms of being run rate?

Yes. No, thank you. Well, we may not provide exact guidance on what we expect from the second half of severance. Let me recap a little bit what we had said and the position that we're in now. So the first quarter was about $500 million. The second quarter just now is another $300 million for an $800 million year-to-date.

You're kind of seeing the acceleration of those actions play through in the head count you see there on Slide 5. And then to recap last year, it was about $800 million also. When we gave guidance for the year, we expect it to be at around that same level or slightly below from a prior year. Obviously, sitting here now and to the point that Jane and I were making, we will still be open-minded about the second half if we see opportunities. If I anchor it back to what we said a couple of months ago at Investor Day, remember, what I said about structural efficiencies to help fund those investments that we want to make over the near term are anchor on 3 legs, right?

Leg number 1 is stranded cost, and you're seeing those already come down from the $1.3 billion a year ago. to about a run rate of $800 million if you look at our second quarter numbers for $200 million that you can annualize. We talked about transformation costs, and Jane just mentioned that as we reach completion of the programs. We're taking action on the portion of the transformation cost that is temporary. That sits in corporate other. I had mentioned that at our Investor Day. You remember, the peak was $3.3 billion of that total expense. About half of those siting corporate other which are the ones that are temporary in nature, not the ones that are structural in nature, and we're starting to see those come down.

And then the third leg of that structural efficiency push is the productivity opportunities that we see from technology and AI automation. And I spoke about how we have more than 100-plus processes that we're mapping end-to-end, where we see opportunities for further automation. We look at this every week and and our COO; and Jim Ryan, our our Head of Technology, and we're very purposely trying to make progress on that. So as we see opportunities and if we see opportunities, this is what I was referring to. I'm trying to connect with us here in the second half to accelerate some of those productivity opportunities. We may take more severance in the second half, but we're not providing a specific number now.

And on North Star with all of this is pulling forward higher sustainable returns.

Your next question will come from Ebrahim Poonawala with Bank of America.

I guess, Gonzalo, just to follow up, I think -- on this, I think, I mean the stock is down 5%. I think to Mike's question earlier about the back half being worse than the first half. I understand that's not what the message was. The message was if the revenue environment is stronger, you're going to take advantage of that by investing. But maybe as we look through in terms of the momentum you had in the first half, yet there's some seasonality as we look into the -- into the third quarter and later in the year. But is there an obvious reason? Like are you -- is the point here that if the revenue backdrop is strong, we could still maybe replicate the strength more or less that we've seen in the first half? Or are you expect -- should we be expecting a step shift due to 2 reasons: one, seasonality; and second, the pull forward in the investments that you've talked about multiple times this call.

Ebrahim, thanks very much. Maybe let me start by not reiterating, but emphasizing a couple of points. The first one is we are pleased to see, and we are not expecting to stop, just to be clear, the commercial intensity that we're driving our execution rigor and focus the already good results we're seeing from past investments. That's -- we're not planning on that to stop. And of course, if the environment is constructive, we expect to see continued momentum, right? I spoke for a minute just now about NII. We have good momentum in our services business, where we're seeing good engagement and higher win rates with new mandates deepening relationships with existing clients and some of the investments that we made in our platform paying off. We had a very good quarter in markets, as you can see.

We're making investments in talent, in technology. The market is constructive. It's good to see the business model working in a diversified way so that not every cylinder needs to be firing right completely in order to have very good results as we just did. Banking, some of the investors we're making, the momentum, the intensity, that business driving in the business playing through. You're seeing the improvement on wealth, right, in terms of the returns being driven there, both in NII and NIA, growing at 9%. Our deposits growing, our NII growing.

Many of those things have an element of sustainability in them as well. And cards, I mentioned a little bit of the dynamics because we are trying to invest in the business. you can look at the drivers, right, even for the last few quarters, not just the ones this quarter to have the element of Barclays and American Airlines portfolio coming in, and they're healthy because we're investing in the business, and we know that's a high return in business. All those things, we expect to continue to play through in the second half. And the only thing we're saying is that we want to make sure that we are accounting for uncertainty. We're accounting for seasonality and we have the flexibility to position the firm even better for the future to come.

Got it. And maybe just, Gonzalo, I think you talked about the USCC in the back half around revenue versus expenses. If you don't mind, double-clicking on that in terms of the trend we should expect in the back half? And just over a more longer period of time, what you expect on the revenue versus expense trajectories there?

Yes. No, thank you for the question. So I think when you look at cards, there's a couple of things that stand out to me and you can see them in the second quarter, so you're going to actually anchor them on the numbers we have seen. The first thing is we spoke about how the through-the-cycle return target for our cars business is low 20s. So the first principle for us is the returns discipline, right? And you can see that we are -- while we're investing, and I'll talk about that more in a second, we are keeping that high focus on returns and the rigor and this is true across our proprietary book, but also every single one of our partner relationships. And you've seen us, as Pam mentioned in our Investor Day, relationships that don't pass our return target. So that discipline to me is super important.

Even in a quarter where we can -- you can see our investment level, you still can see a 22% return there high for our firm. The second piece is we spoke about our strategy. And our strategy has 2 components, 2 big elements that we spoke about. One of them was the shift towards general purpose credit cards. That's been driven by the customer behavior. You see it in the drivers.

If you look at the bottom right side of the [indiscernible] page, which is Page 12, you can see the bifurcation of the drivers, and that -- those are the customers telling us how their behavior is driving the business. And you can see that already in our numbers, right? At the end of last year, 82% of our book was a purpose cards. This quarter, we are at 84%. So over time, you're going to continue to see us increase that purely because one is going to grow faster than the other.

And the second leg is we said we're going to make investments, right? And now you're seeing that play through this quarter. And as I mentioned in my earlier remarks, you can expect that over the next few quarters, there's going to be a few quarters where the expense growth will be greater than the revenue. than the revenue growth. And you should know that we are comfortable with that because, number one, we're keeping the return focus very sharp. And number two, we know that these investments pay off. So this is a deliberate choice to invest in a high return in business while keeping that return focus in the forefront.

And then last piece I'll mention on investments, some of what you're seeing -- remember, as a reminder, the investments in the car business, they play both in terms of expenses, but they also have a contra revenue component because a lot of the acquisition activity place as a contract revenue, right? And so -- what you're seeing us do is you're seeing us invest in acquisitions.

You're seeing us invest in our product capabilities into our client experience, into the loyalty and engagement, which is something that is key so that we can be top of wallet as well as in our partnerships as we did with the Barclays portfolio as well. And so those key pieces are critical. You are seeing as co-brand airport lounges with American Airlines into the U.S., you can already see in a few airports. So you're seeing us lean forward in a business that is high return.

Your next question will come from John McDonald with Truist.

Gonzalo, could you remind us in terms of the capital target, you mentioned 12.6 for now at Investor Day, you noted 13.1 by 2028 to accommodate higher G-SIB. But broader, what could lead that to be better along the way between potential rule changes, structural improvement for Citi and maybe your own lowering of your own discretionary buffer. Can you just give us some thoughts on the capital path, please?

Thanks very much, John, for the question. So yes, just to recap where we are in this quarter, we're at 12.8% CET1, that's 120 basis points above our regulatory requirement of 11.6%, as you mentioned. And then maybe playing -- and thank you also for reminding everyone about the 13.1 because of course, we embedded as far as capital assumptions for our return targets in the near and medium term, equates to the reality and the regulatory regime that we are operating under today, right? We don't -- we didn't bake in any assumptions about what would look like potentially. So I think you hit on a couple of those areas already, but let me piece them out a little bit.

So of course, we're waiting for the finalization of the rules as it relates to Basel III to G-SIB and in particular, the SUV. As I mentioned in the past, Basel III and G-SIB provide us in our early analysis with a moderate net positive position and that emanates from -- on the positive side, the G-SIB coefficient playing through as well as some of the RWA weights in retail and corporate, and that is partially mitigated by the operating risk and the market risk factors that I think a lot of people are familiar with at this point. And so that could be one element that plays through.

The second piece is the stress capital buffer. And the stars capital buffer, there's a couple of vectors there, right? One of them is, of course, the final rules, and we think there should be opportunities for us to benefit from that when they become final, but importantly, and more within our control and hopefully, the DFAS results even if they don't take hold really for this year, and we will see on the back of the new rules in October '27, the real changes, hopefully, as a signal you can take away, and that's how we saw it, the 30 basis point improvement, the third year in a row of improvement of that SUV that came for us down from the 4.3% to the 3.6% that we're under right now and the [indiscernible] results that just came out, take it down to another 30 basis points to 3.3%.

That tells you that how the strategy is working, right? And we talked about this at Investor Day. Strategy working in terms of we have exited the international consumer franchises, number one. Number two, our PPNR position, continue to sequentially improve year after year. And so our loss absorption capacity improves. So even in the absence of any model enhancements that come out from the rules, you can see our strategy at work already also being a tailwind, and we hope that, that -- those 2 factors will pay through an important role.

And then to your last point on the buffer, I think, of course, we will wait until all 3 sets of rules are solidified to evaluate our position for now. We're comfortable we are, and we're managing to around that target of 100 basis points that we mentioned before.

Okay. And then maybe a follow-up on that is on the DTA utilization. Could you give some more color on what drove the nice step down in DTA this quarter. And just a reminder of the path that you're hoping to see over the next 2 years for that to come down from, I think, ending this year at $13 billion going down to $7 billion.

Yes. Thanks very much for the question. And we know that DTA is an area where we have to demonstrate the performance because the last couple of years, we have not consumed as much. But hopefully, you're starting to see a couple of dots there on the page. So just to recap briefly, our starting position at the end of last year was $13.9 billion of the disallowed portion of the DTA. Our position right now is $13.4 billion. So year-to-date, we have consumed about $500 million of that. As a reminder, there's carryback support that builds up in Q1 and then starts to wear off during the year. So you have an element of that playing through. And then our U.S. profitability that we disclosed last year was about $4 billion.

This year, we expect to make good progress in that. And you heard from all my colleagues, the business heads talk about it at Investor Day. And you're seeing it play through in the second quarter, right? When you look at the deposit growth in services, the 19%, a good portion of that growth came from North America. When you're seeing the strong quarters in markets and banking, a good portion of activity in both of those businesses comes from the U.S. The improvement in returns from wealth, right? Wealth coming from 7.7% to 10.8% to now 14.4 RoTCE. A good portion of that activity comes from the improvements in the affluent business in the retail bank and across the franchise that is North America centric. And then finally, of course, the returns in cards, which are also improving year-on-year.

So all of those areas and the focus and I've spoken about before, how Jane has made sure that we are all held accountable in our scorecards for this. will, hopefully, over time, demonstrate to you through the numbers, how that comes through. As I always say internally, and I repeat it externally, you need 2 dots to draw a line. So we're pleased to see the first dot here in the second quarter and we look forward to continuing to demonstrate progress in this space.

And sorry, a final reminder, I guided earlier in the year that the full year target was $800 million of burn down of DTA. And so we've done $500 million of the $800 million year-to-date.

Your next question will come from Manan Gosalia with Morgan Stanley.

So for the elevated investment spend in the back half of the year, can you help us with any specifics there in terms of these specifically investments you were planning to make in 2027 that you now have the opportunity to do in the back half of the year? And I guess, how quickly do you expect to see the returns of this higher investment spend. Does that give you the ability to get to the medium-term targets maybe sooner than before?

So at Investor Day, we laid out the specific investments that we're making in quite a lot of detail. So we'll be looking at what are the opportunities to pull some of those forward. as we talked about, and it would be pretty well across the board. There's nothing specifically. I also do want to emphasize. These are -- we are not looking at anything inorganic. I think I've been very clear about that at Investor Day and in the last couple of earnings calls, when we're talking investments, these are purely organic. But Manan, just to assume we're looking at a number of the different investments we talked about, where we can pull them forward and as Gonzalo alluded, if there's any severance and other pieces as we accelerate productivity gains, we'll do so too.

Got it. And maybe if we can talk about pipelines in investment banking, a clearly very strong performance here. I think you noted that M&A pipelines are strong. But if you could talk about in general, how you're seeing revenue opportunities across that business as we look out into the next year or so.

Look, the level of activity is very strong. The pipeline is very healthy. And we're also in a financial market as we looking for reasons to buy. I think the central CEO question right now across sectors is do we invest for growth now? Or are we preserving optionality. And AI is dominating a lot of the conversations. So tech, data center, energy, defense CapEx is accelerating. Companies are accessing the public equity and bond markets alongside bank debt in size, SK Hynix. For example, last week is another testament to that an offering by the way that we led. And wherever there's a bottleneck in that whole energy power compute mentor memory ecosystem. We're seeing a lot of activity. So we have to see -- we'll probably have the summer lull as everyone takes a bit of a break. We'll have midterms coming up, and the wildcard really is geopolitics. But we're certainly entering the second half with a good pipeline.

Your next question will come from Jim Mitchell with Seaport Global.

Maybe just a follow-up on capital. As you noted, the stress test, you saw about 30 bps of improvements based on similar rules for last year. Seems like model enhancements are likely to lower the volatility in the SCB going forward and likely improve it and profitability is getting better have more certainty on the other regulations. Is there a time when you start to question a 100 basis point buffer, I guess, is my question? And can you run a thinner buffer and use that excess capital while your stock is still in the low tangible book multiple still kind of in the low 1%, 1.5% range?

Yes. Let me reemphasize what Gonzalo said earlier. We're not looking at changing the buffer right now. There's quite a lot of uncertainty in certainly the geopolitical and other environment. So we're not looking at changing it, but we are looking forward to the continued strengthening of our PPNR continued lower stress losses and also getting the models to be an accurate reflection of our business.

We think they overstate risk in a number of areas, treatment of our DTA is a sizable example, double counting of operational market risk is also another area that has a sizable impact. So the biggest upside is going to come from what we hope we will see, which is the new models coming out that are an accurate reflection of the actual risk, and that will have the biggest impact on SCB, but until they are issued, we won't know. And obviously, we hope G-SIB will be addressed better than it has been in the initial proposal.

Okay. Fair enough. Just in cards and consumer, delinquency is down despite sort of years, I guess, that many have had around rising inflation and the impact on the consumer. So what are you seeing in consumer credit and consumer behavior? And does it look like these favorable trends are continuing?

Yes. Thank you. So I think a couple of thoughts there. First, we're seeing a stable spread environment. The U.S. consumer is showing up as -- and I know I sound like a broken record from a few quarters, but the U.S. consumer has been resilient, right? And you can see that the spend.

Even if you take out our spend the part of the Barclays American Airlines book this quarter, you still see 6% to 7%, 7% and ex the gas inflation in the quarter. You're hearing around 6%. That's very healthy as it relates to the spend and in line or on the higher end versus the last few quarters. Then when you look at the delinquencies and the net credit losses, you can see that across the portfolios, right, both delinquency and credit losses are down year-on-year. So across kind of the 4 key metrics.

And when we look at our leading indicators of collections and the usual pockets that you look at when you're trying to seek for stress, you're really seeing an environment that is stable. As Jane mentioned in her remarks, credit has been in line or better than our expectations. That's also why when we guided the range for this year, the 4% to 4.5%. We anchored it on. If you actually -- I know we used to look at the business with a slightly different lens. But if you do the math, this is a lower range than the one we've had in the past, and that's a reflection of we're seeing the environment.

And as you know, because of the write-off rules, which are 180 and 120, depending on the [indiscernible] alone, we have a pretty decent sense as to what the rest of the year paints, and we see that a bit of stability. Again, subject to the watch outs, right? And you mentioned some of them, right? They watch out on inflation and what happens with that, which I know we had a better read just now. What's the relationship between that inflation and the wages, right, the savings rate impact on that for clients and ultimately, the unemployment, which has been relatively in equilibrium for the last few weeks. And so we're constantly looking at that. But so far, it's a constructive environment.

Your next question will come from Erika Najarian with UBS.

Just one follow-up. It was actually a part of Manan's question. We're hearing you loud and clear in terms of the second half investment spend. I guess the question I wanted to reask is Jane, you're not focused on the way point, your focus in the near term, which is 11% to 13% RoTCE in '27, '28 and 14% to 15% medium term, sort of pulling forward the investment agenda, will that enable you to not just hit those RoTCE those return targets but potentially be sort of in the better half of that range. And additionally, does the consent order getting lifted free up additional expenses that you can reinvest back into the franchise?

Erica, Look, the outperformance -- possible outperformance that we've been seeing and the benefit, it allows us the optionality to invest or pull forward where that makes sense. We we didn't see accretive opportunities would, of course, let it play through the bottom line and to the return side. But I think the message you should be taking away loud and clear is we're seeing opportunities to invest will be driving higher sustainable returns, and we're going to take advantage of that opportunity. Don't read anything more into it. And in terms of the consent order, the timing of the lifting is in the hands of the regulators, not in ours. The timing of taking expenses down is in ours. And we have begun to do so as we finish the different bodies of work. We take those expenses down, and those are helping us fund further investments into the businesses. So that is all going -- ticking along nicely.

Next question will come from David Chiaverini with Jefferies.

So you had strong growth in deposits this quarter and good to see the cost of interest-bearing deposits stable at 2.71%. How should we think about deposit cost going forward?

Thanks very much, David, and good afternoon to you. I think when -- let me piece that out maybe between the 2 large businesses that are driving our deposit base, right? So we have services where I was mentioning a little bit earlier. We were able to drive 19% growth year-on-year on average deposits and reaching over 1 trillion milestone there. And I mentioned it a little bit briefly, but a good portion of those are operating deposits. And so when you think about pricing and rates and also what to expect going forward, at least as based on what we're seeing as of now is, yes, we have seen with an environment that's pointing to a bit higher for longer. We have seen some catch-up pricing. But as I mentioned earlier, the betas are well within our expectations, right? So they are in line with what we thought they would be. And the team has been familiar and the team have been very disciplined on pricing. So what is pleasing for me to see and what gives me comfort is that we're not chasing low-value deposit volume and that these share gains come from really driving those operating deposits across both international and North America.

Now when you look at the spread in addition to the pricing dynamics, the more we grow North America, just because it's a more competitive market, not because you're giving away price in relationship to international, you may see some mix factor playing a role there. But other than that, I think generally working well in line with expectations, a little bit of catch-up. The team is all over the pricing, and we're comfortable that our competitive advantage, which is really driving those operating deposits across our payment network really plays through. On the well side, similarly, Andy, very thoughtful about pricing there.

And the only highlight I would mention in terms of customer behavior that we have to monitor for as it relates to how rates evolve especially if they go up is how much of those clients are seeking yield. And you do see pockets of customers seeking yield. Sometimes you may see more synthetic beta in terms of mix shifting into time deposits. So we have a couple of pockets of that. But as you can see from the NII, pretty robust and generally spreads expanding in our business in wealth. So comfortable with the position that we're in and what we're seeing there. And very important that we will keep that discipline very thoughtfully.

Great. And then shifting over to the services business. Very strong growth and momentum this quarter at 18% year-over-year revenue growth. Can you frame this level of growth relative to your medium-term outlook from the Investor Day of low to mid-single digit. What might lead you to see slower growth towards that guide from Investor Day?

Well, thanks for the question. It's a good question, David. And I think some version of that is, I think Shahmir alluded to at Investor Day as well. I think there's a couple of factors that probably play a role into how we think about it over the longer range. And one of the primary ones is the normalization of that deposit growth, right? If you look at the deposit growth between 2022 and 2025, the annualized growth rate there was about 3%. So we're hitting and we're very pleased with the momentum, the commercial intensity and the investments playing through, we're seeing a growth spurt for the last several quarters right? That puts us in the position in Q2 at the 19%. Now we do expect some normalization, right? As Shahmir mentioned a little bit earlier, we are not expecting that we will grow at 4x to 5x money supply over a long period of time.

But at the same time, we continue to make investments, and we're pleased with the momentum that we're seeing in the drivers that underpin that NII. On the NIR front, where this quarter, services delivered 16% and you're seeing there a combination of the cross-border transactions, right, and how customers are thinking about their supply chains and global commerce playing through. And at the same time, the work that we're doing on security services and how we're driving that and that obviously has an element of deposits, but has an element of AUCs and AUAs. And there, you have a combination.

You have alpha, of course, because we have pretty good win rates on new mandates and deepening relationship with existing clients. Some of those are public. And we -- and there's also a pocket of data with market valuations as well. So as you think through the near term and remember, right, the one reminder for the near term and the medium term is that I mentioned this a couple of months ago Investor Days, we have planned for our returns and our targets to be delivered under a range of different environments, right?

And one of the things that we are thoughtful about we're not assuming, right, just because we're sitting at a high part of the mountain with the sun shining and the wind on our backs, given how constructive the environment has been across the industry. We're not assuming that, that will perpetuate over the next few years. So we're looking at being thoughtful about for a range of outcomes, we will still be able to deliver the returns and the growth that we promised. But if you ask me, are there scenarios where you could do better? Yes, there are. But it's also partially market dependent.

Your next question will come from Vivek Juneja with JPMorgan.

Just a clarification. Gonzalo, you mentioned something about -- when you were talking about expenses that historically, revenue markets have all stand in the second half versus first half. Given all the comments you're hearing from up back to pipelines being very strong, which could therefore drive probably markets hold up better than expected. Is this less seasonal [indiscernible].

Vivek, you're breaking up a bit. Can you repeat the question?

Okay. Sorry. Yes. Gonzalo mentioned that historically, you've seen market revenues declined 20% versus the first half. Given the comments you're hearing from you as well as others about pipelines and market conditions are looking very good. Can -- is that historical decline less likely to occur. Is it the path is that the [indiscernible] increase that one has seen in the markets business in the second half versus first half as [indiscernible] may that be lesser given what's going on in the overall market to environment profitability as a market.

Well, thank you, Vivek. The conversation was breaking up quite a bit, but I think I got a good portion of it. So let me have a go and you tell me if I answered the question or I didn't, if that's okay with you, because it was breaking up quite a bit. I think you answered -- just to recap, I think you answered your question on our view on the second half for markets, and you were anchoring on my remarks around how historically, we see a 20% decline or thereabouts between the second half and the first half. And I thought -- 1 part of your question was because you're seeing across the industry and the client momentum being strong, would that be less of a decline this year, right, versus what I said in my remarks, if I got that right.

Yes. Yes. That's the [indiscernible].

No, no worries. So it's first of all, it's very hard to take a position, especially in the markets business because you know that from experience that this can swing in a relatively short period of time to a negative position for the industry as a whole. And so it's hard to look forward to 6 months or 5.5 months and say with certainty, it's going to land on 1 way or the other.

The historical analysis tells us that 20% that I shared before. If you could take 1 point of view, it could be, right, as I highlighted in my remarks, that first half has been very strong, right? So if that doesn't repeat, apples-to-apples, if the second half just putting seasonality to the side. If the environment is not as constructive in the second half as in the first half, you would expect a decline once you layer on the seasonality on top of it, that could be worse than the 20% half-on-half. Now you could also take a different view and say, hey, if this continues to be this constructed, right, where clients are very active in the equity space, and we continue to see good momentum in spreads and currencies as we saw this quarter, and we see those pockets remain robust.

Would you be better than the 20%. It's not an impossibility either, right? So I'm not going to sit here and tell you that that's not possible. The historical first half was really strong. You would need to have an equally constructive set of external parameters in order to justify narrowing that seasonal decline, I guess, is what I would say, if that makes sense.

Our next question will come from Gerard Cassidy with RBC.

Jane, can you -- and Gonzalo, can you share with us -- when you think of Citigroup has a unique lens as a U.S. domiciled bank on the global view. In your services business, in particular, is obviously very engaged globally and had a very, very strong quarter. Can you share with us how are the companies being able to produce such strength in view of the geopolitical situation being fairly intense or elevated. Is it because they've learned lessons from the pandemic and they're just better managed and more conservative. What's your guys' take on the health of that global corporate customer?

Yes. I do believe that the global corporate client base that we serve has been the source of resiliency as well as growth. They have extremely strong balance sheets and they have diversified revenue streams, so they are able to balance out tariffs and the various shocks that have come through. And everyone just learned how to be very adept at supply chain sort of repositioning and adjustments and to energy shocks and other elements coming through. And so they're just very adept at getting their business models to adapt swiftly to whatever it's thrown it.

And we see that pretty consistently around the world. If you're a European company, you've got very low growth in Europe. They're focused on the U.S. and on Asia for growth. in the states of roads are leading here. So companies are getting a lot of growth from the multiple innovations that are occurring in the states and the continued resiliency of the U.S. consumer and China is driving a lot of its strength from the export intensity and Chinese companies growing rapidly abroad. And finally, the AI-driven electronics up cycle is a genuine tailwind for many parts of Asia. So there's a lot of different dynamics here that are really benefiting sort of unique client base that Citi serves and coming through in their growth as well as in their balance sheet strength.

And just tying into that, Jane, Obviously, many of us on the call understand the environment in the U.S. and the supportive regulatory environment when it comes to M&A and this administration seems to be supportive of M&A. Do you see that in other parts of the world, governments being as supportive of facilitating business growth and allowing consolidation?

In a word, no. Europe is almost the opposite. They're not allowing the emergence of emerging market champions. You're seeing much more national consolidation at best in Europe, which is a shame. We need Europe to be strong these days. And in Asia, you're seeing some, but the U.S. is unique and the American entrepreneurs innovation, the breadth and depth of the funding markets here and the investor base as well as how much American companies are on the front foot in AI and transformation, and that is also driving some of the boldness we see. It's a good environment.

Your next question will come from Matt O'Connor with Deutsche Bank.

You guys have successfully exited about half of Banamex and I think you said further exit to be after this year. Just wondering what the latest thoughts are on the timing and why not maybe sooner or just given the positive macro backdrop and successful exit of half?

Yes. Thanks for the question, Matt. We don't expect any additional sales in 2026, and that's intentional. It gives us a new investor group. The runway to drive value creation. And we're already seeing some of that performance kicked in Gonzalo alluded it to it in legacy franchise. Mexico has been improving in its performance. We expect to deconsolidate our ownership in early '27 followed by an IPO as and when market conditions allow and further sell-downs.

Okay. And just remind us in terms of how much capital might still be freed up? Obviously, it's a little bit dependent on the valuation you also have capital against the business. So maybe just give us a rough estimate on kind of current valuation, how much capital will be freed up to offset the earnings give up.

Yes. And just before we get there, I do remind you, when we do deconsolidate, we'll take a big CTA hit, that is capital neutral. So I don't -- I think that very much bears repeating for the beginning of '27. But Gonzalo, over to you.

Yes. Thank you. Now the short answer on the capital piece is around $5 billion, and the RWA tied up there is about almost $40 billion, a little bit over $40 billion of RWA.

Our next question will come from Saul Martinez with HSBC.

Just one question. But I wanted to hover on the investment theme as it relates to the cards business. You've invested there quite a bit. You rolled out the Strata card. You bought the Barclays portfolio. And -- but when I look at your business versus your best-in-class peers, Capital One, Amex, they're spending, I think, around $6 billion in marketing, Chase in sort of that mid-single-digit billion in marketing. And I know there's some -- probably some differences in terms of reporting and accounting classification. But is it an acknowledgment that maybe you need to be more aggressive on promotions, marketing campaigns, benefits? And just how should we think about the magnitude of the incremental investment in the second half that you talked about, Gonzalo. You mentioned expenses exceeding revenues, but that was already the case in this quarter, I think. So just -- is there any way to sort of think about the size of the headwind going forward or the size of the investment going forward.

Yes. Let me kick that one off. Yes, in a short word that we are going to be increasing our marketing spend. And that's scenario Pam laid out at Investor Day. We're making investments across supply wheels, so it is investing in our products. marketing for customer acquisitions. It's also in our partnerships. It's in our lifestyle platform. It's also importantly in AI to drive scale economics as well. And all of this will translate into measurable growth but you can expect us to be increasing marketing spend to drive that customer acquisition for the long term. These things don't pay off quickly. And I also want to clarify the positive -- when you talked about the operating leverage, that's only in cards. It's not for the rest of the businesses.

So I don't think I have much to add. I think Jane was very clear. We're not, at this point, we're not providing guidance specifically on the level of investment in each of the businesses including cards. But as you know, and Jane just mentioned, this is a business that is built over several years. It is what you highlight in terms of competitors really spending a lot. It's a highly competitive space because, obviously, it's a space that allows you to access good returns. We are pleased to be #3 or #4 player depending on what metric you look at on an outstanding basis, we're #3. And so our focus, as we spoke about at Investor Day is to really drive that growth and make share gains over the near and medium term. And so we're focused on that. You can see -- you can see us playing a combination of the portfolio acquisition with Barclays and American Airlines. But also, even if you take that out, you're going to see us -- you can see us -- and you alluded to the Strata portion of that, and there's a lot more behind that, as James just alluded to on the loyalty front and so on. So we're focused on high returning business and we know it will take some time.

Your next question will come from Chris McGratty with KBW.

Just on the Wealth business on Slide 11. The improvement in the pretax margins year-on-year is notable as is the NNA growth. Maybe a comment or 2 on what's changing. I know you're investing here heavily. Any shares on recent wins would be great.

Yes. Look, I think it's not a lot of difference from what Andy laid out at the Investor Day. They're doing a very good job steadily translating growth into returns. So with revenues up 13% year-on-year. That's more like 16% normalized with those one-timers. You're then seeing this translating into the higher returns. We've got a clear path to the 15% to 20%. And we've got a number of different drivers beneath that, be it the integration of the retail bank with wealth, helping us drive more of the customer conversion from deposits to also having wealth activity as well as what we're seeing from capturing wealth creation globally from our global network and the relationships we've got. So it's kind of firing on all cylinders as we steadily march to improving the returns and margin of the business.

Your next question will come from Khun Panga with China Securities.

This is [indiscernible] with China Securities. I have a follow-up on the services business for the very strong GTS net interest income growth. I believe besides the deposit volume growth, there must be some tailwinds from the higher for longer rate environment, right? So you look forward if there is no -- it is not higher for longer for the rates. How can we forecast the mix of the TTS revenue growth in the future? And also, can we have more detailed breakdowns geographically of the performance of the services business beyond the U.S. ex U.S. scope because best in China, I can see the very strong demand directly and personally for years. But this market are also very competitive, a lot of competitors here. So it will be super helpful if you can have some color on how it keeps growing your market share here.

Yes. Look, we're not going to give a breakdown geographically for the business, but it's very say that this is clearly with the growth you're seeing in a business that's firing not only on all cylinders but also in all geographies. And what we -- if you look at the institutional market share gain, we're up 120 basis points year-over-year. I'd also point to client wins. Client wins are up 36% year-over-year.

We've been focusing on increasing share with asset managers. That is up 50% and we've been increasing our share with fintechs. We've had growth of 20% there. And a lot of the growth beyond the movements in rates has come from the innovation that we've been making in the product suite. And our clients choose Citi because we lead with innovation. And as we lean into disruption, AI, blockchain, digital commerce, they are all opportunities for us to lead. They're not threats to us. And so AI is opening up many new vectors of growth and also competitive edge. So in terms of -- as you're thinking about this business going forward, I think you can be feeling a lot of confidence about our continued momentum in fees, our continued momentum in volumes and then the rates curve will be what the rates curve is.

Our next question will be a follow-up from Mike Mayo with Wells Fargo.

Let me try again on the investment question. And the real question is, is this accelerated second half investment spend for defense? Or is it for offense. And the bigger context is, look, you spent the entire decade on restructuring. You're almost done except for reg data with modernization and part of Mexico out of the 14 country exit and org simplification is done.

You did all this restructuring, and it sounds like, is this like another sort of restructuring? Are you repairing some lost market share? Are you doing more with legacy systems? Is it defense? Or is this offense where you're spending more for AI and stablecoin and trying to gain even more share in payments or something. But if you can give some context, this is the debate of the day.

It is 100% on the offense. I was really clear in my opening remarks. This is a firm on the front foot. We laid out at Investor Day a very clear path for us to drive our returns further forward in each business. We have done so in the first half and some. We've laid out a clear path of what are the investments and detailed them as to what it is we're going to be investing behind to continue to drive the growth for the near term and the medium term. I will reiterate again. Those are all organic. I'm excited about what lies ahead for this firm. This is a firm that is much easier to manage. It is much easier to run. Mike, I can't tell you that it's impossible that we will exceed the 11%. We're just not going to box ourselves into that that we see opportunity to take actions on the events, which are accretive to shareholders and support our path to our medium-term targets. That is an easy decision for us. And this is a firm that is growing nicely, as you can see. We're proud of what we're doing, and we are just going to keep going. The momentum is behind us, but we're going to take advantage of opportunities to bring investments forward and not just manage to a short-term numbers, we're playing the long game here.

For our final question, we'll return to Gerard Cassidy with RBC.

Gonzalo, just a real technical question on the second half incremental investment expense, can you ballpark what might be tied to severance expenses in that number? Is it half, 1/3, 1/4?

Thanks, Gerard. No, we're not giving guidance on the severance for the second half. What I can tell you is I'm just going back to the first principles, right? Sharp focus on returns, right, as you heard from Jane, not only in the Waypoint but also in the near term and medium term. Secondly, as I mentioned last quarter, very tight discipline on expenses on a tactical basis. So you can expect us to be -- continue to be very disciplined on expense management. And the third piece is leaning into the structural efficiencies, right? And so as I mentioned a little bit earlier, only if we see opportunities for that acceleration when we look at those 100-plus processes that we're looking to further automate on an end-to-end basis, if we see opportunities for that, we may lean into that. But at this point, we're not providing guidance on that.

There are no further questions. I will turn the call over to Jenn Landis for closing remarks.

Thank you. And before we conclude, I would like to thank Jane, Mark, Gonzalo, Ed and the entire Investor Relations team, especially Tom Rogers for their trust partnership and support during my time leading Investor Relations. It has been a truly a privilege to represent Citi and work with such a dedicated teams across the firm. And I thoroughly enjoyed the insightful conversations with our investors and analysts over the past 5 years.

I'm delighted to welcome Margo as she takes on her new role, and I know the team will benefit greatly from her leadership and perspective. Thank you again for your partnership and support. And I'm sure you'll have lots of questions, so we look forward to talking to you this afternoon. Thank you.

This concludes the Citi First (sic) [ Second ] Quarter 2026 Earnings Call. You may now disconnect.

Okay. We have Citigroup up next, and we're delighted to have with us today Gonzalo Luchetti, CFO of Citigroup. Gonzalo, thanks for joining us.

Thank you for having me.

Gonzalo now you've been in the CFO role for 3 months. You've had one earnings cycle and one Investor Day. So it's been incredibly busy for you. Can you talk about what have your priorities been? And what are you most focused on right now?

Well, the next month is very intense, even more intense than preparing for Investor Day and for my first earnings because the World Cup is coming up and the Knicks are playing. So I'm on very short sleep today for no real good reason because of last night's results, but that drives a lot of anxiety.

But no, if I had to summarize it, thank you, Manan, Great to be here. It would be value creation, right, is the key focus. And that, to me, emanates from 3 aspects. One is driving durability. Two is accountability. And the third piece is execution. So when I think of durability, very focused on ensuring that we're not taking any short-term gain for long-term disappointment. So we look at the -- being a source of resilience. That's why we're so focused on the strength of our balance sheet, the strength of liquidity. We spoke about this at Investor Day, the asset quality, right, our credit risk appetite, our strength in risk and controls and all those pieces because that's the foundation where you build kind of the strong performance over time and not just in one quarter or another.

Accountability, we've spoken a lot about the shift in our culture and how we're a different firm and how we hold ourselves accountable to results, not to words, not to actions. And so with Jane, with the leadership team, that's really our mantra and that level of accountability and rigorous kind of follow through, follow-up, having the telemetry and all of that in place, I think, is super important. The third piece is execution, really being relentless, having the energy, having the urgency, being client-centric and client-focused, that key piece so that we can drive performance over time. So those are kind of those 3 things we focused on.

And those priorities certainly came out at Investor Day as well. And another thing you spoke about at Investor Day, it's been, I guess, less than a month. But one of the things you spoke about was the uniqueness of Citi's global footprint. So I guess 2-part question. As you sit here today, what's your current view on the macroeconomic outlook and -- for U.S. and globally? And I guess, what does that mean from a credit perspective, both on the consumer side and the commercial side? So a broader question here, but I just want to get your sense of the lay of the land.

So maybe let me start going around the world a little bit, and then we'll come back to the U.S. and how we see kind of the U.S. consumer and corporates as well. When you look at the macro from a global lens, I think the thematic of the tension point between what's going to be the velocity of growth in light of the events in the Middle East and kind of the long-term effects of that on whether it's infrastructure damage and/or prices for some of the commodities impacted and versus the elements of inflationary pressure, I think those you see basically across most markets around the world. different impacts, of course. So you see in some emerging markets, which are still showing resilience. Some central banks have already taken hawkish stances and increased rates in some cases or in many cases, in order to care for kind of the import equation with oil prices and also to protect their currency as well as they saw some flight. When you look at places like Europe, we expect some degree of impact on growth, but still positive growth, which I think is relatively good news.

When you think about China, for example, the meeting between -- the presidential meeting between the U.S. and China, if anything, I think, eliminated some of the negative tail risks, right, about the relationship and where things could go. So I think that on a basis is positive. And then the U.S., not that dissimilar from what we've seen in the global economy over the last several years. The U.S. has shown a good level of resilience. And so you have some supporting elements like the build-out on AI, tax cuts and the regulation, the strength of the balance sheets in the corporate side. And finally and not least of it, the strength of the U.S. consumer, right? U.S. consumers have shown resilience, have shown fiscal equilibrium. We've seen on the spend side, for example, even if you take out the portion of the demand volumes that are reflected from gas, if you take that out, we're still seeing mid-single digits in sync with what we were seeing before.

So -- and that's relatively stable and constructive. We've also seen in terms of the mix of spend, categories like travel and dining, entertainment, which are more discretionary in nature, where people usually will go there first to tighten the belt. They continue to perform relatively well. So there's a little bit of -- and it's not that we haven't seen portions of this in the last 3 or 4 years where there was a bifurcation between what people say in a survey, right, as far as sentiment and how they act with their wallet. We're seeing a little bit of that bifurcation on the U.S. consumer side, but the spend continues to be there. And then on the other side, the credit is well within expectations, right? So you're seeing delinquencies and net credit losses down year-on-year following the usual seasonal patterns between Q1 and Q2, but the signs are relatively benign there. And then on the corporate side, of course, we do business with global multinational corporations. Those tend to have the strongest of balance sheets and are able to navigate a range of different environments and outcomes.

If you look at our clients that are more Middle East- centric or more exposed to the Middle East, the focus right now is maybe more on operational resilience, right, and security. But by and large, I think there's a lot of kind of strategic levels of high activity.

Got it. Okay. So maybe help us tie that through with what you're seeing so far in the second quarter. You've been -- what have you been seeing in terms of overall investment banking and markets? And if you have any other updates for the quarter?

Yes. No. And I think probably in part a continuation of what we saw in Q1 as it relates to the good and intense level of customer engagement, right, and customer appetite, I would say. If we -- if I go through, for example, investment banking in terms of fees, what we're seeing for the quarter is something along the lines of a mid-teens level of year-on-year growth, and that is anchored on equity activity, right, where you're seeing IPOs picked up between Q1 and Q2 and what you're seeing in follow-on activities. In DCM, we're seeing investment-grade debt also highly active, a bit more selective on the high-grade side -- I'm sorry, on the high-yield side. And then on the -- also selectivity as it relates to some of the sponsor activity as well. And so overall, fairly constructive in total as a wallet. In terms of markets of our markets franchise, we're seeing in terms of revenue growth, high single digits to low double-digit revenue growth for the quarter.

Some of the trends that we saw in Q1 -- I'm sorry, as a reminder, the -- remember that Q2 last year had the element of volatility into equities that the tariffs brought along. So it wasn't the lowest of quarters, let's just say, right? But even with that, we're seeing strength in equities, in prime, in derivatives, in line with our strategy to continue to drive prime. On the fixed income side, continuation of strength in currencies, in commodities. And spreads, this is in sync with our strategy of driving financing and securitization. We're seeing good volumes in the second quarter as well. And those are a more stable source of revenue momentum across the franchise. And then the last piece I'll mention for Q2 is as it relates to cost of credit, we're expecting to be more or less in the range that we were in Q1.

And that links up with our reserves, which are probably more volume driven in the quarter, given the client activity that we're seeing. And then on the NCL front, I just mentioned, I think generally well within our expectations, seasonal patterns between Q1, Q2, down delinquencies and losses for -- on a year-on-year basis. So overall, constructive.

All right. Perfect. So investment banking, up mid-teens. markets up high single to low double digits off of a strong base in the second quarter of last year and cost of credit in line with 1Q?

Yes, recognizing there's a few weeks to go. I should say this as you have lawyers show up here before I open my mouth. But of course, there's a few weeks to go and some of these things could change. And depending on timing, even on investment banking fees, there could be a bit more opportunity than that. But yes, that's what we're seeing today. Perfect.

That's great. Okay. So at Investor Day, you focused a lot on 2027 and beyond. So I did want to spend some time on 2026 as well. You've given a target range for net interest income ex markets of up 5% to 6% this year. And can you help us think through the puts and takes of that growth, particularly as we think about loan growth and deposit growth?

Yes. So no, thank you. And it's obviously a very pressing question. And let me start by mentioning a couple of things. First, as I said at Investor Day, we are confident in that 5% to 6% that we will be able to deliver that guidance. If you look at what we've done recently in Q1, that NII ex markets number was about 7% year-on-year growth. Last year was about 6%. We guided for the year mid-single-digit growth of the underlying drivers, deposit and loan growth. We are comfortable with that guidance.

And one key takeaway on NII ex Markets is that the majority of the outcome for us for the guidance of this year is really anchored of client-driven engagement and client-driven volumes. So when you look at deposits for a minute, what we're seeing in services, what we're seeing in our wealth business, how we're driving -- how Andy is driving both the retail bank and affluent customer volumes, which are high liquidity value for the firm and also what he's driving on the private bank as he has been rewiring that for the last couple of years. I think that momentum in the mid-single-digit range feels good. And then on the loan side, ex markets, we're seeing good momentum as it relates to wealth in the securities back lending in mortgages as well as on the U.S. cards front as well.

Reminder also that in the second quarter, we acquired the American Airlines portion that was looked after by Barclays. And so that's coming in as well. But overall, in line with the spend that we spoke about as well.

Got it. And as you think about that mid-single-digit deposit growth, we've been hearing from some banks saying that competition is picking up. Anything that you're seeing on either the corporate side or the consumer deposit pricing side that speaks to increasing competition?

Yes. Of course, we'll have to look and see a little bit, especially because the story on rates, given the events in the Middle East may be shifting on us, right? The curve is right now pricing an increase towards the end of the year. A few months ago, that was a very different picture. And so that pivot may impact -- and that's why we want to be thoughtful about the guidance on the 5% to 6% because even though you may say, hey, isn't higher for longer, a bit better for banks, the answer is generally yes to that, but you also have to see the impact that it creates on the volumes and on the pricing. So far, the pricing and the betas are holding stable.

I think there's a lot of what we get to see, especially as it relates to services, which is about 2/3 of our funding sources. There's a lot of operational deposits anchored into the fact that we are a global bank in 90 countries and the customers -- our clients need us every day to make payroll and to really drive their commercial volumes around the world. And so we're highly embedded, and therefore, the price sensitivity is not the same as you see in other pockets.

Got it. And then maybe let's flip to noninterest revenues ex markets. You've talked about your expectations for growth. Can you walk us through the drivers of fee revenues across the businesses for this year? And I guess, what is the -- what should we be considering as we think about that piece of the revenue?

Yes, thank you for the question. I think the -- I'm going to sound like a broken record, client-driven growth momentum. That's what we're focused on, right? Commercial intensity and also not only being in high engagement mode with clients, but also making sure that the investments that we have been making are paying off. And we're seeing that. So if you look at Q1 and the drivers of the NIR ex markets, you had 15% revenue growth in services, you had 14% investment banking fees growth. And you had -- although you had a 5% on wealth, we were also lapping the fact that we sold our trust business a year ago.

So if you look through investment revenue -- investment fees, those were at also double digit at 11%. So we feel good about the momentum that we saw in Q1 and the continuation thereof and our expectations through the year, both as a combination of upping the level of accountability and engagement across our teams, but also the investments that we have been making across those franchises. So those 3 are going to be the primary drivers.

Okay. Perfect. And I guess the last part to round out that 2026 discussion is on the efficiency ratio. You've spoken about an efficiency ratio of around 60% for the year. Are you -- a, are you still on track for that? And b, can you run through some of the drivers for that expense base this year?

Thank you. Thank you. So I think a couple of things. And if I step back, the #1 commitment is our return expectation of 10% to 11% ROTCE. Sacrosanct, very confident that we will be able to deliver that this year. Now operating efficiency was one of the components of that, right? So we guided around 60%, to your point. And yes, we are confident that we will be able to deliver within that range. And what's important to us, if you look at operating efficiency and the progress we've been making, we had 2 years in a row where we've improved our operating efficiency down to 63%. We expect to repeat this year with another 300 basis points of improvement or thereabouts at the -- around 60%.

The key drivers of that obviously emanate from continued momentum on the client franchise and really seeing that revenue growth, part of which is being driven by the investments we've made. Secondly, continuing to make progress on our structural efficiency sources, which are self-funding some of those investments going forward as well. So 3 pieces there. stranded costs, which were about $1.3 billion last year. You already can see in Q1, they were about $200 million. So even if you annualize that, you can see them coming down, and we expect to do for that to continue. transformation costs. Last year, they peaked at $3.3 billion. Now I've spoken in the past about how roughly half of those are sitting in corporate other and are more temporary in nature. They were there to build the house, right? The other half are structural in nature and are there for us to stay with us as part of our fabric. And so the temporary ones, as we are reaching completion, and we spoke about in the past recently, how 90% of our programs are at or near completion.

As we complete programs, we don't need to wait for exiting the consent order in order to be able to release some of those costs. So you're seeing that and the early innings of that, that will play out through the near term. And the third piece is structural efficiencies, right? Those that come from automation, technology automation and deploying AI. We have more than 100 of our kind of largest scale and most manual processes. Our COO, Anand and Tim Ryan, they meet our tech head, they meet every single week with our work streams. And so we have a lot of rigor behind making sure that we -- those 3 sources of funding for self-funding our investments for the future are there and clicking. And then the last piece, sorry, is RWA and capital optimization, right, very focused on driving DTA and making sure that within the businesses, we're very dynamic and thoughtful in how we allocate capital on a quarterly and daily basis.

Great. So with all of that, still on track for that around 60% number and room for improvement. As we think about the AI-related spend that you just spoke about, can you talk about some early tangible benefits you're seeing on the AI side?

Sure. So the -- maybe let me talk about the approach and the focus on pockets of value that we're seeing to make it tangible. First on the approach we take a dual approach. The dual approach is top down and bottom up. Top down because there are some areas where you can see really scale benefit, and that requires the prioritization, the senior management focus and the high urgency and intensity to monetize it, to size it to fund it, right, because you may need technology development and really drive that. That's linked to what I was just talking about, about the structural efficiency sources, those 100-plus processes that we are looking at end-to-end, and I'll come back to that in a second.

The second piece is bottom up. We also want to unleash individual ingenuity, right? And so how do we make available our tools to all of our team members, how do we enable them to grow and develop and upgrade themselves and also in their very specific to some -- not every role is homogeneous, right, at the firm. You may have call centers, you may have KYC agents. Those jobs are more homogeneous. There are others that are not. How do you bring innovation and efficiency and that utility value to everyone at the firm is kind of the second piece of top down and bottom up. And then when we look at the value, we look at really 4 different buckets, right? One is enabling growth.

So tangible there, how we're looking at wholesale credit, being able to make faster decisions that still pass our credit risk appetite. What we've been doing with AI machine learning on the credit card space, where we've seen improvements of 100 basis points on approval rates. All of those things are tangible things that I can see as far as driving and enabling growth. Then you have a vector of efficiency. Obviously, that, I'm sure everybody is on the same boat there. But if you look at customer service, for example, we've been at it for a couple of years now, just on GenAI alone, we've seen improvements of cutting down the call time by 60 seconds, right? That's a big number, not only in sales, but just think of the customer experience of having to be on the phone for so long and from a risk management perspective as well and also from an efficiency standpoint. And we're seeing that even on the corporate side in services, right? The containment rate of our City Direct agents is up about 50%. All of that, again, is better service and more efficient. So you have almost like a triple win, right? It's risk, efficiency and customer experience. So that's the second vector.

The third vector is defense. And so we're seeing a lot of application, not only in cyber, which has been in the press, but also in fraud, in AML, in all of those areas of defensive nature that help us protect the bank. And the last piece is our people, not in that order, but the last piece is making sure that we are helping our team members innovate for the benefit of the firm, but also for self-benefit, right, and making sure that everybody, myself included, right, that we upgrade ourselves, so we don't become the dinosaurs tomorrow.

I hear you. And I think the other piece of what you spoke about at Investor Day was the investment spend that you're making in the business. I think you spoke about $5 billion of investment spend. A lot of it is self-funded. So can you talk about where you're investing and maybe talk about the timing of some of those investments?

Yes. No, thank you. And so maybe I'll start maybe with principle one, which is we want to be very disciplined about this. So we recognize the importance that these investments are going to anchor our path to our near-term and medium-term returns. And at the same time, it's important that we keep the discipline in how we're going to fund these investments. And so we've spoken about how we're self-funding them. I talked a little bit earlier about the levers, so I'm not going to repeat them again. Then when you look at the areas of focus, -- the other -- the second principle in addition to the discipline and the self-funding is that these are not spread the peanut butter investments. These are very focused investments that are 100% aligned with our strategy.

So even if I go one by one, you're going to see a very direct connect, and that's how we hold ourselves accountable with our business heads and our teams into making sure that, that linkage is direct. So if you think about markets, for example, Andy spent most of his -- a good portion of his presentation talking about how we want to scale our equities business. So some of the technology platform and the talent investments that Andy is making that we're enable are linked to that piece in equities as well as continue to drive and maintain our leadership in fixed income.

If you think about investment banking, Viz was talking about how we're investing in talent in certain sectors, right? We're investing in North America. We're investing in technology, in health care, in sponsors, which is an area that we weren't where we wanted to be, and we've been driving that. And DC, we talked about technology. We saw Sky and how we were deploying our AI agents. But at the same time, the investment in talent, right, in bankers and relationship managers and the like and so -- as well as the product capabilities. If you look at our cards business, right, very good return in business, and we want to drive the growth.

So investing in marketing, right, in card acquisitions as well as digital experiences and engagement and driving loyalty for -- so that we're top of wallet card. And then when you look at services, of course, right, our crown jewel, you want to make sure that we are constantly innovating on the platform because that is not only a defensive move, but also an offensive move, right? As you bring 24/7 multi-country cross-border payment availability, we have to invest in the platform and really make sure that gives us not only the durability of those great returns that we get from the services franchise, but also enables consistent growth.

So as you think about the timing of those investments, are they -- I guess, how many years are they spread out over -- and how are you funding them?

So the funding is self-funded through stranded costs coming down, right? What we said is during the near term, the near term, as a reminder, includes 2027, 2028. So these investments play out throughout '26, '27, '28. And how we think about the funding is when you look at stranded costs, for example, right, $1.3 billion a year ago, we expect by the end of the near term that we're going to be down to zero. If you look at our transformation costs, and I said half of them are the ones that are temporary in nature, so half of $3.3 billion.

Again, we expect those by the end of our near-term period to be down to 0 as well. And then in terms of the structural efficiencies across those 100 processes and those apply to functions and operational areas, we're also expecting to see progress. So those are the sources that are funding, right, our ability to do those investments. That's why it's important as we thought about operating efficiency targets that returns is really #1, and that's really the true north. And we want to give ourselves in any given year, the flexibility of being able to do the -- not only the instant gratification, but also anchor the returns for the longer range.

So just on the transformation spend, the portion of it, which is in the Corporate and Other segment versus a portion of it, which is in the different businesses, I guess, how is that different? I know that the corporate and other is more temporary in nature, but how are the 2 spends different?

Yes. So corporate other is -- those are more temporary. It was the ones that we needed to build the house. On the house is built, you don't need those costs anymore. Those are starting to come down already as we reach completion of the programs. The second type, the ones that are more structural in nature, those are embedded across our businesses and our functions. And so those will be equally -- first of all, they're there to stay, but they're going to be also subject to the 100 processes that I was talking on that other bucket, right, on the structural [indiscernible]. So we're still going to go and try to automate via AI and technology, those as well, right?

Got it. All right. Perfect. So well, you also mentioned in terms of the ROTCE for the year, your guide is 10% to 11% ROTCE for 2026. In 1Q, you already did a 13% ROTCE. I mean, obviously, there is some seasonality there.

Thank you. You answering my question...

So I'll say that. But 13% in 1Q is still strong. I guess, what would -- if I were to push you a little bit, what would prevent you from being at the top end of that 10% to 11% ROTE?

Yes. No, thank you. Good question. And as we said in our first earnings call in our Q1 call, yes, please let's not do that times 4 because there is seasonality into the business. But what I would say is, well, first of all, we're confident in the 10% to 11%, number one. Number two, because we're confident because we're seeing the client momentum and the client intensity. We intend to keep, and we have had so far very good expense discipline as well as what we're seeing on the capital and RWA management, how thoughtful the team is and how we approach that. So those 3 things give me the confidence.

In terms of what would determine where we are exactly on the range, I think a couple of factors. Number one, the environment, and we know some of the lines can swing relatively quickly. So if we continue to see constructive volumes and levels of client activity, obviously, you can be on one side of the range, but also the flexibility of deploying some of the investments that we were talking about before, right? And how do we gear those up and down to make sure that we are -- we have higher certainty of the path thereafter.

Yes. Got it. All right. Perfect. Maybe one point of clarification from the Investor Day. You've spoken about the DTA utilization also being an important part of how you manage capital in the near term. And I think you've spoken about $800 million or so of DTA utilization for 2026 -- and then I know you haven't given a specific number, but if I eyeball the Investor Day deck, it's about half of the $14 billion or so in DTA that you intend to utilize over the next 3 years. Can you go through some of the drivers behind that and what drives the acceleration versus the $800 million this year?

Yes. No, thank you. And I think it's a very good area, as exciting as it is for all of us to talk about DTA over here. I'm sure if we did a show of hands for who enjoys DTA profusely, I'm not sure if maybe you and I only, right? You might be surprised. Maybe it's the Citi team, I think, potentially. But a couple of things. I think, number one, recognition that this is a show-me part of our story, right? Because we haven't been burning down DTA in the last few years. And the reason is 90% of it is driven by U.S. profitability. Now what gives me confidence is last year, we had $4 billion of profitability in the U.S. This -- you can see this in our disclosures. And when you think about the strategic and the forward momentum that we have in terms of delivering performance, it's going to be almost impossible to do well in all the other commitments and not be able to produce higher degrees of U.S. profitability that will anchor the DTA consumption.

So that gives us the confidence to -- even though we hadn't been burning for the last couple of years to say this first year of that -- of this new period, we're going to do $800 million is the guidance. But then as you look forward to me, the answer is relatively straightforward is the performance of our strategy and the delivery of everything else that we said will naturally yield that burn down that we spoke about. So you heard from some of the businesses, of course, U.S. cards, good returning business and driving growth. We need to deliver the growth. That's 100% U.S.-based profit. You look at wealth, Wealth, we know we have work to do in terms of returns. But just look at the trajectory from -- and this business over the last couple of years, right? Even Q1 was 11% revenue growth, 1% expense growth.

Last year, I think it was 13.3% or 14.3%. And so as long as we're keeping and we have good confidence in that, that very -- those big jaws that we're seeing, we're going to see that improvement. A lot of it plays out in the U.S. as well. You heard from services, where we have very good momentum in deposits. Part of it is in North America. Some new mandates we're signing with some of the largest asset management companies in securities services anchors that. Biz talked a lot about how the investments in North America as far as talent is concerned and some of the pulls there. And markets also equities and fixed income, a lot of that activity and the growth that we're looking at there in equities, a lot of this happens in the U.S. So when you look at all of that, we're making investments in our home strategy, and that will anchor the 90% of the DTA is really linked to U.S. profitability.

Got it. So as U.S. profitability improves, that DTA utilization improves nicely. Okay. Perfect. So let's talk about some of the Investor Day targets and the time lines there. There's 2 phases that you laid out at Investor Day, 11% to 13% ROTCE in the near term and then 14% to 15% in the medium term. Can you remind us what are the main drivers of getting to the near term and then getting to the medium term?

Yes. No, thank you. So in the near term, we said 11% to 13%, and we said that the second year, so 2028, we expect to be towards the higher end of that range just because we recognize it's a little bit wide. 3 main drivers. The number one, continuing the client momentum. And that anchored not only in the commercial intensity across our 5 franchises, but also the level of self-funded investments that we're deploying across that piece, right? And so that to me is a key -- one of the key 3 factors. The second one is structural efficiencies, right? And we've spoken about stranded costs during the whole period of near term, making solid progress there, transformation costs that are temporary in nature coming down and then driving those structural efficiencies through automation and digitization. And so those are kind of 3 pieces.

The third piece is capital productivity. And so burning down the DTA and continuing to make progress on our strategy. Now as a reminder, we did not bake in any benefit from neither the NPR as it relates to Basel III, G-SIB or stress capital buffer nor any improvements in the stress capital buffer over -- in the course of time with our PPNR growing as we continue to execute our strategy. We have not baked that in, but those are the 3 levers. And then when you think and jump into the medium term, which is 2029 to 2031, that's a different bank as well because you're not going to have stranded costs, right? We don't have legacy franchises at that point. We don't have any of the temporary transformation costs. So it really is kind of the pure version of the 5 core businesses and the firm at that point, driving the growth and efficiency.

And then you have the operating efficiencies as well that you've built on with the investment plan. So maybe a follow-up on that. As you mentioned, the one area of focus from investors has been the underlying capital assumptions behind the ROTCE targets. And clearly, we're going to get some benefits from Basel end game, G-SIB surcharge, stress capital buffer should also be a positive. Are there -- is there any additional color you can give us there on the capital side?

So what I'd say is a couple of things. First, maybe the baseline reminder, right, because I may be the city nerd in the room, not everybody is required to learn all these things, right, and remember them. Our current target is 12.6% because it's 11.6% plus our 100 basis points management buffer. What we talked about at Investor Day is our assumption is that, that number becomes 13.1% under current rules because we're drifting on the G-SIB curve on the basis of enabling our businesses with clients. And that happens starting in 2028. So our assumption is 12.6% now and into '28, beginning of 2028, 13.1%. That's what we assumed for all the returns that we've spoken about at Investor Day. Now at the same time, what has happened -- what we expect to happen is we talked about how Basel III and G-SIB, we expect to see a moderate benefit for us in that equation, subject to obviously the feedback that is being provided to regulators and whether they're going to adjust anything.

But in terms of what they have published so far, you have the puts and takes of the retail and corporate plus the G-SIB coefficient being a positive and some of it moderated by FRTB, CVA operational risk and some of those components as well. But -- and then obviously, a question mark as to -- as we gain more transparency into the models from the Fed and also the adjustment of those models, what we can expect in terms of SCB is still unknown. And then the other piece that is obviously more controlled by us and that we haven't included baked is the fact that as our strategy and we continue to focus on performance and drive better returns, our PPNR will continue to improve, and that will give us a bigger softener that hopefully, over time, will also have impact on SCV. So you have a couple of levers there that we are expecting to drive improvement. We have seen it in the last couple of years. That last event, right, the last element of PPNR, we used to be at 4.2% stress capital buffer. Now we're at 3.6%. And so yes, we have not baked those in. Of course, internally, we have a sense for what that could look like. But yes, I think we -- hopefully, by the end of the year, we have more clarity of where that leads.

Yes. We might even get a little bit more clarity as we get to the end of this month and we get the stress test results as well. Okay. Gonzalo, you've kept us on time. We've covered a lot of stuff in the session. Maybe summarize this for us in terms of the key points you would like investors to take away from both this session and maybe even Investor Day.

I would say, hopefully, you can tell by a lot of the other pieces as opposed to me having to spell it out, but I think we are a very different city. We spent the better part of the last several years fixing ourselves and really remediating what was holding us back. And now we're really focused on client-driven growth on operational performance driving. And so when I talk about accountability, when I talk about the relentless execution mindset, that's really what's going to end up driving the results. It's really the boring, but equally as exciting if you can get there of every single day, looking at how am I engaging with clients, how am I driving efficiency, how am I using every unit of capital to make sure that we drive those returns and the long-term value creation that is the true north.

Very clear. Gonzalo, thanks so much for your time.

Thank you very much.

Actual results may differ materially from these statements due to various factors, including those contained in the Investor Day materials posted on our website and in Citi's 2025 10-K and other SEC filings. Please refer to the footnotes in the presentation posted on Citi's Investor Relations website for definitions and other explanatory information. Thank you. Please welcome Head of Investor Relations Jenn Landis.

Good morning, everyone, and thank you for being here. I'm Jenn Landis, Head of Investor Relations, and on behalf of the entire leadership team, it's my pleasure to welcome you to our 2026 full firm Investor Day. Events like today are so important to us. not just as an opportunity to present the next 2 phases of Citi, but as a continuation of the ongoing conversations we have had over the past several years. Those conversations have shaped how we structured today. And I want you to know that your questions and perspectives have been heard and will be addressed. Over the past few years, we've been very focused on raising the bar in how we engage with you. bringing greater transparency, more consistency and a more analytical framework around how we communicate our performance and our progress. And that is what we will continue to do for the next 2 phases.

We know you want a clear understanding of the trajectory to higher returns for both the near term and the medium term and to have a better understanding of what the firm could achieve organically. So today is designed to give you a complete and transparent picture of what you could expect from us and what we will deliver to you. Now let me walk you through the day. So Jane will open up by grounding you in on our strategy and transformation, the progress that we've made against our commitments, what is left to do to get to the target state and how we will deliver higher sustainable returns going forward.

Following that, you will hear directly from our business leaders, who will take you deeper into the specific areas of the franchise that underpin our growth and our return targets. Ben Gonzalo, will walk you through the financial performance in greater detail, including the assumptions, the drivers and the milestones we expect you to hold us to, to get to our targets. And then we will close with a Q&A session, where the full leadership team will be available to answer your questions. Thank you again for your time and continued engagement. It means a great deal to the entire team. And with that, let's start the day.

[Presentation]

Please welcome to the stage, CEO, Jane Fraser.

Good morning, and welcome to Citi's 2026 Investor Day. I can tell you, we're all excited to have you here. When we presented to you in 2022, we laid out our ambition, deliver higher, more sustainable returns, run the bank with more rigor and discipline, reduced risk and execute at pace. We've delivered on those objectives, and we are on track to achieve our 2026 ROTCE target of 10% to 11%. And -- but that is not a destination. That is a way point. So from here, we will drive to new return targets. We've set a near-term target of 11% to 13%. We expect to be within that range in both years, and we intend to move towards the higher end of that range in 2028. Over the medium term, we see a clear path to 14% to 15% returns. And today, we will show you the path to how we will deliver that, where we will grow, where we will invest, how each business contributes and why our diversified model positions us to win amidst the new global dynamics.

By the end of the day, one thing will be very obvious. We have rebuilt the engine. It is stronger, it is more durable. And now we'll show you what it can deliver. Now from the start, this was about more than just fixing the old city. It was about building the bank the next decade demands. And that meant determining where Citi had genuine competitive advantages and where we didn't and acting with urgency on both. It also meant making substantial multiyear investments to address what has held us back for so long. First, we focus the firm where we have the right to win. We reshaped City around 5 core businesses, and we have largely completed the consumer exits with Poland and Banamex, very well advanced. Now that freed up management focus and gave us capital to reinvest and to return to shareholders. Second, we simplified how we run the bank, fewer layers, unambiguous accountability, faster decisions.

Third, we raised standards, and we added talent. We reset our leadership team. We realigned compensation to returns, and we built a culture with greater ownership, accountability and drive. Fourth, through the transformation, we modernized our infrastructure. We invested heavily in our systems, and we materially reduced our risk profile. And finally, we continue to prioritize investing in the businesses and the capabilities driving improved performance. And we did all of this at the same time. And that is no mean feat. You can see it in the results. The first quarter marked City's best quarterly revenue in a decade with growth in all 5 businesses. That built on last year when we delivered record revenue growth improve returns, positive operating leverage for the second consecutive year and $17.6 billion of capital returned to shareholders.

That's the engine. It's built to win. It's built to last. So the question now isn't whether the engine works, it's what it can do from here. So let's start with our 5 businesses and how they uniquely combine as a connected platform for our clients. Across each our ambition is clear: strengthen our competitive position deepen client relationships and drive durable growth and returns. We'll start with services. This is a business already delivering at its target range in the mid-20s, and we are confident that, that will hold through the cycle. We uniquely sit at the center of global financial flows, moving nearly $6 trillion every single day. Not only is our position nearly impossible to replicate. It's more valuable as flows become increasingly complex. And that's because our strength is helping clients navigate just that complexity. Our focus going forward, deepen our advantages, build on our scale.

And we will get there by continuing to invest in our platform. real-time liquidity, payments, custody and digital assets and by deepening relationships and expanding into new ones, particularly through the commercial bank, and in high-growth segments such as digital commerce and asset managers. This is a scaled durable business. So from here, it's about sustained growth will give you the full picture markets. Markets is a stable, high-quality earnings engine. We're already around an 11% return, and we see a clear path to 13% plus over the medium term. We have a leading fixed income franchise where our corporate client relationships and the linkages of services at our competitive edge, and we'll continue to see more growth from there. At the same time, we're focused on growing our equities franchise, particularly in prime, and we're already seeing momentum.

Equity markets revenue is up 40% year-on-year with prime balances now over $0.5 trillion. We've also exited areas where we lacked Advantage and we focused, we focused on the products and the clients that drive high quality, more sustainable returns. All told, markets has even further upside ahead. Andy Morton will take you through it Banking. Banking is where the depth of our client relationships all around the world translates into higher value revenue across the firm. And we are becoming more focused and more disciplined in how we do that. In Investment Banking, our ambition is to build a top-tier franchise, and we're investing in senior bankers to make that happen. Paramount, McCormick AQT EES, the year's biggest deals, we are at the center of them. Now underpinning that is our corporate bank, the world's best and it sits at the heart of long-standing corporate relationships.

And our corporate bank gives us a unique vantage point to both help our clients succeed and help us captured therefore wallet. Alongside that is our commercial bank and think of it as our client acquisition engine with a meaningful opportunity to scale in North America with sharper capital allocation and focus. Banking has a straightforward path to returns in the mid- to high teens, which will bring us in line with the best on the Street. This will tell us more. Wealth is 1 of our more significant growth opportunities. We're on track to reach target return levels of 20% plus in the medium term by continuing to grow fees and increase deposits. We are proud of the investment platform we've built and how it sets us apart.

It gives us an opportunity to grow faster than the market by capturing a very healthy share of the more than $5 trillion in investable assets that our clients hold outside city. Now this is our priority, and we are confident that we can capture it organically. We will steadily scale by continuing to invest in advisers data and technology, including AI to improve productivity and client outcomes. In the retail bank, will improve profitability and grow by investing in talent, branches and technology and by doing more with small businesses. Importantly, integrating the retail bank with Wealth has really strengthened our ability to manage the totality of our U.S. consumer deposit base of nearly $300 billion. And we'll run you through the plan in wealth in more detail, including how we will grow the business with higher fee income and deepen the funding base.

Cards is a core driver of returns in our North America franchise and it's operating near its target return range in the low 20s. From here, the focus is targeted growth, primarily in general purpose cards. That's both proprietary and co-brand where demand is highest, and our advantages are clearest. We're upping investment in marketing, product innovation and partnerships, including our expanded relationship with American Airlines. In private label, we're being selective, evolving partnerships into co-brand relationships where it makes sense and optimizing the others for returns. And across the business, we're improving performance and customer experience by using AI end-to-end from acquisition and underwriting through servicing and engagement. The result is a scaled business generating competitive returns in North America and playing a very important role in Citi's overall return profile.

And remember, it sits as part of our broader global leadership in payments. Pam will walk you through our growth plan. For each of our 5 businesses, the strategy is consistent with what we laid out at our last Investor Day. We will now advance that strategy by investing where we have a right to win and converting that into durable higher returns. But Citi is much more than just the sum of its parts. So let me switch gears to give you the enterprise level perspective on how we have remade this firm. We rebuilt our strategy around scaled interconnected businesses that deliver for institutions with cross-border needs. Our clients are the most prominent multinational companies operating on the world stage. And today, they face unprecedented challenges, global instability, supply chain shocks, volatile financial markets and technological disruption. You all know the less.

With our business model, Citi is uniquely positioned to both help our clients navigate these complexities and gain competitive edge. A client can have their global cash managed by services, their currency hedged by markets, a strategic acquisition advised on and financed by banking and the personal wealth of its executives managed by the private bank with their spending supported by cards. But this goes beyond the obvious synergies that exist amongst our businesses. because we have the model and the capabilities, and we've put in place the right org structure, discipline and data and incentives. So we deliver the full firm to our clients consistently.

In a world where cross-border complexity is the new normal, our integrated model means that our clients have a single, globally minded and resilient partner to help them succeed. Emphasis on the word resilient. We've been tested time and time again in the last several years, and we have consistently shown ourselves to be a very different city. Our bank in Ukraine has not missed 1 day since the war started 4 years ago in circumstances, most of us can barely begin to imagine. The same is true in Israel, in Lebanon and the rest of the Middle East at this very moment. We were a source of support in the U.S. regional banking crisis, and we help clients reconfigure supply chains all around the world when the tariffs hit. Throughout our financial strength has been constant. We are very well capitalized. We are very well reserved and we are very disciplined about risk. The quality of our balance sheet is excellent.

Our disciplined client selection and risk appetite result in a very high-quality client base. with nearly 80% of our wholesale exposure investment grade and 85% of our U.S. card customers Prime. We are both financially resilient and operationally resilient, although the latter remains less appreciated than it should now be at every turn in recent years, Citi has served as a flight to quality and a source of support for our clients and for the financial system more broadly. In a world of complexity, we don't see constraints Rather, we see the conditions where Citi is built to perform in ways that few others can. The path to becoming a bank that operates consistently in all seasons has been a very deliberate one. Our transformation has been a core driver of that.

We have better risk management practices and processes that allow us to assess exposures in real time. Our monitoring, reporting and stress testing are faster, more dynamic, and they are grounded in trusted data, and that's what allows us to stay ahead of risk, not merely reacting to it. We have improved how we run the bank with a revamped control environment. We've moved from fragmented manual processes to a standardized firm like framework with far greater use of preventative and automated controls. In data, we have moved to a unified model. we now largely operate with just 2 data repositories, one for institutions and one for consumers, and that's reducing risk and it's unlocking capital. In parallel with our transformation, we have built a modern technology foundation, a simpler tech stack, improved data quality, and we automated work that had no business being manual.

We have built a hybrid cloud model. That is across on-prem and public cloud. It allows us to run workloads in the most efficient environment. It allows us to scale dynamically, and it allows us to avoid tying up capital in assets that just don't keep pace. Together, the investments we have made in our transformation and our technology, they feed directly into client experience and into business delivery. So let's take wholesale credit. It's a nearly $1 trillion corporate portfolio. We have built a unified end-to-end system with consistent standards and a single global process for underwriting, transaction management and portfolio management built on a single tech stack. It's big. It was not a thing of beauty. It is now our clients experience the effect. Execution is more predictable.

Decisions are faster operationally rigorous well controlled. But before I move from our transformation, let me briefly touch on the time line. As I talked about last earnings, we are operating at or nearly at our target state in 90% of transformation programs. The remaining work, which is primarily governance of data for regulatory reporting is moving and advancing ahead of our schedule. As we complete each tranche of work in the transformation, we systematically take down the related expenses. That creates capacity for further investments in the businesses and it benefits our operating efficiency. The time line for the ultimate removal of the consent orders, well, that sits with our regulators.

But the way we run the bank today is fundamentally different from where we started, and it is yielding the benefits. Indeed, our work on the transformation has built an important new muscle. We now implement change quickly and at scale across the firm in a disciplined manner, a real capability and one that's more important than ever because it positions us to move faster and to take full advantage of AI. Our AI implementation well, it cuts across 4 outcomes. First and most importantly, this is about growth. We're not playing at the edges here. This is enterprise-wide. And you're beginning to see it and how we're reinventing our offerings we're accelerating product development life cycles, and we are enhancing the client experience. In wealth, we're partnering with Google to create virtual personal advisers.

In services, we have a multitude of major revenue-generating use cases underway. And in cards, well, we're preparing for a world of agentic commerce and AI-powered personal shoppers. It's early, but we're developing new solutions at a speed we haven't seen before. Second, we're changing how we operate. We're applying AI and automation to our most complex time-consuming processes. So think KYC or reconciliations, loan operations, document processing, these are challenging workflows. And in some cases, we're compressing them from months to days to minutes. Third, we're strengthening our defenses so we can better detect fraud, manage financial crime and stay ahead of cyber threats.

Given the speed of what's going on today, you can imagine how glad we are that we've invested so heavily in our sophisticated defenses, particularly in cyber. And fourth, we're changing how our people work. Last year, we deployed core AI tools to over 180,000 colleagues in 85 countries, and we are investing heavily in upskilling. We're seeing the impact, particularly in engineering, where AI-assisted code reviews have freed up about 100,000 hours of capacity every week. Now we're going further. We're building and scaling AI agents across the firm to support more complex multistep work. And that is putting us at the forefront of where our industry is going. We're not waiting to be disrupted. We are disrupting ourselves deliberately and from a position of strength and scale. So when you put it all together, our businesses, our balance sheet, our global network and how we operate.

This is a bank built both to grow and to perform consistently. And that's what underpins the path to our target returns. So let me lay out what happens across the 2 phases. And let's start with the near term. The work to achieve returns of 11% to 13% in both 2027 and 2028 is well underway. To get there, we will continue driving revenue growth across our businesses. Capture more productivity saves from our investments, whilst continuing to reduce the drag. That drag is from transformation expenses and stranded costs. Third, improve capital productivity. And the combination of these factors will deliver positive operating leverage and drive consistently higher returns. That, in turn, will create capacity for us to continue investing in our businesses to achieve higher sustainable returns over the medium term.

When we reach the medium term, the work we're doing to rebuild city will be complete, and our financial system will be greatly simplified, a clear city. There are 4 drivers that will get us to 14% to 15% return, a more diversified revenue mix with a greater contribution from fees, continued investment to drive stronger business performance. higher productivity, including from technology and AI and fourth, further reduction of the DTA to maximize capital productivity. Gonzalo will walk you through the math for both the near and medium term in a lot of detail. And that will include how we're deploying capital and our commitment to continue returning it to you, our shareholders. Importantly, he will make it evident that we can achieve these return levels organically. Let me conclude my opening remarks by emphasizing this. We have built a track record for doing what we say we will do. We have complete conviction in the path ahead. We will get this done. So thank you for being here. I very much look forward to answering your questions later this morning. And now we'll start the business presentations. Thank you.

[Presentation]

Please welcome Head of Services Shahmir Khaliq.

Good morning. and thank you so much for joining us today. I'm Shahmir Khaliq, Head of Services for Citi. This is our third Investor Day for services since 2022, and it's absolutely great to be back. During our last Investor Day, we talked about services as the global economy's connective tissue, making payments, managing liquidity, safeguarding assets driving investments and commerce across the globe on a 24/7 basis. Our strategy across our 5 business remains crystal clear. continue to build the Global Bank of the future through innovation, strategic investment and seamless integration. As we execute on our growth agenda, we expect to retain our #1 institutional rap while continuing to grow our 11.5% market share.

You're probably already familiar with much of the content on our slide from last Investor Day. But as a reminder, let me share a few highlights with you. Our global network remains an unmatched differentiator with an on-the-ground presence exceeding all of our competitors. And this network is getting harder to replicate. We have meaningful scale processing $6 trillion in payments daily across 180 countries, while safeguarding $31 trillion in assets under custody and administration and managing nearly $1 trillion in deposits. You can see on the slide a fundamental strength of our business, 1 city with deep synergies across the entire firm. Three of our revenue comes from clients leveraging the combined power of services, markets and banking. This integration is a strategic differentiator it creates stickier, more profitable relationships and drive significant value for both our clients and our shareholders.

This will be a consistent theme today. which my partners, Andy and Vis will also cover shortly. Over the last 4 years, we've shared our story with you. And today, I'm here to show you how we've delivered on those promises and more importantly, how we execute our road map into the future. Now let's review our financial highlights. But on top of the slide, as you can see, we delivered record revenues of $22.6 billion with an annual growth rate of 12% and and noninterest revenue also growing at 10% during the same period. Operationally, we've remained highly disciplined while making investments to scale our platform. We've improved our efficiency ratio by 600 basis points to 48%, resulting in an EBIT of $11.4 billion, a 16% increase since 2022 all of this has culminated in a 24.6% return on tangible common equity for 2025.

That's right in line with our mid-20s target. If you look at the bottom of the slide, you'll also see we've outperformed on market share, delivering on our medium-term goals ahead of schedule, having captured share across both products and client segments. In the TTS Institutional segment, we gained about 170 basis points of wallet share since 2022 and maintained our #1 position across liquidity, payments and trade. The Commercial Bank is an exciting opportunity for Citi. Since 2022, our focused efforts have delivered significant market share gains, exceeding our 25 basis point target, and we've grown revenue by 1.5x since our 2022 Investor Day.

But despite this rapid growth, we remain only about 1/3 of the size of the market leaders leading a path for expansion into a wallet where we see $100 billion addressable opportunity. And in Security Services, we gained approximately 240 basis points of wallet share since 2022 and closed $1 billion gap to our closest competitor. So as you can see on the page, Services has met or exceeded all Investor Day targets for revenue, ROTCE and market share. I get asked a lot of questions about the performance of our services business during periods of macroeconomic challenges and low interest rate environments. On this slide, I wanted to illustrate how services is a through-the-cycle business and give you a historical view of how we performed over the last decade.

And if I can ask you to take one word away from this slide, that would be resiliency. Our resiliency is a result of our commitment to our footprint, our suite of products across our 5 interconnected businesses our strategy to support clients through uncertainty and lastly and very importantly, continuous innovation. On the top right-hand side of the slide, you can see what this resiliency means for our business. We are deeply embedded in our clients' operations, and this results in long-standing relationships with sticky global deposits, recurring transactional flows and embedded FX. This all contributes to the consistent performance we've seen across our core fee drivers, including scalability over the last few years. And therefore, gives us the confidence to continue to deliver going forward.

And on the left side of this slide, you can see our track record of delivering consistently over the last 10 years. during this period, even in times of recessionary environment with interest rates close to 0, the business still delivered ROTCE in the mid- to high teens. And as you can see, since 2016, we've doubled the size of our business. While we've benefited from higher rates, our outperformance was also driven by balanced growth across our entire business. Revenue and pretax earnings have both grown at approximately 8%, far outpacing global GDP growth and the services wallet which has also been supported by a 6% growth in both our deposits and our noninterest revenue. Our focus on high-quality recurring fee income is delivering clear results.

And in the first quarter of this year alone, you can see it in the last bar, we generated nearly $2 billion in noninterest revenue, demonstrating the power of the core revenue stream. Therefore, the ability to be there for our clients in all environments results in city capturing significant mind and wallet share over time. As we look forward, we are all navigating a rapidly evolving landscape with disruptive innovations like AI digital assets and tokenization are reshaping client behavior and expectations. These changes have the potential to reset market structures across all financial services. On top of that, we're addressing persistent themes such as e-commerce acceleration and supply chain restructurings. And in the investment business, ETFs continue their growth, driven by clients' desire for simpler more accessible and cheaper solutions.

Lastly, but just as importantly, client experience, given all these technological advances will be a critical area of focus for all of us across the industry to simplify and to improve. Given all these dynamics that you see on the slide, I believe our strategy summarized on the right side is well positioned for the future, centered on 3 focus areas: first, executing our client agenda to drive growth. then furthering next-generation platforms to support the future of transaction services; and lastly, driving innovation to deliver client solutions. Let me walk you through each of these. First, let's talk about our client strategy and how we're translating our strong foundation into future growth. So as you can see on the slide, we are enhancing our position with institutional clients, a key component of our 17,000 client base.

This segment represents the largest and most operationally complex companies operating around the world. And as you heard earlier in the video, they all rely on city to carry out their day-to-day operations. And in many, many cases, we are the only bank that is able to facilitate their critical cross-border business. Our integrated FX partnership with markets serves as a key differentiator for us and a testament to our One city model. Andy will discuss this further shortly. As an example, over 90% of services revenue with Fortune 500 companies comes from clients doing business with us in over 10 countries. Our strategy for growing wallet share with this client segment is very clear and focused. First, we're deepening our client relationships in key geographies with a particular emphasis on strengthening our position in North America.

Second, we are expanding our market reach with innovative new solutions across our entire network. Now in the middle of the slide, as you can see, we are focused on supercharging growth in strategic underpenetrated client segments. We've made meaningful progress here and are focused on absolutely accelerating it. Starting with the Commercial Bank. We have a targeted strategy with a goal to be the go-to bank for midsized corporates for international financial services needs. North America is again a key market and represents our single largest opportunity. Within this segment, we've delivered an annual growth rate of 12% since 2022. And significantly outperforming the global wallet. This performance also reflects our strong partnership with banking. You'll hear more on this from this later but we are confident that we are incubating the next generation of global champions.

For asset manager and owner clients, we are developing enhanced data solutions to provide a single multi-asset real-time view. Our investments in this segment have helped drive over 14% annual growth in assets under custody and administration since 2022. And finally, on the far side of the slide, we are capturing share in key verticals that continue to show outsized growth. As an example, we are capitalizing on the sustained growth in e-commerce, evidenced by a 250% increase in average daily instant payment volumes from 2022 to 2025. Meanwhile, our ETF servicing capabilities have enabled us to deliver over a 250% increase in our North America ETF business. In fact, BlackRock recently chose us to provide select middle office services for $4 trillion in U.S. domiciled iShares ETFs on the Aladdin platform.

So as you can see from this slide, our engagement with the world's most complex clients is paramount. And central to our strategy is a co-creation agenda that guides our efforts across our entire client book of business. This approach fuels our growth. evidenced by the tailored solutions our teams have co-created with leading institutions across e-commerce, fintech and financial institution clients. Let me now talk about how our platform strategy contributes to this client agenda going forward. Again, as you heard in the video, the concept of co-creation is fundamental to our approach. It allows us to build technology platforms structured around our clients' needs, empowering them to run their businesses effectively worldwide. And services continues to invest north of $2 billion annually to drive our platform strategy across our 5 businesses.

And here, we are anchored around 3 foundational principles: you can see them on the left, real-time, scalable and always on, a modern infrastructure stack, including our client-facing platforms and a strong data and AI foundation. With a focus on speed, scale and availability, these principles empower us to evolve our platforms and commercialize innovative solutions at the pace of a fintech. You can see some proof points on the right-hand side of the slide. We've doubled the number of applications running on modern architecture, which has made us far more agile and efficient. You can also see evidence of this in our custody business, where we saw a 37% increase in settlement volumes while reducing cost per transaction by 25% over the same period. Both these examples illustrate our ability to leverage technology for enhanced productivity and revenue generation.

Another powerful example of our execution is the Citi Payments Express platform. As some of you may recall, we launched it in 2022. And and it is already processing up to 10 million payments in a single day with the capacity to do much, much more. That volume represents nearly 40% of our total payment volume, which is a testament to its rapid adoption. This pace of commercialization from idea to a core part of our infrastructure is on par with any fintech, demonstrating our ability to innovate and win. And on top of this, we are differentiated by our ability to scale this innovation across our global network. Express is already live in 22 markets and will reach 30 by year-end. As you can see on the bottom right-hand side of the slide, these investments also enhance client satisfaction as reflected in our latest survey.

We are very proud of our progress and client experience and remain committed to driving further improvement Continuing with our platform agenda, let me spend some time talking about AI, which is integral to our strategy. AI's impact for potential and disruption is still in the early stages. However, we believe it is a transformative force that will allow us to reshape our platforms. Our AI strategy has 2 primary goals: enhancing our clients' business models, while also improving our own internal processes and operational efficiency. We are strategically deploying AI through specialized practical solutions you can see them on the slide, structured around 5 pillars that directly address client and business needs. Critically, this is all governed by a close partnership with our risk and control teams. This has enabled us to build a pipeline of over 50 use cases across services, some already live with the rest actively being built, demonstrating our ability to innovate safely and at scale.

Each of these use cases should result in enhanced revenue generation, a superior client experience, improved client solutions while also reducing operational overhead. Let me share with you the benefits of what we're already starting to see. On the left side, the sales assist pillar is a set of use cases designed to augment our sales teams. We have close to 10,000 complex client engagements annually. Our goal using AI is to streamline these engagements, which should result in, frankly, a significant reduction in sales cycle times, faster commercialization and improved client insights. This should drive wins, revenue and market share. On the bottom of the slide, you can see some of the other early results. By leveraging AI in our technology development, we've shortened cycle times driven by a 30% to 40% boost in developer productivity.

We expect these gains to increase as the underlying models continue to mature. Our intelligent document processing platform, which is part of our Ops assist pillar, automates client onboarding and streamlines the digital process of incoming documents cutting review times by 80%. And we are deploying generative AI to accelerate client resolutions at a global scale, empowering 6,000 service agents across 72 countries who handle over 3 million inquiries annually by instantly synthesizing data for each inquiry, these tools have reduced servicing efforts by up to 25%. And finally, our CitiDirect AI assistant has improved containment rates by 50%, driving faster resolutions and higher client satisfaction. Even in these early days, it is clear that AI is a powerful engine for growth.

Our disciplined approach grounded in strategy, governance and risk oversight ensures that as this technology matures, it will unlock sustained growth and efficiency for our firm and deliver superior outcomes for our clients. The benefits we're already realizing from AI are a clear testament to our commitment to innovation, which is integral to our growth agenda. And as I highlighted earlier, we are focused on delivering the near-instant always on and interoperable solutions our clients demand. By commercializing with anchor clients, we accelerate our time to market and revenue. This agility is a core differentiator for Citi. Now let me give you some examples which bring to life what you see on the slide starting right at the top with payments. Our state-of-the-art 24/7 clearing solution is live and scaling fast.

With over 300 bank clients already actively engaged leveraging this capability, we have strong momentum and expect significant growth ahead. This solution also removes friction by improving liquidity efficiency, reducing funding costs and eliminating payment cutoffs. We also recently announced an exciting integration with our blockchain platform, pushing our capabilities even further. I look forward to telling you more about that very shortly. Within payments, our innovation agenda also includes cross-border payments. Our solutions are integrated with City Markets FX capabilities unlocking currency payers across the globe. This allows clients to make cross-border payments in a variety of currencies near real time into accounts, wallets and cards. Looking at that second box, it's important to point out that payments and liquidity are complementary and essential building blocks for a modern transaction services business.

Therefore, as you look at that box, please note that global services deposits are not idle balances. They are the operational lifeblood of the world's largest multinational corporations. For example, half of the global Fortune 500 with over $40 trillion in combined revenue, use cities liquidity structures to run their business. And within our liquidity solutions, our robust pooling and sweet structures serve over 2,700 clients in more than 80 countries, facilitating over $24 trillion in sweeps annually. And in our trade business, our automated onboarding solution called Nirvana added 27,000 new buyer supplier relationships just over the last year alone, bringing us to 440,000 in total on the platform. Our trade business is highly scaled and facilitated about $1 trillion of financing throughput in 2025, which is also reflected in our market-leading ranking.

Then within our Investor Services business, single event processing delivers near real-time asset servicing via a unified custody infrastructure. This solution cut corporate action notification time by 95%, giving CIOs faster access to their cash and the ability to generate higher returns. We will be the only custodian in the world that can deliver the benefits of single event processing at this global scale. And finally, our Issuer Services business is at the forefront of digital issuance capability, having already issued $1 billion in digitally native notes. We have been an early mover in this space and expect to grow meaningfully taking distributed ledger technology from pilot projects into mainstream market practice. So as you can see, innovation isn't just a buzzword for us.

It's embedded into our strategy, directly serving our clients' evolving needs and frankly, driving our growth by commercializing at scale. Remember, we are not investing in hobbies. On the contrary, we're focused on innovation that is centered around co-creation with our clients. Let's now turn our attention to digital assets. I know that's a topic of significant and an area of interest. Citi has been strategically building its blockchain and digital asset capabilities for about 5 years. Our road map is directly shaped by partnerships with leading corporations fintechs and banks ensuring we solve for real-world needs. Regarding stable coins, we remain open-minded about our role in the ecosystem. While we observe that the use in true payment activities is still nascent, our blockchain-based city token infrastructure gives us the ability to issue a city stable coin, and we will continue to evaluate this option as client needs evolve.

So what have we done so far? If you look at the left side, and as I referenced earlier, we have built out city token services, which allows us to move tokenized deposits around the world on an always-on and 24/7 basis. We are live in 5 key global locations, supporting both U.S. dollars and euro flows. And client adoption has been strong with hundreds of clients moving close to $1 billion each day. For now, the most relevant use case for our multinational clients has been using our tokenize deposit capabilities for more reflectant liquidity and working capital management. We are also embedding this technology into our USD 247 clearing solution, building a vital bridge between blockchain and traditional payment networks. As the second box on the slide summarizes the growth in digital adoption and digital assets adoption creates a significant new challenge for our clients, which is seamless interoperability between Fiat tokens and stable coins.

We are working on creating optionality for our clients to use all these instruments while abstracting away the underlying complexity. A few months ago, we announced a partnership with Coinbase to enhance the bridge between traditional and digital finance through on and off ramps for all major stable coin providers. If you look at the next box, we continue to build out digital assets-related custody solutions. We have already started with offering custody for stablecoin reserves and crypto ETFs. In addition, we will soon launch custody services for native crypto assets like Bitcoin. This is mission-critical because our institutional clients demand the bank-grade custody solutions they can trust. And finally, on the right-hand side, we're dedicating to servicing leading virtual asset service provider clients. This is a high-growth segment where we are supporting treasury management and payments while also helping them build on and off ramps for their respective services with both traditional and digital asset solutions.

By delivering on all these fronts, we create real value for our clients as their needs evolve, especially as our proprietary network gives us the unique and nonreplicable opportunity to deliver all of these solutions globally in an integrated fashion. So I hope today's discussion has reinforced why services is at the heart of Citi's global network. We are proud to continue building on our track record of delivering on our commitments. We believe no other firm is better positioned to win than city. Our differentiated footprint, our scale, our deep client relationships and our unique ability to co-create solutions with our clients gives us an unmatched advantage but our ambition is even greater as we continue to build the global bank of the future. This strategy amplified by the powerful One Citi integration you will see today translates directly into financial performance, driving a low to mid-single-digit revenue CAGR in the near term, while fueling our ability to deliver a mid-20s ROTCE through the cycle. We are not just making commitments we are absolutely delivering results. Thank you.

[Presentation]

Please welcome Head of Markets Andy Morton.

Good morning, everybody. My name is Andy Morton. I'm Head of Markets here at Citi. First of all, I'd like to thank probably our most successful alum for his very kind remarks, which I'm going to refer to a couple of times later in my talk. I'm extremely delighted to talk to you today about our business. But first, just a couple of points about myself. I joined Citi in 2008, originally to lead the rates in fixed income financing groups. Then 6 years ago, I became co-head of markets. And 3 years ago, I took over a. At Citi's last Investor Day, we set out a vision of markets to simplify our business and produce higher returns. I'm happy to tell you that we delivered on both those goals. Today, I'm going to demonstrate the power of this franchise and how we can produce even higher returns over the next few years.

Let me get started with just a high-level overview so very simply, we're in the business of market making and financing with institutional clients around the world. And we have 5 product lines. The 4 on the left affects read rates commodities, they're collectively known as fixed income. And as you can see, we have solid share in all 4 -- and in aggregate, we're the #2 player in the space. And we have been for as long as I can remember. In equities, by contrast, we have room to grow with a 5% share. And this will be a topic I'll come back to later. Fixed income makes up about 3/4 of our revenue with equities the other 1 quarter. And at the bottom, I've set out a few other distinguishing features of our franchise. We have people on the ground in 78 countries. We are, by some margin, the largest dealer in foreign exchange in the world.

And as Jane mentioned, our long-term portion to equities is paying off in the short term. Revenue is up 40% year-on-year in Q1. Now let's look at the financials. Revenues have been growing at a 3% pace, unadjusted for businesses we exited since 2022. In the top row, in addition, illustrates some big shifts in our business mix. You see there in the left panel, financing has been growing at about a 9% rate. And on the right-hand side at the top, equities at a 10% rate. More importantly, let's look at the bottom line. which is on the bottom line. You see our efficiency ratio has been improving in the last few years, down to 63% roughly. And at $6.2 billion of net income were very, very material for the firm. But the most important number on the page is right here, 11.6% is our ROTCE. This is what we're focused on. We hit our old target of 10% to 13% 1 year early.

And of course, as you know, we had a great start to this year with 19% ROTCE in Q1. Now I want to get progressively closer to showing you how we make the money in our business. How does the revenue come about? I mentioned the 5 products that we're in. Here, I'm illustrating that 4 of the 5 have $5 billion each in annual revenues approximately very significant scale. We're not reliant on 1 or even 2 of those to be our engines of growth. In the middle 2 pains, I allude to the fact that these products are not islands. They're connected to each other and the rest of city through shared clients, our regional presence and a powerful common technology infrastructure that I'm going to come to later as well. Now let me say a word about Citi's global network. I mentioned the 78 country presence.

Here, you see our very even regional breakout by revenue. No other bank can deliver these products across this breadth. How does it make a difference? How does this play out? In a fracturing world, being able to actually meet the client for a coffee or to deliver last mile local currency payments in, say, Kazakhstan is differentiating. Secondly, we find that emerging markets clients and emerging market governments are increasingly using financial tools that developed market clients have been using for years. If you take it down to numbers, you can see 42% of our revenue comes from non-G10 countries. And I'm expecting that number to grow. And finally, continuing over to the left, of course, we service all the major financial institution segments.

But the important thing you should look at on that ring diagram is our corporate share, more than 30% of our total. And why does this matter? Because corporate flows are far more stable, as I'll demonstrate shortly. And finally, I'm quoting Harry Markowitz, who had met once. He said, diversification is the only free lunch in investing. And I thought about this and I wanted to bring it to life with an example. I always like to think of examples. And as a trader, a former trader, I always think in terms of P&L. And so this is the example I come up with. It's my favorite slide in my entire presentation, just so you know. I would like it to be your favorite slide in the entire day. There's some mild competition coming later.

So let me say what it is, okay? So I should be clear. Last year, we made $22.4 billion in markets. I'm going to show you the trajectory of our actual cumulative P&L day by day through 251 trading days. So I'm obviously going to show you a line that ends at $22.4 billion, and it's obviously going to start at 0. You with me? Okay. So everybody in your own head, you have to think what's it going to look like? What is that graph going to look like. Now I want you to all be honest with yourself. Was it what you expected? You can tell me later. I think you might have expected some bumps. And by the way, 2025 was a pretty interesting year. We had a new President. He did some things. Tenure notes rallied 60 bps in the first 6 weeks after his inauguration.

We had Liberation Day. S&P 500 sold off 10% in the 2 days following we had the first Israeli on War. And of course, later in the year, we had combined tech and private credit concerns. But this was our P&L. So what drives this? Why is that? Why does it come about this way? Or why did it come about this way in 2025? And broadly speaking, I have 2 reasons. The first, I already showed you Five products, 5 regions, 5 client segments, plus the increase in financing that I mentioned. Secondly, and this probably kicks in more on the really big days kind of like the ones I'm referring to on the page the nature of the client flows and the risk exposures that we have in equities are pretty different to what originates in fixed income. And on those big days, it's quite diversifying and very helpful.

Let me close by showing you 23 and 24, so you can see the difference. And you can see that the stability and of course, the outright revenue number are already improving just over 2 years. So I said I wanted to show you how we make the money. Where does our revenue come from? And there's no better place to show you that than FX to start. Our FX business enjoys a great partnership with services just as I enjoy a great partnership with Shahmir, and I'm going to show you why that is in the next couple of minutes. So foreign exchange is a very complex activity, thousands of clients, multiple segments. At the risk of heavy simplification, I'm going to boil it down to 2 segments. And not only that, I'm going to summarize each 1 with 1 word.

So financial institutions, hedge funds, asset managers, banks, the word is price. In the end of the day, they want a good price. They want it fast and they want it 24/7. The world's largest foreign exchange dealer can do that. And not only that, our franchise very often provides offsetting flows. But as the pie chart indicates, 70% of our revenue comes from the corporate segment, which is really the core of our business. My word there, my 1 word, is embedded. And I'm going to explain with the real-world example from a real client. So this client is headquartered in Switzerland, and they've got subsidiaries all over the world, and I'm going to pick Pakistan. You can see it there in the blue. Head office up in Switzerland, they use our Global Treasury Center app.

This gives them global FX execution and monitoring capability. Now let's say, the subsidiary down needs to pay dollars to a supplier in Europe Head office executes the trade. So they execute the risk rate, dollar rupee risk rate on behalf of this subsidiary. City feeds the trade into the client's treasury system. What's important to head office is they have accurate global risk exposures around the world. Meanwhile, down in Pakistan, the local team simply makes a rupee payment from their city account via services connectivity. Then a simple FX conversion is generated and the dollar amounts delivered to the supplier's account via again, our services network. And then Citi populates the local system of the client. What the local office cares about is reconciling their supplier payments with the FX trade that head office has done.

And again, our integrated services and FX platform makes this happen. Very, very simple to describe took me 1 minute. Not so easy to build. We've done that with this client in 62 currencies and 57 of their subs. We've laid out a few other statistics down there at the bottom. So I hope this example shows you 2 things. Number one, why our FX revenues are stable, and why our model is not so easily replicated. So now I'm going to hop metaphorically only to the other side of kind of the fixed income spectrum and that's to talk about our spread business. And what do I mean by this spectrum? Why did I introduce that word? Three things really to distinguish FX and spread and they're pretty much at the opposite is, as you'll see was obviously an international activity.

Our spread business is concentrated here in the U.S. FX does almost no financing, as you're going to see spread is largely financing now. And our FX model is highly mature while our spread business has seen big changes. So just by way of background, sort of what is the spread business, what do I mean by that? Years ago, we combined mortgage, corporate bond and municipal trading and so all associated financing into a single group at the firm. And then when Citi created the 5 businesses reporting to the CEO, we brought that group fully into markets. And as you can see, coming out of the COVID crisis, we've got P&L back to 2021. The trading side of this business, in particular, had had a very good run. Volatility and activity levels were high, but both dropped and capital requirements, SAR specifically rose.

So it became quite difficult to profitably trade both munis and secondary credit in particular. By 2023, ROTCE was down to 8%. And -- and so we made some difficult decisions. We exited munis and we exited distressed credit. But on the back of our deep asset class and securitization structuring expertise and seeing growing client demand, we began to expand our lending book. As you can see, these choices together delivered 600 basis points of improvement in spreads ROTCE. And I believe these returns can go even higher. So let me quickly describe a few features of the securitization based lending that we do and it's over there on the right-hand side, suberized. It's mostly senior lending. So by that, I mean, there's a thick tranche of protection below us in the capital structure.

That makes it capital efficient, 40% RWA on average per unit loan extended. Origination spreads are typically double that of similarly rated corporate bonds. So for plus 200 versus silver plus 100, roughly speaking. And as you can see from the pie chart, the underlying collateral is highly diversified. And spread products has expertise in all of these asset classes, reflected in our overall top 3 rating. Finally, our clients are almost entirely large institutions. When you put all that together, you see the expected returns, including the securitization fees on the right-hand side. So net-net, we're very comfortable with this risk. We have an expert team, and that's why we intend to keep growing this activity.

Now Time won't allow me to go through all of our fixed income businesses in the same depth. But I do want you to know about our rates and commodities businesses. They're both exceptional franchises that you should know about. Rates, of course, very close to my own heart. It's not only top 3 in the market but is so in all the major subcomponents as well. Internationally, rates is probably the best example of what I was alluding to before about applying developed market innovation to the emerging markets. This is partly related to a strategic choice we made years ago. to put the local markets and G10 rates units together. Secondly, the business houses most of our fixed income structuring team.

That, in turn, has led to some landmark emerging markets transactions, some of which you can read about in Risk Magazine; and #2 ranking in non-G10 so #2 in non-G3 in 10. Finally, rates as well has a very strong financing component, in this case, called repo. And you see there the number of risk awards that the business has one, due to the client satisfaction, it's generated, and alluded to it in his opening remarks. Finally, commodities. Now as I mentioned at the very beginning, we take a different approach in commodities. It's a nimbler business smaller. We don't try to offer every product in every region. However, as we saw a few years ago, post the Ukraine invasion when energy prices in Europe sort or even in this past quarter with heavy oil volatility, clients value our ability to provide liquidity in the segments we choose listed there are just the main areas we're focused on.

North America Power and Gas, precious metals where we're opening a volt shortly. And again, using our security expertise and asset class expertise for financing across all of commodities. So before turning to the equity side, of the equation of our business. I want to show you the wallet of markets. It's very interesting and very important to understand the strategic direction that we're taking. So this is the bank wallet only. So this is the wallet from coalition that's available to banks. 2 points should stand out, partly because they're in the title. Number one, the wallet has grown materially in the last 6 years by $100 billion from $152 million to $252 million roughly. So why did this happen? And here, since this is more of an external thing, I want to sort of give you some reasons, but obviously, compared to some of the other things that we're talking about is less under city's control.

But I wanted to put forward what I think are some of the factors that have led to this development in the wallet. It's kind of hard to remember now, but in the period between 2011 and 2021, Inflation was incredibly low. U.S. core PCE was below 2%, 90% of the time. Not only that, even though the miss was kind of small, authorities were concerned enough to keep real rates at 0 just to try to get inflation up. Then COVID happened, fiscal spending, burst of inflation, which really hasn't still gone away. Secondly, you may remember the term secular stagnation associated with excess savings or excess demand for savings. Of course, right now, we have the exact opposite. We have excess demand for investment in AI and technology. And this has pushed real rates up.

We also have high government issuance around the world. And as I alluded to, emerging market countries are tapping Capital Markets products historically used only by developed market clients. So my own view is that many of these factors will sustain. But as I mentioned, I wanted to put it out there so you can make your own assessment. And then the second piece that I highlight, equally important is the shift of the mix of the wallet between fixed income and equities. For that first decade really up into and including 2020 the fixed income equity split was about 70-30. Post COVID, it's moved to 60-40. At the bottom, I've listed just a few what I would call micro or more equity-driven factors that have contributed to this. I won't go through them. But again, I would argue, and I think myself that they're likely to be here to stay.

These wallet dynamics have had a pretty big effect on bank performance. So I want to show you that next. The first bit pains me slightly to show it, I must admit. But the growth of the equity wallet was very helpful to our large U.S. peer competitors who had a full platform built out in 2022. They've seen 40% revenue growth since then. This is total, by the way, not CAGR. At Citi, we're extremely proud of how we've grown revenues by 31% whilst improving our platform. And at the bottom, you can see that we've now surpassed our average European competitor as measured by 2025 revenues. But it's returns that are important, so let's add returns to the picture. So I'll give you a second to take this 1 in. It's relatively straightforward. I'm showing revenues on the horizontal axis, ROTCE on the vertical axis. And of course, the position of Citi's equity and fixed income business in the middle.

I would say if you want to have 1 slide takeaway for the strategy that we're undertaking in markets, it would be this slide. It explains to you why it is we're doing what we're doing in city markets. You can see there our fixed income business very healthy. just under $17 billion of revenues last year and mid-teens returns. Equities, as I mentioned earlier, higher fixed costs, returns are lower at our current size, and you can estimate the weighted average ROCE is 116 exactly as I highlighted on the first slide. But now just as on my previous slide, I want to add the competitor picture. Again, a little painful, but it is what it is. The other 4 large U.S. banks had revenues of about $13 billion to $14 billion in high-teens returns according to our estimate.

So it shouldn't surprise you to see what our strategy is in equities continue to scale and grow to take a bigger piece of this pie. So next, I'm going to show you why I'm extremely confident that we will do that. But first, let me give you a little bit of evidence that's our progress since 2022. So now let's talk a little bit about City equities and how we will close that gap. As it happens, the biggest driver of our equity revenue expansion over the past few years, 22 to 25 has actually been equity derivatives. We've got exceptional capabilities in Corporate Solutions, in structured notes, complex derivatives, and we're also top 3 in futures and derivative clearing. But even as Jane mentioned earlier, the critical ingredient for long-term growth in equities is the quantity of prime balances. And why is that?

Again, it's that financing word, Prime balances provide stable financing revenue. But moreover, they provide kind of a halo effect that creates stickier client relationships and more cash execution. You see we've doubled more than doubled, in fact, prime balances from $200 billion in 2022 to $450 billion in 2025. You may say, Andy, the stock market has gone up. But more than half of this, 55% of this increase actually comes from client acquisition. So that's our track record. -- derivative capability, platform stability. Why will this growth continue? I'm going to give you 3 reasons. Number one, and this is really the most important. This is the critical reason. And referred to it himself. The clients we're building with are already city's clients. In fact, they're usually clients of our dominant fixed income franchise. They know us. They like us. They want to put balances with us.

Some of them tell us they want another large partner because nearly 50% of the market is concentrated in 3 players. And many people don't want to be on the other side of that. My second reason is the strategic investments we're making in the platform, again, as alluded to by Jane earlier, and I'm going to mention them briefly in a second. And finally, 1 city. Our growth is going to be heavily boosted by the improvements in banking and wealth, which Vis and Andy will be telling you about in a couple of minutes. And I want to close on equities, just if you focus at the bottom of my slide, by emphasizing something that I just briefly alluded to. For a variety of reasons, the number of stock exchange connections you have to make, the requirement for high-speed and high-volume technology Equities is much more of a fixed cost business than fixed income.

Or put another way, it's a scale business. Returns accelerate once you cover the fixed cost. And we've illustrated that here as we show our plans into the near term, the expenses don't grow nearly as quickly as the revenues so I spoke about investments this is a good time to switch and give you a picture of the investment picture across all the markets. And what's important to take away is that the level of investments we're making in our franchise is materially increased. I just finished speaking about the importance of the prime platform to equities, so you won't be surprised to see that listed at the top. In a nutshell, what are we doing? We're just growing the outright capacity of the platform, the volume, the number of trades, the speed of trades and so on that we can take on board. And secondly, the product set for the next set of clients that are coming to the platform.

We're bringing clients on board sort of in order, if you will. On the fixed income side, again, as you'd expect, the set of investments is more diverse. In commodities, we're opening a precious metal volt in London just this month. In rates, the huge investment is in our low latency and Algo capabilities. As I alluded to before, large U.S. treasury and swap dealers like Citi, we get most of the big risk transfer flows from clients in the marketplace. But given that we have that foundation, why should we leave money on the table for the smaller, faster markets. And so that's part of our investment plan going forward. I already mentioned our plans in spread lending. And of course, just like is, we're continuing to improve our cross-border payment and custody infrastructure. In fact, we're doing it jointly with them. That's our future investments.

Let me show you some of the results of the past investments that we've made largely in consort with our colleagues in Market Tech. This is a pretty long-term time line. Many of you are users of velocity Velocity got started just a few years after I joined the firm. In fact, we started behind 2 other major dealers that had leading platforms then. Now we have the leading platform and not velocity. Olympus. It's 1 of only 2 strategic data repositories at the firm. It began its life as the single source of truth of data inside of markets. Much, much more can be said about stylists that's our democratized GenAI platform, which delivers modern, safe AI access to all of our employees. But by far, so far, the biggest single impact of technology to us in markets has been the Zing platform.

So let me just walk you through that briefly. It's an ultra-modern, scalable, decentralized risk management platform. started small. It started as an analytics library just developed by our quant Group. Now as you can see in the middle, it includes transactions, environments and even results. Something as simple as transactions is different depending on the use cases. There's nothing so simple as just give me a list of all the trades you have. Each use case and I list some of the use cases there on the right, has its own requirement for a transaction list, for example. The other big feature of the Zinc platform is each asset class, be it credit, FX, rates, maintains its own calculation library. They need to do that. They're the experts. But the trade-off is those asset class libraries must meet rigorous common standards.

And as a consequence, complex calculations can be done in a robust and very scalable way. Of course, since it's a markets platform, 100% effectively, 100% of markets transactions are zinc compatible. But what we're most pleased about is the left-hand side, the user base. It's growing rapidly. Because of the API, because of its self-service nature, colleagues in risk and finance or anywhere in the firm can access zinc capabilities. So this obviously is going to have huge and is having huge long-term benefits, eliminating duplication of both data and software, of course, speeding up development and compute costs. So I like examples, kind of examples, guy. Here is the best example of how cool this technology is. We can write a 20-line Python program that runs a scenario stress test on our entire markets trading portfolio, 20 lines of Python, that's it.

I would argue, again, that in this case, we've leapfrogged some of our competitors who tend to have more big box, all or non-type systems that were built years ago. So net-net, it's clear to me is ahead of markets that technology is a huge competitive edge for us. I'm going to show you 1 last competitive edge, and that's our capital productivity. So I've explained to you how we make the money, how we make our top line revenue, I hope. And through the investments that we're making and the opportunities that we have, the prospects for top line growth across the entire franchise. But its returns that matter. And we have a fantastic track record with the denominator as well, capital.

Those of you who remember the last Investor Day were here for it, you may recall when it came to the business discussion about markets, we weren't at that point disclosing externally TCE for markets or indeed any of the other businesses. So what we did was we used revenue over RWA as a proxy. We're running that at 4.3%, and we set ourselves a 5.5% intermediate-term target. We got there early, in fact, hit 6.1%. Notice how we did it. we went down in RWA between 2021 and 2024. I can't talk about any individual competitor in this regard, but certainly, the entire industry went up. ROTCE has since replaced revenue over RWA, but the techniques we use are the same. So let me just quickly highlight what those are. And I'll go back to what we did beginning with the origination of this program and this team when Sacra came out.

We set up a capital team reporting to someone in my group. And the first thing they came back with was -- if you want to improve something, you need to measure it frequently and with high granularity. So we've built the capability in the business to produce daily RWA and G-SIB numbers for management choices. Then we decided, as the next step to think through how we allocate those precious resources. And what we did as a markets group is maybe not surprising. We created an internal market for capital including auctions and bilateral trades between different desks. This gets the right incentives out across the entire enterprise. And the involvement of the whole enterprise and the whole franchise leads to better client transactions.

And there's room in this space for transactions which are very economically beneficial to clients, but also capital efficient for us. So let me close with a summary. I hope I've shown you the incredible strength of Citi's Markets franchise and maybe some things you didn't expect. I've also been very clear on where there's room for us to take share. especially with the significant investments we're making. I've shown you reasons why the wallet could remain elevated. Putting it all together makes me very confident that our revenues will grow at that mid-single-digit rate. I'm certain that in markets, we have a mindset which is returns driven across the whole enterprise.

So let's look at the specific numbers. We finished 2025 at 11.6%. That's 11% after the firm's change in TCE methodology earlier this year. It's very reasonable to expect another 200 basis points bringing us to a very lucky 13-plus percent. So on behalf of all my colleagues in markets, I can assure you we will do our best to deliver that. And I'd like to thank you very much for your kind attention today. I really have to credit Citi for in recent years how they've really rolled up their sleeves, understood our business also brought different perspectives to help our business become better. They've been great strategic advisers pushing the envelope and our thinking to get to a better solution, not just for our investors, but for our patients as well.

Having a partner with the financing capability, the strategic insight and the global reach to support us at scale is critical. City has earned that role. Our financial partnerships need to be reliable, responsive and proactive. That's where Citi stands out. So when it came time to raise capital, we turn to a partner we could trust return to Citi. We know that when we're trying to work through complexity, that city will be able to provide us important advice knowing who we are and what we're trying to do. And that will make a real difference in where we lean in and where we don't.

[Presentation]

Please welcome Head of Banking and Executive Vice Chair.

Good morning, everyone. I'm this Raghavan, it's great to be with you all here today. 2 years ago, I stepped into this role with exceptionally high expectations about the power and potential of our banking franchise. I'm excited to share that they've since been exceeded by every measure. But before I get into the numbers, I want to start with something more fundamental. Our purpose at Citi, our ambition is to be the preeminent banking partner for clients with cross-border needs. That is our North Star. It shapes every decision we make, how we are organized, how we deploy capital and how we serve. And at the heart of that ambition is a simple belief when our clients succeed, we succeed. Our job is to help them grow, help them navigate complexity and realize their strategic ambitions. And when we do that well, consistently and at scale, the returns follow.

Today, I'll cover 3 things. The strength of our banking model and why we have a genuine right to win, the deliberate work we've done to build a stronger, more integrated franchise and the clear plan we've been executing to gain share and deliver higher sustainable returns at the heart of banking is our world-class franchise powered by 3 businesses. Our leading corporate bank, where we are #1 internationally, our growing commercial bank, an incubator of next-generation clients and our top-tier investment bank, top 3 in debt capital markets and top 5, both in equity capital markets and mergers and acquisitions. Our banking franchise is the embodiment of One Citi. For clients, we serve as the front door from strategic dialogue to deploying capital, connecting them to the full part of our franchise. We are not just a product provider.

We are a partner in their success. You heard from Shahmir and Andy about the strength and breadth of their businesses. In banking, many of the products we deliver sit in services or markets, helping clients manage trade flows, execute payments or hedge FX, for example. Banking is also deeply connected with wealth and the number of referrals between our 2 businesses has been steadily increasing. The numbers you see on the slide tell the story of banking's impact. On the bottom left, you can see that we enabled $39 billion of revenue broadly across the firm last year. And banking's on reported P&L on the bottom right shows an additional $6 billion. over $45 billion of total revenue impact. That is the power of One Citi and the result of putting clients first. Here, you see a snapshot of our excellent progress since the last Investor Day.

On the top left, 2025 banking revenue of $6.4 billion, a 10% CAGR since 2022. And the upper right shows our balance sheet might with $415 million of committed exposure. On the bottom right, you see that our investment banking wallet share has been steadily increasing, and the result is on the bottom left, ROTC that's up significantly from 2022. This is more than just cyclical luck. It's a result of disciplined execution sharper capital allocation and fully integrated client coverage. And the opportunity ahead is substantial. Our competitive advantages are real and they are durable. When I arrived, what struck me most of our Citi was this amazing franchise with much more value waiting to be unlocked. Our client relationships are top tier. Citi's global network cannot be replicated, and our brand carries real weight in board rooms around the world.

As you see on the left, it starts with deep and long-tenured client relationships. Nearly 60% of our clients have been with Citi for more than 10 years, including relationships dating back more than a century in some cases. That is remarkable and a testament to our people and Citi's ability to successfully serve clients through the cycle. And for the next generation of global champions, we are serving them through our growing commercial bank. In fact, the overall number of commercial banking clients increased roughly 25% since the last Investor Day. And our franchise is strongly balanced across sectors and geographies. As you see in the middle, it includes roughly 80% of Fortune 500 companies, both here in the U.S. and globally, and our exposures are highly weighted towards investment grade.

So why do clients Banquet Citi? A big reason is our unmatched global scale and network. Citi's on the ground in 90 countries. As you heard from Jane and Shahmir, we have a closed-loop network that handles $6 trillion in payments daily. No other provider can come close to a combination of depth, scale and reach. That is why we are uniquely positioned to serve clients with cross-border needs. And while helping them navigate today's complexities is both our mission and our competitive edge. And that is particularly invaluable in today's multipolar world. Our model delivers because of the strong operational connectivity we have with clients. As I mentioned earlier, it starts with deep rooted entrenched relationships. Citi is often plugged directly into our clients' infrastructure, giving us a reason to be in dialogue every single day.

Our corporate bankers provide strategic counsel at the finance and operational level, balance sheet optimization, liquidity, swaps, FX, capital allocation, you name it. And our commercial bankers work directly with founders who value Citi's partnership and globality as they scale. For these clients, our cross-border capabilities are not just a feature it's the reason they choose us. They help them move capital, manage risk and expand internationally in ways no other institution can match. And when clients are ready to tap capital markets or pursue M&A, investment banking industry expertise and financing powers drives trusted C-suite and board level engagement. This is about serving clients holistically and being a true partner, helping them to realize their vision and achieve their strategic objectives. When they win, we win.

On the bottom of the slide, you will see some of the amazing clients we have the privilege of serving. I'd like to bring to life what I've been talking about with a few examples. Johnson & Johnson. As you heard from the CFO a moment ago in the video, we have an exceptional relationship with them. It spans 75 years, and we serve them in more than 50 countries across multiple products, including payments and lending but Citi was not historically in primary position for strategic advisory. To address that, we put the right talent in place and establish trust at the CEO, CFO and Board level. Since then, the results speak for themselves. In 2025, Citi advised J&J on its $15 billion acquisition of intracellular. Subsequently, we're advising them on plans to separate their multibillion-dollar orthopedics business, leveling up the relationship, earning mind share, delivering for Johnson & Johnson.

And I always believe no endorsement speaks louder than repeat business. Imagine how many more J&Js are out there where we have a right to win Paramount. When Paramount proceed Warner Bros. last year, City was by their side, every step of the way serving as adviser and leading $54 billion of committed financing with conviction and with speed, coverage, M&A, financing, risk markets, all synchronized, all working together. And while M&A grabs a glamorous headlines, it's happening across our franchise. An example from capital markets, this one with Oracle, another client you saw in the video. When Oracle announced a $50 million capital raise this January, including their first equity raise in 40 years, it was city that designed, executed and delivered. We engaged early, led with differentiated content and execute it impactably.

When we lead with client mind share, wallet chair follows. This is what's possible when we match strong client relationships with industry-leading talent powered by Citi's platform, a truly virtuous circle. And despite these success stories, we are just getting started the foundation we built is strong, but I want to be clear about something. This didn't happen by accident and it didn't happen overnight. After joining, it was a deliberate choice to focus first on fundamentals before chasing the upside. We had to enhance how we were organized, how we deployed capital, how we cover clients and how we thought about talent, get those things right and the results follow. I'd like to spend these next few minutes talking about what we've achieved thus far and why we are well positioned for the future. We have been taking deliberate actions to build a high-performing, sustainable and scalable model.

The work we are doing cuts across 5 dimensions all delivering. First, an integrated organization. We've unified leadership across corporate, commercial and investment banking. In the past, these businesses operated too independently, sometimes siloed. Today, they are genuinely connected, sharing intelligence, sharing clients, sharing ownership with accountability. This has unlocked revenue synergies and improved how we cover clients and deliver for them. Second, best-in-class talent. Strategic investments have been made to replenish and strengthen our bench. We have combined the best of Citi's own talent with industry-leading hires from across the street. We're building a team that knows what serial winning looks like and is passionate and hungry to do it. Third, One Citi capital deployment.

We established a banking balance sheet forum with representation from across Citi's institutional businesses. Capital allocation decisions are being made with alignment across finance, risk, markets, services and wealth. Every dollar is deployed with a purpose and with clear ownership and accountability. Fourth, aligned risk-taking. We have a disciplined, fully aligned approach when it comes to key priorities such as leveraged finance and securities underwriting. It's always done in full partnership with colleagues in finance, risk and markets. And finally, ownership and accountability. More than ever before, we have a metrics-based approach for measuring productivity, relationship depth and wallet capture. And performance evaluations and compensation are transparently and directly connected to results.

When I spoke earlier about banking as the portal through which clients experience city, that starts with our corporate and commercial bank. As I noted, through services and markets products, Citi becomes indispensable to our clients' day-to-day functioning. In the corporate bank, this is true, not just for large multinationals, but their subsidiaries operating around the world. When a crisis strikes, markets become volatile or established rails collapse, clients trust Citi for advice. They leverage our intellect, our scale, our network and our financing capabilities so they can continue operating seamlessly. And our ability to successfully deliver has been tested again and again and again. This also holds true for our commercial bank. And here I want to highlight what makes us different.

Many midsized and emerging companies, the Citi's commercial bank precisely because of our global reach and cross-border capabilities. These companies are growing internationally expanding into new markets, managing multicurrency flows and also navigating complex regulatory environments across borders. They need a partner who can be with them in every market where they operate. That is city. No other institution can offer midsized corporates the same combination of local expertise and truly global access. The success is reflected by the numbers on this page. Our Corporate Bank posted 15% growth in average revenue per client and year-on-year client revenue growth of 11%. Our commercial bank delivered 20% growth in average revenue per client.

And we grew investment banking activity with commercial banking clients by 60%. Let me give you a concrete example of our model in action. McCormick & Company. They are a client we partnered with in Commercial Banking for more than a decade. This includes supporting their growth through working capital solutions, supplier finance, risk management and helping them navigate international markets. As their ambitions grew, so did our partnership. This March, when McCormick announced a landmark $45 billion combination with Unilever's Foods business, Citi was there, providing strategic advice and leaving $16 billion of committed financing. That is the power of our franchise, long-standing relationships that scale seamlessly from commercial banking to complex transformational advisory. We help them grow, we help them go global.

And when the moment comes for a transformational deal, we are their natural partner. This slide spotlights the strategic actions we've been taking across investment banking that are beginning to bear fruit. You see them on the left. The early results show broad-based share gains across products, clients and geographies. Mergers and acquisitions is up 100 basis points. 2025 was the best year for M&A in Citi's history and it's continued into 2026. As Jane said, so far this year, we played a leading role in the 3 largest deals. That is a clear statement of our intent. Equity Capital Markets is up 70 basis points with 2 consecutive years in the top 5, and we still have much more room to grow in ECM. This will be a key area of focus. Debt capital markets is up 45 basis points. We have maintained Citi's long-standing leadership in investment grade while asserting our presence in leverage finance.

And it's the same story by client. Financial sponsors are up 135 basis points, our highest share in a decade, and we are up 200 basis points with our strategic clients. And the narrative continues by geography in North America, which is our core market, we are up 60 basis points, and we have plans to drive an intense focus on getting more share here in the U.S. Internationally, we are up 85 basis points with strong growth across the board. All good progress, but as Jane says, not a destination. We have excellent momentum and a strong pipeline, there is much more to come so where are we going? And how will we get there? We've reset the foundation and proven the model works. Now it's time to raise the bar and go after the immense opportunity in front of us. 3 pillars will define how we execute, exceptional talent, disciplined capital deployment, and above all, a serial winning mindset, all powered through One Citi.

That is how we will deliver against the priorities that will appear on the right-hand side of the page. First, scale in high-growth sectors, tech, health care, industrials, Roughly 2/3 of the investment banking fee pool resides here. Second, outperform in the U.S. We remain underpenetrated in our home market. Concrete steps are underway across banking to drive increased levels of revenue here in the U.S. which will also help further utilize our deferred tax asset. Third, lead with strategic advisory and financing. Our purpose is to be the trusted adviser to management the C-suite and the Board. When we lead with client mind share, wallet share will follow. Fourth, accelerate primacy with sponsors. In any given year, financial responses may represent a 1/4 to 1/3 of the investment banking fee pool, it's not just leverage finance.

We are capturing the entirety of the sponsored ecosystem all the way down to the portfolio company level across One Citi in a risk-aware and responsible way. And finally, expand our middle market footprint. We are partnering with middle market companies through every stage of growth. We see the middle market as a precious incubator for our future pipeline of clients. All of this will be primarily driven by talent. It's essential that we have best-in-class people driving our franchise forward. This slide shows how we are building for the future. Since 2022, the investment banking wallet grew from $79 million to $106 billion. Over the same period, as you can see, Citi share grew from 4% to 4.7%, and while running a far leaner team than our peers. As you can see, our gap to peers is about 100 managing directors, and we still grew share. That speaks to the quality and productivity of our people.

And frankly, it speaks to what this franchise is capable of when it's focused, finally tuned and aligned. But we are at a pivot point. To deliver on our ambition, we need to continue investing in talent deliberately and strategically. We've already begun since the start of '25, we have hired more than 60 managing directors across banking from 20 institutions across the street with approximately half of those hires here in the U.S. We are attracting the best. And we can get whoever we want. Going forward, quality of hires over quantity will be our focus. It's not just a numbers game. We are targeting a roughly 15% increase in managing director headcount, which will extend our product and coverage reach enhance productivity and ultimately drive increased wallet share.

Ours will be an innovative, transparent and performance-driven culture, expectations are clear we will measure and reward those who deliver at the end of the day, this business comes down to people and capital. Having covered people, I'll turn to capital. Capital is a key strategic asset. It is our raw material and should never be deployed out of habit or relationship inertia. We will always sweat our balance sheet and our capital continue to be deployed strategically for maximum One Citi impact. This will be guided by 4 principles. First, scale. Our $415 billion balance sheet gives us formidable heft and relevance. We will use it. we'll show up with creativity, flexibility and size. Our leadership positions in both the $54 billion Paramount bridge and the $16 million in the current bridge are proof points. Second, productivity. Our capital is now generating 20% more revenue per dollar committed compared to 2022.

And Capital allocation decisions are made with a strategic lens to ensure exceptional client outcomes while keeping in mind total return expectations. And by the way, that includes having honest conversations with clients about what those expectations are. Third, quality. Roughly 80% of our book is investment grade. We constantly stress test our portfolio and have managed effectively through all macro conditions. And finally, discipline. While the recent cycle has been somewhat benign, our NCL ratio of just 0.1% reflects prudent underwriting, and an uncompromising focus on book quality Above all, to drive our strategy forward we are embedding a serial winning mindset. This is incredibly important. It's predicated on 5 key elements. First, client mind share leads to wallet share. We're instilling clear ownership and accountability for every client.

The motto is to lead with creativity and deliver all of city always always with the client success as the goal. Second, we must focus on the entirety of the wallet opportunity. Our days of operating in silos are over. from M&A to deal contingent FX to cash management, to financing, to the escrow, the list goes on and gone are the days of city being easy to say no to we will earn and ask for all available business again and again, if necessary. Third, we're instilling a culture of accountability. We have clearly defined expectations and areas of responsibility. Bank productivity is closely scrutinized. Results are measured and positive client outcomes are what matter. Fourth, we are ingraining a corner store mindset. This entails relentless efficiency. We're ensuring maximum impact from every dollar of expense every dollar of balance sheet and every hour of human capital. Our teams will treat every resource as if it was their own.

And finally, embracing AI as a growth driver. AI appears on this slide because it's really about a mindset shift. Our teams at all levels must embrace it as a catalyst for growth. Those stuck in a Jurassic are at risk of being left behind. We will use the tools to disrupt ourselves, challenge convention, become more efficient and drive better client outcomes. This is being ingrained across the franchise. As we come to a close, let me talk about where we're investing and highlight our KPIs. Talent remains the linchpin of our strategy, as I discussed earlier. We will continue to invest across sectors, products and key geographies, doubling down on the U.S., U.K. and Western Europe, while nurturing our strengths in Latin America and Asia Pacific. Our other clinical investment is in next-generation technology.

As I noted a moment ago, we are deploying AI native tools that will enable us to work smarter, to be more productive and serve clients better. from city AI and the leading LLM to piloting application layer specialists such as heavier, we are putting the best tools in the hands of our teams. The goal is simple greater efficiency, smarter working, superior client outcomes. Our strategy and our investments will translate directly into the KPIs you see on the right-hand side of the page. We are targeting a greater than 6% share across investment banking overall, North America investment banking and financial sponsors, investment banking. While the progress won't always be linear, the momentum is building, and we will accelerate it. I'm confident about the path forward for banking.

We expect that the key priorities you see listed across the top of the page, together with strategic capital deployment, and disciplined expense management will elevate our ROTCE from 10% at the end of last year towards mid-teens in the near term and mid- to high teens in the medium term. We covered a lot of ground today, but I want to leave you with a clear message. Our franchise is exceptional. Our client relationships are deep. Our network is unmatched. Our talent is world-class, and our culture is changing. We exist to help our clients succeed to be the partner they turn to when the stakes are highest, when they need to move fast when they need someone who can show up anywhere in the world with conviction and capability. When we do that, we win. Clients are noticing, and they're rooting for us. Competitors are definitely feeling it.

And the league tables are beginning to reflect it. If it looks and feels like a different city, it's because it is. We have the balance sheet. We have the platform. We're growing the talent and we have the strategy. The opportunity ahead is immense and we will capture it. Thank you.

We will now take a 15-minute break. Thank you.

[Break]

Please welcome, Head of Wealth, Andrew Sieg.

Hello, everyone. It is great to be here. Now this is my first Investor Day as Head of Wealth. I joined Citi because it was clear to me that we had the ingredients to build one of the world's leading wealth managers and the commitment from Jane and the Board to make it happen. We are proud of our turnaround, and we're moving fast, as I like to say, the new Citi Speed.

I'm excited to share our vision and our plans today, and we're going to start with the basics. As you'll see on the slide, this is a distinctive and powerful wealth management firm, a global private bank, a scalable consumer wealth channel and a workplace offering through wealth at work. And this business has some standout attributes. 650 U.S. retail branches in six dynamic markets, 25% of the world's billionaires served through the Private Bank and a sizable footprint in Asia, the world's fastest-growing market. 30% of our revenue comes from the region.

Now with $1.3 trillion in total client balances, we have scale, but we want more. The key number right in the middle of the page, you heard it earlier, a $5 trillion office opportunity with existing clients. That's $5 trillion in investable assets belonging to clients who already bank with us and already trust us. When you think about it, yesterday's struggles to deepen wallet share equal today's massive opportunity to grow. This isn't a build or expansion story, and it is not an expensive bet on new client acquisition. We have the clients. Our challenge is to deepen the relationship by showing them what's possible when they entrust more of their financial life to Citi.

Today, this business is on the move, and our momentum is building. Now there's four key takeaways from this slide. On the top left, Revenue is growing and NIR has outpaced NII with a shift from transactional to fee-based investment revenue underway. In the center, efficiency is improving. Since 2023, 2,000 basis points of operating leverage, bringing our efficiency ratio down to 84%. On the top right, returns are rising. Revenue growth, expense control and balance sheet discipline have driven ROTCE from negative in 2023 to nearly 11% in the first quarter. Now that's a lot of progress. But candidly, we're only about midway to what a strong wealth business should look like.

And finally, in the bottom center, nearly $90 billion of net new investment assets in 2 years. That's an 8% organic growth rate on investment balances, and that's among the best of our peers. Now Jane and I are impatient for this to be one of the largest wealth businesses in the world. And while we know that will take a while, there is no reason we can't be one of the fastest-growing wealth businesses right now, and that's what we are.

Now we have real progress. And in critically, we have a leadership team in the seats that knows what great looks like in wealth management. It's truly essential. Now as all of you know, this required a significant reset beginning in 2023. You see it summarized on the slide here. When I joined, we implemented some major changes, just beginning in the upper left. We simplified and sharpened our focus. We exited noncore businesses like trust and proprietary asset management. We reined in the number of initiatives, our mantra, no hobbies. And we reduced headcount by 20% and flattened our structure as the leadership team was doing across Citi. We also anchored our business to global product and functional centers to ensure we bring the best of Citi Wealth to our clients all around the world.

Second, we elevated our focus on investments. In Wealth Management, that is the key to stronger client relationships, and we aligned to a single North Star KPI, net new investment assets. It is the clearest measure of the value we're delivering to clients.

Third, as you'll see on the lower left, we put our weight behind two powerful scaled growth engines. We've integrated our U.S. retail bank into wealth. Now remember, in recent years, this business was unprofitable and dragged on returns. But the team has done some tremendous work to address the headwinds weighing them down, and we're already seeing improved performance.

The realignment we announced last year was designed to accelerate the deepening of relationships with affluent and high net worth clients and drive that growth of our U.S. Citigold franchise. I'm going to speak more about that later. We've also been better connecting our private bank into Citi's unmatched global institutional network. You've heard it mentioned several times. We are fully committed to showing clients the power of One Citi, what [ Viz ] and Andy and Shamir and Pam and I can collectively do for them. And then from a wealth perspective, we're securing net flows in the process.

And lastly, we began the journey to modernize our platforms and improve the client experience. Fragmented data held this business back for too long. It frustrated clients and it frustrated our people. We've embraced the firm's mantra. We have got to be modern and simple, and we're accelerating the pace by working with world-class partners like Palantir and Google.

Now as we look ahead, in Wealth Management, it is clear. Our clients are going to judge us across four dimensions, and we need to ensure our vision is defined by these same four dimensions. Advisory. They expect a trusted adviser that will bring to bear the best products in the market in service of their goals. Holistic. They expect us to see the big picture of their financial life across their balance sheet and across generations. Seamless. We have to be as responsive, proactive and tuned in as they are. In simple terms, we've got to be very easy to do business with. And then global. Being global in this business is nonnegotiable. Our clients are the world's change makers.

Their dreams, businesses and families are distinctly global. They want and they need an adviser that sees the world like they do. So there's a lot to do, but I am very confident we can rise to the challenge by simplifying our priorities and driving relentless execution. How we're going to build this business? Well, it really boils down to a focus on a few key areas: products, coverage and platforms. We're going to start with products. Now we aren't unique in wealth management in offering investments, loans and deposits. But we do have an exceptionally clear view of how they work together to serve clients. Each product reinforces the other, and we don't let individual product P&Ls get in the way. As you see on the right, we're making it even more compelling for clients to grow with us by building out relationship-based pricing. And over time, this will drive results.

Now already, client investment assets as a percentage of total client balances have grown from 42% in 2022 to 52% today. And we see a path to the high 50s in the near term. Now let's double-click on the core here, our investments offering. It is unrecognizable compared to a few years ago. Our CIO, Kate Moore and her team are delivering differentiated insights, and they fundamentally changed how we see the world as an investment adviser. And by the way, they're working differently.

By layering AgenticAI directly on to Citi's proprietary research and models, they've created a step change in how quickly we move from investment thesis to portfolio construction and the quality of what we deliver to clients reflects this. They are deepening the research, sharpening the analysis and turning up the volume. In the middle of the slide, you'll see that Keith Glenfield and our Investment Solutions team, they are resetting our core investment product offerings and the platforms.

In the process, they're driving on some historic Citi strengths like world-class capital markets capabilities and a very strong alternatives offering. But they're focused on how do we ensure we build a market-leading open architecture core in our platform. Now to support this, they have energized our asset manager partnerships, and they've turned a subscale proprietary asset management offering into a one-of-its-kind global partnership with the world's leading asset manager, BlackRock.

And as you'll see on the right, we're ensuring we have the specialist support and the product structure to deliver bespoke solutions to our clients at scale in the context of their goals and priorities. We just announced a very exciting partnership with Advyzon. Together, we're going to launch a fully multicurrency, multi-jurisdictional UMA this fall. It's going to be best-in-class. Now you bring together everything on this slide. Insights, products, platforms, delivery capabilities, getting stronger day by day. And the formula is working. It's resulted in 17% annual growth in investment revenue per adviser, and we expect that trend to continue in the high single digits through the near term.

Now let's turn to our second priority because the fact is strong product offerings alone don't win. You have to deliver them to the right clients in the right way. And we understand one size does not fit all. Obviously, think about our business, a family office in Singapore has very different needs from affluent clients in the U.S.

And that's why we have four distinct wealth coverage models, Citi Private Bank, U.S. Citigold, International Citigold and Wealth at Work. Each is purpose-built for the clients it serves. Now across these models, we have 2,300 advisers serving clients from affluent all the way through ultra-high net worth with coverage tailored specifically to their complexity, jurisdiction and goals. Within each business, we have clear expectations for adviser productivity. Therefore, when we meet them, we're in position to responsibly grow our frontline teams.

Now let's look more closely at Citi Private Bank. This is an extraordinary franchise. We have the honor of working with so many of the world's true change makers. I recently spent a few days in Mexico City. Now this is a country where we work with nearly 3/4 of the nation's billionaires. From our conversations, it's clear they value our global coverage, our sophistication across credit, wealth structuring and family office governance. They appreciate our network of booking centers and the flexibility that affords, the direct access to our institutional markets platforms and the integrated dialogue that we can create across their family, business and philanthropic priorities.

Clients like these are small in number but they represent a large and fast-growing market. Ultra-high net worth cross-border wealth is forecasted to increase by $6 trillion or 62% through 2030. Now that's not simply a tailwind. That's a structural shift. And the global platform we've built is perfectly suited for it. Think about what that looks like in practice. The average Citi Private Bank client has a net worth of over $400 million.

Now that could be a family that made its fortune in Hong Kong, has children living in the U.S., runs a business in Dubai and maybe today is buying real estate in Portugal. For clients like this, our private bank isn't just a good option. Quite often, we're the only bank that can provide seamless global coverage and solutions across this range of needs. And -- One Citi plays a pivotal role. Last year, we saw over $13 billion in NNIA as a direct result of referrals from our banking, markets and services colleagues. And those cross-firm synergies, they're accelerating.

In Q1 of this year, One Citi Referrals were up another 40% year-on-year. Those institutional links, together with a stronger focus on investment advisory, have driven an increase in NNIA per adviser of 1.7x since 2023. Now that's the power of connecting the private bank to Citi's incredible global network, and it's the power of One Citi. We have an elite team in the private bank, and we're investing in it.

Today, we have roughly 400 bankers and 200 investment counselors worldwide with plans to grow their ranks by more than 100 in the near term. And this will enable us to continue fueling growth in key markets. Now why the private bank sits globally at the top of the client continuum, our single largest opportunity is here at home in our storied retail bank. In fact, a full $3 trillion of the total $5 trillion office opportunity is represented by U.S. retail banking and Citigold clients. That's why it is front and center here on the slide.

Now the Citibank franchise is unique. It is focused. It's in 6 highly affluent urban markets. Now as a retail bank, we are deeply engaged in our communities. We reach out to all. But the Citibank brand and our offering disproportionately attracts affluent and high net worth clients. Our affluent base is 1.6x larger than the national average, which is a key reason we are #1 in deposits per branch. In fact, for 9 years in a row, we've been named the best bank for high net worth clients. And as you see noted across the bottom of the page, simplified banking has been a major success since its launch in 2022.

We've upgraded roughly 325,000 clients from retail banking to Citigold over the last few years. And when those clients receive dedicated Citigold Wealth advisory coverage, we've seen an average increase in investment revenue of nearly 2.5x. Now that's strong, but we can do even more. With the retail bank realigning to wealth, Kate Luft and I are focused on making the most of this massive growth opportunity. And we know to get that done, we're going to need to raise our game even further. That's why we're planning significant investments in Citibank across four areas.

First, the branches themselves, renovations. We're going to refresh our network and maximize space for advisory interaction. With NextGen teller and workstation technology, we're reimagining the Citibank branch of the future, and we're ensuring it's designed for client meetings and consultations as well as efficient transactions.

Second, we're elevating service quality and expanding client coverage. We'll add over 400 client advisers and personal bankers. More advisers means deeper relationships and more investment conversations. Third, you'll see a dramatically increased focus on small business, the economic bedrock of the communities we serve and where Citi's commercial bonafide is hold very special appeal. We're going to add over 200 small business advisers and refresh our small business product suite.

And fourth, technology. Our systems were outdated and fragmented, and we needed to upgrade and enhance our online banking and investment offerings. We've made and we're continuing to make significant investments to change that. And our strategy is not just to catch up, but to leapfrog ahead. We're closing gaps today while seizing the moment to set new standards for innovation.

Now if you think back, 15 years ago, Citi pioneered the ATM, a bold bet on technology. In fact, as some of you may know, that inspired the tagline, “The Citi Never Sleeps”. That boldness remains in our DNA, and we intend to reassert it. Here's a great example. A few weeks ago, we unveiled CitiSky, an AI-powered member of the Citi Wealth team, built with Google DeepMind and Google Cloud. Now CitiSky is more than just a new digital tool. It provides our clients with a new intelligence layer, conversational, actionable and secure. CitiSky will change the model of wealth management for clients and make our advisers and RMs vastly more productive.

Let's take a look at what CitiSky will do.

[Presentation]

It is stepping into the future, incredibly exciting. Now this is very powerful technology. Last month, Google Cloud invited us to unveil CitiSky at its annual conference, 32,000 attendees. We demonstrated how we're using Google's tech, the video, the voice and Gemini-driven intelligence in new and innovative ways. But for me, what was even more telling were the side conversations with the attendees. There was a common theme. They told me, CitiSky will change my financial life by giving me the opportunity to think and ask questions about my finances when I have the time, not just when banks are open.

They see this as a new channel. It is a major opportunity for us to help them, and it is a force multiplier for our business and our advisers. CitiSky is going to begin rolling out this summer to Citigold clients in the U.S. with a broader introduction to follow. Now CitiSky is only the most recent and visible element of our new technology platform. Think of it as four layers, each building on the other. At the foundation, secure, trusted data, unified and organized in a way that allows us to truly know our clients, anticipate their needs and act on them in real time. That's the layer that makes everything else possible.

Above that, core capabilities, products, analytics, risk and controls. This is the institutional-grade infrastructure that fuels every client interaction. Then AI orchestration, intelligently routing information and triggering actions in real time so that the right insights reach the right person at the right moment. We're embedding AI seamlessly across our platform and partnering with true leaders like Google and Palantir to make it happen. And at the top, client and adviser experiences, CitiSky, our online and mobile apps, our adviser workstations, all powered by the platform and the data capabilities underpinning them. The result, an autonomous intelligence system that enables personalized insight for every client 24/7 and at scale.

Now let's bring it home. A quick review of our investments. First, expanding the number of bankers and advisers across Private Bank and Citigold. Second, elevating the branch network, so our branches are modernized and advisory first and reinventing the client experience through CitiSky and a broader AI-powered platform. Our near-term financial targets are based on these moves, along with the day-to-day focus on client service, productivity and operating discipline. And with these priorities at play, we're confident in our ability to produce high single-digit organic NNIA growth and mid-single-digit deposit and loan growth.

Now let's take a look at where this will take our returns. We've already gone from a negative ROTCE in 2023 to 8% last year and nearly 11% in the first quarter of this year. The balanced growth on the prior slide is expected to drive low teens revenue growth in the near term, which together with continued expense discipline, will lead to a pretax margin of 25% to 30%. This positions us to deliver 15% to 20% ROTCE in the near term and above 20% in the medium term. This is beginning to look like the kind of returns that shareholders expect from this type of business.

Now there is incredible value in the Citi brand and in this wealth franchise. It needed to be reset, and this team got it done. We are proud of how far we've come, and we are even more excited about the future. Thank you all very much.

[Presentation]

Please welcome, Head of Consumer Cards, Pam Habner.

Good morning. I'm Pam Habner, and I'm delighted to be here today to talk about Citi's consumer card business. I joined the firm in 2020 after a long career in financial services because I believe in the Citi brand and the potential of the firm.

I led the branded cards business until earlier this year when I became the Head of the combined U.S. Consumer Cards. Our CFO, Gonzalo Luchetti, previously led U.S. Personal Banking. And thanks to his leadership, USCC is a business with a solid foundation. We have scale, strong top line growth, and we operate near target returns. And now we have the opportunity to take the business to the next level by accelerating investments in growth. Today, I'll share our progress, proven business model and how we're playing to win in an ever-changing market.

Let's start with an overview of U.S. consumer cards. Our mission is to win the hearts, minds and wallets of U.S. consumers. And as you can see from the slide, we offer three product lines. Our primary focus is general purpose cards with a range of Citi branded and co-branded cards. These products are issued on major networks like Mastercard and Visa. We also offer private label cards for consumers to use exclusively in store.

But as you may know, the demand for private label cards has been declining over time. That's why we reduced our exposure and increased investments in co-brand. Today, most of our private label partners like Macy's and Best Buy offer co-brand cards as well. We also offer digital installment loans. Now this is a relatively new business for Citi, but it's gaining traction as more customers look for buy now, pay later options.

We're the #3 card issuer with 14% of loans and over 70 million customers. That's about one in four U.S. adults with a Citi card. And our base of customers is growing. Last year alone, we acquired 13 million new accounts. Many of those came through partnerships with 12 marquee brands.

Now let's take a look at our financial performance. We'll start with customer drivers on the left. The data shows that our focus on general purpose is working. General purpose represents the majority of acquisitions and 92% of our spend. This helped us deliver a record $626 billion in total spend last year and led to strong revenue and returns. In fact, revenue has grown at a healthy 8.4%, reaching $18.3 billion with a ROTCE of 22%. We've delivered on every one of our Investor Day commitments and set the business up for sustained and profitable growth.

Turning to the next slide. We often get questions about our credit losses. So let's dig a bit deeper into this topic. Strong risk discipline has allowed us to grow loans while stabilizing loss rates now at around 4%. So how are we building resilience through the cycle?

First, we shifted the mix of loans to general purpose with lower loss rates and acquired higher FICO customers. Second, we stayed within our risk appetite and maintained prudent reserves. Today, reserves are at 8% as we prepare for potential economic headwinds. Third, we negotiate terms in our partner agreements to share in downside risk through the cycle. Now NCL is slightly higher today than pre-pandemic, but that's largely due to macro factors like higher unemployment.

Looking ahead, we're getting even smarter. We're leveraging data and AI to elevate our models and modernize risk processes. Since our last Investor Day, we've made significant progress on our strategic priorities. First, we committed to innovating across products, and we delivered. We refreshed and launched 18 products. We also reentered the premium card space. And Strata Elite is key to attracting affluent customers and deepening engagement with our wealth clients. We also elevated the customer experience by upgrading more than 10 core platforms. And we improved servicing with the help of AI in all of our call centers.

We've expanded key partnerships, signing six new agreements often with improved terms. And we're especially proud of our expanded partnerships with American and Costco. And as I mentioned earlier, we pivoted our partner cards towards general purpose. In fact, we've exited 12 private label programs, and we grew general purpose to 82% of loans. The upside potential is significant. Citi co-brand customers spend 8x more and carry 2x higher balances than private label customers.

Going forward, we'll build on this momentum by leveraging our proven business model. We call this the USCC flywheel. The flywheel starts with a holistic suite of competitive products, attracting a strong and growing base of high-quality customers, enabling us to partner with marquee brands to power Citi's commerce ecosystem, which deepens loyalty with both customers and merchants.

Our business generates scale economics and strong margins, so we can keep investing in innovative products, partnerships and platform. And so the flywheel keeps turning to create a virtuous cycle of growth. On the right, we are fortunate to operate in a large and growing market. The industry is expected to grow at around 5% in the coming years. And our core competencies, these are assets we've built over decades, create a strategic moat in a highly competitive market.

Now let's spend some time discussing each element of the business model. We'll start with products. We're incredibly proud of the suite of cards we've designed to serve a range of customers' needs. Customers have responded and the industry has taken notice. Since 2025 alone, we've earned more than 80 best of accolades. Newsweek listed Citi Strata Elite as a best new card and the PointsSky named Double Cash as the Cashback Credit Card of the Year, and the list goes on. While we appreciate the recognition, what we really care about are results. And investing in product innovation has been a key driver of growth.

Last year, when we introduced the Strata family, we saw a 38% increase in new accounts. That's a big number. When we became the sole card issuer for American and introduced a new mid-fee card, accounts grew 18%. And just last month, we successfully converted the Barclays co-brand, adding millions of high-quality customers. We saw similar results when we extended our Costco partnership. So the pattern is clear, and you can expect to see more of the same in the coming years.

Now let's talk about my favorite topic, our customers. We're pleased to see our innovative products have attracted high-quality customers. Over the past 4 years, we've grown our base of affluent and younger customers, deepened engagement and built long-lasting relationships. There are many proof points on this slide, so I won't read all of them, but I would draw your attention to the chart on the upper right.

This shows our acquisition engine isn't just growing accounts, it's compounding value. Since 2022, we've increased lifetime value of new accounts by 20% while maintaining retention at 98%. With the help of AI, we're building even more sophisticated tools, driving towards hyper-personalized offers to take our marketing to the next level.

Going back to our mission to win the hearts, minds and wallets of our customers, we've been investing in a lifestyle platform with compelling rewards, travel, dining and shopping benefits. As a result, these programs have grown dramatically. Just take a look at the travel category. In 2023, we partnered with Booking.com to offer a whole new travel portal. We created a premium hotel collection and added hundreds of travel partners. As a result, spend on the program is up 32% and customers who use Citi Travel spend 7x more. We see similar trends across categories. Customers who redeem thank you Rewards spend nearly 10x more. These are clear signs of enduring engagement. So to keep the platform fresh, we'll keep adding benefits and expanding categories.

Now let's turn our attention to our partners. We're proud of the relationships we've built with 12 strategic partners, including 8 of the top 50 retailers in the U.S. These include brands like -- the Home Depot, American, Costco, Macy's and more. And it's worth noting that most of these partners are also very important corporate clients. The mutual benefits of these relationships are real.

For partners, we deliver share shift with cardholders spending 3x more than regular shoppers in their stores. For Citi, partners offer access to a loyal customer base through efficient partner channels. The key to success here is growing together. This win-win formula has led to long-lasting relationships with an average tenure of 16 years. It's pretty incredible to think that American Airlines is approaching 4 decades with Citi and AT&T nearly 3 decades.

Looking ahead, we'll add new partners and integrate more deeply into their digital channels with a broader set of Citi payment options. Together, our lifestyle and payment platforms create a powerful commerce ecosystem. Customers who carry Citi cards enjoy a range of benefits as well as payment flexibility and the backing of our service and protections.

On the other side, partners benefit from a powerful marketing engine, generating incremental sales, customer insights, shared economics and competitive network terms. The value to Citi is deeper loyalty and access to merchant-funded benefits to enhance our products and reduce our dependency on expensive points-based rewards. Now we'll move into the last element of the flywheel, driving scale economics. Over time, we've invested in transforming key processes to reduce the cost to serve while improving the client experience. Digital, data, machine learning and AI have all been enabling this transformation. To bring our strategy to life, we have two case studies.

Let's take a look at customer service. Digital adoption has grown 18%, while the cost per account has declined 12%. The impact on collections is even more dramatic, with digital collections up 21%, while cost per delinquent account is down 22% -- during the same time frame, our digital Net Promoter Score has risen 5 points. This is a key marker of customer satisfaction.

The savings we generate are used to improve efficiency and also reinvest in growth. This is how scale becomes a strategic advantage. And this is also where AI takes center stage. We've been rapidly embedding AI across every aspect of the card business, and it's been a game changer. This isn't just about playing defense and reducing expense. It's about playing offense, leveraging AI to win with customers and unlock top line growth. Early focus areas are on track to deliver meaningful results this year.

I'll give you some examples. In risk, we've been using machine learning for decades. Now we're deploying new AI models, increasing approval rates by 100 basis points. In controls, we're using AI to build a smarter smoke detector. This cuts time by 95%, so we can resolve customer issues before they spread. In customer service, we've used Gen AI to improve our IVR, and we rolled out Agent Assist. This reduces call handle time by 60 seconds. Technology. Developers are managing teams of AI coding agents. That's driving productivity gains up to 40% in software development time.

And lastly, in marketing, we're using AI for personalization and generative search optimization helps Citi cards show up when customers turn to AI for recommendation. This is helping us grow digital sales by 25%. AI is quickly becoming part of our DNA as we prepare for the next frontier, Agentic commerce. We can envision a future where a customer's personal AI assistant can advise and execute transactions on their behalf.

Just think about it. An AI agent could automatically rebook a canceled flight and arrange transportation, paying with the card that offers the best travel benefits and protections. As Agentic commerce evolves, our mission is clear, to work with industry players to ensure AI agents keep city cards top of wallet to transact safely and securely on behalf of our customers.

Now let's bring all the pieces together. We are a scale player confident in the future of U.S. consumer cards. We plan to accelerate investments in product innovation, grow acquisitions with advanced marketing, expand key partnerships and deepen loyalty with our commerce ecosystem. We'll sustain scale economics by continuing to deploy AI across the business.

You can expect to see an increase in the mix of general purpose, total loans and revenue growing at mid-single digits and through-the-cycle returns in the low 20s. We have momentum, a proven business model, an incredibly talented team with a passion to win and the investments to fuel growth well into the future. Thank you for your time today.

Please welcome Chief Financial Officer, Gonzalo Luchetti.

Well, thank you all for being here today and for the confidence you have put in our company to this point. It means a lot to us, and we take the responsibility very seriously. I'm Gonzalo Luchetti, Citi's Chief Financial Officer.

You've heard from Jane and our business heads. My job today is going to be to pull this all together for you and walk you through how we will deliver sustainable, higher returns. I worked across several regions, countries, businesses and functions at Citi for 2 decades now, and it's been a very rewarding journey. For me, it is all about driving results, holding ourselves accountable and acting with ownership, responsibility and integrity.

All right. After sitting down for 3 hours and absorbing information, I have a price. 19 more slides and exactly 273 more numbers. But before I begin, I want to say that my confidence in our firm is wholly grounded in three components.

First, strategic clarity on the path forward. We focus the firm on five core businesses where we have the right to win. Second, the progress we've achieved thus far and our forward momentum. And third, our intense focus on operational and financial performance executed with discipline and rigor. Now I will lay out the building blocks that underpin our revenue growth, our efficiency ratio target and the path to higher returns. As a result of our progress and improved business performance, we are confident that we will deliver on the 10% to 11% return target for 2026.

In the near term, we expect to be within 11% to 13% ROTCE range ex notable items for both '27 and '28. And we see a clear path to reach 14% to 15% ROTCE over the medium term once we hit steady state, having fully eliminated our legacy portfolio and operating with only five interconnected businesses. Now the hard work of restructuring is nearly complete. We are now shifting more resources towards improvement in business performance and greater efficiencies. We know driving sustainably higher returns is achievable because we're already seeing the early proof points in our recent performance. Let me show you how we did on the next slide. Here, we have laid out an overview of the financial performance of our firm and our performance since 2022.

Turning to the top left side of the page, you can see we've delivered consistent revenue growth as well as marked improvement in our RWA efficiency. This is a direct result of the execution of our strategy, and it's about the concentration on client engagement and elevating our level of accountability across the firm.

On the right, you'll see how our investments in transformation, technology and functions made concurrently with business investments that drove the top line growth have improved our efficiency ratio. We've been able to drive growth, invest heavily in transformation and increase efficiency at the same time. Driving that positive operating leverage sustainably is what we're focused on. I'm also pleased to note that we started to show improvement in our return trajectory in the last couple of years and the first quarter of 2026 as well.

Yet we know we have more work to do. We remain focused on keeping our momentum and driving disciplined execution. In short, to me, we've proven capable of handling multiple strategic priorities, and I am confident that we will sustain our execution focus and drive and deliver on our commitments. Now this slide demonstrates the performance of each of the five businesses and the KPIs that have driven our ex legacy revenue growth of $13.3 billion since 2022, a CAGR of 6%. That's solid progress.

That improved performance is anchored by strong client-driven activity, a direct result of our intense commercial focus, strategic investments and execution urgency and discipline. This is the city you're investing in, where every one of our five core businesses is contributing to growth and returns.

As we talked about previously, we strategically invested in technology and our transformation initiatives in order to modernize our infrastructure, automate our risk and controls and enhance our data. As you've heard from Jane, we have rebuilt the engine. At the same time, we continue to invest across our businesses in talent, technology innovation and acquisition marketing. And we were able to improve our efficiency ratio from 68% in 2022 to 63% ex notable items in 2025.

Now what I want our investors to understand is that our approach to expense management is to maintain strong cost discipline on a tactical basis and continue to drive structural efficiencies through tech and AI automation. This is all in order to enable targeted strategic investments in our core businesses to consistently drive higher returns. That's the key takeaway here.

Now so far, I've mostly focused on performance, growth and efficiency. Let's move to the durability of our engine and results. First, I'll turn to our credit profile and risk management framework. These play a critical role in supporting sustainable returns. I want to highlight how our firm operates with a robust risk framework and a strategic and deliberate client-centric balance sheet deployment approach. You'll see here that our institutional portfolio includes predominantly investment-grade corporate loans. This is underpinned by a multinational client base, which are typically multiproduct, multi-country and long-tenured relationships.

On the consumer side, we are carefully managing a stable prime U.S. consumer portfolio with 85% of FICO scores greater than 660 -- our credit strength in the consumer segment is rooted in a robust risk framework, which includes frequent stress testing, digitized collections and an advanced AI and machine learning models.

Our holistic approach to our risk framework puts the firm very well placed to navigate a diverse set of economic environments, and this is a discipline we will maintain. Shifting our focus to the balance sheet. We are a source of strength for our clients and for the financial system, and we have proven this through several market dislocations and disruptive events.

As you can see on the left here, we have a diverse set of funding sources in our $1.4 trillion deposit base. This is anchored by corporate clients with 80% of deposits in operating accounts. And as you heard from Andy, we also have a significant wealth customer deposit base that spans multiple business segments and geographies. We have over $1 trillion of total available liquidity resources and an LCR of 115%. And we are delivering high-quality loan growth and maintaining strict return discipline while optimizing corporate lending and wealth portfolios.

Looking at the right side of the slide, our standardized CET1 ratio stood at 13.2% as of the fourth quarter of 2025, which was 160 basis points above our CET1 requirement. As of the first quarter of 2026, our CET1 was 12.7%, and we expect to remain around our target of 12.6% CET1 for the balance of the year. In the past couple of years, we've seen our SCV come down to 3.6% in 2025 from 4.3% in 2023. This is because we simplified our firm and grew PPNR by $6 billion, which has made us more resilient in stress.

On the bottom right, we show that since 2022, we've returned over $40 billion of capital to shareholders through a mix of common dividends and buybacks with over $17 billion of capital returned in 2025 alone. This demonstrates our unwavering commitment to drive shareholder value. Now what I'd like you to take away from this and the prior page is that our strength across asset quality, controls, balance sheet, liquidity and capital provide the bedrock that is essential for sustainable returns improvement.

Now let's look at the path forward. Turning to 2026. Let me make this easier for everyone looking at this page. We are confident that we will do what we said we would do. That means we expect to deliver our 10% to 11% return target. We also expect to deliver NII ex market growth of 5% to 6% year-on-year. We expect to see fee growth in services, banking and wealth. An efficiency ratio will be around 60%, driven by our commitment to managing expenses with discipline while investing in our businesses.

As you have seen in the first quarter, we have strong client-driven momentum behind us and we'll maintain expense and capital discipline. Without a doubt, we are focused on execution, and we will deliver on our commitments. Let's move on to the near-term path covering 2027 and 2028. This slide outlines the key building blocks of higher returns in the near term.

This trajectory is firmly grounded in three elements: First, revenue growth driven by client activity; second, continuous efficiency gains, creating capacity to reinvest in our businesses. And third, capital productivity through the utilization of DTA driven by higher U.S. earnings and efficiently deploying our RWA. This enables us to reach our objectives without having to rely on perfect conditions. That gives us confidence in our ability to deliver in a range of environments. I'll demonstrate how each of these mutually reinforcing drivers will elevate our performance beyond 2026 and into sustainable higher returns throughout the remainder of the presentation.

Now this slide shows our first key driver. the heart of our operation, our businesses. We are leveraging our competitive advantages and strong returns in services and cards while strategically scaling our equities, investment banking and wealth franchises. You heard from our business heads, but let me quickly pull it together where the momentum is coming from in each of our businesses.

Let me start with services, which is continuously innovating and investing in our global platform to acquire and deepen relationships and drive increased fee revenue. Markets aims to strengthen our leading fixed income franchise by growing financing and securitization and scaling our equities business.

Banking is targeting high-growth sectors and financial sponsors, fueling North American growth through strategic initiatives and cross-business synergies. Wealth is focused on growing investment penetration across the business and on being a source of stable deposit growth. And cards as a top 3 issuer in the U.S. is growing general purpose cards via digital marketing, partnerships and innovation in order to enhance loyalty and engagement. With those strategies in place and momentum underway across our businesses, we continue our focus on execution.

Now I really want to emphasize that looking at the contributions of the businesses on a stand-alone basis does not tell the full story. The real value is in how these businesses connect. The powerful client capability, cost and balance sheet synergies across our businesses create a compounding effect that is incredibly valuable.

This spans the multi-business corporate clients and wealth clients accessing institutional grade resources. It includes leveraging customer and cost synergies between cards and wealth. The whole is greater than the sum of the parts, and that integration is a core source of strength, diversification and resilience. Together, we expect to continue to deliver a revenue CAGR of mid-single digits over the near term.

Now in order to realize this continued growth trajectory, we have to invest. Let me show you how we plan to do that on the following page. Building on the strategies we just discussed and the momentum underway, this slide outlines our plan to deploy an incremental $5 billion of strategic investments across our businesses over the near term. These are targeted investments with clear return expectations focused on areas where we're already seeing momentum. This is a significant commitment and will be largely self-funded through structural efficiency savings.

As you can see, this funding will be distributed among several areas such as payments and trading, increased marketing for card acquisitions, strategic hiring in banking and wealth and physical branch refreshes. These investments are vital for sustained growth and long-term success. Now on this slide, you can also see two important elements that will enable additional client-driven growth in the near term. First, as we have invested in modernizing our infrastructure through the transformation, we expect our run-the-bank component to reduce, providing greater capacity for change the bank technology spend.

In addition, as we near completion of our transformation programs, that change the bank spend component will also become increasingly more business-driven. And on the right, you can see the impact we expect AI to have on the productivity of that change the bank spend in the coming years, allowing us to get more for every dollar.

So in totality, technology spend in the near term will be more and more geared towards supporting business growth and more and more productive. We are committed to funding our strategic vision with discipline, and we are holding ourselves fully accountable to ensure our investments maximize long-term shareholder value. A significant part of maintaining that discipline is how we fund these investments.

This slide shows our second key driver, which is how continued efficiency gains are creating capacity to increase business investment while supporting volume and other growth-related revenues. I want to start by making it clear that our efficiency improvements are not about short-term cuts. They are about driving structural efficiencies that create sustainable capacity. We demonstrated for 2 years in a row that we can improve our operating efficiency and we expect to continue on that trajectory this year.

On the left side of the slide, you'll see our efficiency ratio walk from 63% in 2025 ex notable items, which is down from 68% in 2022, lowering to about 60% this year as we previously guided. This culminates in a ratio of about 55% to 60% in the near term. And this will be driven by continued reduction of transformation expenses and stranded costs related to the divestitures.

We will also continue to achieve productivity savings from past investments and efficiencies in functional and operational expenses. This will happen primarily through technology automation and AI-driven process reengineering. Now this slide shows the sources of funding for our growth investments. This includes the role of AI, which presents an opportunity to drive end-to-end process automation. Diving a little deeper into costs on the slide, the 3 cost areas that are coming down are stranded costs, transformation expenses and functional and operational expenses.

Stranded cost reduction will come down materially from $1.3 billion in 2025 to almost 0 by 2028, a meaningful reduction, and you have already seen the progress in our first quarter 2026 results. Transformation expenses reached a peak of $3.3 billion in 2025, $1.6 billion of which sits in Corporate and Other, which is the portion we expect to roll off by 2028, and we have already started seeing those come down as we reach completion of our programs. As I noted on the last slide, our past investments, combined with those we are making in AI and technology allow us to drive additional efficiencies in our functional and operational expenses and the remaining transformation expenses that sit in the businesses.

We have defined task forces with clear objectives, milestones and resources in order to ensure those structural saves are fully realized. Essentially, over the next few years, our expense base will continue to shift to having more investments going into the businesses and in technology and AI. Importantly, this approach will allow us to scale and enhance our competitive advantages.

Now on to the third and final driver of our improved returns in the near term, which is capital productivity. On the left, you can see exactly how the capital stack is evolving. Continued investment in our U.S. businesses is expected to improve U.S. profitability and accelerate DTA reduction. This helped us close the gap between TCE and CET1, and this decrease will show up in capital reduction in Corporate and Other.

As my colleagues noted during their presentations, the drivers of earnings growth in North America are banking, notably in our financial sponsor coverage and the commercial bank, which you heard from Biz, Retail Banking Citigold and the Private Bank in wealth, through the focus on non deposits in TTS as well as increased client activity in Investor Services and Securities services overall. And of course, through our U.S. consumer cards franchise, which has shown improved returns and in which we continue to invest for additional growth.

Over the forecast horizon, we're assuming a 13.1% CET1 ratio starting in 2028. We expect our growth to push us to a 4% GSIB under the current rules, and our SCB remains at 3.6%. And while we do expect capital tailwinds, we have not included them as contributors to our target commitments. These tailwinds include a lower SCB as our PPNR continues to grow and we execute our strategy as well as the changes that are expected based on capital NPRs.

Now turning to our capital priorities. I'll start by giving you the key elements of our approach. Over multiple years, we have been positioning the firm to be agile and a continued source of resilience for our clients in multiple weather patterns. We look to deploy capital to drive return accretive growth across our businesses, while at the same time, returning capital to shareholders.

In the first quarter of 2026, underscored by both our earnings power and the closing of the Russia exit, we demonstrated this framework at work. We supported a strong quarter in Markets and Banking as well as the largest quarterly buyback level of $6.3 billion. The latter put us very close to completing the $20 billion buyback program that we announced last year. Today, we are excited to announce a new buyback program for $30 billion. This reflects both our earnings power and our confidence in the trajectory of our business, and we remain committed to returning capital as part of our total shareholder returns.

With that context on capital generation and deployment, let's turn our attention to the medium-term return outlook. The strategic actions we have taken over the past several years have materially changed the starting point of the firm. This allows us to focus and invest in our 5 core businesses. I've seen firsthand how these shifts have energized our teams and sharpened our vision for the future. And that, to me, is very inspiring.

Now this slide bridges our returns from where we are today to where we're headed, moving from our 11% to 13% near-term return profile toward our medium-term ROTCE objective of 14% to 15%. The first contributor is continued improvement in the core businesses as we drive revenue growth while maintaining cost discipline and a continuous focus on productivity. The second contributor is a steady-state corporate other, where transformation costs have rolled off, legacy franchise exits have been completed and we drive additional DTA utilization over time.

We expect the efficiency ratio to advance from our target of around 60% for 2026 to below 55%, driven by continued expense discipline, coupled with top line revenue growth. Taken together, these actions support a sustainable 14% to 15% ROTCE in the medium term.

Now on this slide, you can see in greater detail the 2 contributors that I just mentioned. Starting on the left, with continued business improvement, our medium-term targets rely on services staying in the mid-20s RoTCE, markets driving towards 13% and above, banking at mid- to high teens, wealth moving above 20% and cards staying in the low end of the 20s. This is in addition to the continued normalization of the capital in Corporate/Other, with most of it coming from additional DTA reduction, whose drivers are explained in detail earlier.

Now let me be clear, this does not require a heroic performance, just disciplined execution of the plan already underway. Getting to the high end of those targets, along with the progress in Corporate and Other will get us to our medium-term targets. Now as a reminder, for the purposes of this medium-term walk, we assumed a CET1 target of 13.1%, and we have not assumed any benefit from the capital NPRs or improving SCB due to the PPNR growth. Put simply, we know our goal, and we have a well-defined attainable plan to reach it.

Now with all due respect to my partner, Andy Morton. And despite the fact that I'm really excited about the stability of our markets revenues, believe me, I really hope that this is your favorite slide of the whole day because for us, it is all about sustainable, higher returns, if you haven't heard me say that a few times already. Now to put it all together, our 2-phase strategy combines 3 mutually reinforcing drivers: client-driven growth, efficiencies that fund reinvestment and capital productivity. This is all in order to accelerate return improvement across all 3 horizons. Every time frame has both an ROTCE and an efficiency ratio target.

In 2026, a 10% to 11% ROTCE and an operating efficiency of around 60%. In the near term, an 11% to 13% ROTCE moving towards the high end of the range for 2028 and an operating efficiency of 55% to 60%. And in the medium term, a 14% to 15% ROTCE and an operating efficiency below 55%.

Now to wrap it up, what we've outlined today is a testament to a city that has fundamentally transformed. We've come quite far, but we still have a lot to accomplish. The work we have done has changed our starting point. We have built a strong foundation through disciplined execution, strategic investments in technology and AI and a focus on our 5 interconnected businesses.

Our resilient balance sheet, robust risk management and clear path to increasing returns are not merely aspirations, but verifiable outcomes of our collective efforts. We are on track to meet our targets this year and have a clear path to drive sustainable growth and deliver improved shareholder value for years to come. This is a new era for Citi, one defined by strength, agility and a relentless pursuit of excellence. I truly believe this, and our results are starting to show it. I know this is real because I've been at the firm for 20 years, and I can feel the shift in our culture.

I walk through the building, and I see signs calling for us to raise the bar, and we're doing that. We hold ourselves accountable, and we measure ourselves on results, not on actions, not on words. We are confident in our trajectory, and I'm deeply committed to leading with the financial rigor and operational discipline necessary to realize these goals.

Thank you for your time and attention this morning. We look forward to your questions.

We'll now open the floor for questions. [Operator Instructions] All right. Your favorite part of the day. Now you get to ask a bunch of questions. So we're going to start Q&A for about 30 minutes. And first question.

Mike Mayo with Wells Fargo Securities. Thanks for having today. This question is for Jane and each of the line of business CEOs. I think if I were to characterize Citi's culture for, I'd say, the 50 years before you became CEO, Jane, I would describe it as reckless, arrogant and complacent. And I think a lot of people in this room would back me up on that.

You've all mentioned a change in culture, but I'd like to know what that really means and how long that actually needs to take place. I get the sense that you're changing at the top, but what message are you giving the 200,000-plus employees? How long does it take to change your culture? And what are each one of you doing to have that culture affect the change that you desire?

Thank you, Mike. And you're looking very sharp today. I think we appreciate the city blue tiger. It's exciting to see the culture change. And I think it starts, as you say, around my table. The businesses sit around the table. We work together to make sure that we're removing the barrier so that we can deliver one city to our clients. We run the firm of enforced enterprise-wide standards, framework approaches. That was not the case before. You saw AI as an example, we talked about, but many more.

We have institutionalized disciplines that you've heard, Vis talking about it, the cornerstore mindset, but equally the disciplines around productivity. We measure the organizational health. So there's no slippage from the org structure changes we put through. We review as a team, the operating dashboards every single month in excruciating detail, a bit like the 19 pages and all of the data that Gonzalo shared with you earlier. And we drive this through consistency of messaging through the entire organization.

We take ownership, we deliver with pride. And the leadership principles that we've laid out is fundamental to it, but they're embedded into recruiting, into financials, into the reviews that we do in the firm. And we are relentless about it. Guys, jump in.

If I can go next, I think for me, Mike, it's really around getting -- having a serial winning mindset. It is -- it is just kind of that obsession with kind of delivering for clients, client centricity, put the client at the center of everything and just kind of wrapping them in the best of Citi. I think that the way you get into that psyche, the wallet share and everything else that we talked about, those metrics will follow. It's really about client excellence. And I think that obsession is critical to how we win.

And I'll jump in, Mike. I mean I think it's, of course, ambition and accountability, but it's also making sure there is no time for managing up. I mean this is a culture which is focused on leading our people and focusing on our clients and putting our energy there.

If I'll just add, I think we have a huge responsibility. which is running the biggest global network in the financial services industry. And I think that responsibility is rests on the shoulders of this management team and all the more than 200,000 people who work every day for the benefit of our clients and run their businesses, do everything that they can to make our clients happy.

So I think that responsibility is very near and dear to our hearts. And therefore, the execution agenda, thinking about risks, thinking about control, but also thinking about doing the best for our clients is probably the most important thing that we rise with every day.

I go next. I'd say, Mike, my a little tough after what these guys are all covered. But my take on it would be success breeds confidence and itself breeds further success. So I think the success that the firm has had in the last few years in addressing its issues head on, fixing them and at the same time, building something that can win every single employee feels that. You walk on the trading floor, every single employee feels it. And the management team, Jane in particular, always gives credit to the employees themselves for driving it. And we walk around the firm and you can sense that. And that in itself is the change in the culture.

So I guess I got to wrap it up by saying everything that's been said before is consistent for the card business. We are customer obsessed. We are maniacally focused on winning in the market and the pace and the energy feels really different. We know the world is moving very quickly. We asked our team what mantra we wanted for this year, and we said, go mode. We're in go mode, we're moving quick. And it's an exciting, very energetic culture that we have right now.

And Mike, I love how we've got 7 questions in there.

Saul Martinez from HSBC. I'll try to ask only one question. But clearly, impressive accomplishments since the last Investor Day. You've outlined a number of areas where there's a lot of white space for growth and profitability expansion. But the couple of areas where in terms of the financial guidance stood out to me as being a little bit cautious were the low to mid-single-digit growth outlook in the near term in banking and in services.

In services, that is a pretty sharp deceleration and lower than what I would expect nominal GDP growth to be. I'm just curious what -- if you can outline what the building blocks there are. I'd imagine rates have something to do with that. And Vis, super positive presentation. I was hyped up listening to it and a lot of opportunity for share gains, but curious how you got to the mid-single-digit revenue guidance if you can also outline the building blocks there.

Sure. Maybe I can go first. So Saul, I was thinking of you when I put that slide together for the last performance. So clearly, you and I were in empathy mode at that time. But just if I go back to that slide, one of the things we tried to show was the predictability of the fee revenue base. We've shown you how we've grown that base. Secondly, we've shown you how we grow the deposit base. Thirdly, I think we gave you a little bit of a glimpse in how we're seeing settlement volumes, issuer volumes go through our pipes, payment volumes go through our pipes.

So we've been disclosing all of these metrics. And therefore, you see that those numbers come through. Just on the total revenue, the simple fact that the stage of the interest rate cycle that we're at in the near term as we're expecting rates to come down. You saw it on the 10-year slide as well. So what we've done is given you a full view, NII and NIR. We've given you a view on the drivers of the KPI and then where the interest rate cycle is. So we've given you a through-the-cycle view and a near-term view as well. So hopefully, that answers your question. But one of the things I would say to you is we are absolutely focused on grasping up opportunities.

The one thing I started my presentation with was when I said we're going to retain our #1 market share, and we're going to grow it. So if you think about the wallet share, the fact that we will be a more preeminent player when it comes to wallet share. So hopefully, if a rate impact happens, it happens and impacts the entire wallet for the industry, but our aspiration is to continue to grow wallet share.

From the banking side, I mean, if I start with clearly, our key kind of investment areas. NAM inbound is a massive focus for us across the corporate banking piece, the commercial banking piece and the investment banking piece. And when you look at the areas where we're underpenetrated, North America is one. So that's a huge focus area. Leveraged finance, we've talked about. We're going to do this responsibly and with a lot of care. But when you look at where we could really turn up the dial and we talk about it all the time, for instance, in ECM, clearly, we are in the top 5.

In secondary trades, et cetera, we can ramp it up. In convertibles, we can ramp it up. But in something like IPOs, we are struggling a bit with the lack of incumbency because we didn't feature with the sponsors when folks put them into those assets, when those exits come, we lack the incumbency because we were not there when the sponsors acquired that. We are building up to that and in a kind of way the broader macro plays into that because not every IPO is entirely doable today, and they are taking different forms of M&A and sell sides and the like.

So I think we are creating that incumbency. So which is why this will not be linear. We will -- M&A has been incredible. I think that mindset is already in there. We are doing the bridges. You saw the proof points. I think ECMB will ramp it up. Leverage finance, we are ramping it up. Sponsors, we are gaining share. So I don't think it will be linear, but the key here is steady progress where bit by bit.

And one last point there is talent. And this is really a talent game. It's not a numbers game. It is really quality of talent. You have the classic 80-20 rule with the best bankers. And this is something that we really started -- we got going last year. A lot of the folks have just come on board this quarter, and this is something that we'll keep investing in and focused on.

And maybe -- sorry, maybe to jump in on both just for a second on how we thought about our client-driven growth, right? First, we -- there's a couple of lenses in our approach that I think maybe is worth noting. One is we look at have we done this before? Have we been doing this? Do we see it in the momentum? And two, do we have the actions? Do we have the investments in order to anchor that? And you will see that most of our revenue commitments at the firm level is mid-single digits on the revenue front. They are really anchored primarily on volume and continuation of client-driven growth, right? It's really a Q story.

You're seeing in Q1, and we hope to be able to show you that in the near term as well. The second thing I would mention is we've also -- we've assumed a normal environment as our base case. You saw that on one of the slides. But we've also pressure tested our commitments, and these are commitments, not aspirations, just to be clear. We pressure tested them for a range of environments as well. So that goes into the consideration set, too.

Great. Thank you. I think we had a question over there.

Ebrahim Poonawala, Bank of America. I guess, maybe, Andy, for you on the wealth management side, it's long been discussed whether Citi lacks distribution in the United States from a wealth management product. Just talk to us, like you obviously highlighted the AI agent. When you think about wealth distribution in the U.S., do you need hundreds of more financial advisers that you need to recruit? Or is the business transforming where how you acquire clients and how you deepen that is truly changing, where the playbook has changed as opposed to just paying up and bringing on advisers?

Ebrahim, thank you. Great question. Here's how we think about it. I think the most important things in terms of growing the wealth business in the U.S. are do you have real feeder engines for the business that you can lean into. We talked about 2 during the presentation. One, the powerful plugging in of the Private Bank, in particular, into our institutional businesses. I mean that is a massive feeder engine for our business.

Second, the realignment of the retail bank, which we talked about, a massive driver of growth in the affluent and high net worth arena. We didn't talk about the workplace, but we have a wealth of work business as well. It has deep 50-year roots serving law firms. There's a lot more we can do with that business. So those are really paramount in terms of importance of growing here in the U.S. And I would look at AI and Citi Sky as an eye-opener in terms of what's going to be possible in terms of productivity.

You're going to see us invest behind that technology. You're also going to see us add advisers and bankers that's happening at the same time. But what I think you should take away is, though, to achieve our ambitions, we don't need to spend 10 or 20 years recruiting to get to scale. Technology is giving us the opportunity to unlock scale in ways that we didn't -- we couldn't have imagined just a few years ago.

Brent [indiscernible]. And I was very impressed with the dynamics of all you professionals. But Shahmir, with regard to the Global Payments and being the bank of the future, I was stablecoin going to affect or possibly disrupt your business? Or how are you going to work with that? So could you address that for us?

Sure. Absolutely. I'll try and summarize. So first and foremost, as you've probably seen with recent research, while there's a lot of hype around stablecoins, if you look through the volumes, you will see that there's a relatively small amount of volume that are truly used for what I would call institutional payments. So I think it's -- we're still in the very early stages of it. So that's the first data point.

The second one is that as we talk to a number of our clients, and I made a point of that, we are constantly consulting with the biggest multinational banks, fintechs around the globe. Everybody is assessing what they want to do as they think about the future. There is pockets of take-up. And there is pockets of interest.

As I mentioned, I think there is stepping away from stablecoins, there's a lot of focus on saying, what can blockchain technology do for me? How do I move my money more efficiently? How do I make payments more efficiently? How do I think of managing my working capital better? So that's something we've already put in play, as I showed to you today. So as stablecoins evolve, as our clients come in and say, I need a stable coin or I need to use a stablecoin for something.

As I mentioned, we are open for business. We've got a blockchain up and running. We will look to evolve our product strategy to involve a stablecoin as well. But in the meantime, if you're a West Coast company, who wants to pay an app developer sitting in Asia and they want to get paid in a stablecoin, we're absolutely engineering for that. We -- as I mentioned, we've signed an agreement with Coinbase. We're in the process of engineering that solution using our WorldLink platform, and we will be up and ready and be able to service our clients as they engineer their agendas going forward.

So I would say we're right in the thick of it. We're in the very, very early stages of the first innings as our clients look to evolve their platforms. And I think this is going to be just one of the many things our clients will look to do. And therefore, the way we are thinking about it is with an interoperability lens. This will be one of the building blocks in addition to the many that we offer our clients.

Next question, Erika?

Erika Najarian, UBS. My question is for Gonzalo. I think your investors very much appreciate that you laid out your ROTCE targets through the numerator, right? I think the very powerful message from today was you talked about growth in revenues and not taking out expenses to get to that answer by just taking out the transformation expense and start reinvesting it. That being said, the denominator opportunities are very real in terms of capital reform.

And so if I take that 14% to 15%, and there's essentially 2 parts. One, your SCB is 100 basis points higher than JPMorgan, BofA and Wells Fargo, right? And second, your 13.1% essentially assumes that you're going to cross that 50 basis point surcharge on January 1, 2028. as you understand the reforms and if you could normalize your SCB to 2.5% to 3%, and I know you've done the math already. I'm pretty sure you were picked for that reason. What -- where could that...

[indiscernible] as well.

[indiscernible] was the key, absolutely.

Where could that 14% to 15% go?

Well, thank you. And thank you for trying to buck me into different numbers that we already shared, Erika. Good to see you. Let me step back maybe for a minute, and let me take it in pieces, right? Let me start on the journey that we've been on with capital. You saw it for a couple of years, right? In the period between 2020 and 2023, our SCB actually increased all the way to 4.3%. Now on the back of our strategy working and our PPNR increasing by about $6 billion, that increased our absorption capacity, you started to see the SCB come down for us from the 4.8% peak down to 3.6%.

Now we haven't assumed that, that comes down. This is -- before I talk about NPRs in a second. But I would think, right? And again, I think you want us to be thoughtful and not bake in things that -- where we don't have clarity and finality yet. But you can think that over time, as we continue to successfully implement our strategy, our PPNR will continue to go north, and that will continue to increase our absorption capacity. And hopefully, over time, there's a narrowing range between our internal assumptions and also how the Fed models work. That's box #1.

Box #2 on the NPR, I'll go back to a couple of pieces. In the first quarter earnings call, I spoke about how -- purely on the NPRs of G-SIB and Basel III, net-net, it's a moderate net benefit. Again, we have not baked that into our assumptions. And then the last piece, obviously, is the SCB and the changes that are going to be made to the modeling. You called it out well. We are 110 basis points away from the floor, right, from the 2.5% SCB.

So our assumption is that there will be some benefit there. And now I know you can do the math, right, for about 10 basis points of CET1, that equates to a little bit over 10 basis points of ROTCE. So if you want to do, I think about on top of the 14% or 15%, that gives you a sense of depending on what you believe, how far you can go.

Ken Usdin from Autonomous Research. Another one for Gonzalo. We talked about a lot about risk management and Pat touched on some of the changing dynamics inside the card business. I believe a few years ago, we talked about the cost of credit. That was also embedded in the ROTCE outlook being around 1%. Just want to understand like how you think -- what built into the 14% to 15% in terms of cost of credit and how the overall just credit risk environment and structure has changed with -- inside Citi over the last few years?

Sure. Happy to start. And obviously, feel free to jump in and overwrite anything I say as you're running the business, but thank you for the question. I think a couple of thoughts. First, and I mentioned this briefly, so did. We have invested quite a bit in continuously strengthening our risk framework, right? And so we feel very comfortable. I feel very comfortable with it because we been working hard on AI and machine learning models on digitizing collections of being recession-ready, right, at multiple spots. You have seen us behaving this way.

Actually, if you go back to the -- for those that are very familiar with the vintages and the normalization cycle into peaking into 2024, we started with preventive actions. That is how dynamic we are in the fourth quarter of 2022, taking credit driven tightening in action. So we feel confident about how dynamic we are, how thoughtful we are about some of those pieces.

The second thing I would say is we're very well reserved, right? Tam spoke about that at 8% or thereabouts. That's $16 billion of our $21 billion of reserves, right, that really account for multi-scenario, -- we reserve on a multi-scenario basis. I think I was sharing in one of my slides, 5.2% is the blended 8-quarter unemployment assumption, which is obviously higher than the current. And the peak unemployment scenario has -- is close to 7%, 6.9% -- so that gives you a sense also that we are, we are reserved and we manage to those set of potential scenarios.

Now you also asked about the medium term and what we're thinking about. So in terms of that, as we invest for growth in this business, the credit cost that we've assumed, right, move in sync with that growth and expectation, we've given guidance in our KPIs for the cards business of mid-single-digit growth for our loans. And so you can imagine that our credit costs will move in sync.

And then the last piece I'll mention is in addition to stress testing constantly, right, our portfolios and our franchise, and I mentioned this a little bit earlier, as we looked at our commitments, both the near term and the medium term, again, we assume the normal environment as the base case, but we've also tested for a range of environments as well so that we can deliver the commitments within a range of deterioration.

And anything, I don't know, Pam, do you want to add?

I think you covered it.

Question over here.

So in terms of the very impressive improvements in profitability we've seen since 2022, part of it's been driven by the business units, but we've also seen a fall in deferred tax assets. And can I just get a bit more color about what you're expecting there? Gonzalo, it looked from the slide like the EUR 14 billion from last year almost goes away by about 2030. But can you give us a little bit more color around that?

Yes. Two observations. Thank you for the question, first of all. The first observation is everybody gets to talk about fancy products, and I get to discuss VTA reflection. I know it was a Roll-choice, but still -- but a couple of things I would say on DTA. Thank you. And I'm sure you're going to pull up a ruler, right, with the slide printed and you're going to try to measure the near term and so on. That's what I would do at least for sure. What I would say is a couple of things.

We have seen DTA consumption obviously doesn't happen in a day. It's something that you may not have seen us consume a lot in the last few years, but -- and you can see through the disclosure through the disclosures, our U.S. profitability has been increasing. Actually, '25 was much greater than '24 and '23, respectively. So we have seen the momentum. That's also why we're confident in making this commitment.

Secondly, in first quarter earnings, I spoke about how this year, we're expecting $800 million and above of burn-in. And that comes -- hopefully, you saw it come across, but each of the businesses we're talking, you heard Vis talk about his home strategy, right, and how we really wanted to outperform there. Of course, PAM is 100% U.S. profitability.

So all that journey that she showed of improving returns for the last few years underpins a lot of what you've seen. Andy, of course, as well, right, that improved profitability. A lot of it is U.S.-centric. I can go on and on. But that to me is what underpins the path that we are forecasting as it relates to the DTA burn-in. So it is -- and by the way, the last thing I would say is that Jane has made it part of everyone's scorecard out here, myself including.

Part of the culture change.

I think we have a question back there.

Manan Gosalia, Morgan Stanley. Gonzalo, a question for you. As you think about the expense ratio this year, it's about 60%. There's going to be revenue growth from here, transformation costs are coming down, stranded costs are coming down. So as you think about the range of 55% to 60% that you've given in the near term, can you help us narrow that down? And I think investments are also going to be self-funded largely over the near term. So can you help us just think through that expense number over the next couple of years?

All right. Thank you. Thanks very much for the question. Let me start by -- first, I appreciate your confidence in us because you're giving it as a fact that we're going to meet our guidance for this year at the 60%. So I appreciate it.

We are.

We are. So yes, we are looking forward to 3peating, right, because in 2 years in a row, we brought down our operating efficiency, and this will be the third year. And as you look into the near term in that 5% to 60% range, there's a few drivers there, right? The first one is client-driven growth. And we just spoke about it, right, how the mid-single-digit growth and how we're making the investments required to make sure that we can sustain that.

Now you've seen us do that before, right? Our ex legacy franchise CAGR is 6%. Last year, our ex notable items is 7% revenue growth. So we expect the continuation of our mid-single-digit revenue growth, and that will help with the 55% to 60%. And then you go to the expense side, right? And as we said, we're trying to make sure that we can self-fund the investments that we have spoken about, the $5 billion in incremental expenses as well as the technology spend that we were talking about.

And to me, the test that I use is a confidence test, right? Have you seen it before? Can you touch it and feel it? Is it just a best effort and an aspiration? Or do you actually have plans that you are maniacally focusing every week? And so if I go through the 3 components that will help underpin that structural efficiency, you look at stranded costs, $1.3 billion last year, first quarter, $200 million. You annualize that, that alone already is showing you that we're coming down.

I think we're going to do faster probably. If you look at transformation, Jane has spoken about, we are at -- in our programs, 90% of them are at or near completion. As the programs get completed, we started in the first quarter already seeing those costs come down, and we showed you how we expect those to basically go away in the near term by 2028. So I'm very confident in that, right, because it's trigger-driven. This happens, that happens. It's not something that I need to go find it. And the third piece is are the functional and operational expenses.

You heard from Pam about the investments in AI and agent assist. And you heard from actually from everyone else. And those -- by the way, those functional and operational expenses, just to give you a taste, I spoke about milestones, I spoke about resources. [indiscernible], our COO, Tim Ryan, they sit every single week. We have all the processes mapped. We have our teams, finance is part of that. My teams are engaged every single week. We have milestones. We have resourcing. We have targets. So it's a target-driven exercise. It's not a -- let me see what I can do.

Great. Question over there, back there.

Glenn Schorr from Evercore. So I asked this in the context of, I'm sure your investors are very happy with you basically doubling what you earned about a year ago if you hit these targets. So I have 2 observations. One is ex markets, the 4 other businesses have targets that are above the overall company's target. And two is despite this great progress, if you hit on it, you'd still be a couple of hundred basis points short of where some of your largest competitors have their targets. It's what it is, they're all targets.

So I'm looking for the high-level thought of, one, does that have something to do with the capital intensity of what you are building out like markets? Is there just conservatism built in towards the denominator question or expenses or maybe leaving room in there for a credit cycle. So just curious on the high-level view.

Look, as we take the the continuation of the journey that we started in Investor Day in 2022 is this is the step -- we're taking you through the step by step of how do we get up to the medium term. Do all of us around the table believe there's further upside from the firm from there? Absolutely. But you've seen this. I think you know me, you know us by now. We are maniacally relentlessly focused on delivering step-by-step what we need to be doing. We've laid you out a very deliberate path.

We're ensuring we have the flexibility to invest so that we can be driving both the medium term and beyond return profile of the firm, making sure it's durable and making sure it comes in line with the peers eventually. I think there's some business mix issues here that get taken into account. There's some taxation elements that get taken into account. But let us focus on 11% to 13% first, 14% to 15% afterwards, and we'll be back at that point to update you on what the path is from there.

I think we have time for 2 more questions.

It's Richard Ramsden from Goldman Sachs. Great presentation. You spent some time talking about the opportunities from AI. Can you spend a couple of minutes talking about some of the risks that you're thinking about? And just in the interest of time, can we just narrow it to the services and the wealth business where I think there's a lot of focus. And maybe talk a little bit about what you're doing to protect against those.

Sure. Maybe I can...

Yes.

So as I mentioned, and I specifically talked about it, is that whatever we're doing in AI is in full partnership with Zodenk and all of our risk partners and our audit partners. So anything that we do effectively has to go through a process where our second-line partners, operational risk partners have to sign off on it between model risk management, operational risk management, audit, we take them along for the ride, so before anything gets deployed. So hopefully, that gives you a view. And then as we deploy some of the AI, and I talked about some of the use cases that we've deployed, we have a model review process as well, where we say, what are the outcomes from the model as we've deployed the model, does this model behave like you would expect it to?

And I think the third piece of it is that as we've deployed models, there are clearly processes. If you think about just the 20 million, 25-odd million payments every day that we do, if we employed a model just to execute those transactions, as our COO loves to say, even if the model is 99.9% effective, you're going to have a 0.1% chance that you're going to have a payment go back. So how do you think about putting a human in the loop in how you think about processing that transaction? So it's all of those thoughts going into how do we deploy a model, how do we keep humans in the loop as part of the proposition.

We should still be able to generate saves and get the right outcomes from the model, but it needs to be a full circle where a model gets reviewed, gets launched with risk and oversight and then consistently improved over time. Hopefully, I answered your question, but it's a really engaged process with second line and third line to say what we're deploying in a governed way with oversight and controls is how we are thinking of having rolled out this AI strategy. Again, very early days, still a lot of work to do, but risk is very much front of mind as we're thinking about rolling out model.

And I'll just jump in because many -- I won't repeat many of the same themes that Shahmir just went through because they apply to wealth. Richard, to your question, I'd say we're very aware of the risks, but we're -- we also are very excited about the opportunities for risk mitigation that come from deploying AI. And so I'll just give you 2 examples. I mean in wealth management, one of the most important things that all firms are trying to do is ensure consistency across a scale adviser group in terms of how clients are being approached, the kind of advice that's being delivered. You can create that level of consistency in, again, very powerful ways using AI.

And then in terms of our supervisory processes, I mean, historically, supervisory processes involved a good deal of sampling. With AI, you've got an opportunity for truly auditable interactions with clients happening continuously. So that focus on consistency and continuous oversight of the business, these are massive new opportunities to risk manage these businesses.

And I would just add that from a competitive dimension. If we look at services, the scale, we've just consistently shown that we disrupt ourselves. So we're not protect -- we're not in the mindset of protect what we have. We're in the mindset of build what we need. And if that requires disruption, we will do so. And I think the same for Andy. I remember the day, Andy, when you and I sat down, I said, go for it, go and disrupt everyone else in wealth. So...

You do things that make other people nervous.

Alright, time for one last question.

Matt O'Connor, Deutsche Bank. I wanted to ask a question on prime brokerage within equities. Obviously, you highlight that as an area, a key driver going forward. And to be frank, like some of your peers have kind of gotten a head start and focusing on it in the last few years and have had good execution there. But I also hear that there's kind of an endless demand for it from the client base.

So I answer my own question, but how much of this is kind of gaining share with new product, new technology, new people? And how much of it is just the kind of endless demand out there?

Matt, thanks, and you help me with the answer. It's a little of both. I think it's one of the reasons why we're pursuing this, and I hope my diagram was very clear. Our clients are telling us literally that they want us to enter this game. And it's exactly for the 2 reasons that you said, partly because there's the endless demand and partly because they'd rather meet that demand at the margin with a new player. They'd rather have a fourth big player on top of the 3. So that's one of the reasons that we're pursuing this long-term strategy to grow it. We're doing it at a reasonable pace.

I think there would have been ways when some others did it, there would have been ways to just buy a lot of balances at a very high price and you get sort of a mix of things and maybe some of which you don't want, some of which you can't handle at that juncture. We're doing at a very, very even measured pace. As I think I mentioned, we definitely helped by the market going up, but we're doing more than that. And as we have these investments, we can take on more. And it's all powered by the fact our equity derivatives business is just churning out the money. And so it helps to fund this thing.

So -- but yes, the implicit answer you had in your question is exactly right. It's a combination of the demand from clients and the need to maybe have a fourth big provider. That's worldwide. I think that's one of the reasons perhaps why the European banks have maybe not grown at the same pace as the U.S. banks. They just don't have as full a platform.

Thank you, everyone. Now I'm going to turn it over to Jane for some closing remarks.

Yes. Well, thank you. Well, we have certainly covered a lot of ground today. And I think on behalf of all of the team and indeed, all of the firm, thank you so much for your time and for your engagement. At our Investor Day 4 years ago, I told you we would transform Citi. And today, you see that we have. This is now a bank with ambition. It's a hungry team. They're eager to go toe to toe with any competitor and gone are the days when good enough was good enough. We're a team that has shown that we can multitask. We do not take the easy way out.

We don't take short-term fixes. This is a well-managed bank. The holding company mindset and diffused accountability of the past has been vanished. And it's now a resilient bank with global capabilities that are a real clear competitive advantage, and it's well past time to change the outdated mindset about our global footprint. You can see we have moved at pace. We have persevered through unprecedented challenges, and we have built the capabilities that will sustain our progress.

As we've said, a new city has emerged. It is one with intellectual firepower, with ingenuity, with scale, with executional excellence and above all, with drive. I am deeply grateful to every single one of our colleagues for what they have done to get us here. But I am even more grateful for the passion that they have for what comes next. We put Citi back in the game. We intend to stay there, and we intend to win it. Thank you very much.

Hello, and welcome to Citi's First Quarter 2026 Earnings Call. Today's call will be hosted by Jenn Landis, Head of Citi Investor Relations. [Operator Instructions] Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Ms. Landis, you may begin.

Thank you, operator. Good morning, and thank you all for joining our first quarter 2026 earnings call. I'm joined today by our Chair and Chief Executive Officer, Jane Fraser; and our Chief Financial Officer, Gonzalo Luchetti.

I'd like to remind you that today's presentation, which is available for download on our website, citigroup.com, may contain forward-looking statements which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these statements due to a variety of factors, including those described in our earnings materials as well as in our SEC filings.

And with that, I'll turn it over to Jane.

Thank you, Jenn, and good morning to everyone. We picked up right where we left off last year with an exceptionally strong start to 2026. This morning, we reported net income of $5.8 billion for the first quarter with an EPS of $3.06 and an RoTCE of 13.1%. Four of the five core businesses saw revenue up double digits. Overall revenues were up sharply at 14%, and we had another quarter of very healthy positive operating leverage. The continued strong performance across our lines of business shows the benefit of a diversified model, which continues to drive consistent, predictable revenue growth.

Services, our crown jewel, had an exceptional first quarter. New mandates were up 40%, while the combination of client-driven growth and fees underpinned a 17% increase in revenues. Cross-border transactions were up 12%. Deposits grew by 16% and assets under custody and administration were up over 20%.

Markets crossed $7 billion in revenues for the first time in a decade. Equities was up nearly 40%, surpassing the $2 billion revenue mark, driven by derivatives, prime services and cash. And FICC, up 13% saw notable performance in commodities and FX.

Banking continued to build momentum, with fees up 12% amidst a record first quarter for us in M&A. ECM was up over 60%, while we continue to gain share with sponsors. We advised on the three largest deals so far this year, Paramount, McCormick and EQT-AES, demonstrating how we are far better penetrating the C-suite, supported by continued investment in talent. Clients are increasingly looking to Citi for our advice in addition to our execution capabilities.

With revenues up 11%, Wealth saw its eighth straight quarter of growth and its returns continue to improve. Now as you know, its results now include U.S. Retail Banking. Citigold and Retail Banking were up 13% as we leverage our branch footprint to capture assets that our clients have with other firms. Investment revenue grew 11%, with client investment assets up a pleasing 14%.

U.S. Consumer Cards saw 4% revenue growth with spend up 5% and delivered a 19% RoTCE as American consumers remained resilient. With our portfolio heavily weighted to prime, delinquencies and credit losses declined and are well in line with expectations. You can now see how we've lined up the reporting of this business with our strategy as we focus on growing our general purpose portfolio and optimizing our private label portfolio.

In the quarter, we demonstrated our continued commitment to returning excess capital to our investors with the repurchase of $6.3 billion of shares, and we are close to completing our $20 billion share buyback plan. We ended the quarter with a CET1 ratio of 12.7%, which is 110 basis points above our regulatory capital requirement, and our tangible book value grew by 8% from a year ago.

As we look towards the new capital regime, whilst the latest NPR is an improvement upon the 2023 version, it's not yet where it should be and we should be active in advocating for necessary changes in the comment period.

These quarterly results reflect the execution of some of the most consequential changes in our firm's history, our business investments, the transformation, the simplification, divestitures, delayering and modernization. That said, and I know I've said this many times, we have not yet reached our destination, and we will continue to be solely focused on executing our vision and relentlessly driving our business performance.

We've now entered the final phase of our divestitures, and we continue to drive down our stranded costs. In February, we completed our exit from Russia. We have entered into agreements with several prominent investors to sell an additional 24% of Banamex, in transactions that are expected to close in the coming months. And we're on track to close the sale of our consumer business in Poland this summer.

The momentum we have established in our businesses can also be seen in our transformation, which remains our other top priority for the year. 90% of our programs are now at or near our target state. And our firm is materially safer and sounder as a result of this work. We've started to reduce the spend on our transformation programs, resulting in an improvement in our operating efficiency this year and beyond. We are methodically deploying AI at scale across the firm to drive revenues and process improvements, enhance client experiences and strengthen our defensive capabilities and you'll be hearing much more about this on Investor Day.

Switching gears, the global macro economy to date has weathered shock after shock. However, the impact of the Middle East conflict is hitting Asia and Europe harder than countries such as the U.S. and Brazil, which are more insulated from energy shocks. Clearly, the longer this goes on, the more pronounced the second- or third-order impacts are going to be around the world. And inflation is now a greater risk to growth and will likely cause central banks to lean towards more restrictive monetary policies.

Consistent with our position throughout the last decade, we continue to be a source of trust and financial strength for our clients during turmoil. We intentionally designed a very resilient strategy that performs in different environments, and the last few years have borne that out. You can see it in the deposits and loan growth in our high-quality loan portfolios and robust balance sheet built on the foundation of disciplined risk management. And we have the capital we need to continue to grow as we support our clients.

So with a very strong first quarter behind us, we remain well on track to deliver the 10% to 11% RoTCE for the year. At our Investor Day next month, we will lay out a clear vision for how we will continue to grow each of our five businesses organically and deliver sustainably higher returns over time. This is an exciting time for our firm. We have momentum behind us, and we are looking forward to sharing the path ahead with you next month.

With that, I will turn it over to Gonzalo. And then we will be happy to take your questions.

Thank you, Jane, and good morning, everyone. Before I begin, I would like to start by thanking Jane and Mark for their support and providing a very smooth transition to my role as CFO. I'm excited to build on the momentum they've created as we focus on delivering higher, sustainable returns and value for our shareholders.

As I step into the role, three elements stood out to me quite distinctively. First, we have a formidable foundation underscored by a robust balance sheet, rigorous risk management and a well-diversified business model, which gives me confidence in our ability to produce durable results. We are a source of resilience and strength for our clients in a range of environments.

Second, I'm excited about the opportunity to help deliver significant return improvement over time by driving client-led growth, continuously pursuing productivity improvement and deploying capital to accretive return opportunities.

Finally, I'm highly energized by our relentless focus on execution. I see how each of our businesses and teams operate with urgency, focused on driving performance every single day. And my role will be to ensure we are strategically purposeful and tactically disciplined in resource allocation. We are firmly in execution mode, and I feel it is time to continue to elevate Citi and leave an indelible mark on a 200-year-plus iconic firm.

With that, let me remind you that on April 3, we published a recasted historical financial supplement for our reportable business segments to facilitate comparability with the results this quarter and going forward. Additionally, the results for the segment this quarter reflect the TCE allocations for this year, and we've included additional details on this in the appendix of the earnings presentation.

Now turning to the quarter. I'll start with the firm-wide financial results, focusing on year-on-year comparisons unless I indicate otherwise, then review the performance of our businesses in greater detail.

On Slide 6, we show financial results for the full firm, which demonstrate the progress we've made and the momentum of our strategy. This quarter, we reported net income of $5.8 billion, EPS of $3.06 and an RoTCE of 13.1%, on $24.6 billion of revenues, generating positive operating leverage for the firm and the majority of our five businesses.

Total revenues were up 14% with growth driven by each of our businesses and legacy franchises as well as the impact of FX translation, partially offset by a decline in Corporate/Other. Net interest income, excluding Markets, which you can see on the bottom left side of the slide, was up 7%, driven by growth across all businesses and legacy franchises, partially offset by a decline in Corporate/Other. Noninterest revenues, excluding Markets were up 29%, driven by growth across all businesses and all other. And total Markets revenues were up 19%.

Expenses of $14.3 billion were up 7% with an efficiency ratio of 58%, which I'll provide details on shortly. And cost of credit was $2.8 billion, primarily consisting of net credit losses in U.S. Cards as well as a firm-wide net ACL build of $597 million.

On Slide 7, we show the expense and efficiency trends over the past 5 quarters. As I just mentioned, expenses increased 7%. And you can see on the bottom of the slide, we incurred nearly $500 million of severance as we target efficiencies across our expense base and bring down head count. Excluding severance, the increase in expenses was 4%, primarily driven by FX as well as volume and revenue-related expenses including compensation and transactional and product servicing expenses, partially offset by lower legal expenses.

As you can see on the bottom right side of the slide, in addition to severance, growth in compensation and benefits included investments we've made to support growth in the businesses as well as performance-related expenses, partially offset by productivity saves, stranded cost reduction and lower transformation expenses in Corporate/Other. And it is worth noting that this expense increase was against 14% revenue growth resulting in an improvement in our efficiency ratio of approximately 400 basis points.

On Slide 8, we show U.S. Cards and corporate credit metrics. As I mentioned, the firm's cost of credit was $2.8 billion, primarily consisting of net credit losses in U.S. Cards as well as a firm-wide net ACL build. Embedded in the firm-wide net ACL build is a further skew to the downside scenario, reflecting the increased uncertainty in the macroeconomic outlook. And our reserves now incorporate an 8-quarter weighted average unemployment rate of approximately 5.4%, which continues to include a downside scenario, average unemployment rate of nearly 7%.

At the end of the quarter, we had nearly $22 billion in total reserves with a reserve-to-funded loans ratio of 2.6%. We continue to maintain a high credit quality card portfolio with approximately 85% of balances extended to consumers with FICO scores of 660 or higher and a reserve-to-funded loan ratio in our U.S. Cards portfolio of 8%.

Looking at the right-hand side of the slide, you can see that our corporate exposure is 78% investment grade. And in the quarter, corporate nonaccrual loans as well as corporate net credit losses remained low. We are confident in the high-quality nature of our portfolios, which reflect our robust risk appetite framework, rigorous client selection and our focus on using the balance sheet in the context of the overall client relationship. And this quarter, we included a slide in the appendix of the presentation that shows Citibank's loan to nonbank financial institutions, including $22 billion of corporate private credit which is 100% securitized, 98% investment-grade and not a significant component of our overall exposure.

Turning to capital and the balance sheet on Slide 9, where I will speak to sequential variances. Our total assets of $2.8 trillion increased 5%, driven by growth in trading-related assets, cash and loans. Net end-of-period loans increased 1% with client-driven growth in Banking and Markets partially offset by a seasonal decline in U.S. Cards.

Our $1.4 trillion deposit base remains well diversified and increased 3%, driven by growth in Services as we continue to deepen with clients with a focus on high-quality operating deposits. We reported a 114% average LCR and maintained over $1 trillion of available liquidity resources. In the first quarter, we continue to deploy capital to support client-driven growth while at the same time, prioritizing the return of capital to common shareholders as evidenced by $6.3 billion in buybacks executed, which includes the benefit from the sale of the remaining operations in Russia. We ended the quarter at 12.7% CET1 ratio under the binding standardized approach, approximately 110 basis points above the 11.6% regulatory capital requirement, including a 100-basis point management buffer.

Turning to the businesses on Slide 10. We show the results for Services in the first quarter. Revenues were up 17% with the best first quarter in a decade, driven by growth across both TTS and Securities Services. NII increased 18%, driven by higher average deposit balances and deposit spreads. NIR increased 15% as we continue to see strong activity and engagement with both corporate and commercial clients and across key high-growth segments, including e-commerce and fintech driving momentum across underlying fee drivers with cross-border transaction value up 12% and assets under custody and administration, up 21% which includes the impact of the market valuations as well as new assets onboarding.

Expenses increased 14%, primarily driven by higher volume and revenue-related expenses, higher compensation as well as higher technology costs. Average loans increased 14%, largely driven by export agency finance and working capital loans. Average deposits increased 16% with growth across both North America and international largely driven by an increase in operating deposits as we continue to deepen relationships with existing clients and onboard new clients. Services generated positive operating leverage and delivered net income of $2.2 billion with an RoTCE of 27%.

Turning to Markets on Slide 11. Markets had its best quarter in over a decade with revenues up 19%, driven by growth in both fixed income and equities, with strong momentum across client segments, including corporates, asset managers, hedge funds and banks.

Fixed income revenues were up 13% with growth across spread products and other fixed income as well as rates and currencies. Rates and currencies was up 6%, driven by FX on higher volumes and optimization of the balance sheet, largely offset by rates; and spread products and other fixed income was up 27%, primarily driven by strong growth in commodities. Equities revenues were up 39%, driven by continued momentum across derivatives, prime services and cash. We grew prime balances by more than 50% with growth across both new and existing clients as well as higher market valuations.

Expenses increased 11%, primarily driven by higher performance-related compensation as well as higher volume-related and legal expenses. Average loans increased 27%, primarily driven by financing activity in spread products. Markets generated positive operating leverage and delivered net income of $2.6 billion with an RoTCE of 18.7%.

Turning to Banking on Slide 12. Revenues were up 15%, driven by investment banking and corporate lending. Investment banking fees increased 12%, driven by growth in M&A and ECM, partially offset by a decline in DCM. M&A was up 19% and represented our strongest first quarter in a decade with continued growth in sell-side fees and strong performance with sponsors. ECM was up 64%, reflecting growth in follow-ons and convertibles against the backdrop of an active market. And while DCM fees were down 6% amidst lower non-investment grade activity, we maintained our overall market share versus year-end 2025. Corporate lending revenues, excluding mark-to-market on loan hedges, declined 3%.

Expenses increased 20%, primarily driven by higher compensation and benefits, reflecting performance and investments and higher volume-related transaction expenses. Cost of credit was $132 million consisting of a net ACL build of $126 million, reflecting the increased uncertainty in the macroeconomic outlook and exposure growth, largely offset by refinements to loss assumptions. We continue to feel good about the high-quality nature of our corporate lending portfolio with nonaccrual loans and net credit losses remaining low. Banking delivered net income of $304 million with an RoTCE of 15.8%.

Turning to Wealth on Slide 13. Revenues were up 11%, driven by growth in Citigold and Retail Banking as well as the Private Bank, partially offset by a decline in Wealth at Work. NII, which you can see on the bottom left side of the slide, increased 14%, driven by higher deposit spreads and average balances, partially offset by lower mortgage spreads. NIR increased 5%, driven by 11% higher investment fee revenues, partially offset by the sale of the trust business.

Net new investment asset flows were approximately $15 billion in the quarter, contributing to approximately $43 billion in the last 12 months, representing approximately 7% organic growth. This contributed to client investment assets being up 14%, which also includes the impact of market valuations and was partially offset by the sale of the trust business assets.

Expenses increased 1%, driven by investments in technology and higher volume-related expenses, partially offset by lower compensation and benefits, including the impact of the sale of the trust business. Average loans were up 6% as we continue to grow securities-based lending and deploy balance sheet to support clients and drive client investment asset growth. Average deposits were up 4%, largely in the Private Bank, as net new deposits were partially offset by outflows and a shift from deposits to higher-yielding investments, including on Citi's platform.

Wealth had a pretax margin of 18%, generated positive operating leverage and delivered net income of $432 million with an RoTCE of 10.8%. We remain confident in the path to higher returns from here as we continue integrating our Retail Banking business within Wealth and building on its improved performance this quarter.

Turning to U.S. Consumer Cards. On Slide 14, as we've said in the past, customer preferences have continued to shift towards general purpose cards. And as such, we've provided disclosures for this segment to show metrics split between our general purpose and private label portfolios.

This quarter, revenues were up 4%, driven by growth across both NII and NIR. NII was up 3%, driven by higher interest-earning balances and spreads and NIR was up 14%, driven by lower partner payment accruals and higher annual fees. We saw momentum in underlying drivers supported by growth in general purpose cards, with acquisitions up 12%, spend volume up 6% and average loans up 4%, partially offset by declines in private label cards.

Expenses increased 1%. Cost of credit was $2.1 billion, consisting of $1.7 billion of net credit losses, which declined 11% as well as a net ACL build of $350 million reflecting seasonal portfolio mix changes, the forward purchase commitment of the Barclays American Airlines co-branded card portfolio as well as increased uncertainty in the macroeconomic environment. This was largely offset by lower seasonal volumes and refinements to loss assumptions.

U.S. Cards generated positive operating leverage and delivered net income of $732 million with an RoTCE of 19.2%.

Turning to Slide 15, we show results for all other on a managed basis, which includes Corporate/Other and legacy franchises and excludes divestiture-related items. Revenues were up 15%, driven by growth in legacy franchises, largely offset by a decline in Corporate/Other.

Growth in legacy franchise was driven by Mexico consumer, which included the impact of Mexican peso appreciation, momentum in underlying business drivers and a gain on the sale of an investment, partially offset by the impact of continued reduction from our closed exit and wind-down markets. The decline in Corporate/Other was driven by lower NII, which included a lower benefit from cash and securities reinvestment resulting from actions taken to reduce Citi's asset sensitivity in a lower interest rate environment, partially offset by higher NIR.

Expenses were down 4%, driven by lower legal and transformation expenses as well as expenses related to closed exits and wind-downs and professional services expenses. This was primarily offset by higher severance and the impact of FX translation. Cost of credit was $400 million, primarily consisting of net credit losses of $371 million driven by loans in Mexico.

To close, we've included our full year 2026 outlook on Slide 16. While there remains a lot of uncertainty, at this point our overall expectations are unchanged. Subject to macro and market conditions, we continue to expect NII ex-Markets up approximately 5% to 6%, NIR ex-Markets growth driven by momentum in Services, Banking and Wealth and an efficiency ratio of around 60%.

In terms of credit, we expect a total U.S. credit card NCL rate of between 4% and 4.5%, which is lower than the aggregate of the expectations that we provided previously for branded cards and retail services, reflecting the delinquency trends and loss performance we've seen year-to-date. And the ACL will continue to be a function of the macroeconomic environment and business volumes. Additionally, we remain well positioned to return capital to shareholders and plan to provide more detail on our expectations for share repurchases going forward at our Investor Day in May.

As we take a step back, the results in the first quarter represent significant progress towards our goal of improved firm-wide and business performance. We remain steadfast and focused on executing our transformation and confident in delivering our RoTCE target of 10% to 11% this year, and we look forward to laying out the path to delivering higher returns beyond that at Investor Day.

With that, Jane and I would be glad to take your questions.

[Operator Instructions] Our first question will come from Glenn Schorr with Evercore ISI.

Wonder if we -- I think we get the great trading and banking results. I want to talk about Services, if we could. One is if you could give any color on the $4 trillion win on the BlackRock middle office, servicing ETF platform or portfolio?

And then two, maybe bigger picture, talk about what you think maybe I and the rest of us could be underappreciating in terms of the growth outlook in services, including tokenization as a good thing as opposed to maybe the threat that people might think it is.

Glenn, good to hear from you. Look, Services' exceptional performance this quarter comes from successfully executing the strategy that Shahmir and his team precisely outlined at our Investor Day 2 years ago and then going beyond it. We've told everyone this is a through-the-cycle business, which consistently delivers strong returns in a range of environments. And this quarter, the team did just that. Revenues up 17%, deposits up 16%, fees up 14%, returns at 27%. This is firing on all cylinders.

But part of your question, why is this business growing so much? So the growth is coming from deepening with existing clients, new client acquisition and new product innovations. Our investments over the last few years, I think, are best demonstrated by the 40% growth in new client mandates. We have a very high retention of existing client business, and we have what can only be described as exceptional win rates, right? We are the leading franchise not only in share but in innovation. And you're seeing momentum across the board.

For example, as you point out, in digital assets, we are leading in tokenization. We've been investing in this for many years. I've talked about it on many of the recent calls on this. This is a benefit for us in driving and meeting more of our client needs in an always-on world and an instant world. You're seeing us in real-time payments where we are doing a lot of business with the global e-commerce juggernauts.

And as you say, in Security Services, we laid out a strategy of growing share with North American asset managers, ETF and in other spaces. And frankly, BlackRock is the most notable win we've had, it is far from the only. And we're also benefiting from our focus on fee generation, which continues to make over 30% of our revenues across different macro environments.

So there's a reason we call Services our crown jewel. It is incredibly durable. While our offerings are deeply embedded in our client operations that creates lasting relationships and stable deposits. There is always a flight to quality when there are things going on in the world and we are quality.

Maybe we can just follow up with a lot going on in the world. There was some conversation about linking you to some interest in being a bigger retail bank in the United States. Watching you fold the business into Wealth and tweaking the strategy, I know that lack of low-cost deposits has been a thing in limiting your profitability in the past, but you seem to be getting by now without that. I wonder if you could just comment in terms of just aspirations or not on that front.

Let me kick off. I want to be crystal clear. We are only interested in and focused on organic growth, period, end of story, for the whole firm. We have achieved a lot in the last 5 years. We have a lot more to do and there is a large organic growth opportunity ahead of us across all five of our businesses. And that is what we're focused on. And we're excited about it.

So I would say, Glenn, and for everyone listening on the call, if you walk away from this call thinking of nothing else, let it be this: Citi has a lot of momentum, and we're not going to be distracted from it.

Now let's turn to the question about the Retail Bank and what are we looking at there. The retail branch network, it's 650 branches, the deposit base that we have across Wealth and the Retail Bank in the U.S. is about $284 billion. The footprint is a targeted one. It's in six urban markets with an affluent client base that covers 1/3 of the nation's high net worth and affluent households. And that's 40% of the ultra-high-net households.

So it's highly aligned with the Wealth business. It's an important source of clients for our investment franchise. And we saw a lot of top line momentum from the franchise last year. It was up 21% on the Retail Bank. And we look forward to continue improving its profitability and its performance and realizing the synergies between it and Wealth organically.

Our next question comes from Mike Mayo with Wells Fargo.

I just wanted to like for you to be even more clear than you were already, so you're only pursuing organic growth. Does that mean that Citi is not pursuing a deal or an acquisition? It's just there's been so many articles and as investors say to me, where there is smoke, there's fire. There have been so many articles about Citi pursuing an acquisition. So are you saying Citi is not pursuing a deal, you're not thinking about Citi pursuing a deal and that's 1,000% off the table?

I am always transparent. I'm always straightforward with you. I want it to be crystal clear, we are not interested in anything other than organic growth.

Okay. And then a separate question as it relates to the transformation. You're now up to 90% done. And I guess the question you can answer is, since you're done with the safety and soundness part of the transformation, I have a tough time reconciling while the consent order is still on, when regulators are focused on safety and soundness, but I'm sure you put your best foot forward in that argument, but what you can answer is the last 10%, is there last-mile problem with the last 10% of the transformation? Or is this continuing to move forward? And what is that last 10% and what's left?

Yes. So there is no challenges for us ahead. 2025 was a real turning point for us on the transformation, and we just continued the strong execution into 2026. We're finished with the vast majority of the work. As I've said earlier, 90% of the transformation programs are now at or mostly at Citi's target state, and they're operating in BAU mode.

So what does that mean? What's left? For each major body of work, what you have to do is define -- we defined our target state and the work that needs to be done to achieve that target state. We are at or nearly at those Citi-defined target states for all the bodies of work, except our data programs. And the remaining work of that 10% is primarily related to data used in our regulatory reporting.

And Mike, I'm pleased with our progress on this. We are executing well. However, once we are operating well at our target state, what happens next? We pass that work over to our independent audit team for validation. Once it's validated, each major body of work is then handed over to our regulators, and they go through their assessment. They move to their closure process when they are satisfied with the work. And this takes time, and let's be very clear, they control the time line. So completing the work is just the beginning of the end.

From an investor point of view, you can see the transformation expenses have started to come down as we complete the different bodies of work. This is helping create capacity for investments in AI and other strategic business priorities. And at Investor Day, Mike, I will detail the many benefits that we have been gaining from the transformation.

Our next question comes from John McDonald with Truist Securities.

Gonzalo, I was wondering if you could give a little bit of a take on the new Basel and G-SIB proposals and what they mean for Citi. Any initial estimates on the impact if they were approved as proposed?

All right. Well, thank you, John, and good morning to everyone. Pleased to be here. As we look into the rules, our expectation is that overall, there will be a net benefit to Citi. You have seen that in the estimates from the regulatory agencies as it relates to the Category I and II banks. And we see a moderate net benefit on what has been published. But of course, when you look at the full stack with the stress capital buffer, we expect an even additional benefit there.

Some puts and takes, of course, when you think about RWAs. And those pieces related to Basel III, you have the components of retail and corporate credit providing a benefit, and that mitigated by the operational risk, the CVA and the market risk, as you probably would expect. And then on the other side, on G-SIB, even if we probably have feedback from regulators there. At the same time, you can see in the G-SIB, there's benefit from the coefficient going back to 2019 as we have been advocating for. Thank you.

So does that result in a net benefit to Citi at this point, Gonzalo, in terms of the RWA presumably up a little bit and the G-SIB down a little bit. Is there a net benefit that you see on the initial proposal?

Moderate net benefit. Yes. Thank you.

Okay. And then just a question for you also on the efficiency ratio. You started off very strong at 58%. Even with the big severance in the quarter, could you give some context to the target for 60% for the full year? What are the puts and takes if we're starting at 58%, I assume there's some seasonality from the first quarter, but just walk through the 60% target versus starting so strong at 58%.

Thank you Very much, John. I'm glad you kind of answered your own question there, given how much you know about us. So that's good to see. And maybe before I get into the specifics, maybe it's worth grounding ourselves in how we think about expenses, right? Our approach is really to maintain very strong cost discipline on a tactical basis and in addition, is to be driving structural efficiencies over time so that we can enable and allow ourselves to make the targeted investments that we think are necessary in order to drive our returns consistently over time to a higher place. So that's really our mantra and what we're focused on.

So when you look at and you break down those expenses for the quarter and you have that 7% growth, obviously, and provided 14% revenue growth which drives that 400-basis point improvement in operating efficiency, you have the effect of the severance that you mentioned there, and you can see at the bottom of the page, we provided on earnings. You have FX playing a role, of course, the revenue-driven costs and transactional costs attached to that revenue that you can see in transactional revenues and costs and also in some of the compensation pieces.

And we're also making targeted investments, right? We've done it in Services, we're doing it in Banking, we're doing it in Wealth. And for us, it's important to be able to have that balance. And so as we look through the year, we're comfortable where we're sitting with around 60% for operating efficiency. And it's primarily on the basis of, yes, you alluded to it, there's seasonality that comes with the first quarter. Usually, Markets has the strongest quarter of the year on the first, and that is true in this case as well. And we also think it's important to be able to balance that seasonality as well as recognize that we're trying to make targeted investments so that we can get our returns to be higher, right?

Our objective in my mind, is very simple, right? We're focused on driving sustainably-improving returns over time, not just to give you short-term upside. Thank you.

Our next question comes from Ebrahim Poonawala with Bank of America.

I guess just following up on that, so Gonzalo and Jane, appreciate the seasonality in the business. But when sort of putting together the momentum you have, the way you're talking about sort of just across businesses, when we look at the 13% return on tangible equity that you earned this quarter, I have a hard time thinking why it should go down to the 10% to 11% range, even adjusting for some of that seasonality on expenses and Markets revenue. Just maybe frame it, if you think there are areas where Citi may be over-earning in any given quarter that's boosting the RoTCE to 13%? And if that logic is missing something?

Let me jump in with one point, and I'm going to go British on you. One first -- one good-rate first quarter does not a full year make. The first quarter is always the strongest. And we do have an unclear macro environment ahead and we want to continue investing.

So I think what you're hearing from us clearly is we have confidence in being able to deliver the 10% to 11%. We want to keep investing in the business, as Gonzalo was just talking about. Our revenue growth is important. We'll be talking through the investments we want to make to continue the pretty impressive revenue growth we've had the last few years and intend to continue having. So I -- we just make it as simple as that.

Got it. And I guess, maybe just quickly on the capital front, reflects the -- it was good to see buybacks ramp up this quarter. As we look forward, do you think we stay in a holding pattern in terms of the CET1 ratio where it ended this quarter? Like how do we think about incremental capital leverage at Citi beyond just optimizing how capital is deployed?

Thank you, Ebrahim. I think a couple of things stand out. Of course, for those that are referencing the deck, you can go to Page 9, and you can see there at the bottom left of the slide, kind of it goes to your -- to the core of your question. We have guided in the past that our objective was to, through this year, be at around 12.6%. And so we're basically there as it relates to Q1. But let me walk you through for a second on what has been driving that.

First, you can see that in this quarter, right, basically reducing the excess that we had above our regulatory capital and the management buffer that we have carried for some time. So that gives you a signal of how we're basically at or around where we wanted to be.

Now we came at this from a couple of angles, right? First, the earnings power that you saw in the quarter, right, which was very strong. And in addition, we closed the sale of our Russia entity in the middle of the quarter. That released within the quarter about $4 billion of capital, and we've been very thoughtful and active in thinking about the deployment of that capital. You can actually see it even on the slide and through the results that RWA deployment is really to anchor the activities that we're driving with our clients and the intense engagement that we have with them. It's no surprise that Markets also had a very strong quarter on the back of the support that we gave.

So as you see us -- and I'm using this as a micro example of how we think about it. So that hopefully is helpful. You had an event-driven component. Obviously, you had earnings, which, over time, will be the primary driver, but you have an event-driven component. A part of that goes to support accretive growth return opportunities for our businesses. And in addition, another piece goes into the buybacks that we just announced for the quarter, which are a high watermark at $6.3 billion. And obviously, there will be more to come as we go into Investor Day. Thank you.

I'd jump in with just the three observations as well. First of all, G-SIB is still gold-plated relative to the Basel standard. So the economy has grown significantly since the original framework was created, but the current proposal doesn't fully account for that growth. We're going to be very active in advocating for that as you've been hearing from some of the other bank CEOs.

Secondly, there is still material duplication between the NPR and the current stress capital buffer for operational risk, for market risk, for CVA, and that needs to be eliminated in the revised Fed SCB model.

And the third piece, which I know you've heard from us on many occasions, our SCB still does not reflect our strategy. So fully, the divestitures we've made, other elements of it and really the risk profile the bank has today, which is so different from what it was in the past. So I think those three elements are things that we're obviously going to be active on. And I hope will also be helping us going forward.

Our next question comes from Jim Mitchell with Seaport Global.

I think we all appreciate the breakout of the Card business on its own, and we can see some solid profitability there. But it does also highlight, I guess, the low profitability of the Consumer Branch Banking segment. I know we'll hear more of this at Investor Day, but can you just kind of discuss what the issues are there and what you see as the opportunities to improve efficiency and returns in that segment?

Thank you, Jim. So I'm assuming -- it broke down there for a little bit, but I'm taking your question as more focused on the Retail Bank, right, and how we think about the return profile. So if you look at what we did...

Yes.

Yes, thank you. Thanks for confirming it. So if you look at our RoTCE for the quarter, and that's an all-in. I know we've restated in the supplement, you can actually see the history there. You can see that our RoTCE at 10.8%. Of course, it's not where we want it to be. And of course, we have more work to do. But if you think about it from -- going back to a year, right, it's almost doubled in the year since. So Jane was alluding a little bit to this earlier. We have made progress both in our Retail Bank franchise as well as in our Wealth franchise in terms of driving consistent revenue growth and positive operating leverage. And that will take us home. That's basically the simplest version.

So if you look at last year, the Wealth business in aggregate with this new recasted element was growing at 16% revenue and 1% expenses. That's 15% operating leverage. If you look at this quarter, you can see the 11% and the 1%. So another quarter of very strong operating leverage, and that comes on the back of the good momentum that we have on deposit volumes, mix management, pricing management that give us the confidence that there's sustainability there as well as the good levels of activity and the focus on NNIA and driving client investment assets so that we can, over time, also balance the business there between investments and deposits.

The more quarters we can put together in the future with the same kind of profile around solid revenue growth and maintaining the discipline that Andy and the team have kept on driving continuous productivity while still investing for growth, the closer we're going to be getting to the ranges that you would expect and that we would push and expect of ourselves as well. So I have good confidence, and you can kind of see the momentum. We know we have to show it still, but you can see in the recent past that we made the progress and I have confidence in the immediate future. Thank you.

Right. Great. And maybe just as a follow-up and pivoting to just private credit. Any thoughts and detail on your exposures and how you're thinking about the credit risk there would be helpful.

Sure. Thank you. So maybe a couple of thoughts there. Maybe let me step back. First, I feel very good about our position. We wanted to provide additional transparency and disclosure. You can see that on Page 23. But let me start with what gives me comfort across a range of corporate exposures, including our private credit piece, and I'll go there as well in a second, right?

First, we have a very strong risk appetite framework, right? When you think about customer selection, right, we're very rigorous there. You know we do business with global multinational companies with top-tier sponsors and asset managers. These are folks that have strong balance sheet and have the ability to withstand different environments. And secondly, we are not one product relationships, right? We are, in most cases, multicountry, multiproduct, multiyear relationships. So that gives us confidence.

The second piece is we have very strong protections, right? And we look at concentrations, which range from single name to country to geography to sector to industry and across the board, we look for correlations to make sure that we're not missing things, right, that may be linked in sometimes hidden way. You have seen the credit performance, right, with NCLs and NALs, both low and stable. You have seen us also be very prudent in terms of reserves, right? And so we feel we're adequately reserved there.

And then last but not least, we are constantly stress testing our portfolios in the private credit space and in all the spaces to make sure that both for a range of macroeconomic environments but also for event-driven aspects that we're passing our own test, and we're comfortable with how we're sitting there. So the constant monitoring, the risk capital framework all play a role.

Now we gave you a bit more clarity because we thought it was important to provide, you can see it's not a significant exposure for us, right, at $22 billion of loans, 98% investment-grade, and that's because we have ample subordination, right, in terms of the position that we take and all the protections that I was alluding to. We also have additional protections in terms of our collateral. We have fraud controls. We utilize third-parties where appropriate so that we just don't rely on attestations and warranties. And so we feel very good and comfortable that we are able to navigate a range of environments with the portfolio, and it's all anchored in the strength of our risk appetite that we built over time. This is not built in a day. It comes from years of constantly strengthening.

Our next question comes from Manan Gosalia with Morgan Stanley.

Gonzalo, I just wanted to clarify, as you have some of these business exits, I know you get a temporary benefit from CTA. Are you saying that, that gives you the opportunity to be more nimble on your capital deployment strategy, whether it's in buybacks or in the Markets business as you get that benefit between the announcement and the actual deconsolidation?

All right. Thank you, Manan, for the question. So what I would say is, and I mentioned a little bit earlier, right, we -- for us, it is really a balance, right? When we have events like in the case of Russia that we just saw, and I'll allude to your comment, which I think was a little more specific to Banamex, right, as it relates to the deconsolidation. What I'll mention is we're always looking for opportunities to deploy that capital constructively in accretive ways to support our businesses and support our clients.

I think Q1 just gives me magically a very good example of our behavior. So you can actually see it come through in real life versus just me describing in general terms. But with -- on the basis of -- on the back of the Russia event with the $4 billion of relief, you can -- you have seen us both support our businesses and anchor some of the results that you just saw in the quarter from Markets as an example, and a couple of other businesses. And at the same time, you're seeing the highest level of buyback that we've done in any quarter on the $6.3 billion. So -- and that's supported by an event like that.

Now as it relates to Banamex, as we've alluded in the past, there is a temporary capital benefit that happens both on the 25% sell-down that we announced and executed during the fourth quarter last year as well as one to come when we complete the closing of the second tranche of the sell-down of the 24% that we announced recently, which will happen over the next few months, right? And that's temporary in nature. As you were alluding to it too, clearly, you've cited all of us very well, Manan, which is at deconsolidation, you can expect the CTA to come back, right? We've been clear in the past that, that will attract about an $8.5 billion or so CTA adjustment that will flow through the P&L, but in aggregate, it's capital neutral.

Got it. Okay. Great. And then maybe just pivoting over on the expense side. You've been pretty clear that as part of the transformation projects, Citi is not just delivering on the ask from the regulators, but also taking the opportunity to invest in modernizing. So I guess my question is just beyond the transformation. How do you view your current tech stack versus where you want it to be? And how are you thinking about tech spend going forward?

Yes. We'll go into a lot of detail about this at Investor Day in terms of laying out not only in technology, we'll spend quite a bit of time on AI and the structured strategic approach that we're taking to this firm-wide. So you're -- in the 3 weeks, you're going to get a lot of clarity around all of this. I feel good about the modernization we've done as we've moved our tech stack from a multiplicity of different platforms into singular platforms and at the same time, making sure that we've got good simple -- singular processes end-to-end that we have been working on simplifying and automating over the last few years.

And I think we feel good about that side. We feel good about the investments we've been making in leading-edge innovations in technology like Citi Token Services like Payment Express in Services. I can give you a long list in Wealth and what we're doing in Markets, et cetera, but we'll leave that for the 7th. And I think above everything, the other area we're really happy about is the investments we've made in our data architecture, where we are on a single repository for all of our data for institutional and a single one for consumer, enormously beneficial in the world of AI that we're living in. Thank you.

Our next question comes from Ken Usdin with Autonomous Research.

Just a follow-up on the NII side. First of all, seeing the very strong end of period and average loan and deposit growth, and I know looking at the supplement, there's a little help from FX translation in there. But upper single-digit growth, just wondering how sustainable that is, especially on the deposit side. And if you saw any environmental-related benefits that possibly may not continue?

Thanks very much, Ken, and good to hear you. I think as we look at NII ex-Markets and maybe just to refresh everybody's mind, what we guided for the year, and it's on the deck, is 5% to 6% NII ex-Markets growth, and that is anchored by around mid-single-digit growth for both loans and deposits. We're pleased that Q1 is a good showing against that. As you highlighted, there is a bit of FX playing a role there for 7% that we delivered, but we are comfortable in that guidance.

And the part that I like the most about it is that most of that growth is really anchored on client-driven activity, right? And our commercial intensity, we're pushing to win in the market with our customers, whether it's in Services, whether it's in Wealth, both of those are driving deposits, right? Services up 16% deposits, Wealth up 4%, all of that blends to the 11% that I think you were marking. And then in terms of loans, ex-Markets, we are growing at the 5% mark, which is again in line with our guidance. And you can see that coming through in Wealth. You can see it coming through in U.S. Cards and also in Services with export financing and working capital.

So as I said, most we hear of the growth is really being driven by commercial intensity, the client engagement and how we're winning in the market with our proposition, and that's a good place to be. There are smaller contributions into it from both the pricing discipline that we've shown, right? Beta is quite stable for us. And that, to me, is a proof of our value proposition is performing, how embedded we are in our clients. We are a global network on the Services front and the quality of our advice and engagement on the Wealth business.

On the other side, I think we mentioned this before in the past is our investment securities portfolio as it rolls off through the year, we're able to reinvest it at higher rates than before. So all those pieces are helping, but it's really the client activity that drives the bus here. Thank you.

Great. And then as a follow-up to your point, the first quarter also started above the range, 7% ex-Markets year-over-year. And so I just wanted to ask, I know maybe you're still being conservative with the 5% to 6%. Can I assume that the American Airlines card is in the guidance? And why wouldn't you continue to be 7% if the volume side you just went through is pretty sustainable.

Thanks very much, Ken. I give you points for a very sneaky and smart way of asking, Ken, if I want to up the guidance. The answer is not at this stage. We are comfortable with the guidance.

Yes, first, let me answer the first part of your question. The American Airlines-Barclays portfolio that is coming in, in this second quarter is, of course, fully factored in. And we know if we feel confident in the client activity that we're seeing. And at the same time, we know that as Jane said a little bit earlier, right, for all those modelers out there, don't just do 1 x 4 because we know we have to manage through some degree of uncertainty, inflation, growth and other pieces that are playing through.

Our next question comes from Steven Chubak with Wolfe Research.

You've been crystal clear, using your words, on the commitment to focusing on organic growth. One factor which has contributed to below peer returns is the large DTA or unallocated capital base. It remains stubbornly high. The pace of DTA utilization remains pretty tepid. I think it's only been about $1 billion or so over the last 5 years. I was hoping you could speak to the drivers that would potentially support some acceleration in that DTA consumption, especially given your aversion to solving for it potentially with higher North America earnings inorganically?

Yes. I feel very good about our organic growth opportunities in North America. And you're right, the very simple driver of accelerating the DTA consumption is driving North American earnings. We are very focused on it. Every single one of our businesses is focused around it. It's also where we've been doing investing to support that growth. So this will come the good old-fashioned way, and I feel confident that we're going to be making some very good progress on this, and we'll talk a bit about that in a couple of weeks' time.

All right. Well, I anticipate a similar response in terms of additional color at Investor Day for the next question. But if you'll indulge me, I did want to ask on -- appreciate it. On the head count reduction targets, which you guys had spoken about a few years ago, I believe at the time, this was post the consent order, the head count increased from about 200,000 to 240,000, you had indicated that you would look to drive that closer to 220,000 or so employees, you're 2/3 of the way there essentially. But admittedly, we're in a very different environment where the potential for AI-driven efficiency gains are much more tangible than they necessarily were a few years ago.

I was hoping you could just speak to your approach or philosophy to head count management and resourcing just in light of this new AI regime that we're all operating in.

Well, thank you, Steven. Let me maybe highlight a couple of points there. First, you saw this quarter, a severance. We had guided that it would be a little bit higher for the quarter, and it was of about $500 million. But that will enable us to take earlier actions in the year in order to contribute to our productivity and our efficiency journey as well. And so that's one piece.

I think we've spoken in the past, you can actually see it in the quarter when you look at our head count, right, on the expense page, coming down quarter-on-quarter from the 226,000 down to 224,000 or thereabouts. We have spoken about through the year, you would expect us to be coming down on head count.

And as I said a little bit earlier, right, not only do we expect to drive expense discipline in terms of how we're driving the day-to-day. But in addition, we are focused on structural efficiencies over time. And what that means is both benefiting from the investments we've already made in our transformation where you saw us modernizing a lot of our platforms, but also what we have ahead of us in terms of continuing to drive with the support of technology, automation in our processes, further automation as well as leveraging AI to give us further opportunities to turbocharge those investments that we want to make in a self-funded way.

Our next question comes from Erika Najarian with UBS.

Just one follow-up question for me because I appreciate that we're going to have quite a day in a few weeks. So Jane, this one is for you. You talked about your stress capital buffer not reflecting your true risk profile. Obviously, we're not going to hear more on that until next year. And you've also talked about that Basel III Endgame reform and G-SIB reform is fine, but hasn't gone quite far enough.

I'm really wondering about that green bar on Slide 9 that represents your 110-basis point management buffer because even if I adjust for seasonality, as I flip through the slide in terms of business line results, again, even after adjusting for seasonality and Wealth not hitting the marks quite yet and all other, it implies sort of a much higher return profile even with this 12.7% CET1.

So I guess I'm wondering, I'm sure we'll hear about the denominator -- sorry, the numerator at Investor Day. But as we think about the denominator and we get more clarity on reform, does that make a management buffer redundant?

No. So I'm pretty clear, and I think Gonzalo has been as well what we're looking at, at the moment in terms of CET1 for the rest of the year, is looking at being sort of 100 to 110 basis points above the regulatory minimum. And that is the 100 basis points of management buffer. I think that's a good number for us at the moment, and I don't have plans to change it in the immediate future.

Our next question comes from David Chiaverini with Jefferies.

So I wanted to start with capital markets. Can you talk about the pipeline looking out to the second quarter and the rest of the year following a very strong first quarter?

So thank you. So what I think about that, let me maybe parse out -- I'm sorry, let me ask the clarifying question, David. Are you thinking more of Banking, M&A, ECM, DCM? Or were you talking more about capital markets in the Markets business?

Yes, the former rather than the latter.

Okay. All right. Thank you. I appreciate it. I'm glad I clarified. So a couple of things, I would say. The engagement with clients in the first quarter has been very robust. You can see it, Jane alluded to this, we were advisers in the top 3 deals right on the Street, and we're pleased with the progress that we made, and we know we have more to go, and that's why we're making the investments that we're making.

When you look at the M&A pipeline, it continues to be quite strong, actually. And so we see good dialogue. Remember, we engage with global multinational corporations, right? Those have the resilience and the strength of balance sheet. And we've seen good levels of engagement and good levels of activity in the pipeline that is in front of us. Of course, if the conflict were protracted, right, and deeper over a longer period of time, that may start introducing some risk of deferrals and things like that into the second half of the year.

I think you've seen -- the other thing I would say is in the sponsor space, it's a little bit less active and a bit more cautious than on the corporate side, so corporate is very active and on the sponsor side, a bit less so. And I think what you see is selectivity, right? Selectivity in terms of -- you still see a lot of good quality deals getting done, right, in terms of IPOs, in terms of debt capital markets as well, but there is a little bit of flight into quality that plays through in an environment like this, probably not surprising, right? So more momentum on levels of activity in M&A in the high-grade space for debt and more caution and moderation in the high-yield space as well as in IPO where a lot of quality stuff is still happening, and there is a bit of risk off there.

I'd just add in that when we look at it generally, as Gonzalo was saying, most corporates have watchful, they're certainly not passive. And we've been very actively engaged with clients. It's rerouting of supply chain, hedging programs, ensuring liquidity that goes -- obviously, the pipeline of activity we have goes well beyond the capital market space. And I think we benefit in North America from some greater resiliency than other parts of the world face given the macro environment and the conflict in the Middle East.

Great. And my follow-up is more of housekeeping, but can you provide us with an update on the expected timing of the Banamex IPO?

Yes. So look, obviously, we've made significant progress on the divestiture. First step is actually going to be closing the latest tranche in the coming months as Gonzalo is talking about, at which point we'll have successfully divested 49%. And that substantially advances our ultimate full exit.

Given the accelerated pace of the sell-down that we've just done, we don't anticipate any additional stake sales in 2026 ahead of deconsolidation in early 2027. The IPO most likely would happen after that when market conditions are favorable and when the regulatory requirements are met. And as always, we're going to just carry on making sure that we exercise the ultimate full exit of Banamex in a way that optimizes value for all stakeholders as we've done so far successfully.

Our next question comes from Gerard Cassidy with RBC.

Can you guys share with me, just a follow-up on your advisory business and you're talking about pipelines. As we all know, the regulators changed their leverage loan restrictions back in November, giving, I think, banks more opportunities to finance higher-leverage deals. Can you share with us your color, have you been able to use that yet? Will you use it? Or how is -- what opportunities does that provide to help you in the advisory business?

Yes. I'll pass that to Gonzalo but just make one observation. The Fed has not changed their guidance on this. And so we're still bound by that regime. But Gonzalo, over to you.

Yes. So not related to the regulatory guidance as Jane just alluded to. But I would say in that space, we've been both deliberate and very disciplined in our risk management, right? So you have seen us expand a little bit our momentum there because we were not really that active a couple of years ago. And we've done it with a lot of care, right? We're well reserved. We're seeing basically very good loss trajectory there. It comes out in two parts. So let's think this in terms of distribution, where it's functioning well and operating normally as well as on the whole book where we see de minimis NPL. So really performing well, and we're being very thoughtful and disciplined there. Thank you.

Very good. And Jane, have you guys heard any word from the Fed, whether they're going to follow suit with the OCC and the FDIC on these changes?

I have not.

Okay. And then just to move to a different area on Consumer Cards, Gonzalo, you pointed out -- I think on Slide 14, you guys break out the general purpose versus the private label card. And I go back, and I know I'm not probably comparing apples-to-apples. But I look at the first quarter '24 slide deck, I think it's Page 9, where retail services were 33% of U.S. Card loans and now they're much lower. Again, it's probably not apples-to-apples because now it's called private label.

But here's my question. With the changes, you guys obviously have done a very good job in divesting businesses that didn't hold up their profitability to the levels you wanted to -- them to attain. With the advent of buy now, pay later, AI, is the retail private label credit card business, a business that is going to have challenges in reaching profitability levels that they need to reach because of this competition?

Thank you, Gerard. Very good question. I didn't know you were a historian there. I was trying to get back in -- play back in my memory. And unfortunately, it's in front of my boss. I was running the business at the time. So I can't say that I didn't know. So I appreciate your question there.

But now, what I would say is a couple of things. Now what we're seeing in the private label space -- and maybe there could be a contribution for what you're bringing up. But I attach it more because I've seen it even before BNPL started to play any role in terms of the lending elements. I attribute it more to changing customer behavior as it relates to borrowing preferences, right? And so -- and that's a change we have seen over a number of years.

And that's why I think I alluded to earlier in the conference, and I think you're going to hear a lot more from Pam at Investor Day, you can see it in the numbers already, right? Our investments are really in the general purpose credit card space because that's what our clients are taking us, right? And so over time, a lot of the retailers themselves are also pivoting into co-brand relationships and some of the more successful ones like Costco that we have and many others, they have made some of those pivots because they're basically following the customer behavior there. So that's what I would say as it relates to that.

And yes, you have seen us be very disciplined in terms of return, right? So obviously, those scaled relationships do work very well as it relates to returns. But you have pockets where some of the relations have low scale, Jane had been the first one to impress upon me when I was running the business that we're not in the business of hobbies. And so we have been very disciplined about exiting smaller portfolios that -- where we didn't see a path to improved returns. And that discipline, we're going to keep. Thank you.

Our next question comes from Vivek Juneja with JPMorgan.

Just a couple of clarifications for you both. Could you dimensionalize a couple of things. One is what do you mean by -- when you say moderate capital benefit, Gonzalo, are you talking about 3%, 5%, any range in terms of -- under the current proposal for capital benefit?

Vivek, first of all, thank you, and good to hear you. The modeler in me really appreciate the question, but I would say we're not giving specifics at this time. Thank you...

We'll be able to do that when we get the final proposal.

Okay. DTA, Jane, since you talked about it, any sense of -- the pace has been very slow as the question came up earlier. What's the pace do you expect it gets to in the next couple of years because...

I'll give the CEO answer, which is better and then pass it over to Gonzalo.

Yes. So Vivek, maybe let me give you a bit -- clear -- I will be able to give you some precision just to make up for my last one there where I didn't want to go into specifics.

So first quarter, the disallowed DTA increased by about $200 million quarter-over-quarter. Now that is attributable -- and we have this, I think, every year, that's attributable to higher U.S. income that was offset by seasonality of the [ carryback ] support. So that usually happens.

Now as you see us go through the year, and we've been clear on trying to increase U.S. earnings over time. We would expect that the disallowed DTA would reduce this year in excess of $800 million. That's roughly what we expect. We're very focused as we -- and again, you're going to hear more at Investor Day on what's the multiyear path for that so that we can continue to accelerate that trajectory and really burn down that disallowed DTA. Thank you.

Okay. We'll look forward to hearing more at the Investor Day on this.

The final question comes from Chris McGratty with KBW.

Great. Just going back to the tech AI conversation for a moment. I'm interested in how today's outlays and -- could ultimately yield ROE benefits. And how are you thinking about that when you are putting together this Investor Day over the next few weeks. How does that influence the medium-term ROE outlook?

You're going to hear a lot more about AI at Investor Day and sort of how we are approaching it. I think with the rapid advances of the models, of agentic AI, we have established a more strategic, structured firm-wide approach, and that's looking at four different buckets, which will ultimately yield ROE benefits.

One is around business strategies that's covering revenue generation, client experience improvements and also potential changes to our business model. And so many with a direct driver to either revenue growth or to RoTCE. Second one, which you've heard me talk more often about is productivity and end-to-end process improvement. And that body of work that's underway is further simplifying our most complex and manually-intensive processes leveraging both AI and automation. So that's a direct operating efficiency benefit with investments needed to get there, which we're making.

Final area, it would be the defensive capabilities covering cyber fraud, AML, general risk management. So I see that as issue avoidance. And we're also looking at the longer-term talent and workforce implications. So it's -- our approach is structured and deliberate. It's not just about tech, it's about people and our processes and our business model and that's just trying to give you a bit of a framework for what we'll run through in 3 weeks and how that then translates into growth, how it helps translate into our RoTCE benefits, wallet capture, et cetera.

That's helpful. And I guess my follow-up would be global rates are moving in various directions at any moment. Interested in just the broader rate sensitivity, domestic, international, and how we should think about the whole Citi entity?

Right. Thanks very much. Yes. And I know we provide disclosures on IRE, which even though it is a static measure, the ones that we disclosed, gives you a little bit of a sense, at least from a risk management perspective. But let me backtrack for a second, right? So because your question is also linked to NII ex-Markets and what one could expect.

So I'll just repeat a little bit what I said earlier on NII ex-Markets, which is the vast majority of the growth that we have baked in for the year, that is anchored to our guidance is really driven by the client engagement, the client momentum that we have across the business, and that's reflected into our deposit and loan volume growth, right? That really drives the bus as it relates to that.

Now when you were talking about interest rate sensitivity, you have two pieces for us. One is U.S. dollar sensitivity. You have seen over time, number one, very actively manage our balance sheet and being deliberate there and bringing down our asset sensitivity over time to be more or less in a relatively neutral position today as it relates to U.S. rates. We like that position given what's going on out there and not only the direction that we all thought rates were going to have, but even in the current situation, I think we like that position. And then on the non-USD rates, right, we're structurally more asset sensitive. That has to do with our strategy. It's well diversified sensitivity, right, because it's across 65-plus currencies, and it's very, very much anchored by our Services and Wealth franchises that we have around the world. Thank you.

There are no further questions. I'll turn the call over to Jenn Landis for closing remarks.

Thank you all for joining the call. We look forward to talking to you this afternoon with any follow-up questions. Thank you.

This concludes the Citi First Quarter 2026 Earnings Call. You may now disconnect.

Welcome to RBC Financial Institutions Conference. Thank you for all of you attending and really, Jane doesn't really need much of an introduction. She's obviously a Chairman of the Board and Chief Executive Officer at Citigroup. This is her fifth year as CEO at Citigroup. And I was doing some number checking and the stock is up under her tenure, 53% versus the Bank Index, which is up 31%. So you're outperforming the Index, which is great.

It's getting going, though.

Which is the most important part. As you may know, the market cap of Citigroup is about $187 billion, and it's truly one of our big global banks in the United States.

And so we're going to have some questions during the fireside chat. And Jane, maybe we could start off with given the Citi's broad and deep global reach. Can you share with us -- talk to us about the dynamics that you're seeing around the world right now? And what are you hearing from your corporate and investor clients? And any thoughts on the consumer sentiment activity that's going on?

Well, it's quite a lot in there. Look, I kick off just by the underlying economy, it's doing just fine around the world. And activity is good. Business momentum is good. The consumer spending was up about 5% in February here in the states. We're seeing a pretty fiscally responsible consumer as well, which is probably where some of the sentiment has translated into some more mindfulness in it and the balance sheets are in pretty decent health.

On the Corporate side, I think particularly here in the States, I hope it's very much on the front foot. You're seeing strong investment both in AI as well as into general automation and technology investment that's going on, pretty vibrant M&A market linked in as well. As companies are looking at consolidation and opportunities really to move momentum forward. And I think particularly given everything going on in the Middle East, most relevantly, balance sheets are probably the strongest I've seen in my tenure, and they haven't been weak during that tenure.

So again, corporate is in good shape. And we've also got some other positive drivers that are coming through. deregulation is making a difference. We're seeing things getting done faster, more confidence out there. And then we're also going to have the tax bill benefit, it's coming through.

So the underlying side, particularly in the States in good shape. I'm just back from Europe. Germany, definitely feeling much more positive about their outlooks. And Europe generally feeling this year will be better than last year. So the big wildcard is obviously the Middle East. And when we look at the big question really is the duration and the containability, if that's a word, of particularly what's going on in the straits. And we don't know the answer on that one.

But if I look at -- I was chatting with our economist yesterday, and his view, which I think is the right one from what we're seeing is, if the oil price is over $100 for the next 4 to 6 weeks, say it comes down to about the $85 mark for the second quarter and then below $70, which is more in line where inventories, other things are in the second half of the year. That probably shaves 15 bps, 1-5, of global GDP growth. And part of that is there's a lot of physical inventory out there still.

Now if it's longer than that in terms of above $100 oil price for a longer period, then you're looking at a very different scenario. And that has ramifications for inflation. So I think, the central banks have a tough job at the moment. They're all set globally for bringing rates down. And they're in a wait-and-see mode at the moment. And they will be in suspension for a little bit, I suspect.

So they've got the tougher job and particularly here in the States because the labor market is -- the supply side is not a challenge, but we've all seen a clear softening on the demand side. So I think the Central Bank, the Fed is going to have a tougher job between the balance of, if inflation is picking up, because of the oil price, and you've got the labor market on the other side, where do they land?

But if you go despite everything, Corporate activity, very strong at the moment. Large-cap M&A is not missing a beat right now where we see a bit more of a pause is, say, middle market private equity, equity capital markets, IPOs, the best names continuing forward.

I think probably going to be a little bit more selective with some of the smaller IPOs as to which ones will be up to come or not within in the larger space, not. And the credit markets have been very constructive. If anything, right now, they've been more focused on AI than they have on the oil price.

And obviously, for investors, I think the equities guys, we're better positioned in the equity markets. We've seen a few of the hedge funds with some pretty hefty losses on the rates front, but not for everyone across the board and commodities we all know about.

So you put it all together, the other noises we see in the markets around private credit. And what I'd say there is we do need to just get some facts on the table.

Private credit is a $1.7 trillion market, right? We just wiped $1 trillion of crypto and never no one missed a beat. It is the retail investors are not a major investor in the space yet. And it's not a levered part of the market. It's 1, 1.2 so leveraging there. So I'm more sanguine on private credit. There'll be some idiosyncratic risk in there from folks don't have credit standards, but I don't think it's a systemic issue.

Where it gets a little more concerning would be if the Middle East crisis goes on for a long time, and you see a convergence of the concerns on AI valuations on the disruption risk into business models from AI. We're seeing it obviously with SaaS software, some of the business services and private credit all coming together and getting and converging, that would be more problematic. So that's what we're keeping an eye on.

No. Very insightful. I appreciate that. Can we follow up on the regulatory comment? Obviously, we have the stress capital buffers and CCAR coming up very shortly. Can you talk about what you're thinking in that standpoint from what the regulators recalibration? But also in terms of how do you look at it from a capital perspective as well?

Yes. Well, I think, we're going to know a lot more in about 2 weeks, that's we're hearing the time frame for getting the proposal through as it comes out of the FDIC, the Fed and the OCC on Basel III and GCIB. So I think, we'll know as it were the, worst case as it were on capital. And I think we're all optimistic, but let's wait 2 weeks, isn't that long, we'll get a better sense around it.

And then SCB, I -- well, it's always frustrating when you're expecting your SCB to come down that you have to wait a year. I would much rather -- and I think all the bank CEOs would say the same thing. We would much rather have the right models developed and then have that giving the market and ourselves much more certainty around the stress capital buffer system for multiple years. Then have a pillar system or some other approach that was more of a Band-Aid, getting accurate and better models will, certainly, from Citi's point of view, be very beneficial in bringing the SCB to be an accurate reflection of our risk and our risk is coming down.

And then the other piece is, it's good to see the focus on material financial risk. I mean, from the supervisory side, the last 15 years have -- they've not been banal, but they have been benign. And I think, thinking that it's going to continue being benign for the next few years is probably a tad optimistic.

So having a supervisory focus much more on material financial risks is very important for the next few years. So I think it's from an investor point of view, you want the supervisors focused on what is important for the future, safety and soundness and not on things that are not. I'm optimistic about our capital, because I see the risk of our bank materially different from what it used to be way back when, and I look forward to our SCB reflecting that.

That is very good. Yes. No, we're all very anxious to see the proposal when it comes out from Washington later this month. So that's good.

Maybe shifting over to the first quarter. You touched a little bit about the market conditions. Can we dive into what you're seeing in the overall growth in investment banking this quarter as well as markets? And then anything else you'd like to call out into the quarter or ahead of the Investor Day in May?

It's always lovely being asked that question with a few more weeks to be left in the quarter when you've got an uncertainty in the Middle East going on. So with the appropriate caveat of, let's see, how the events unfold. I'd say for the first 2 months and a bit of the quarter, it's been good activity. So our perspective as I sit here right now is when I think about investment banking fees, we're expecting mid-teens growth in fees for the quarter year-over-year. And that's really been M&A, as I talked about before, and ECM, that are the big drivers.

Same guidance for markets. Our markets business, we're expecting mid-teens as well year-over-year, and that's both been strength in equities and fixed income. Obviously, that can change in 2.5 weeks, but I feel pretty good with that where we sit right now.

And then in terms of where looking at overall, we will be expecting, as I talked about at the last earnings call, around about a 60% operating efficiency for the full year. But you can expect us to be front-loading some of the severance expenses and other elements in the first quarter just because of obviously that, that is better for our shareholders and for ourselves when we do that.

And you'll get the benefit in the first quarter earnings of seeing the Retail Bank sitting into Wealth and then the clarity of what our cards franchise looks like. So I hope that, will make everyone even though you have to change some of the models around, it will make it much easier to forecast some of the pieces going forward. So short-term pain for long-term gain.

And the Investor Day is obviously coming up in May.

Honestly, I can't wait. So we're looking forward to that because we'll -- I think you'll see the confidence we've got in the 10% to 11% RoTCE for this year. And with a lot of good tailwinds behind us. And also, we've really -- we've tested a lot for different macro environments. I think all banks have had to in the last few years are making sure the model is pretty resilient under different scenarios and good diversity of businesses there. So we'll be looking forward to laying out the path from here.

Great. You touched on the 10% to 11% RoTCE. Are you feeling confident on that? And then what are the drivers that you see in efficiencies to get to that number?

So yes, I feel good about that. I think we all do. Gonzalo is sitting here in the audience with me has been looking at everything with a good fresh pair of eyes as well. If we unpick it on the revenue side, I think you've seen us with sort of 7% revenue growth for the last few years, despite the various challenges in the environment.

You look at the NII numbers, I'm looking forward the rest of the year, expecting to see some good deposit growth. We've had benefit of a flight to quality of late, but we're just expecting to see good growth in NII from volumes. We also see the benefit in mix as well as seeing some of the investments we have in treasury getting reinvested. And that provides a very, very good offset to a potentially declining rate environment, the timing of that's TBD. So good growth on NII ex markets.

Similarly, NIR, feel good on the growth there. We'll see it from services. We'll see it in Wealth Banking. So markets, I find it very hard to predict exactly what markets revenues are going to be over the course of the year when you sit here in March. So I sort of decline to comment on that one.

And then on the operating efficiency and expense side, as I said, the expenses we'll be looking at around the 60% number for operating efficiency. But as you go beneath that, you'll see both productivity saves as well as investments. So the different components on the expense base, we've got productivity benefits from investments that we've been making. We'll have the transformation costs as we're -- as I mentioned in the last earnings call, over 80% of the programs are at the target state that we've laid out. That enables us to bring the cost base down associated with that.

So you'll see that in head count and expenses starting in this quarter. We also got stranded costs with Russia getting closed, China is done. Mexico, other pieces getting into a strong position that enables to bring stranded cost down. And then the benefits of the investments we made in transformation and others translating into productivity.

On the severance side, I expect it to be a little bit lower than last year, but as I say, we're really front-loading that into the quarter. And then on capital, we continue with the discipline and we love giving capital back to the shareholders if we don't see the opportunity to deploy it at high returns internally.

So a bit -- very much the same, as you've seen from Citi over the last few years. I think there's been a consistency. Revenue growth positive operating leverage, capital discipline, improving returns and investing in the businesses for the long-term growth at the same time as driving the productivity improvement. So I hope this year is just continues on nicely as more of the same.

There you go. And you touched a little bit on the Wealth and the Retail Bank coming together. Maybe you've had some real momentum and success in that area. Can you talk to us about the drivers of what you see going forward? And then also, what are the synergies that you're looking for now that the Retail Bank is included in the Wealth Management area?

So, Andy has been doing a super job. I think what we've been doing most of late, and we put a lot of it within the first couple of years he was in, he was getting the platforms put together, getting the synergies in. You saw a lot of the cost benefits coming through. The focus at the moment, we've been continuing to attract really excellent talent as well as retaining some of the -- we've got some fabulous talent in different parts of the business in the world. And we've been doing a lot of work on the CIO capabilities and product, Kate Moore and the team have got a fantastic set of capabilities and proposition now.

We've also been putting a lot of work into the investment platform. So, Keith Glenfield and the team there have been making sure that we've got a platform agnostic, platform and offerings. So we're not pushing our own product. We're very much agnostic as to where it comes from. I think that's a competitive advantage, building out in alternatives and the core investment offering.

And then we've got some fantastic partners: BlackRock, iCap, Palantir, looking at how can we disrupt, how can we improve client experience, and how can we also leverage our partner scale. So you'll continue to see us very focused on quality, NNIA, on investment growth, in the investment platform to drive our returns, but also good discipline in the balance sheet and getting returns there. So I feel good about that.

And then good timing for putting the Retail Bank and Wealth together. Seeing Retail Bank had obviously been a drag in the USPB franchise. It's had very good revenue growth in the low to mid-20s.

As you saw in the recent numbers, Wealth had strong growth and revenue momentum and underlying momentum. So, we'll put them together. It won't change the -- it changes the RoTCE as you'll see, but it doesn't change our expectation to continue growing the RoTCE in line with the targets that we laid out.

And the synergies are just, they are so obvious. There's real value of having a deposit franchise together in one. I think that's another area. You'll see as investors the benefit of seeing what does the full U.S. deposit franchise look like without having to flip through supplements and other things. But the heart of it is, we're very -- our Retail Banks in the six markets where most of the -- a lot of the Wealth is in the states. It's about 35% of the high net worth households are in the six markets that we've got the strong holds in. And so, that ability to have a pretty seamless client experience all the way up, the client elevator is an obvious one.

And we could see it when we had USPB and the Wealth franchise with the referrals going across, that we have $3 trillion of assets in the U.S. of us with clients with an existing relationship with their operating account for the day-to-day finances and we've been that forever. So we're highly confident particularly given the investments in client experience, the platform work we're doing in Palantir and others that we will be providing a very modern and highly appealing Wealth proposition into that Retail Bank client base.

I think you can tell I'm excited by this one.

Yes. Very interesting. And the other big part, of course, of Citigroup on the consumer side is cards. And now, can you talk to us about the franchise? It shifted as a stand-alone. So how are you going to be -- what are you looking for in terms of the drivers there? Now that is a stand-alone.

You'll hear a lot from Pam at Investor Day about this, as you obviously will from all five of the business heads. So what we're seeing is we're the #3 franchise in the States. We've been investing a lot in terms of our product platforms. You've seen us launching the different strata, so that we're filling in with the premium customers. That went so beat my expectations. I think the team low-balled the numbers when they showed them to me the first time, because the growth has really been strong there.

We've also been seeing a lot of strong momentum behind loyalty and engagement that we've been investing behind. We've got American Airlines coming on board. So that's had a lot of attention in terms of building out the proposition on the rewards side in terms of the lounges. And really spectacular growth in client acquisition on that front. Also very happy where the Costco relationship has been going as well, which has been a big and important one. We've been focused on driving up the returns.

On the CRS side, I think what we've seen is consumers now prefer a general purpose card, and more of the closed-loop system. So you'll see us in terms of our growth, focusing more on the co-brand relationship and even some conversions of existing ones into co-brands as well as the proprietary cards for the growth going forward. But I'm excited about what we're going to be doing. And AI is also an area where we'll talk quite a bit about that at Investor Day because that's also providing all sorts of new possibilities.

And on the credit cards, from time to time, portfolios come up potential bidding or sales. Are there any on the horizon that you're aware of that Citi may have an opportunity to look at?

I'm not going to let our competitors know about that one. But we're very clear both with the existing ones when they're coming up for renewal as well as other opportunities. It's laser focused on the returns. We have -- if something is not cutting it on the returns in the renewal, we won't be pursuing them or we'll be looking at a very different set of economics. And the same again for new situations that come up.

The Barclays portfolio that we're taking over, for example, next month, the economics are all ones that our shareholders will be -- would say is appropriate.

And one -- because of all the different changes as recently as from January, it was talk about that 10% limit, and you were very clear on your earnings call, how you felt about it. But we haven't heard anything. Is it kind of past us now? Or is that still something that's?

Look, I think the President is rightly focused on affordability. Right? We have a very broad array of different offerings for our customer base that play into that, not only in cards, but also the Retail Bank and the like, as do many of our peers as well. And I think we've been very clear that, this is not the way to solve affordability. This is the way to crush access to credit for anyone other than the wealthy. And I don't think that's what the President would like. So I hope -- I think Congress understands that.

Yes. Coming back to the returns, the 10% to 11% RoTCE, what are you most focused on to ensure that it's higher returns are sustainable over time?

Yes. And this is what you'll hear from us a lot at Investor Day. I think we're excited just to help you see the continuity of the strategy, but where does it -- where does it take us to next. And there's a lot of tailwinds from the investments that we've made over the last few years. So that really does help us with momentum in the next 2 years and then beyond. We will be continuing to invest in acquiring new clients, deepening with existing client relationships in the product capabilities.

And AI is obviously another area where investments are driving greater productivity. They're driving opportunities in revenue. They are driving opportunities in service, and we're extremely, extremely active in that front, particularly with the new raft of models that have come out.

And we -- I've talked a bit about that before. But what you'll hear at Investor Day, will be, where do we have the -- where are we looking at the investments that will help drive the revenue growth by each of the different businesses. So you see in services where we're making investments in the product innovations that we've been talking about, new ones in markets, prime, finance as an example, in the financing space and the technology investments behind that.

You'll be hearing in banking about some more of the talent growth that we'll be investing behind. So we'll lay all of this out. We are not short of growth opportunities. And we're also, because of all the work we've done, able to bring the firm together and have much more of a one Citi approach to clients and the client coverage improvements is really helping drive the wallet share capture going forward.

We'll lay it out. We'll lay out where we see the expense opportunities, continuing to invest, but particularly as transformation, stranded costs, other elements come through. That will be a benefit for continuing improving our operating efficiency and operating leverage.

I think we have the best corporate loan portfolio on the street. That's our belief. And we have some good proof points behind that. We are a source of resiliency for our clients. We see it at the moment, Middle East, that's operating resiliency for them as they sort out supply chains, operating resiliency because our infrastructure is modernized and strong.

And then on question more financial resiliency for our clients in terms of our capital, liquidity and whenever there's a port in the storm needed, we see the flight to us in moments like this.

And then on the capital front, we continued to making sure capital is investing in high-return opportunities, things commoditized moving from that and then return of capital to our shareholders. And we'll also get the benefit of the back end of final stranded costs coming down, transformation expenses coming down, DTA getting used up here in the States. So, it's a pretty logical path to the next set of returns in the next couple of years and then towards returns that are firmly in the respectable category beyond and the team is on the mission. We'll get it done.

No, that's great. We're running out of time. So the final question, can you share with us -- we touched on -- this is your fifth year as CEO at Citi, the progress that you've made over this period. And then finally, one of the key messages that invested that you'd like investors to take away from today?

Yes. I mean, I think, we really put the foundations in place over the last few years for what Citi is for going forward. And you can feel the positive momentum behind that. Clarity of the strategy, five interconnected businesses in which we have the right to win. And we are advancing in terms of our market share, wallet position and others in all of those businesses and getting those synergies and connectivity from them.

At the same time, really good progress on the divestitures. We've either got sales agreed or completed on 13. And as you saw from the announcement a couple of weeks ago, much further ahead with Banamex, and I think anyone would have thought. So it will be down to 51% when the latest tranche of investments closes before too long.

So it's a clearer Citi. We've also, as an organization of the org simplification, you've got a flatter, simpler, better connected firm, faster decision-making, much easier to connect the pieces to deliver one Citi to a client with a focus and accountability within the organization to do that. And that transparency and accountability from the org side was a really important piece.

Transformation in good shape, as you've heard, but also importantly, driving some of the benefits that we'll get from the investments in transformation, translating now into efficiencies. And we have modernized the firm, the infrastructure of the firm. And we have a fantastic leadership team in place that really works as a team. So you put all of that together, we got a lot done in a short -- relatively short period of time, translate into results in terms of the revenue growth, positive operating leverage, improvement in returns, improvement in the position of each of the businesses.

And I am looking forward to the next 5 years as we manage the firm with a much simpler, better Citi. And our competitors better watch out, and our investors should just enjoy the upside because we're still cheap.

And with that, please join me in a round of applause thanking Jane for joining us today.

Thank you.

We'll go ahead and get started. So delighted to welcome, next up, we have Citigroup and from Citigroup, we are fortunate to have Gonzalo Luchetti, Head of U.S. Personal Banking and incoming CFO for Citigroup joining us. So first of all, thank you so much, Gonzalo.

Thank you for having me, Ebrahim. Nice to be here.

I think if I'm right, this is probably, Gonzalo's first debut solo performance as the incoming CFO. So we are super lucky that you could join us. I know you had a very extremely busy schedule.

And for those of you who are not familiar with Gonzalo, just when he was named CFO, I think -- and just talking to investors, his background, I think been with Citigroup for 20 years, 2006. And grew a lot of different businesses through a lot of different regions. I was just going to the bio again last night. I was like, wow, you've seen it all actually over the last 2 decades at Citi.

But maybe just if you don't mind, give us your perspective, like I think you do have a unique lens having been at Citi for 20 years. Like as you prepare to assume the CFO role, just an overview of your background like what you've picked up over the years and kind of how you view the franchise?

Sure, sure. Thank you. Well, thanks for having me here. Great to be here, Ebrahim. And good to see you again.

If I have to think of a word for my background -- first of all, I don't love talking about myself. Let me start with that. I'm Argentine-merican. I saw the World Cup flashing on the screens. Very excited about that. I have a pretty decent hedge between the World Cup and the Olympics, I can celebrate on both because of the Argentine American thing. We don't tend to do very well, the Argentines at the Olympics, and we do a little bit better, hopefully, again, in the World Cup.

And diversification doesn't necessarily mean, as some people may interpret that there's nothing that I know much about, hopefully. But as you said, I've been around in a few places in the last, almost 20 years, in April it will be 20 years at Citi. I had the privilege of working across regions. So I worked in Latin America, in the U.S., in EMEA, in Asia Pacific. I lived for 6 years in Singapore. So I had -- and at that time, we were overseeing 18 markets in the Retail Bank, in the consumer franchise as well. So I had the opportunity of seeing digital develop in different countries and different models, and I was able to apply much of that in the last 5 years as Head of U.S. Personal Banking.

I've been across business and function. I've also operated at the local, at the regional and at the global level. So a few elements that gave me some -- different businesses, too. I started in the private bank, then I worked in the wealth, affluent franchise, with financial advisers in the U.S. with relationship managers in Asia, looked after the retail bank, looked after our unsecured credit card businesses, our secure mortgage businesses as well. So a range.

So that's an awesome set of experiences coming into this role. And I guess as you sort of take over the CFO role, just talk to us in terms of the key priorities that you have, like as you're thinking about what's top of mind?

Yes. I think if I had to simplify my priorities are probably twofold. Number one, drive consistent, higher returns. And two, pursue excellence in execution.

So to unpack that a bit, for me, it starts with durability. You want results to be consistent and sustainable over time. And that, in my mind, starts from strong risk and control management practices, from a strong balance sheet and strong liquidity and to putting safety and soundness first because that gives you, I think, the ability to build on that, the performance that you need later.

In USPB, I use that as an example for me, which is, we did that, and as a consequence of that is why we were able to string together 13 quarters of positive operating leverage because we're really focused on making -- the gains that we were making stick over time.

The second thing that I would say is driving performance and execution mindset. And that to me comes from strong accountability. Jane is doing that with each of the 5 businesses. I know it in my own scheme because I've been one of the 5 for the last 5 years. And so that accountability to me is important. It's recognizing that the results speak louder than actions and speak louder than words, and that what we say we want to do, we actually have to do everything we can to achieve it. And so that mindset of doing what we say we're going to do, I remember Jane and Mark saying in the fourth quarter earnings call in -- which was in the first quarter of 2024, saying that our business, a U.S. personal banking business needed to have returns in the mid to -- mid to high teens was the range that we were aspiring to.

In 2024, we printed a 5.5% ROTCE, so well below that. But the focus that we had as a team enabled us to put it in the second half of last year north of 14% and for the average for the year was north of 13%. So that ability to really focus on execution and try to anticipate the risks, do something about them early enough and have urgency of purpose, I think is the second thing that I find would be important as I look forward.

And the last piece I'll mention is this Japanese word called, [ Shoshin ] which is, even if you've looked at a problem 100 times, trying to approach it like a beginner, with a beginner's mindset. And that usually releases you from the boundaries that we tend to put on ourselves. So I look forward to, as I work with the whole leadership team and with Jane, looking at opportunities to go further in terms of our returns, which we're going to talk about that in our upcoming Investor Day. And that, to me, would be also a critical focus. So higher, sustainable returns and that mindset of relentless execution is what I'll be about.

You're welcome to give us a preview of the Investor Day, if you like.

I'm sure.

But...

I'm scared of Jane, so I don't -- I wouldn't do that.

So I think, maybe just taking a step back, Gonzalo, in your current seat, there's a lot of debate around the consumer, the macro outlook. I think we were anticipating the jobs data this morning. Just talk to us kind of how you would assess the health of the consumer when you look at card activity and from a credit quality standpoint?

Yes. No, thank you. So I think a couple of things from -- maybe starting from the top. From a macro perspective, we see what we expect a continuation of the constructive dynamics that we saw in terms of growth in 2025.

And maybe let me start going around the world and then come to the U.S. last, but -- from Europe, we expect moderate continued growth, supported by the prior cuts from the ECB as well as supported by the Germany focused on infrastructure. What we've seen in emerging markets is emerging markets being able to adapt so far at the policies of the developed markets, doing more intra-EM trading and having some demand-driven growth in economies like in ASEAN, in India, in Brazil, in Mexico, so in a few places. China with a strong export machine and redirecting into the EU and ASEAN as well as policymakers being willing to step in if they see any softness in private consumption.

And then in the U.S. continues to show a constructive posture, right, and that's in line with our expectations.

And as far as the U.S. consumer, we see resilience. We continue to see resilience early in the year you were asking about what do we see in our data because we have the privilege of serving 70 million customers in our U.S. consumer franchise. And we continue to see that resilience of spend in line with what we've seen in the last several quarters. And at the same time, we're seeing stability. We still see the K-shape, right, that a lot of people talk about. But we also see -- because we are prime-focused, and we're prime-centric at 85% plus prime FICO lender. We still see stability in credit and delinquencies.

So, so far, pretty constructive. Of course, we always worry about what could go wrong, and we monitor closely things like geopolitics or policy choices, obviously, the equity markets and unemployment, which again, the 4.3% is pretty -- looks still to be in good equilibrium. But we also know all those 4 things could change relatively quickly. We've seen it before as well. So we are optimistic but paranoid, I would say.

Okay. And when you think about -- you just mentioned the K-shaped economy, are you seeing the lower end of sort of, I guess, of the K getting better? Like is there some stability like we've heard about that the lower income consumers has been under stress for a few years now. Is that getting better or worse or more or less the same?

We see a little bit less bifurcation that we saw 2 to 3 years ago, what I would say, right? It's a little bit more -- the behavior is a little bit more similar across the spectrum. A couple of years ago, we saw a little more differentiation between the affluent and the non-affluent consumers. So far, the trends are a little bit more consistent. You still see the K shape but a little bit more consistent across in terms of delinquency, in terms of spend growth and so on.

Got it. Just very quickly, I mean, I think obviously, we started the year a lot of us were surprised by the 10% credit card cap debate around that. I think we hosted a panel yesterday. It sounded like the administration better appreciate sort of the macro negatives of that policy. But just would love to hear in terms of how you thought about it, impact on the business, merchants, consumers.

Yes. No, very good question, Ebrahim. And I think -- well, first of all, I should say we are well aligned in terms of the pursuit of supporting consumers in the affordability challenge that many face, right? So as Citi, we have a long track record of offering low-cost options for customers.

So example would be, we have our access deposit account, which is a very low cost account with a very easy path to 0 cost. We were the only big bank that eliminated overdraft fees. We've been 15 years running the leading affordable housing lender even though we don't have a very large mortgage company, and we have our Simplicity card, which is a no-fee card that we offer customers on the credit card side.

So we've been trying to support affordability for a while now. And at the same time, as you were mentioning, we don't support, right, the proposal on APR cuts because we think that the detrimental impact on the economy would be really material, right? If you think about $6 trillion of the $30 trillion that is this economy is credit card spend, and we're talking about something that in theory could have material impacts in credit lines, in availability of credit, especially for the lower income and the lower FICO because it will become completely unprofitable in an unsolvable way. That, to me, would have massive ripple effects through retail industry, through hospitality, travel. And so that's why we don't see it as a good thing that we would support.

Got it. And maybe, I guess, just talking about the business, I think you mentioned in terms of the improved returns within USPB and just several quarters of positive operating leverage. Just talk to us in terms of the biggest changes that you made? And because I feel like it's going to be useful to you as you look at the other businesses that are sort of coming up the curve on returns. Like what is it that drove that improvement?

Yes. Yes. Thanks. So just maybe starting at the top for those that are not integrally familiar with our USPB franchise. We serve 70 million customers, as I mentioned. And we took the business as a team from -- over the last 3 years, we were able to grow at about -- a little bit over 8% annually in terms of revenue. So we took it from kind of mid $16 billion into $21 billion. And the 13 quarters of positive operating leverage, which allowed us to bring the operating efficiency down from 57% then to 53%, then to 49%. And last year, it was 46%.

And that, to me, came -- by the way, we're not done. I should actually say that, right? We're not -- we're -- this is only -- we're in the middle of the road still, I think there's a lot of opportunity for Pam and the team on the credit card side and for Andy, on the retail bank side to continue moving forward. But we did, I think, 3 things. One was really focused on having a strong foundation. So benefiting from the transformation work across the firm, continuing to strengthen over the last few years, the risk and control management posture, our management of the balance sheet, running data, all those pieces were super important for us so that we can really focus on driving the engagement with customers.

Second, having a clear strategy, knowing where we wanted to go. We focus a lot on customer obsession and driving simplicity. That's why we did in the retail bank, our simplified banking offering to really sharpen our value proposition. We also focused on what we thought we were good at, which is in the retail bank, for instance, we really focused on our 6 core markets as opposed to trying to be everything to everybody.

And then the third piece, as it relates to cards is we've focused a lot on growing our proprietary cards, which are very high return, and at the same time, having a lot of discipline on accessing scale through partnerships with a mindset on returns. And so those are the elements that play out.

And then the last piece, going back to what I said a little bit earlier, really relentless execution focus. So holding ourselves accountable and being there to identify any opening risk and doing something about it earlier, usually puts us in a better position to resolve.

And just on the cards, one small follow-up around, talk to us about the competitive landscape, like you're seeing all the incumbents coming up with offerings. Obviously, one of the largest card issuers did an acquisition, they became even larger, new banks jumping in, just what does that look like? Is it more intense than anything that you've seen over the last 5 to 10 years or pretty much the same?

Yes, good question. I would -- my description of having lived it for the last 5 years in this business, it's very, very competitive, right? Very competitive. You see a lot of investment because it's a good returning franchise. So maybe taking a step back to recap, our business in cards for those that are less familiar, is an $18 billion revenue business and about $175 billion in outstandings. That puts us squarely in the #3 position, which is one that we like in terms of scale because if you think about this industry, the credit card industry is both -- it's large, it's growing and it's profitable. So you like that kind of triple play and being able to play in that space.

We see competition in product innovation. We see competition in experiences. We see competition in ecosystem. So when you think about our strategy, and our portfolio is a diversified portfolio in the credit card space. So we have proprietary cards that only carry our name. We also have co-brand cards with some marquee names like Costco and American Airlines, some of the largest portfolios in the country. And then we also have private label cards that we do in partnership with some retailers like Best Buy or Home Depot or Macy's and so on.

But when we look at where do we focus on, given this high level of competition, is we try to really lean into product, platform and ecosystem innovation. So we launched over the last 1.5 years, our Strata family. That was our reentry into the rewards and affluent space in our proprietary business. We also have focused a lot on driving disciplined returns and scale with our partnerships. So Costco, we refreshed the whole product last year. American Airlines, our 38-year relationship we extended in the fourth quarter of 2024, and we're broadening it. So in the second quarter, we're going to take on the part of the portfolio that we don't have to fully unify the relationship. On both of those portfolios, we saw record acquisitions in the last year.

And one of the biggest areas we've been investing on that is highly competitive Ebrahim, to your question is really the loyalty ecosystem, right, and the platforms. And the reason for that is that what you want is you want to augment the quality of your relationship and the depth beyond the card itself and the swipe alone. And so things that we've done there is we launched Citi Travel over the last couple of years, Citi Shop, merchant offers so that you create that loyalty, loyalty on the point side, right, our ability to not only -- if you're a customer, you cannot only redeem the points in the [ thank you ] ecosystem that we created that many others have, but you will also try to give customers the flexibility and ubiquity of point usage. So you can use it at point of sale with Walmart, with Amazon, with PayPal, with Walgreens with CVS, so that it's really flexible in terms of what you can do.

And the same is true for financing. So if you're not -- if you don't want to be a revolver, we allow you to convert your expenses into installment loans. You can do that after you made a purchase by going to our app and choosing one and saying I want to convert this into installment loan or you can do it at a point of sale with Apple Pay, you can do it at point of sale with Amazon and so on. And so the focus on that platform and ecosystem has been very important.

And then the last thing I'd say -- sorry, to not take too much time. But the last thing I'd say on cards is as we go forward, and obviously, we'll talk more about this at Investor Day. There's a couple of things we see in the customer behavior in the market, right, that speak to how competition is evolving. And that to me is the blurring lines between the co-branded space and the private label space. And customers over the last few years really choosing with their wallet to lean more towards general purpose cards. So whether the proprietary cards or the co-branded cards, the ones that you can use in any store.

And so I think what you're going to see from us is, us making investments and leaning in that direction, where the customers are taking us as we go forward.

Makes sense. That's how I've been leaning personally. So that makes sense. But maybe just one more on the business. I mean, obviously, you announced a splitting of the retail bank. And then sort of having a stand-alone cards business. Just talk to us the strategic rationale behind that? And how does that change sort of the growth algo for both those businesses going forward?

No, great question. And I think the easiest way for me is customer synergies. So that's really the answer for me. And when you look at our Retail Bank business, we operate across 6 markets in the U.S. Those 6 markets are -- represent about 1/3 of the affluent and high networth households in the U.S. And we're always talk in our wealth business about that our wealth customers have $5 trillion of wealth of us, right, that we think that's an opportunity for us to deepen our relationship to tap into. These 6 markets cover about a little bit more than half of those $5 trillion.

So clearly, the alignment between our retail bank business that we were running inside U.S. Personal Banking and our wealth franchise is very strong. You can actually see it in 2 forms. You can see it in the deposit per branch. We have one of the highest ratios. So that shows you we have an affluent leaning franchise. And the second thing, right, so that to me is the biggest point because I can tell you how much the overlap and you will say, well, I have to believe many things.

We actually -- if you look at what we've disclosed the last couple of years, last year alone, we upgraded and referred $15 billion of volumes from our branch network into the wealth business. So it's not something that you have to believe, it's actually happening every day because many of the relationship managers from wealth sit inside our branches and get the instant referrals, right, as far as the commercial activity.

So we thought the opportunity to really augment those level of synergies get enhanced when they work under a single roof. So that was the main one reason, I would say. The second reason, even from my current perspective as I come into the CFO role, is having an end-to-end view and management of the U.S. consumer deposit franchise is very useful to me because now Andy and his team can oversee end-to-end our ability to capture low-cost deposits. So that piece is important to me.

Now you may ask why now, right? If this was so clearly evident. And I think to me, the answer goes through a couple of pieces, which is, I think both the retail bank and the wealth business under Andy's leadership, they have made sufficient progress in terms of upgrading performance and really driving results that I think they are now in a position to be put together.

So if you look at our Citigold business, which is really the one that is synergistic with the retail bank, last year, we disclosed this last year, that revenue grew 17% year-on-year. And if you look at the retail bank, we grew revenues 21% year-on-year. So you're starting to see consistent performance across both of the franchises, which gives us the confidence that you put them together and you get 1 plus 1 equal 3.

And I guess what does this mean for the stand-alone cards business? Does the narrower focus help in terms of execution, growth, all of that as we look forward?

Yes, I think so. I think in that identity of being -- becoming one of the 5 businesses, it's still very large because it's $18 billion franchise, allows Pam and the team to really create that unified strategy, right, really reorganized the business to make sure that we're aiming towards that future that I was describing in terms of that focus on general purpose cards around proprietary and co-brands, while still making sure that we're serving customers in the private label space. So that unified card strategy, I think, will be the primary benefit on that side of the house.

Got it. I guess maybe just pivoting a little bit to firm-wide and putting on your CFO hat, I guess. So I think Mark laid out the NII ex markets guidance, 5% to 6% up year-over-year. I think it does much better than most of us expected. Just talk to us as we think about the drag from rate cuts this year relative to what you believe will be the offsets, be it on the card loan growth on the deposit side?

Yes. Thank you. So yes, we provided a guidance of 5% to 6%, maybe 2 comments of the topic. The first one is that would be a continuation of what we did in '25. In '25, our NII ex markets was 6%. So as we looked at the guidance with Jane and Mark, that 5% to 6% operates in that range. But to me, the most positive element of that, and I'll talk to some of the puts and takes, but the most positive element of that is that it's really client-driven activity, right? It's a whole set of franchises leaning forward commercially to gain more business from our customers. So the biggest component of the 5% to 6% really relates to volume and to mix just in line with what I just said, right?

So to split it up a little bit, let me start with deposits. We expect to see mid single-digit growth in our operating deposit services franchise, which is one of our crown jewels as you look into the global payment volumes and what we're doing with customers there. We also expect that level of growth within our wealth franchise that now actually encompasses all of the consumer deposits across the firm. So those 2 are key drivers of the 5% to 6%.

On the flip side of the balance sheet, we also expect to see 5% to 6% -- sorry, not 5% to 6%, mid-single-digit growth in our card loans. I was just talking about the strategy and how we're leaning forward into both the co-brand relationships and the proprietary and making investments there with Strata, with what we did with American Airlines, with Costco, with others. And then secondly, we expect to see growth also from the wealth business as we deepen the relationship with our customers in terms of loan growth. So you have mid-single digit on the deposit side. Services and wealth, you have mid-single digit on the loan side. Cards and wealth, which are good, high-return loans.

And then the second piece that is a contributor, and it gets partially mitigated to your point, around the short-term rates, and we had baked a couple of records into our assumptions on the 5% to 6%. So that detracts a little bit from that upside I was talking about, but it's fully considered into it. It's also our investment portfolio, right, as fixed rate securities and derivatives rolled off into higher-yielding elements, we're also able to pick up a little bit as well. But the primary driver is really that client-driven activity and those underpinning elements in the franchisees.

And just on that, like the deposit growth environment, like how would you characterize just the competition for deposit growth, you mentioned wealth or services, where you obviously have the sticky client relationship, but just incrementally bringing on core deposits, like how tough is that right now?

To me, it's always tough in the sense that it's highly competitive, right? I would equate it to what we were talking in the credit card space. These are good return in businesses, right? When you think about Wealth Management, it's a high-returning business. When you think about services, obviously, as I mentioned, one of our crown jewels, even if we have an [ irreplicable ] network, we think and something that's really a competitive advantage. That doesn't mean that we're not competing market-to-market and flow to flow with many companies around the world.

So however, what I would say is we're seeing good momentum, right? You saw in our results in the fourth quarter, the progress we've made on services, whether it's on the NII or on the NIR on that business. So the momentum, both coming from existing global multinational relationships and deepening those as well as what Shahmir and team are doing in terms of gaining new sizable mandates, we really are seeing good momentum. And then what we see in the wealth business is that focus that Andy has on net new investment assets and that single-minded mindset of that's the true north as we grow into our strategy on wealth.

That brings along also elements of deposit to deepen the relationship as well.

And maybe just on that, you mentioned NIR. So when we look at noninterest revenue ex markets, I think, again, Mark laid out, you're not guided for it, but just expectations for growth. When we think about the top 2 or 3 drivers of that growth this year, just talk to us kind of where that should come from?

Yes. I'm going to sound repetitive here. But to me, the positive of what we expect in NIR ex markets is anchored in the same momentum that we're seeing across our client franchise. So it's really the engagement and the positive share momentum across our businesses.

So let me unpack a couple of the drivers that we see. Let me start with wealth because I was just talking about it. Wealth, you saw NIR growth of 10% last year, supported by an 8% growth in net new investment assets. So that includes investment revenues and other fees that we make. So Andy and the team are really focused on driving that fee income component in terms of deepening their relationship with the clients across the spectrum of the franchises, all the way from the private bank into our affluent businesses.

The second big piece for us is services. So services has more than a $6 billion NIR component into the business, and they were able to grow at 6% last year. And it goes through U.S. dollar clearing volumes, cross-border payment volumes, asset values increasing as well. And it is that combination, the momentum that they have really good momentum as it relates to gaining new mandates, but also deepening their relationship with multinationals across more markets that makes those deposits as well as the fees that we get stickier, right? And so that breadth, I think, will continue to drive NIR.

And then the last piece is on banking. We started the year with what is a constructive wallet so far across M&A, ECM, DCM. So you're going to see us continue to deliver momentum. We see good pickups in technology, in health care, in industrials, and that's usually will be constructive for us as we look into our momentum earlier.

Helpful. I guess maybe moving from revenue on to the expense side, I think you -- not to be nitpicky, but I think slightly tweaked the efficiency guidance to approximately...

It just shows that you have attention to detail, Ebrahim.

Thank you. So I'll take that as a compliment. But the 60%, just talk to us around -- I'm assuming it offers you a little flex in terms of as the business evolves to do things that are necessary, to grow the business, invest in the business. So one, just what are the drivers of the outlook when we think about the expense base, expense growth. And then I'd like to sort of -- I'll follow up with -- can this actually be flexed lower over some period of time?

Yes. Thank you. Maybe to recap at the top. What I would say is, if you think about the overall posture for the firm over the last few years versus the next few years. And obviously, we'll talk about this at length at Investor Day, very clearly for us, the biggest objective this year is to deliver what we committed, which is the 10% to 11% ROTCE.

We've also always been clear that that's a way point, not a destination. And so we expect to talk on our upcoming Investor Day about where are we trying to take those returns over the next few years.

Now if you think about our journey, I think the next 3 or 4 years are going to be less about what the last few have been in terms of simplification because much of it we have done are transforming the firm because as we said recently, 80% of our programs are or near completion. And so it will be less about that, and it will be more about pushing forward our growth and our client franchises, right?

And so that to me is the context under which we look at efficiency. And I think it will be important to do 2 things very well. One is to continue to focus on opportunities to drive greater efficiency and at the same time, and therefore, the adjustment, find the balance in enabling high returning growth that we can access. So if we want to invest in our global payments platform, where we have a differentiated capability in services, we want to be able to do that. If we want to deploy talent in banking or in wealth, we think that's important to do. If we want to lean into marketing and product innovation in cards, we think that's super accretive or if we want to go into equities in markets and build greater scale, we think that's important. So we wanted the flexibility, but at the same time, we recognize the impetus is still important.

If you look at our efficiency picture, last year, we printed a 63% operating efficiency. We brought that down from 66% rough numbers, right? So we brought it down by about 3 percentage points from 66% in 2024 to 63%. And our guidance, as it stays in 2026 is to do above another 3% and bring it in and around 60%. And we think that allows us to have that balance.

And then as you move forward, I think -- I still think there's more opportunity. And to me, the drivers are going to come from a couple of sources. The first one is we talked about how our transformation costs, the peak of those was last year. So what you can expect over the next couple of years is that as we reach -- get closer to full completion, right, and beyond the 80%, which we're working hard as a team, you're going to see, especially the component of those costs that were temporary surges in order to build components of the house in the transformation program, they're going to start to roll off. So that you will see coming through.

The second piece you're going to see coming through is our stranded costs from some of the exits and the legacy franchise decisions, that will play through as well. And the last piece, which I think is a multiyear journey is adjusting our operating model across our key processes. So we've identified the more than 50 core big scale processes that we think there's opportunity to drive further automation even beyond what we've already done through the transformation, leveraging technology and AI, I think those will give us also a continued source of efficiency over the next few years. So we're not done. I guess, is the short answer to your second question.

That's good to hear that you please your shareholders. But maybe -- so you mentioned 80% through transformation. You mentioned AI initiatives. I think you've been involved in firm-wide AI initiatives. Just talk to us in terms of within USPB, the projects you've undertaken? And just from a firm-wide standpoint, obviously, a lot of discussion around all things AI. Like how do you think that could sort of transform the bank operationally?

Yes. We -- in terms of the transformation, let me start there. As we talked about how we are -- 80% of the programs are at or near target state. I got to see it in U.S. personal banking as a microcosm, right? And the example externally that I usually use because I get to see how we changed our machine last year across the firm, not just in USPB. We really standardize our control set across the whole firm, which was a very large effort that we've concluded. We've also -- and I got to see that as U.S. Personal Banking, and that was super beneficial for us as well in terms of driving consistency.

We talked also externally about data. And sometimes I find it even as a topic, it becomes somewhat abstract. So the example that I used that you can actually see and verify on your own is -- and this was a U.S. personal banking example. But this is one of many, many that we don't disclose, of course, but this one you get to see is, if you look at our DFAST results from 2023 to 2024, you're going to see in our first lien and also in our HELOCs stress losses, a significant decline. I can tell you that was data improvement. So that was -- it's a microscopic example, but it hopefully gives you a more tangible version of what does it mean when we're saying we have transformed the firm over the last 3 to 4 year and how do you touch and feel some of the benefits.

A few of them, you get to see, not all of them. But as you see automation and you see the data lineage and data accuracy, that enables us to make improvements such as that one.

And then as it relates to AI, our approach is twofold, right, in terms of the benefits that we're trying to see. One is, I would describe it as bottom up. And what that means is that we really want to unleash the innovation that each of our 200,000 employees can bring to the table, right? Why? Because as an enterprise, you cannot reach every micro journey of how everybody does their new and specific role. Not all of the roles have scale, right? Not everything is a customer service agent.

And therefore, we believe in the importance of the bottom up, and that's -- I think, so far, we've enabled 182,000 of our employees across more than 84 markets to access the tools. We're seeing very good uptick. I think more than 70% adoption across the firm. And those are micro improvements in productivity that you see in finance, in HR, in Legal, summarizing this report, creating this presentation, creating a new logic for scanning a legal contract and telling you whether it's aligned with a policy that may be the job of 3 or job of 4 people as opposed to job of thousands.

So we think that component is important because not all the innovation comes from the top, very clearly. We do think it's beneficial, and that's the second leg of our strategy in AI to make sure that on the things that are scaled that we do put the full force of the firm because that allows us to access greater pockets of efficiency and effectiveness as well as we can do it faster. So not only do we have the bottom-up approach, we also have the top-down approach, which are those greater than 50 processes that I was talking about a minute ago.

And we organize ourselves to be able to look at those end-to-end. So when we step back on each of those, and we say, how can we further automate? It's not only AI, by the way, right? AI is one component, but it's also process reengineering. It's also technology and automation. And the benefits are customer experience in many cases. The benefits can be risk management and control management benefits, and there can also be efficiency and effectiveness. So we're seeing that kind of dual polar element of our strategy, which is the bottom up.

Complemented by the top-down approach that really allows us to go after those 50 processes, 50-plus into -- with some intensity with scale and putting the full force of the firm to make progress. And let me give you something more tangible because you hear what are these 50-plus things that you're talking about? U.S. Personal Bank, we started a little bit over a year ago on customer service. And what we created is Agent Assist, leveraging AI. So how does it improve, right, the customer experience or the controls or the effect or the efficiency that I was talking about?

Well, so let me give you 2 or 3 examples of Agent Assist. One of the things we do is where -- with AI, we are able to understand the intent of the customer in the automated response system better. So if you're capturing X percent of what a customer says and if you're accurate, you're going to be able to send him or her into the right branch of the tree for disposition and for servicing the customer we're able to increase the level of interpretation ability. So that is super valuable.

The second thing we did is whatever you say to the machine in the first few minutes, if you end up with a human, we're putting a summary in front of the human so that before here or she picks up the phone and says, Hi, Ebrahim, how can I help you? I know what you want to do already. And I can help you without having you to repeat yourself which is super frustrating for people. So that is a customer experience improvement.

We also give you a live transcript. Sometimes people are calling from cell phones. There's noise on the phone. The agent may need to say, can you repeat that? Can you repeat? Again, super frustrating. You have a live transcript that's going live in front of the eyes of the person listening to the customer. So you have a higher odds of just being more succinct in the conversation and being able to make the client happen.

And finally, we also summarized the call. Instead of asking the agent to type them up for 3 or 4 minutes, it summarizes the call for them. All those things, when you add them up, there are minutes of safe human interaction and a better experience for the customers. So that's how we're seeing it deployed in real time.

So I guess we should look forward to our next customer service call based on that?

Yes...

But maybe I think just to close this out, Gonzalo, as someone who's watched Citi for 20 years personally, I think there's been demonstrable sort of improvements and changes made on the Jane's leadership. I think that's not up for debate anymore.

But again, when we started this conversation, you've been at Citi's since '06. So you went through the financial crisis, you've seen different iterations. Just talk to us around your confidence in the positioning of Citigroup today as we think about just sustained improvement in the efficiency that you laid out, but also in terms of the competitive positioning as we think about how does Citi compete with some of the largest and the best banks in the United States and globally.

Yes. No, thank you to me. We've always had -- and you've followed us for many years, so you can probably -- you may agree with me. We've always had some distinctive assets, right, at the firm. Our globality is not new, right? Our global network, the aspirational element of our wealth franchise, the scale we've had in services, in markets, in cards, that's long-dated. But what feels really different and gives me the optimism as I look forward even from my USPB had as well is -- are 2 or 3 things that I see different with Jane's leadership and what the whole leadership team is driving.

The first is having a clear strategy. That makes a big difference, right. Knowing who we want to be. You saw Jane make the decision on the 5 businesses. There's very clear clarity and accountability. I felt it in my own skin, right? We're not subsuming to some big holding thing where the performance gets diluted, it's very, very clear. So that simplicity is important. We also were very purposeful in exiting business that we thought were not core to the strategy. So that clarity of purpose to me is paramount. To me, it starts there.

Second, you need the leadership. And what Jane has done in terms of the mix and match of having some people that have been at Citi for a while, like me, but also others that are bringing new ways of thinking in several of our businesses and functions, that right balance mix to me is important but also culturally to me, and you probably heard us talk a lot about in the past that one of the things that held us back is avoiding the silo mentality. We work as a team. Doesn't mean we always agree with everybody but we really work as a team on a single purpose. And that to me is very clear. So when you put accountability together with teamwork to me, that is to me a different posture and a different change. If we continue on that trend, I'm very optimistic.

And the third one is just sharp, relentless execution, right? You probably heard me say execution too many times. I hope nobody is counting on the transcript. But to me, it is about that, it's like waking up every morning saying, how can I do better? I have weeklies with my team on financial performance, have weeklies on my team on efficiency, have at weeklies or biweeklies on control. These things are really important to us. If we say they're important, we have to act like they are important operationally. And doing that at scale across our whole leadership team and every level of our pyramid to me is what will make the difference between doing what we say we're going to do and just having a dream that doesn't get achieved.

Perfect. Gonzalo, thank you so much for your time.

Thank you.

All right, everybody. Good afternoon. Our final, but -- last but certainly not least, we have Citigroup. And with us today is the Head of Services, Shahmir Khaliq. Welcome.

Thank you.

Thank you for joining us. Thank you for the cocktail portion of the day.

So just to start, you were on the stage 3 years ago. And 2 years ago, you and your team gave us a very in-depth view of the services business. So for the investors that aren't as familiar with you, can you give us a run-through of how long you've been the Head of Services and when your -- where your focus has been since your previous Investor Day?

Sure. Firstly, Erika, thank you so much for being here. I think this is, I think, my second or third year that -- the second time I've been here in Florida. but I think it's been about 2 or 3 years since I came to this conference last time. And a lot has changed. And as you mentioned, we had our Investor Day back in the summer of 2024.

So just very quickly about myself. So I've been Head of Services since 2023 when Jane announced some of those organizational changes. And then before that, I was running our Treasury and Trade Solutions business, which is part of the services construct. And if you step back and think about what services is for the ones that may not be as aware, it's basically a combination of our old, what we call TTS business, Treasury and Trade Solutions business, which is payments, liquidity and trade services and then the Security Services combination, which is Investor Services and Issuer Services. So I was running the TTS business.

And prior to that, I ran ops and technology for TTS for about a year. And then before that, I ran our direct custody and clearing business. And if I age myself another 10 years or so, I was running the Investor Services business for North America. So for the last 10, 12 years, I've been in the services business running some of the market-leading businesses within the services construct and helping drive the strategy.

And so the way I would think about it is we had our '22 Investor Day, we had our '24 Investor Day, and that's really what we've been focused on since then, really focusing on forward thinking, thinking about innovation and driving the agenda, but really with one overarching agenda in mind, which is services is the world's biggest transaction services platform, and it operates in 95 markets around the world. How should we invest in the platform, both from a technology and a talent standpoint? How do we drive the right client engagement? And I'm sure we're going to touch on some of those subjects today.

But that's really been top of mind for us that how do we continue to propagate the services agenda and provide solutions to our clients across the globe in very, very challenging macro environment and therefore, growing profitability, growing wallet share as part of that proposition.

So speaking of challenges, it's been quite a last 13 months in terms of U.S. trade policy and geopolitical tension. So would love to hear from you in terms of what are your clients saying? And what's the current sentiment? And how is Citi uniquely positioned to help clients navigate an evolving geopolitical and macro environment?

So I would say our clients are generally very large, significant clients who have global footprints around the world or have aspiration to have a global footprint around the world. So our conversation with our clients, given our preeminent incumbency position is always robust. And if I go down the list of clients, starting, frankly, with the corporates, corporates in a very challenging environment with Venezuela recently with U.S.-China relations, with Russia, Ukraine and then at the start of the year with the change of the administration, the changes around tariffs and supply chains, if you think about all these factors, the ability for us to have a conversation with our clients and give them solutions that encompass all of the regions around the world with all the markets that they operate in, I think, has been invaluable both from a client and from a Citi standpoint.

So what are we hearing? Firstly, on the corporate side, I think the focus on access to capital, the access to financing, the access and the ability to continue to run treasury operations around the globe while making sure that their supply chains are unimpacted and the ability to finance their working capital and frankly, think about free cash flow. So that's on the corporate side.

Talking about banks and broker-dealers, banks, broker-dealers are focused on whether for their retail business, their wealth business or for their markets business, they're thinking about best execution at the cheapest price point. So that's been a big area of focus for us as well in talking providing solutions to banks, broker-dealers who are, again, a significant part of our solution set.

Thirdly, thinking about public sector, how do we help public sector become more efficient. And at this time, when fiscal deficits are running significantly higher, public sector is also on a mission to think about how do they get smarter, how do they think about making their services, whether it's managing their payments agendas around the world or whether it's managing their holdings of treasury bills and securities around the world.

Then if you continue to move towards the investment side, asset managers are with the entire move to private markets, how should they think about their middle and back-office structures. And as part of their public holdings, how do we think about driving down the cost of what they've invested in to allow them to eat out every single basis point of incremental performance that they can show to their investor community. So that's been a big agenda item.

And last and not the least, I would say, if you think about the fintechs, as the bank with the largest fintech client set in the industry, we're actively engaged with our fintech clients to basically say, how do we help you provide access to the bank in a box, the banking as a service to help them run and manage their businesses around the world.

So I would say a fairly challenging environment, but I think Citi's unique capability to provide that global expertise, coupled with local knowledge and market-leading innovation around how we connect the dots for our clients has been mission-critical for our clients and actually to continue to engage and drive some of the profitability that I'm sure you see in your investor community sees across the board.

To that end, your ability to help your clients navigate through challenging times has translated into quite a strong year in 2025. What drove that performance, that strength across both TTS and Security Services?

Yes. So we had a record fourth quarter. And if you look at our numbers, we had record revenues in Q4. We -- basically, if you look at our full year numbers, we delivered $21.3 billion of revenue, which was up 8% on a year-over-year basis. We delivered a ROTCE of 28.6%, again, which was a number that slightly higher than what we had set out for ourselves on Investor Day. If you look at the underlying components of that profitability and that revenue growth, our NII grew about 12% and our fees grew on a 6% on a year-over-year basis across the board. And if you look at the underlying drivers, our deposits grew about 7% on a year-over-year basis. Our loan book was up about 9% on a year-over-year basis. Our cross-border volumes in dollar terms were up 10% on a year-over-year basis. Our clearing volumes were up 5% on a year-over-year basis. And our AUC, our assets under custody and administration was up 24% on a year-over-year basis. That was basically injecting more clients into our operating platform, but also we outstripped MSCI growth. MSCI grew about 17%. So we saw net new inflows into our business.

And I think underpinning all of that was -- I talked about this robust client dialogue. We had a record number of new wins also in 2025 on an aggregate basis across our business. So we -- that effectively allowed us to deliver what we delivered in '25, but also helped set us up for a strong start to 2026.

So Shahmir, maybe just if we could pull up, how are you performing relative to the 2022 Investor Day guidance and Services Investor Day guidance?

Yes. it's a great question. I think as I mentioned earlier, fourth quarter was very good for us. And if we go back in time, I would say, in the 2024 Investor Day, we talked a lot about investing in our business. And a lot of that investment in our business is what has helped us drive some of this agenda. And if you -- if I can share with you some numbers in the '24 Investor Day, what we had laid out was a low to mid-single-digit revenue growth number and a ROTCE in the mid-20% range. Our year-over-year number that I just talked about was 8%. Our '23 to '25 revenue CAGR was also 8% as we think about this. And if you look at our revenue CAGR since the 2021 Investor Day, that was at 14%.

So I think generally speaking, I think from a revenue and a ROTCE standpoint, we have been delivering above the benchmarks we had set for ourselves. If you think of share of wallet for a second and use that as a metric, that was the second set of metrics we had set, we've gained more than 200 basis points of wallet share, both in the institutional TTS space, and we have gained more than 200 basis points of wallet share in the securities services space. So those are, again, 2 strong data points.

The third one is we had set ourselves a goal of growing our wallet share in the commercial bank business where we had a suboptimal share, we have doubled our wallet share in that business as well. So across the share of wallet metrics and across revenue growth and return metrics, we have overdelivered from that standpoint. And as I mentioned earlier, I think if you look at our volume growth drivers across the board, whether it's cross-border volumes or it's AUC, AUA, generally speaking, we have overdelivered across those metrics. So we feel cautiously optimistic about how we positioned, and we look forward to talking about our new metrics as we think about our upcoming Investor Day in May.

Yes. Excited for May 7. You've done a great job in deposit volume growth, in particular, since Investor Day. As we think about the areas, the segments that you're focused on, can you maybe provide some color on where we can expect the revenue, loan deposit growth to come from?

Yes. So we had laid out our strategy, Erika, in the 2024 Investor Day and what we had said basically, and this -- what I'm going to say is really a continuation of that, and we're going to go into much more detail during the Investor Day. But the way I would think about as the underpinnings for growth in our business are, first and foremost, is our, what I would call, large institutional clients. These are Fortune 500 companies that have global operating business models. These companies continue to evolve and drive their growth around the world. So we bank more than 80% of these companies. We're either the #1 or #2 bank as part of their agenda. And our goal is really making sure we're delivering that thought leadership and that engagement model in partnership with banking and markets and wealth to drive that conversation forward.

So really deepening our wallet and our penetration with the large clients, which has helped us, as I mentioned, with the wallet share growth we've already seen, but that will continue to drive that momentum. So that is what I call the first big building block of what we want to accomplish.

I think the second one is our commercial bank clients. Commercial bank clients, we talked about a wallet share, which was smaller than what I would call in our -- relative to our peers and our competitors. And that is one big agenda item for us that as we've continued to innovate and invest, we thought our services really stand up well, having really spent a lot of time modernizing our platform, making it easier for the small to midsized companies to access. We thought that, that would allow and enable the small to midsized companies as they have growth agendas, given e-commerce development and given platforms now available, various marketplaces and other platforms available for clients to continue to grow their business. We have plugged into that particular agenda, and that's the double-digit growth in market wallet share sizes that we've seen. So I think both of those strategies have come to the fore and will continue to be integral to our growth agenda.

The third one, which I think is absolutely the, I would say, the third leg of the stool is you can have the right client strategy and the right client construct, but you've got to marry it up with the right product setup and the right innovation infrastructure investment agenda. And we talked about it during our '22 Investor Day and our '24 Investor Day, investing in our payments platform, in our liquidity and deposit taking platform, our trade and working capital solutions platform, coupled with the investor and issuer side of the business has been mission-critical for us. So how we've grown this wallet share is with the right client strategy, coupled with the right investments that we have made over the last 5, 6 years in this business, and that's helping us monetize this growth agenda that we've delivered over the last few years.

So pivoting a little bit, Shahmir, at Services Investor Day, you talked about the marriage between conventional rails and new rails like blockchain, through Citi token services. You've also told us about real-time 24/7 U.S. dollar clearing, cross-border instant payments, real-time funding, target balancing, Payments Express. Over the last few years, can you highlight how you've continued to innovate to meet client needs?

Yes. So I think for us, as we think about how we run this business, I think there are a few core principles, and I talked about them during the Investor Day. The first one is while we run a business which is in 95 countries, we think of our business as a no borders business. We think of our business enabling our clients to run their treasuries almost as if they were 24/7. That's our operating principle.

The second one is that -- and I talked about this at length in Investor Day is we want to invest. We want to innovate, but we don't want to just invest and innovate for the purpose of investing or innovating. We want to integrate. So for us, innovation is all about integration and actually monetizing that investment by integrating into an existing or a new set of services that allows us to have the right anchor clients and drive that agenda over time. So for us, I think that has been a mission-critical agenda, and we continue to drive that forward. And I'll talk a little bit about some of our investments where we've either invested recently or we've integrated recently.

I think the second thing I'd just mention here is AI. AI is -- it's a big talking point. And as I think about AI and the ability for AI to liberate more P&L, the ability for us to engage with our clients better, the ability for us to run our back and middle offices better, the ability for us to run our technology platform better. So we've thought about AI with the following lens. If you think about tech assist, how do you help your technology team become better programmers? How do you cut down programming and therefore, use the same tech dollars that you're using and actually develop code much faster.

The second one is agent assist. How do you help agents who are operating, acting for clients actually help them with information access. And so as we operate 95 countries, multiple applications around the world, how do you help agents around the world? Then I talk about client assist. When clients come and engage with you on various platforms, how do you inject AI and give them the information that they would need to make the best possible decision. Then ops assist our operators around the world, running the biggest operations team in the industry, how do we streamline the operating processes. And last but not the least is service assist. As our clients engage with us, the biggest custody platform, the biggest payments platform, the biggest institutional deposit taker platform, how do we help our service agents around the world, help them make the right decisions for our clients and continue to make sure we are delivering for our clients day in and day out.

So AI for us is mission-critical. We continue -- we're building that out. I'll give you one example. As you think about onboarding, you're dealing with some of the most sophisticated companies around the world, operating in some of the most difficult companies -- countries around the world. Think about an account opening process. You've got to tick the boxes from a local regulatory standpoint and a documentation stand. Imagine getting a stack of documents which you previously had when you received you had to review. So a person would take hours to review a set of documents before they could sign off and actually allow for the account to get open to make sure that local regulatory requirements and city requirements have been fulfilled. What took hours is now taking minutes as part of our testing.

So what we're doing is still with the right oversight, making sure that we are truncating and collapsing some of the processes we've been running as part of this agenda. So it's really helping us make our platform more agile and reduce friction across the board.

I'll give you a few more examples on innovation. Recently, we rolled out what we call single event processing, single event custody processing for asset servicing around the world. Think of it this way. You have a subcustodian and a global custodian. As you think about an asset or an equity or a fixed income instrument that's held around the world by a global investor, imagine when the instrument has a corporate action, a fixed income event or a corporate action event around an equity offering, imagine you touch the instrument a few times between the sub-custodian, the global custodian and the asset manager before the CIO can then deliver or use the funds that are freed through this process.

So the ability for us to collapse at the sub-custodian and global custody level and touch it once is a big enabler for us. We're rolling that out across the globe. We are the only bank in the world that can actually roll that out simply because we run the biggest sub-custody platform in the industry, and that's one of the things that we are pushing out and helping our investor community drive their agendas.

A few other things. We talked about Citi Payment Express. We talked about it at our '22 Investor Day. At that time, we just started. We imagined it. We were building it out. We've built that out. Now it's rolled out to more than 20 markets in about 22 markets right now. But 40% of our payment flow transaction is now on this new modern infrastructure. So I talked about integration. So not just innovate for the sake of innovation, but building a brand-new payments architecture, and we've now got 40% of our volumes running through that infrastructure.

24/7 clearing, we talked about. So I think as we've rolled that out, we've got about 300 banks now using 24/7 clearing, trying to provide through conventional rails, the ability to move liquidity and money movement around the world as we provide clearing services for most of the banks around the world.

And lastly, I would say on digital assets, again, another major innovation agenda item. As digital assets have developed, we've built out our own internal blockchain that we've effectively connected a number of our critical Citi branches to, and we are using that to move money and liquidity around the world for the benefit of our branches and our clients.

So our aspiration is always to continue to innovate, listen to our clients and make sure that as we innovate, we are putting our clients on the platform and we are commercializing it and which allows us to drive incremental revenue, but then frankly speaking, improved client satisfaction and better client solutions across the board. So I could give you multiple more examples, but innovation is at the heart of what we're doing as part of the services agenda.

No, that was very helpful. Thank you, Shahmir. Your peers at JPMorgan, I think, mentioned a stat about maybe 40% reduction in unit cost in terms of KYC. So it's going to be very interesting in terms of how this evolves. So let's maybe talk a little bit about the synergies. I mean, obviously, Citi is a large, diverse firm. Maybe talk about the power of synergies in different lines of businesses within Citi.

Yes. I think great question. We think about synergies all the time, particularly as you think about Jane's agenda, I think one of the things Jane really thinks very hard about is how do we have an environment or an enterprise that has a best-of-breed operating model across the board. And therefore, if you're best-of-breed or you build the right infrastructure and architecture, how do you make sure that you're driving -- regardless of business, you're driving your process towards that best-of-breed operating model.

So I would say we and services think about 2 types of synergies. One is internal to services. As you think about the 5 businesses I just talked about, payments, liquidity, trade, issuer and investor, we think about how do we collapse some of the stuff that we do on a day-to-day basis. Onboarding, for example. We onboard a client for custody. They're also a client for our treasury services business. How do we collapse that onboarding? How do we think about cutoff times from a liquidity standpoint? How do we provide the best cutoff time for a market participant who is moving money, but also a market participant who's settling securities in the same market. So how do we think about best-of-breed platforms in every market and drive that agenda.

So whether it's onboarding, whether it's servicing, whether it's sanctions or whether it's product capabilities, I would say that is mission-critical for us as we think about that, and that's what's helped us drive a lot of this operating efficiency. We've improved our operating efficiency, something like 300 basis points within services over the course of the last few years. And that's allowed us to deliver some of the returns we've been delivering is through driving a lot of these synergies and automation and platform modernization across the board. At a firm level, I will talk about business synergies.

For example, when we go out and talk to an investor client, an asset manager clients who's managing money, when we go to that client and offer them our custody services or our agency lending services or a combination thereof, we think about what are you doing for FX? How are you thinking about hedging? How are you thinking about building those services and providing a set of services between markets and services together, so we give them a singular pipe to access. Cross-border payments. Think about going to one of the largest fintechs in the world and giving them a cross-border payment pipe that gets them access to an FX rate and gets them access to a payment platform. How do you integrate that together? So those are partnerships that we've built out within the institutional bank.

I'll give you another example. You think about an M&A transaction and you think about a client executing M&A, maybe they need an escrow service. Maybe they are doing a capital market issuance and equity or a fixed income one, maybe they need an issuing agent, maybe they need a paying agent. So how do we think when we speak to the client and offer them our services, how do we start as an integrated proposition. We can do your M&A advisory. We can also be -- help you with your depository receipt. We can also help you with your capital markets. So that's how we are bringing the organization much closer together. And therefore, our partnership with wealth, with U.S. credit cards, markets and banking is absolutely mission-critical for us. As we think about our clients' wallet, we think about that wallet together as part of that proposition.

Shahmir, maybe just double-clicking on this topic of working with other businesses. How do you partner with the other business to most effectively use the corporate loan book in context of client returns and wallet?

So first and foremost, I think having been a former banker myself, I've been at Citi for about 30 years, and I've been in banking for about 20 of those years. And then for the last 15-odd years, I've been part of our country management and our regional management and then markets and securities services. But having seen a number of our businesses, I think our partnership between our various businesses could not be stronger today as I sit here and see it. And a lot of that comes together not just through how we engage with our clients, but also how we think about capital extension. And I'll talk about capital extension.

First and foremost, as we sit and talk to a client and think about a client's wallet, we think about that wallet across all businesses. And then as we extend capital, whether into a revolver, whether into a term facility or whether into a facility that helps the client access capital markets, we always think about are we extracting maximum value for this capital. That capital extension could be through the loan book, that capital extension could be through the market side. That capital extension could be through the services side through our trade and working capital finance book. But we have a holistic picture of our clients. And a lot of the investment we've done is actually building that holistic picture of our clients under our client organization and really thinking about how do we maximize bang for the buck for capital.

And so account planning, pipeline building and then having a balance sheet forum where clients get discussed with every new transaction coming to the balance sheet forum and then talking about what our aspiration is, that aspiration that goes into the banker's scorecard, the banker goals and our sales team's goals on the business side. And so it's a joint partnership, joint accountability in driving that cross-sell in making sure that we get the right bang for the buck for what we are delivering to the client through our capital window. So it's a process that we've significantly improved the engagement on over the last couple of years. And my aspiration is that we will continue to see more traction on it and us getting even better on it given all the MIS that we've built out internally to help make better decisions around our clients. It should help our clients and it should help the firm.

So before I ask this last question, maybe just remind the audience that if you wanted to ask Shahmir a question, you could scan the QR code and submit it, and I could read it from this iPad, and we also have mics around the room.

So as we think about Investor Day ahead and the success that you have already generated for shareholders in this business, what are your priorities for '26? You indicated at the Services Investor Day that your through-the-cycle returns are in the mid-20s. You did print, as you mentioned a couple of times, 28.6% this past year. How do you ensure you defend your position in the space? And is there a path to sustainably higher returns?

Yes. That's a great question. And I look forward to discussing Erika in our upcoming Investor Day. But I would leave the audience with just a couple of takeaways, right?

Firstly, this is a business that has been built over several decades. But as part of Jane's focus, we have significantly increased the intensity around the investment agenda for this business. And you can see it from all the investments we've made and how we're bringing those investments to market much, much faster. Similar to how a fintech would go to market is how we're driving this agenda is how we think about putting those investments out there.

Secondly, I would say we're through-the-cycle business. So we talked about our -- not just our -- and what we've delivered since the '21 or '22 or the '24 Investor Day, but I would also add one more data point for the folks that from an investor standpoint, if you look at -- go back to 2015, we have delivered a revenue growth of 8% CAGR over the last 10 years. So the way I think about it is that our strategy continues to be unchanged. We will continue to execute on the strategy that we've laid out, and we look forward to laying out our aspirations around the go-forward agenda, particularly around returns as well as we think about the future.

But our goal, our aspiration will continue to be to invest in the business, to drive much better and improved client engagement and client solutioning while making sure we are innovating to drive revenue growth, to drive profitability growth and drive wallet share growth. So those -- that is mission-critical for our success, and that's something we will continue to focus on, and we look forward to the Investor Day in May to talk more about those numbers.

Great. Any questions in the room for Shahmir? No questions on -- sorry, we do have a question on the iPad. Thinking long into the future, how do you see the durability of services revenue streams if blockchain tokenization proliferates across the industry, aren't many of the nowadays considered crown jewels at risk?

Yes, it's a great question. I would say, as you think about, firstly, the world at large, one of the things you've got to think about is the world is not homogeneous. The world has borders, the world has FX controls, the world has liquidity controls and the world has capital controls. So as you think about that world and how our clients navigate that universe, our goal, our aspiration is to give our clients access to the best possible technology platform that helps them execute and manage their treasury on a day-to-day basis.

So we've actually thought long and hard about the agenda and talking to our clients. So as I mentioned earlier, we've already got a functioning fully built out blockchain, where we've got billions of dollars of client money moving across our pipes every month. And as we talk to our clients and we build that agenda out, we do believe that the world will move at different pace in how they modernize infrastructure. And I think the world will be much more about integration and interoperability. And so the winners in the space are going to be ones that can integrate what I would call conventional rails and digital rails or blockchain-based rails. So we're absolutely on that mission.

We are building and continuing to upgrade our conventional rails to be as 24/7 as possible. We are building and investing in blockchain to build out our token strategies and tokenizing and helping move money using tokens around the world. And we are also actively engaged with the industry across the FMIs to build out interoperability across the token universe.

So I would actually say that we are trying to build the infrastructure of the future while making sure that we are driving our agenda across the conventional side as well. So as I mentioned, we're going to have clients move at different paces, different economies move at different places around the world, and we will continue to evolve and move with it. I think our overall aspiration of being 24/7 of actually innovating and working with our biggest clients and making sure we take our clients along and our clients take us along is what's going to help us continue to drive the agenda. And as I said, there won't be singular winners and losers. I think what we will do is play our role in helping the industry continue to move forward and drive to that agenda across the board.

But I do see a world where I see tokens, crypto, fiat, tokenized securities all coexist. And over time, you're going to see and you're hearing this already, you're going to see banks, FMIs, crypto players, infrastructures continue to drive towards that agenda. So I don't see a singular world, but what we see is a world where things work in consent with each other and continue to build that infrastructure of the future.

That's great. Anything else from the audience? Shahmir, thank you so much for joining us today. It was a pleasure.

Thank you.

Hello, and welcome to Citi's Fourth Quarter 2025 Earnings Call. Today's call will be hosted by Jenn Landis, Head of Citi Investor Relations. [Operator Instructions] Also as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Ms. Landis, you may begin.

Thank you, operator. Good morning, and thank you all for joining our fourth quarter 2025 earnings call. I'm joined today by our Chief Executive Officer, Jane Fraser; and our Chief Financial Officer, Mark Mason. I'd like to remind you that today's presentation, which is available for download on our website, citigroup.com, may contain forward-looking statements, which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these statements due to a variety of factors, including those described in our earnings materials as well as in our SEC filings.

And with that, I'll turn it over to Jane.

Thank you, Jenn, and good morning to everyone. This morning, we reported another strong quarter to close out what was a very good year of progress indeed. We got a tremendous amount accomplished in 2025, and I am proud of our team. That said, and we've always been clear about this, we are on a multiyear journey, and we remain focused on executing our strategy and transformation. And I'm excited to update you on our progress in greater detail and to outline the next phase of our journey at our Investor Day on May 7.

In terms of the quarter, excluding the impact of a notable item, our adjusted EPS was $1.81, and our adjusted RoTCE was 7.7%. For the full year, our returns improved to 8.8%, a 180 basis point improvement after adjusting for Banamex and Russia, and adjusted net income surpassed $16 billion. With adjusted revenues up 7%, we delivered positive operating leverage in every 1 of our 5 businesses as well as the firm overall for the second straight year. Each business had record revenues and improved their returns by between 250 and 800 basis points.

Services continued to deliver with revenues up 8% and an RoTCE of over 28% for the year. Fee revenue grew by 6% and cross-border transaction value by 10% as we deepen client relationships and supported them across our global network. Securities Services assets under custody and administration grew 24% as a result of existing client growth and the onboarding of new client assets. We continue to innovate to provide our clients with always-on cross-border multi-bank solutions.

In 2025, we integrated Citi Token Services with 24/7 U.S. dollar clearing, launched in Hong Kong and Dublin and added euro as a transaction currency. We also expanded our industry-leading Citi Payments Express to 22 markets, and it processed 40% of TTS' payments during the fourth quarter. In October, we began the journey to a unified custody infrastructure and enabling near real-time asset servicing by launching single event processing. All the investments we have made translated to growth and robust market share gains. Markets delivered record revenues, even surpassing our 2020 performance combined with better capital efficiency, RoTCE increased to 11.6%.

Fixed income was up 10% despite a challenging year for us in commodities. Equities revenues of $5.7 billion was also a record with an over 50% increase in prime balances as that business continues to gain share. Banking had a record year including the best quarter and year for M&A revenues in Citi's history as we gain share in our target sectors as well as in leverage finance and with sponsors, resulting in an 11.3% RoTCE. Citi had a role in 15 out of the 25 largest investment banking transactions of the year and advised Boeing, Pfizer, Nippon Steel, Mars, Johnson & Johnson, Blackstone and TPG. This all drove a 30-basis-point year-over-year increase in our investment banking wallet share.

Overall, revenues were up 32%, whilst keeping expenses flat, showing the discipline we are applying to this business. Wealth delivered another year of strong performance in 2025, including 14% revenue growth, 8% organic NNIA growth and an RoTCE of over 12%. It's a direct result of the strategy we've executed over the past 2 years, attracting and retaining industry-leading talent and driving better operating efficiency that's allowed us to invest in key growth areas, and that includes notable partnerships with industry leaders such as BlackRock that have enhanced our open architecture platform and are elevating the client experience.

The integration of the retail bank into wealth makes it easier to deepen share with existing clients and unifies our U.S. deposit franchise. USPB's returns more than doubled for the year, reaching mid-teens driven by continued product innovation, solid customer engagement and our high-quality Card portfolio. Branded Cards revenue grew 8%, driven by robust engagement from customers in spend, borrowing and new account acquisitions across our proprietary offerings and our American Airlines and Costco partnerships. While retail services showed some revenue softness, the business's returns remain solid.

In terms of capital, we repurchased over $13 billion in common shares during the year, including $4.5 billion in the fourth quarter as part of our $20 billion plan. Increasing our dividend resulted in a total capital return of over $17.5 billion, the most since the pandemic.

We ended the year with a CET1 ratio of 13.2%, which is 160 basis points above our regulatory capital requirement. So we have ample capital to support our growth, and we will continue to return excess capital to our shareholders. We've reached some significant milestones in terms of our simplification as we near the end of our international divestitures. We signed an agreement to sell our consumer business in Poland and we are receiving final approvals to sell our remaining operations in Russia. And just 3 months after announcing it, we closed the sale of a 25% stake of Banamex to one of Mexico's most prominent investors.

We have made significant progress in terms of our transformation. Over 80% of our programs are now at or nearly at our target state. And while there is more work to do, I'm very pleased with how far we've come, as evidenced by the OCC's removal of Article 17 of the consent order in December. When combined with how we're deploying AI, this bank is being truly transformed in terms of its operational capabilities, its controls and its tech infrastructure compared to 5 years ago. But we're also building AI into the processes that move money, manage risk and serve clients. Colleagues in 84 countries have now interacted with our proprietary tools over 21 million times, and we continue to see adoption increase. It's now above 70%.

With much of our transformation behind us, we are shifting our focus to how we can use AI tools and automation to further innovate, reengineer and simplify our processes beyond risk and controls to improve client experience whilst reducing expenses. We have started with just over 50 of the largest and most complex processes in the firm, ranging from KYC to loan underwriting. And we're moving with speed to systematically implement modern and efficient solutions.

Turning to the macro. The global economy has powered through many shocks over the past few years, creating optimism and confidence that economic growth is poised to continue. With inflation now at normal levels globally, almost every central bank is becoming more accommodating. And while the labor market in the U.S. has softened, capital investment remains strong, especially in tech. And it's the combination of that CapEx, the health of the consumer, the tax bill benefit from anticipated rate cuts, that should be enough to sustain growth.

China is relying on exports to grow and compensate for slower domestic consumer demand. And Europe has taken some steps to accelerate its anemic growth, and we're hopeful but Germany can create a meaningful stimulus. We have shown that our strategy can deliver results in different environments. Our corporate clients are in great financial shape and, as you know, are predominantly investment grade in terms of credit quality. We are very well positioned to continue to help them navigate whether through our balance sheet or expertise developed from being on the ground in almost 100 countries.

So we enter 2026 with visible momentum across the firm. You see it quarter after quarter in the business performance, the improvement in our risk and control environment, the investments in innovation, our ability to attract top talent and the pace of capital return. As I told our people at a town hall in December, this was the year we changed the conversation around Citi. We are now decidedly on the front foot. But we aren't taking any victory laps. We are intensely focused on completing our transformation and maintaining our trajectory to deliver the 10% to 11% RoTCE we have spoken to you about as well as another year of positive operating leverage. Those are our top priorities for this year. And we are really looking forward to hosting you for Investor Day, where we will lay out how we will take our strategy forward and our path through for improving our returns in a sustainable manner. As you'll see, we are just getting started in capturing the upside in front of us.

Now before I turn over to Mark, I want to say a few things about him. As you know, this is Mark's last call as CFO, and he has done a fantastic job for us as I know you would all agree. He helped guide the bank through the pandemic, provided continuity during my transition to CEO and has driven a significant part of the remediation work for the consent orders. Through it all, he has been a level source of strength and wisdom. There are a few people as responsible for where Citi stands today, especially in terms of its financial performance as Mark. And I wanted to take a moment to thank him for all he has done for our firm. Gonzalo has big shoes to fill indeed.

And with that, I will turn it over to Mark, and then we will both be happy to take your questions.

Thanks, Jane, and good morning, everyone. I'm going to start with the firm-wide fourth quarter and full year financial results, focusing on year-over-year comparisons, unless I indicate otherwise, then review the performance of our businesses in greater detail, and close with our current expectations for 2026. On Slide 7, we show financial results for the full firm. This quarter, we reported net income of $2.5 billion, EPS of $1.19 and an RoTCE of 5.1% or $19.9 billion of revenues, generating positive operating leverage for the majority of our 5 businesses. On an adjusted basis, which excludes the notable item consisting of the impact of the held-for-sale accounting treatment of Citi's remaining operations in Russia, we reported net income of $3.6 billion, EPS of $1.81 and an RoTCE of 7.7%.

Total revenues were up 2%, driven by growth in Banking, Services, USPB and Wealth, primarily offset by a decline in all other. Adjusted for the Russia notable item, revenues were up 8%. Net interest income, excluding markets, which you can see on the bottom left side of the slide, was also up 8%, driven by Services, USPB, Legacy Franchises, Wealth and Banking, partially offset by a decline in Corporate/Other. Noninterest revenues, excluding Markets, were down 17%. However, adjusted for the Russia notable item, noninterest revenues, excluding Markets, were up 23%, driven by better results in Banking and all Other, partially offset by declines in Services, USPB and Wealth. And total Markets revenues were down 1%.

Expenses of $13.8 billion were up 6%, driven by increases in compensation and benefits, tax charges, legal expenses as well as technology, partially offset by productivity savings and lower deposit insurance expenses.

Cost of credit was $2.2 billion, primarily consisting of net credit losses in U.S. cards.

And for the full year, we generated positive operating leverage for the firm in each of our 5 businesses with $14.3 billion of net income, up 13%, with an RoTCE of 7.7% on a reported basis. And adjusted for the Russia notable item this quarter as well as the goodwill impairment related to Banamex in the third quarter, we delivered $16.1 billion of net income, up 27% versus the prior year with an RoTCE of 8.8%.

On Slide 8, we show the full year revenue trend by business from 2021 to 2025. This year, we reported revenue of $85.2 billion. Adjusted for the Russian notable item and excluding divestiture-related impacts, revenues of $86.6 billion were up 7%, our strongest growth in over a decade. With each of our businesses achieving record revenues, 2025 demonstrates another year of our investments in the franchise, driving solid top line growth. And it's worth noting that since 2021, we have generated a compound annual revenue growth rate of 4% on a reported basis, 5% adjusted for the Russia notable item this year and excluding divestiture-related impacts, and 6% excluding legacy franchises, which has declined by over $2 billion over that period.

On Slide 9, we show the full year expense trend from 2021 to 2025. This year, we reported expenses of $55.1 billion. Excluding the Banamex goodwill impairment in the third quarter, expenses were $54.4 billion. The increase in reported expenses was driven by higher compensation and benefits, the Banamex goodwill impairment, technology and communication and transactional and product servicing expenses, partially offset by lower deposit insurance expenses and restructuring charges. As you can see on the bottom right side of the slide, the increase in compensation and benefits was driven by performance-related compensation, higher severance, which totaled approximately $800 million for the year and investments in technology, with productivity and stranded cost reduction partially offsetting continued investments in the businesses. And as you can see on the bottom left side of the slide, we have been reducing headcount, and we expect that trend to continue.

As we take a step back and look at the trajectory of our expense base, over the past 5 years, we've invested significantly in the transformation and technology to modernize our infrastructure, simplify and automate our processes and enhance and streamline our data. At the same time, we've incurred restructuring and severance charges to simplify our organizational structure, and invested in the businesses to drive top line revenue growth in a disciplined way. We continue to see the benefits of these investments play through this year with continued productivity saves as well as revenue growth, both contributing to an improvement in our firm-wide efficiency ratio to 63% on an adjusted basis.

On Slide 10, we show consumer and corporate credit metrics. As I mentioned, the firm's cost of credit was $2.2 billion, primarily consisting of net credit losses in U.S. cards. Our reserves continue to incorporate an 8-quarter weighted average unemployment rate of 5.2%, which includes a downside scenario average unemployment rate of nearly 7%. At the end of the quarter, we had over $21 billion in total reserves, with a reserve to funded loan ratio of 2.6%. We continue to maintain a high credit quality card portfolio with approximately 85% to consumers with FICO scores of 660 or higher and a reserve to funded loan ratio in our card portfolio of 7.7%. And it's worth noting that across our U.S. cards portfolios, delinquency and NCL rates continue to perform in line with our expectations.

Looking at the right-hand side of the slide, you can see that our corporate exposure is primarily investment grade. And in the quarter, corporate nonaccrual loans as well as corporate net credit losses remained low. We feel good about the high-quality nature of our portfolios, which reflect our risk appetite framework and our focus on using the balance sheet in the context of the overall client relationship.

Turning to capital and the balance sheet on Slide 11, where I will speak to sequential variances. Our $2.7 trillion balance sheet increased 1%, driven by growth in loans, partially offset by a decline in investments. Net end-of-period loans increased 3%, driven by growth in USPB and Markets. Our $1.4 trillion deposit base remains well diversified and increased 1%, driven by growth in Services, partially offset by a decline in Corporate/Other. We reported 115% average LCR and maintained over $1 trillion of available liquidity resources. We ended the quarter with a preliminary 13.2% standardized CET1 capital ratio, approximately 160 basis points above our 11.6% regulatory capital requirement, which reflects a 3.6% stress capital buffer.

As we've said in the past, we remain very focused on the efficient utilization of both standardized and advanced RWA while providing the businesses with the capital needed to pursue accretive returns. And we will continue to prioritize returning capital to shareholders through buybacks as evidenced by the $4.5 billion of buybacks in the fourth quarter, and over $13 billion for the year against our $20 billion buyback program.

Turning to the businesses on Slide 12. We show the results for Services in the fourth quarter and full year. Reported revenues were up 15% and 8% adjusted for the Russia notable item, driven by growth across both TTS and Security Services. NII increased 18%, primarily driven by higher average deposit balances and deposit spreads. NIR increased 10% on a reported basis and declined 11% adjusted for the Russian notable item as higher lending revenue share outpaced total fee growth of 13%, which you can see on the bottom left side of the slide.

We continue to see strong activity and engagement with corporate and commercial clients and momentum across underlying fee drivers. Cross-border transaction value increased 14%. U.S. dollar clearing volume increased 3% and assets under custody and administration increased 24%, which includes the impact of market valuation as we continue to deepen with existing clients and onboard new clients and assets.

Expenses increased 9%, primarily driven by higher technology expenses, compensation and benefits as well as volume-related expenses. Average loans increased 10%, driven by continued demand for trade loans, in particular, export agency finance and working capital loans. Average deposits increased 11% with growth across both international and North America, largely driven by an increase in operating deposits.

Services delivered net income of $2.2 billion, with an RoTCE of 36.1% in the quarter and 28.6% for the full year.

Turning to Markets on Slide 13. Revenues were down 1% against the best fourth quarter in a decade last year. Fixed income revenues were down 1%, with rates and currencies flat and spread products and other fixed income down 1%. Equities revenues were also down 1% as growth in prime services with balances up more than 50%, which includes the impact of market valuation as well as derivatives was more than offset by a decline in cash against a strong prior year quarter.

Expenses increased 14%, primarily driven by higher legal expenses, compensation and benefits, technology and volume-related expenses. Cost of credit was a benefit of $104 million, primarily consisting of a net ACL release resulting from a refinement of loss assumptions for certain portfolios in spread products. Average loans increased 25%, primarily driven by financing activity in spread products. Markets delivered net income of $783 million with an RoTCE of 6.2% in the quarter and 11.6% for the full year.

Turning to Banking on Slide 14. Revenues were up 78%, driven by growth in corporate lending and investment banking. Investment banking fees increased 35%. M&A was up 84%, reflecting a record quarter that closed a record year with momentum across several sectors and continued share gain. ECM was up 19%, driven by investment-grade and leveraged finance debt, partially offset by lower participation in loans. And while ECM was down 16%, driven by lower participation in follow-on, this was partially offset by a continuation of the IPO market recovery supported by favorable market conditions.

Corporate lending revenues, excluding mark-to-market on loan hedges increased significantly, driven by an increase in lending revenue share. Expenses increased 10%, driven by higher compensation and benefits, which includes recent investments we've made in the business. Cost of credit was $176 million, which included a net ACL build, driven by changes in portfolio composition, including credit quality and exposure growth.

Banking generated positive operating leverage for the eighth consecutive quarter and delivered net income of $685 million with an RoTCE of 13.2% in the quarter and 11.3% for the full year.

Turning to Wealth on Slide 15. Revenues were up 7%, driven by growth in Citigold and the Private Bank, partially offset by a decline in wealth at work. NII, which you can see on the bottom left side of the slide, increased 12%, driven by higher deposit spreads and average balances, partially offset by lower mortgage spreads. NIR decreased 1%. Net new investment asset flows slowed to $7.2 billion in the quarter, consistent with typical seasonality, and we continue to see growth in client investment assets, which were up 14%, including the impact of market valuations with net new investment assets for the full year representing approximately 8% organic growth.

Expenses increased 6%, primarily driven by investments in technology and volume and other revenue-related expenses. End-of-period client balances continued to grow, up 9%. Average loans were up 1% as we continue to grow security-based lending and deploy balance sheet to support clients with a focus on shareholder returns. Average deposits were also up 1% as client transfers from USPB as well as net new deposits, were primarily offset by operating outflows and a shift from deposits to higher-yielding investments on Citi's platform.

Wealth had a pretax margin of 21%, generated positive operating leverage for the seventh consecutive quarter and delivered net income of $338 million, with an RoTCE of 10.9% in the quarter and 12.1% for the full year.

Turning to U.S. Personal Banking on Slide 16. Revenues were up 3%, driven by growth in branded cards and retail banking, partially offset by a decline in retail services. Branded cards revenues increased 5%, driven by higher loan spreads, interest-earning balances, which were up 4% and gross interchange fees, largely offset by higher rewards costs as customer engagement remained robust with acquisitions up 20% and spend volume up 5%. Retail services revenues were down 7%, primarily driven by lower interest-earning balances and lower loan spreads. While growth has been impacted by foot traffic and sales at some of our partners, we continue to see strong returns across the retail services portfolio. And retail banking revenues increased 21%, driven by the impact of higher deposit spreads.

Expenses increased 2%, driven by higher transactional and marketing expenses to support acquisitions and customer engagement, partially offset by a reduction in other expenses. Cost of credit was $1.7 billion, driven by net credit losses in cards. For the full year, net credit losses in each of our cards portfolios were at or below the low end of our guided ranges, with branded cards at 3.6% and retail services at 5.73%. Average deposits increased 2% as net new deposits were primarily offset by the client transfers to wealth that I mentioned earlier.

USPB generated positive operating leverage for the 13th consecutive quarter and delivered net income of $845 million with an RoTCE of 14.3% in the quarter and 13.2% for the full year.

Turning to Slide 17. We show results for all Other on a managed basis, which includes Corporate/Other and Legacy Franchises and excludes divestiture-related items. Revenues declined across Legacy Franchises and Corporate/Other. The decline in Legacy Franchises was driven by the impact of the Russia notable item as well as the continued reduction of revenue from our exit and wind down markets, partially offset by growth in Mexico. The decline in Corporate/Other was driven by lower NII due to a lower benefit from cash and securities reinvestment, driven by actions taken over the last few quarters to reduce Citi's asset sensitivity in a declining interest rate environment.

Expenses were down 6% with a decline in legacy franchises, partially offset by growth in Corporate/Other. And cost of credit was $449 million primarily consisting of net credit losses of $341 million, driven by consumer loans in Mexico.

Turning to our current expectations for 2026, starting with net interest income, excluding markets on Slide 19. Following solid growth of nearly 6% in 2025, we expect NII ex Markets to be up between 5% and 6% in 2026. As you can see on the left-hand side of the page, we expect most of the increase to come from volume growth and mix, primarily driven by higher loan volumes in cards and wealth and deposit volumes in services and wealth. And we expect a continued benefit from our investment portfolio, including fixed rate securities and derivatives rolling into higher-yielding instruments, partially offset by declining U.S. and non-U.S. short-end rates. Overall, we expect the drivers of NII ex Markets growth in 2026 to be consistent with those in 2025.

Turning to Slide 20. We show our outlook for operating efficiency and the drivers of our expense base in 2026. In terms of expenses, we will continue to invest in our businesses to support continued top line revenue growth and expect higher volume and other revenue-related expenses with capacity generated from productivity savings from our prior investment, reduction of transformation expenses, continued reduction in stranded cost as well as a lower level of severance versus 2025. We expect our disciplined expense management combined with top line revenue momentum will drive another year of positive operating leverage as we target an efficiency ratio of around 60% for the full year.

On Slide 21, we show a summary of our expectations for 2026. In addition to our outlook for NII ex Markets and efficiency ratio, we expect continued fee momentum across the businesses to drive growth in NIR ex Markets. In terms of credit, we expect card NCLs to remain within the ranges that we gave for 2025. We will continue to provide the businesses with the capital needed to pursue accretive returns while we optimize our standardized and advanced RWA and capital usage. And we will, of course, continue to buy back shares against our $20 billion buyback program.

Now, before we take your questions, I want to say a few words as this is my last earnings call as the CFO of Citi. I've been with Citi for nearly 25 years, and I've been the CFO for the last 7. During my career here, I've seen Citi go through many different evolutions and faced some very challenging times. Yet I have shown up every day for the last 25 years wearing my one Citi Jersey, surrounded by colleagues who have the same mindset. I've always believed that what sets Citi apart is the heart and determination that it takes to drive real change and deliver for all of our stakeholders: our clients, employees, regulators and of course, our shareholders and analysts.

As I said in our 2022 Investor Day, it was a lot to do and there were no quick fixes, but we had a clear strategy to set the company up, to have a higher-quality earnings mix and higher sustainable returns. And to achieve these financial goals, we were going to do 3 things: first, invest in our businesses to grow our revenue; second, become more efficient by investing in the transformation and technology and simplifying our operating model; and third, manage our capital to drive improved returns. And while there is still a lot more work to be done, as I sit here today, I could not be prouder of the progress that we've made as a firm in terms of executing on our transformation and improving the performance of our firm and each of our 5 businesses.

Since Jane took over, she has built a truly impressive team and one that I have been incredibly proud to be part of. I want to thank Jane, my colleagues and all 226,000 employees for the privilege of serving as your CFO over the last 7 years. It has been the most exciting and rewarding time of my career and it has been an honor to be part of one of Citi's most significant chapters. Looking ahead, I remain fully committed to supporting Jane, Gonzalo and the broader leadership team as the firm continues its path towards achieving its RoTCE target of 10% to 11% this year and delivering higher returns over time.

So I am leaving the role not at the peak for Citi, but on the upswing, with nothing but upside from here. And with that, Jane and I would be happy to take your questions.

[Operator Instructions] Your first question will come from Glenn Schorr with Evercore.

And Mark, you're the best. You deserve sit on a beach for a little while.

Thank you, Glenn...

Not yet.

Not yet, not yet, but exhale at some point. Okay. I have a question in Markets. And I feel like markets is one of the big pieces of the puzzle to get to improved returns. So it could be just 1 quarter, but I see the flattish revenues in the quarter you talked about tough year-on-year comp. Let's more focus on the interesting, PB balance is up around 50%, allocated capital about the same trading assets are up like 23%. Loans are up a bunch. It's -- I'm curious on how those things are growing while allocated capital is the same and yet the RoTCE in the quarter is like 6%. So there's just a couple of things that make my head scratch a little bit, so I just need a little help there.

Yes. Look, I'd point to a couple of things. So first of all, you can see the top line revenue for the full year up 11% for Markets. So very strong performance. The fourth quarter was very strong last year, so it was a tough year-over-year comp. But we're seeing particular momentum over the course of the year in parts of the franchise, like spread products where we've been doing more around financing and lending activity, and that is a very optimal use of RWA. It's very high returning, low RWA for us. Similarly, that momentum in equities is supported by prime with equities up 13% for the full year.

And a lot of the action that we see in 2025 is on the heels of having spent a lot of time optimizing RWA in the prior years, and ensuring that we're deploying it where we get the highest return for it. And so we come into the year with lower levels of capital. You know we set that once for the year. We've allocated more GSIB capacity towards the business and allocated more higher returning use of the balance sheet towards lending activity, and those things have contributed to the higher RoTCE that we see here for all of '25.

So a combination of optimization of balance sheet and deploying balance sheet in higher-returning areas of the franchise.

Okay. All helpful and good perspective. And then this is a small one. But on the expense and efficiency, Slide 20, and correct me if I'm wrong, I thought the last look was efficiency ratio below 60%, and now it's -- we're targeting around 60%. It's -- in the grand scheme of the Citi story, I don't think it's a big deal. I'm just curious if it changed or it meant to change? Or am I reading that wrong?

No, you read it right, Glenn. I think -- look, I think the -- it's a couple of things. Your last point is well taken as well. In the grand scheme of Citi, like what are we talking about. But let me make the bigger point, which is, in '26, as you know, we are focused on ensuring we deliver on the 10% to 11% return, right? That means top line momentum, good expense discipline. But in that expense discipline is both creating capacity through greater productivity, bringing down our transformation costs, et cetera, and investing in the business, all right? And that investing in the business point is a really important one because Jane has said a number of times now that 2026 is just a way point. And in order for us to ensure we're delivering greater returns in '27, '28, et cetera, we have to continue to invest in the franchise. And so what you highlighted as a less than 60%, moving to an around 60% is giving us the flexibility to ensure that where we see the opportunities to invest beyond '26 that we're taking advantage of those. Does that make sense?

Yes. Yes, it makes sense, and I appreciate it.

Your next question will come from Mike Mayo with Wells Fargo.

Jane, if you could elaborate on the new data point that over 80% of your progress with transformation is at the target state or near the target state? What remains, and out of what remains, how much of that relates to safety and soundness?

Yes. Thanks, Mike. Well, while we have some more work to do. Let me just say, I do feel really good about where we are. As you remember, the orders mainly revolved around 4 areas, so compliance, risk, controls and data. And we are operating at almost at our target space. These are the Citi defined ones for compliance, risk and controls. And in data, we've significantly accelerated progress over the past year. And some of that's really been helped by AI as well. And we're seeing this translate quickly into both outcomes, and that's including the detailed accuracy of our most critical regulatory reports and in the modernization of our underlying data.

So we're focused on completing the work. And we have a finely tuned execution machine that's delivering on time and at the appropriate quality. And I am highly confident in our ability to get the remaining work done. And I think we all took it as a positive sign that our regulators are also seeing demonstrable improvement in Citi's safety and soundness, and that's publicly evidenced by the OCC's termination of the July '24 amendment.

Ultimately, the timing is up to the regulators. I'm getting the work completed is just the beginning of the end as it was, and we need to get comfortable that the work is delivered the desired outcomes, it needs to get validated by our independent audit function and then the regulators go through their assessment and closure process. That will take time. But from the shareholder's perspective, we are beginning to see the benefits of the investments we've made in our transformation. We're becoming more efficient, as you can see, on the back of many of these investments. We're far better controlled. And as we complete each body of work, we're beginning to bring our expenses down.

And to Mark's point earlier, that creates the capacity for additional investments. It creates capacity for higher returns in 2026 and beyond. And I would also say it frees up some more management mind share for growth and innovation.

And correct me if I'm wrong, I think you're at the end stage for risk and compliance, but now you're saying at controls, you're mostly there?

Yes.

So that's new. So you're really left with regulatory data, which -- and again, correct me. And to me, that sounds like regulatory box checking the sort of thing regulators have talked about, they're deemphasizing. So if you've addressed the substance and what remains has nothing to do with regulatory box -- anything to do with safety and soundness or customers or anything like that? I don't know why the regulators would still have the consent order on after 6 years. So I guess, are you the bottlenecks in the process and you just have to kind of validate what you've done in internal audit and then turn it over to the regulators? If that's the case, how long does it take you to validate your internal progress?

I wouldn't go quite as far as you've jumped to. We still do have some work to do. And we're very focused around it, and we're making good accelerated progress with it. But yes, we have to get the work done, validate it and then hand it over to the regulators and the process we talked about. So all of those things have to happen, and I'm confident that we'll get there in good shape.

And one little attempt when you hand it over to the regulators? Are we talking months, years? what are you thinking?

That's up to them. They have to answer that one. That very much lies in their hands.

Your next question will come from Ebrahim Poonawala with Bank of America.

I guess maybe 2 questions. One, Jane, just following up beyond the regulatory piece, what would you say? I think one of the concerns investors have is Citi was behind the curve in terms of franchise investments. You've done a tremendous job over the last 5 years where -- how would you respond to that there is a gap between Citi and best-in-class peers when we think about investment banking, capital markets, et cetera, how would you size that gap? And what is needed and how long to narrow that gap or if, in fact, eliminate that?

So you're right. Over the past 5 years, not only have we been investing in technology and the transformation, but also in innovations and making sure that we are positioned to drive our growth and our returns and our competitive position. In terms of services, we are the leading firm in a #1 position. We've been building out digital asset capabilities. We've been expanding product innovations, as you've heard us talk about, Payments Express, real-time liquidity and other always-on digital solutions. And we're investing in scaling our security services platform and broadening capabilities there, and you saw the huge growth in the assets under custody and management this year that we've achieved as a result.

So services is in a very strong position. Markets where we've been investing as we continue filling product capability gaps, we're improving capacity, we're reducing latency, increasing resiliency to support the 11% growth that you saw this year and in particular areas like Prime, which had huge growth of 50%. But we're always looking at where are the new capabilities that can get added on in FX and equities, spread products, rates across the board.

Now in Banking, you saw our talent investments driving share gains. So we saw sponsors, an area of focus, up 180 bps, [ LevFin ] up 100 bps, M&A up 90 bps. And we're going to continue to bring in top talent to fill remaining gaps that we have notably in North America. Wealth retooling key areas of investment product platform with the open architecture is the key operating principle. So you've seen us retool the research product. We've been investing in deploying new AI-powered capabilities to drive continued momentum in client investment assets and investment fee revenues. And then finally, in cards, we're driving engagement and growth with new innovative products, our commerce platform launches and refreshing -- various refreshing of different offerings so that we can complement the suite of proprietary cards. We can broaden out our marquee partner relationships.

So all of this investment is making us feel that we're in a very good place to compete. Our goals, as we talked about, is to be the leading player, top 3 or top 1 in all of the businesses that we're engaged in. It's very important for us that we invest for the long term and not just looking at this on a year-by-year basis. So that's the mindset we have if that helps you. And you can see we're making progress.

No, that's helpful. And maybe, Mark, one for you. Appreciate you're moving away from a revenue guidance, but maybe help us fill in the blanks a little bit around when we think about fee growth maybe there's about 6% ex Markets when we look at 2025. Just how we should think about fee revenue growth embedded in your expectations around that 60% efficiency ratio? And any color on markets NII of at least what the puts and takes should be in terms of delta versus the $10 billion-ish that we saw in 2025?

Yes, sure. So first thing is we did have good fee growth this year. We'd expect that to continue as we think about 2026. Now keep in mind, the 2026 banking wallet was north of $100 billion. And so we expect a constructive wallet. We'll see what that looks like, but we also expect continued share gains against that constructive wallet. We've got a rich pipeline as we go into the beginning of the year. And as Jane mentioned, we've been investing in key parts of the franchise that will continue to pay dividends for us in '26 and beyond. So that will be a positive contributor to fees as we think about 2026.

Similarly, we're expecting continued momentum on the investment revenue side of wealth as well as on deposit, but in investment revenues specifically as it relates to your fee point. We saw a good growth in client assets up about 14%, good growth in NNNI, up about 8%, and that momentum is expected to continue in '26 as well. So that will be a contributor to fees. And then you've seen throughout the year good KPIs in our Services business and in both Security Services as well as in TTS with U.S. dollar clearing volumes and cross-border transaction value, but also on the securities side with growth in assets under custody and assets under administration. And we'd expect that momentum to continue, particularly with some of the big wins we've seen on Security Services side in North America, in particular. So the combination of those things, I think, will be positive contributors to NIR as we think about 2026. I've been pretty consistent in stressing the importance of thinking of the Markets business from a total revenue perspective. And I would stick to that point.

With that said, I think that one way to think about Markets is probably relatively flat year-over-year. Subject to what the wallet is, revenues should be somewhat flat year-over-year. But again, off of strong momentum that we've seen in 2025 and obviously, mix will matter there.

What I will point out is that we have seen meaningful growth in the spread products and financing side of the business. And that obviously does show up in part through NII inside of Markets. And so hopefully, that gives you some sense, but again, feel good about the NII ex Markets outlook. 5% to 6%, that will be both volume and mix. And on the volume side, I'd expect to see loan growth in cards and wealth probably in the mid-single digits in terms of loans and deposit growth in Services and Wealth probably in the mid-single digits in the way of volume there as well.

Your next question will come from Betsy Graseck with Morgan Stanley.

So Mark, I had a question for you on the NII outlook. Coming into this print, I think you were looking for a slowdown in NII growth from 2025 levels of 5.5%, but you actually increased the NII outlook to 5% to 6%. And I know you mentioned also that you took some actions to reduce asset sensitivity. So maybe we could wrap this all up into what drove that better NII outlook?

Yes. Look, it was -- the NII guidance that we gave last year, we came in a lot better than that in 2025, and that was in part due to the higher loan volumes that we saw, the higher deposit volumes that we saw throughout the year. And in fact, that is what is informing the 5% to 6% ex Market NII guidance that I've given for 2026. We'd expect the loan volume to continue. And as I mentioned -- I'll correct what I said earlier, I expect loan volumes to probably be up mid-single digits for total ex Markets loans.

And that will be, again, the combination of growth that we see in cards. We saw good volume growth in cards this year, particularly on the branded side. We had good purchase sale activity, up 5% in the quarter. All signs are that we should see that continue and good loan growth on the Wealth side, particularly in security-based lending type activity, which is tied to some of the investment momentum. And then really impressive growth in deposits, average deposits for TTS for the year were up 6% and good operating deposit growth there, a nice healthy balance between North America as well as internationally.

And so the long-winded way, Betsy, of saying the momentum that we've seen in cards, in loans, we expect to continue into 2026, and that's a big driver, big factor in that NII momentum we're showing on the page. And then as you mentioned, we've been -- I've been mentioning it pretty consistently quarter-over-quarter. The way we've been managing the investment portfolio that we have is such that we have, in this case, in '26, about 30% of those securities maturing. They're maturing at lower rates than we're able to redeploy them at, including in loans and cash and securities and other instruments. And so that's going to give us a bit of a lift as well. So it's the combination of those things that give me confidence around the 5% to 6%.

Okay. Great. And then just on the actions to reduce asset sensitivity, did that play into this at all? Or what actions did you take?

We took some -- you can look at our IRE analysis and if you look at it pretty -- it's been pretty consistent in that we've been managing the portfolio in a very dynamic way. If you look at it as of the third quarter, our U.S. dollar IRE for a 100-basis-point drop is $300 million, right? And so we've taken a number of actions as it relates to the nature of securities that we hold and exiting those in some instances to make sure that we're reducing the asset sensitivity given that we know that rates are likely to go down. And so most of that sensitivity is in the non-U.S. dollar part of the portfolio, which, as you know, represents more than 65 currencies or so.

So it's active management of the balance sheet, things you'd expect that we would be doing in order to manage the direction of things that we expect.

Your next question will come from Jim Mitchell with Seaport Global.

And Mark, I think everyone appreciates your efforts over the years. So good -- definitely good luck with your new -- next chapter.

Thank you, Jim. I appreciate that.

Yes. Just maybe on the capital return side, you're 160 bps above your minimum CET1. I guess, number one, are you still targeting a buffer around 100 bps? And if so, how quickly are you looking to get there? Just trying to get a sense of the pace of buybacks from here over the next few quarters and the year?

Yes. No, thanks for the question. We are, as you say, about 160 basis points above. We are still targeting a 100 basis point management buffer. And as -- what that would obviously equate to is us getting closer to a 12.6% as I think I said in my prepared remarks, we're over the course of the next number of quarters, we'll be working our way down towards kind of a 12.6%, which would represent that 100 basis points. We're not giving guidance on buybacks quarter-to-quarter, as you know. But as you look at what we've done in the year at $13 billion or so, I think you can expect that we would look to do more in 2026 in the way of buybacks.

Okay. That's helpful. And just maybe on just the deposit growth in Services. It has been very strong. It sounds like you're pretty confident in the outlook there. Can you maybe kind of just dive into a little bit more on the drivers, and why you think that should be sustainable going forward?

Sure. And look, I think the team has done a really, really good job in TTS, in Security Services at first ensuring that our clients appreciate that what we bring to bear is more than just deposit taking in the breadth of our offering, particularly around multinational clients. The second thing that I'd say is there has been a focus on as we work with those clients around the world and they look at new markets to enter, that we are right there by their side, ensuring that we can help them move and manage their cash and liquidity needs in an effective way. And that focus and continued dialogue has manifested itself as -- in growth in operating deposits for our business, particularly this year.

The third thing I'd mention is that there's still, I think, a significant opportunity as it relates to commercial and middle market clients. And the team is very focused on with a -- I think, a growing front end on how we capture more share with that client base. So the combination of doing more with our existing multinational, bringing on new clients and targeting what is a relatively nascent segment for us gives me confidence, not just in '26, but in beyond '26 and our ability to have some continued momentum here.

Your next question will come from Erika Najarian with UBS.

I didn't plan to ask this question, but this literally just hit the Bloomberg. Bilt just unveiled credit cards cap at 10%, and they will maintain those rates for a year and it will be applicable only to new purchases. Obviously, a tiny player, but I'm just wondering, obviously, we all know the main reasons why this shouldn't be capped in perpetuity, including really curtailing credit to those that need it the most. But is this going to be the end game, you think, Jane, in terms of these demands and sort of the push for affordability? I know this is all new, but...

Yes. Happy to tap in there, Erika. Look, let's start with -- we applaud the President's focus on affordability. Everyone agrees that for many Americans are pressing concerns and escalating costs that require immediate attention. And we're always interested in collaborating with the administration to put in place more effective solutions that are going to foster the expansion of accessible and affordable credit to those who need it most. And today, we provide our card customers with lower-cost products. Think of the no-fee simplicity card or our balance of transfer offers. And I'd also note, we were the only big bank to eliminate overdraft fees, amongst other measures. And we're very proud of our role as the leading financier of affordable housing in the country for the past 15 years when you look at the bigger picture.

But to your point, a rate cap is not something that we can support. And I think the reception from the Hill also seemed less than enthusiastic from what we could tell. And just to be clear, the impact to us and other banks would just be dwarfed by the severe impact on access to credit and on consumer spending across the country. These things just don't work out as intended. And think back when the Carter administration put credit controls in place to reduce costs, the impact was so severe they were very swiftly rescinded within 2 months. And I think it's helpful to have a few pieces of data.

For context, U.S. consumers spend $6 trillion on their credit cards every year, and outstanding U.S. credit card balances are over $1.2 trillion. They grow about $80 billion a year and there's over $4 trillion in untapped capacity at risk. So if you make these products unprofitable, that spending will be drastically reduced, and that's British understatement. And we've seen this in -- as other countries have experienced when they've tried this and also the studies in the U.S. have shown a vast majority of consumers and businesses will lose access to credit cards. They be forced to pursue more predatory alternatives. And you'd only be left with the wealthy having access to credit cards and nobody wants that.

We'd also see some of the domino effects ricocheting through retail, travel, hospitality sectors, much broader impact on GDP. So as I said, what we want to do is engage on how we can expand credit rather than restrict it to those who need it. And that's our goal.

Very clear. And my real question, and I'm going to try to smoosh it into one. You talked about the progress in the consent order amendment getting lifted. And Jane, you talked earlier about as you hit your end state, your target end state expenses come off. As we think about the entirety of the consent order lifting, is it a gradual expense savings? Or is there sort of a giant chunk that could be reinvested? And the sort of follow-up question is just on EB's question on market NII. Mark, I know that your market NII is probably less volatile than that of your peers. And I know you want us to think of markets more broadly. But I'm just wondering, as we sort of square your markets -- sorry, your NII ex Markets guide with consensus, is it prudent to, as a placeholder, put in what you earned in 2025 into 2026 in terms of markets NII, but perhaps with upward bias?

Yes. So you snuck in a few different questions there, Erika. Let me just quickly touch on what does it mean for our -- what does it mean as we get different bodies of work, I think different from some others, we begin to see the benefits of the investment we've made, and we begin -- and we become more efficient on the back of the investments. But as we complete each body of work, we begin to bring the expenses down related to that. And that's what creates the additional investment capacity and will help us drive returns. So it's not as if it's a cliff at the end of the consent order. You're beginning to see us doing this as we get work completed, bringing that expense down and then redeploying that either to the bottom line and as well as to the investments that we need for growth.

And maybe just before I turn to Mark, just in terms of long-term return trajectory because I think it's -- we haven't talked as much about it, and we're looking forward to doing so at Investor Day. But when we're looking at our longer-term performance, there's really going to be 3 drivers of the higher returns: the revenue growth, the expense efficiencies and our RWA and capital efficiency. On the revenue side, you've seen us, and we're very proud of this. You've really seen us steadily grow revenues over the past few years.

2025 is the condition of -- continuation of that, and that will continue going forward. Services will grow with new and existing clients, including the opportunity Mark just talked about with commercial clients as well as further product innovation that opens up whole new revenue streams as we've seen in e-commerce. Markets. continue to grow in prime, where you've seen very high growth from us the second leg to our derivative capability as well as high-return opportunities in financing and securitization that's now over 70% of our spread product business. And you -- and we'll continue filling in some of the areas that we've got with different client bases and others to continue driving growth. And I would note we now have 4 $5 billion businesses, or over $5 billion in Markets as opposed to the 4 $4 billion ones we've talked about.

Banking, you saw the proof of the pudding this quarter, gaining a fuller share of our clients' wallet and just systematically building out the areas we've had gaps and driving our productivity. Wealth is about scaling up investment penetration with existing and new clients and also the value that we can see from the integration with U.S. retail. Cards continue growing proprietary products and platform innovations. We have the American Airlines renewal, we're really excited about for next year and all the different expansion of the offering there, and our momentum in co-brand offerings, as Mark referred to in his introductory remarks, and then a lot of synergies between the businesses.

Mark talked about where the expense efficiencies will come from in the second leg that benefits the investments in our transformation and the technology that we've been doing as well as the increased productivity, the stranded cost removal, et cetera. He's run through where you'll continue to see the expense efficiencies coming through whilst we also make the long-term investments. And then I'm very proud of our business leaders. I've been really unrelenting in the optimization of resources in RWA and capital, and we're hoping to see some reductions in our capital requirements as we saw with the SCB results going forward.

So there's a lot of potential both for the continued revenue growth, the durable return improvement in the years ahead, and you'll obviously get a lot more detail at Investor Day. But I think it's important to put this in the context of the long term where we're headed rather than just the nitty-gritty of the short-term pieces here.

Erika, if you're not excited about Investor Day after that, I don't know what will excite you.

We're excited about it.

I need to pick up my outfit right now.

That's right. That's right. All 5 of these businesses are humming. So we're pretty excited. To your question on markets, here's how I think about it, Erika. So what I said earlier was that total revenues, you can assume that markets revenues will be flat in 26%. I think that's pretty consistent with what consensus has right now. If you wanted to try and parse it within that flat, I think your instincts are probably right that NII, I would forecast to be up within a total revenues of flat if for no other reason, as Jane mentioned and I mentioned earlier, the more work we're doing in financing and securitizations are likely to lead to higher NIIs in market as we think about '26.

And I appreciate your starting point in the question, which was that our Markets revenues tends to be more steady. And I think that is true in a byproduct of our model, our client coverage and our business mix. So -- but thank you. See you at investor Day.

Your next question will come from John McDonald with Truist.

Just to follow up on the last thing and maybe just summarize it on the efficiency journey. Fair to say that both you have plenty of expense flex to deliver the efficiency improvement to 60% this year. And also that the 60% is a way point itself. It's not the destination for your efficiency ratios of both of those fair?

Yes. Look, the way I think about it, yes, we have flex is the bottom line. So if revenues come in, come in softer, we will dial back expenses accordingly, importantly to make sure we get to 10% to 11%, right? So I don't want to lose sight of that point, John, I'm not avoiding your question. The answer is yes in terms of flex point. But we're focused on ensuring we deliver the returns of the 10% to 11%.

In terms of the long-term operating efficiency, I'll leave that for Investor Day to talk about. And again, the reason I'm saying that is because we want to invest. We need to invest in this franchise, right? The earlier question that was asked in terms of closing the gap versus peers, this is not -- these are not businesses that you can invest once and be done with. They continue to evolve. They require continued investment in working of them. And so I don't want to sit here with you today and tell you that operating efficiency goes to some number that's significantly lower without giving you the full context of how we think about the next couple of years, and that's what Investor Day is about. But, Jane, I don't know if you want to add anything?

Yes. And I think you're also hearing confidence from us on our ability to do both. And AI has been an additional benefit. We talked a little bit about what we're doing with our over 50 processes in the prepared remarks, that will be driving new sources of efficiency that, 3, 4 years ago, we didn't -- we couldn't have imagined. And we see that ability then to bring the efficiency down and drive our returns up and grow the franchise going forward. And you're hearing the confidence from us to be able to do that and frankly, the excitement.

Okay. That's fair. And then one quick follow-up. Mark, could you give a little more color on the outlook for the card NCLs? The range is the same as last year, but the mid to upper end of the range implies a little bit higher losses than the actual 2025 loss rates, particularly on retail services. Are you just allowing for some macro uncertainty by keeping the ranges? Or is there anything in the delinquency roll rates that you're seeing?

Yes. Look, there's -- to answer your question with the latter part of it. As we look at delinquencies, we're not seeing anything unexpected in either of the portfolios. And even when we cut it by different FICO scores and income brackets and the like. And so are there things out there that could have an impact over the course of the next year? Sure. Does the range give us some cover around some of those things from an NCL point of view? It does, which is why we're sticking to the range. But there's nothing that I see right now.

Your next question will come from Ken Cassidy with RBC -- I'm sorry, Ken Usdin in with Autonomous Research.

Just one for me. I know we're going long here. Mark, the services deposits last year were just really strong. And I'm just wondering if you could tie that into just the broader macro economy and rates -- and are you continuing to still expect that, that part of the business can still generate that level of deposit growth?

Yes, sure. So for deposits, total deposits for the firm next year, we're expecting mid-single digits. As I look at Services for 2025, as you said, we were up about 7%. A big part of that TTS was up about 6% year-over-year, and Security Services were up about 12%. I do expect to see continued strength there despite -- as I think about growth from, as I mentioned earlier, more with the large multinationals, more with some of our commercial middle market clients, I think a particular emphasis in growth in North America is what I would expect. We've been very thoughtful around pricing obviously, as rates have declined. And remember, we've got good loan growth. And so we want these deposits to come in. It's a lower cost of funding for us, and we see opportunities to deploy it at good margins and help drive our returns. And so this has been about ensuring that we're managing these clients with a client relationship mindset, which includes the deposits but also all the other things we bring to bear for them.

Your next question will come from Gerard Cassidy with RBC.

Mark, you're leaving big shoes to fill, so good luck in your future endeavors.

Thank you so much, Gerard.

Jane, you guys have done a good job moving the ball down the field in divesting your presence in Mexico. You talked about it today. Can you share with us where we are in terms of -- I know market conditions will play a factor once you get all the regulatory approvals to do the IPO. Can you share with us where we are on the regulatory part? And then second, will you guys give us the announcement that all the regulatory approvals are in, and now it's just market conditions. You've got the green light and you're going to wait until you think it's right?

Right. Okay. Well, look, first of all, we had a great outcome for all parties involved with the accelerated closing of the sale of the 25% stake to Fernando Chico Pardo. And the Mexican President and how government have been publicly and privately very supportive of both our path forward and of Fernando as the anchor investor. And I think we saw that with the record closing of that stake. Normally, it would take 9 to 12 months to do. So we're very pleased with that. We are focused on the next step in the exit process, and we're actively looking at selling some additional smaller stakes as we lead up to an IPO. And as we've said, and you referred to, the actual timing and structure of what we do is all going to be guided by several factors that includes market conditions with the ultimate goal of maximizing value for shareholders. But that 25% stake that we've just closed is a much bigger opening position than it would be if we had IPO-ed. And so I think the next step is going to be some smaller stakes, and we'll keep going from there.

Very good. And then just a real quick follow-up. Mark, you talked about markets, you talked about equities, the strong comparison to a year ago, how prime balances were up nicely this quarter. But in the cash equities business, what was the weakness there? I know you identified it, but what was it inside cash equities?

Again, I think it was more of a year-over-year comparison. We had a really strong fourth quarter in equities last year, and that was a big driver.

Yes, we had a very big -- we had a couple of very big alpha trades. And so if you strip that out, it looks much more in line with what you would expect.

Yes.

A problem if you have a great fourth quarter, it comes back...

Your next question will come from Saul Martinez with HSBC.

I just have one, and I'll show you some love as well, Mark, the best of luck, and we will miss you on these calls.

Thank you, Saul.

The wealth business, net interest, NIR was down 1%. I know that was -- that reflected the sale of a trust business. But op leverage was minimal. The EBIT margin was pretty much the same as last year. And net new assets still good, but a little bit softer. I'm just curious how you're thinking about the progress there, your level of confidence that you're on track to continue to drive higher op leverage. And if you could just remind us what the end goal is for op leverage, for EBIT margin, I should say, and over what time frame do you expect to get there?

Yes. Let me kick off and I'll pass it back to Mark. Look, we had a good quarter in Wealth. It was capped off a year of real continued improvement and our revenues are up 14%, the RoTCE is over 12%. We grew client investment assets 14% on the back of 8% organic growth. So a lot to like here. What's the strategy and the direction that Andy is taking this, right? It's to be the lead investment adviser for our clients has been a lot of our focus. So we've been attracting, retaining industry-leading talent, strengthening the CIO research product with Kate Moore doing a fabulous job there. A lot of retooling of key components of the investment product platform and some impressive partnerships that are really going to differentiate us with industry leaders like BlackRock, iCapital, Palantir, which means we're going to have a -- we have a really superb open architecture platform and a far better client experience.

And all of this is helping us drive and accelerate growth in investment fee revenues over the next few years. That's the famous $5 trillion of us opportunity, $3 trillion of that is with clients in our U.S. retail and Citigold business, which is why the integration of the retail bank makes so much sense. But we're clear, there's still more work to be done. There's room to grow profitability and revenues from here. And Andy is going to lay out the path at Investor Day. So you have the clear set of KPIs and the different elements that are needed to continue to drive that growth forward. But we remain committed and we see the path to improving the returns of the overall business to above 20% in the long run.

Mark, what else would you add?

The only thing I would add, and I do think, as you pointed out, Jane, we are seeing good momentum and feel very good about the momentum we're seeing on the investment side and frankly, the opportunity with the wealth of our clients that sit in our retail banking footprint is still a significant opportunity for us that is largely not yet tapped. Your question around margins. The medium-term EBIT margin that we set for the business was about 20%. So when you look at 2025, we're there. The longer term is 25% to 30%. And so we still have some, some headway to make. And as Jane mentioned at Investor Day, we'll be mapping out how we intend to get there.

The final question will come from Chris McGratty with KBW.

Chris, we are leaving the best of luck.

No pressure, thanks Jane. Related to Investor Day, I'm interested when the management team is getting together in the room and discussing the communication of the new targets, does the level of profitability or the timing to what you get there, carry more weight. I ask because the market seemingly wants a little bit higher and sooner, but I'm also sensitive to the bar you set and growing into the targets?

Yes. I would say both are important, right?

Yes.

I mean, look, clearly, 10% to 11% is not sufficient. It shows demonstrative progress since the last Investor Day, but we're clear minded that when we're creating value, we're doing so with returns that are well above our cost of equity. And so being able to grow the return level is critically important. And if you know anything about Jane, you know the sense of urgency and kind of making things happen quickly. So without committing in any way, I would say both are factors as we think about the forward look for the firm. But Jane, why don't...

Yes. I mean we want to have our cake -- what can I say.

There are no further questions. I will turn the call over to Jenn Landis for closing remarks.

Thank you for joining the call. But before we wrap up, I just wanted to briefly echo what Mark shared earlier about Citi, and thank him for his leadership as the CFO of Citi. His focus on transparency, performance and long-term value creation has set a very high standard for Citi. And I personally want to thank Mark for his mentorship and guidance over the years. So thank you. And thank you all for joining, and I'm sure I will talk to you this afternoon.

This concludes the Citi's Fourth Quarter 2025 Earnings Call. You may now disconnect.

All right. If everybody could take their seats, we're going to get started with the next presentation. I am delighted to welcome Citigroup to the stage.

Mark needs no introduction. He has been CFO of Citigroup since 2019 and has attended this conference every year as CFO, and we greatly appreciate your support. As many of you know, this is Mark's last time presenting as Citigroup's CFO. Mark has been a tremendous CFO at Citigroup. But I think he's also played a critical role in what I think is shaping up to be one of the most impressive transformations in the banking industry over the last decade.

So I think I speak for everybody in the room when I say, Mark, we will miss you next year. We want to wish you all the very best for the next chapter of your career.

We're also joined by Gonzalo Luchetti, who's Head of U.S. Personal Banking, overseeing Retail Banking, the U.S. and the U.S. Card business. I think 70 million clients, I think, give or take. He is also the incoming CFO effective from March. I have been fortunate to spend some time with Gonzalo very much looking forward to you and very much welcome you to what I hope will be the first of many presentations at this conference going forward. So great to have you as well.

So Mark, maybe we can start off with you. And I think this is the first time that you've spoken publicly since the announcement of the transition. You've obviously seen the firm through a period of change, obviously, significant progress over the time that you've been CFO. So why is this the right time for you to make this transition?

Yes. Well, first of all, thank you, Richard, for having me. It's great to be here, and it's great to be here with so many investors. It's a great question, and I have to just kind of reflect on the fact that I've been at Citi for 25 years. And I've been CFO for almost 7 years. And I show up to this company every day wearing the 1 city hat, 1 city jersey. And I highlight that because I grew up not believing in silos. And I think that is what, in fact, differentiates Citi when we show up for our clients and when we execute on the strategy that we have in place.

And so I reflected on that before taking this decision. And there were 2 things that were important to me. One was that I leave the company and I leave the finance function in a better condition than which I found it. And the progress that we've been making as a firm gave me confidence that I was doing that.

And the second thing was that I transition out of the role in a way that can ensure Citi's continued momentum on the commitments that we've made to our investors, to our shareholders, including the 10% to 11% return next year and that being a way point to higher returns. And so those 2 things being very important, as I sat down with Jane to talk about my decision that now is a time, I gained increasing confidence that with her selection in Gonzalo with a transition agreement that we worked on in terms of me staying through signing of the K and through Investor Day, and through 2026 to help her with some strategic initiatives, all gave me increased confidence that I could deliver on those 2 objectives.

I'd make one final point, Richard, which is, as I was thinking through this, I thought it would be incredibly awkward and inconsistent with the credibility we've been trying to build with investors to stand on stage in May, on May 7 of next year and talk about the go-forward strategy of the firm knowing that I wasn't going to still be here. And so consistent with our desire to build trust and transparency and my confidence in my ability to deliver on those 2 objectives is how I got to this decision. And I'm really, really excited about the trajectory that this firm is on. We still have a lot more to do, but the momentum, I think, is significant, and I'm confident that it will continue.

Okay. Great. So Gonzalo, maybe you can just give us a sense of your background. I know you've been a long-standing employee at Citigroup. You've done a number of different things. So maybe you can talk a little bit about your experience. But also talk about what you're looking to bring to the CFO role.

Well, first of all, thank you for having me here. Richard, it's great to be here. The first thing I'd say is that if you're wondering about the name, I'm Argentine American, which means I have a pretty decent hedge between the Olympics and the World Cup. So that's how I see it at least. I've been at Citi for almost 20 years in a variety of roles from running businesses to being in the finance function and strategy. I've also worked and/or lived in the U.S., 5. 5 years in Singapore, oversee in Asia, EMEA and Latin America, so I have been around in terms of our regions.

And then I'm really excited about the opportunity, number one, to really secure that path to our target in 2026, and making that execution that will deliver the 10% to 11% returns. And then equally as excited about being part of laying the foundation for the next phase at Investor Day in terms of our targets for increased returns and more importantly, and more energized and actually making those real through execution. And then in terms of what to expect or my approach to things, what I would say is a couple of things.

First, I think you can expect continuity and stability. And I'm super grateful not only to Jane, but also to Mark. He's been incredibly kind and generous already and I've been having a lot of support from him as well. And so I think you can expect that.

Secondly, I'm very focused on results delivery. I've always been and on accountability. And so doing what we say we're going to do is very important to me, the power of results being louder than actions and actions being louder than words. It's also important to me when Mark and Jane in Q1 of '24 said U.S. Personal Banking should be in the range of mid- to high-teen returns. And last year, we were at 5.5% and this year, year-to-date, we're at 12.9%. In Q3, we did 14.5% starting to edge inside that window on the lower end of the range. That was super important to us that we actually did what we had said.

Third thing I would say is durability is important to me. The fact that we don't do one hit wonders. And so durability to me comes from strong balance sheet management, liquidity management, risk and control management and that's what will make the results stick and be consistent for a period of time. So even in USPB in our trajectory, we work quite hard to make sure that the 12 quarters of consecutive positive operating leverage are there, all the way from our operating efficiency being 57% in 2022, down to 53%, down to 49% last year. Year-to-date, it's 46%. Q3 was 44%. So that was really important to us that we're able to provide that continuity of results.

And then the last piece, I'd say, even if I've done some things for some period of time, the importance of -- the Japanese have this work called Shoshin, which means looking at things as new fighter as an apprentice. And I like that philosophy of approaching even old problems in new ways. And so we did that with American Airlines a year ago when we not only extended our agreement and also consolidated the relationship, but also found ways of trying to unlock growth at the same time that we were accessing better returns. So a big thank you to Mark, but that's what I think we'll be focused on.

And look, just a quick follow-up because as part of the CFO transition, you also did announce a change to U.S. personal banking. So can you speak to the strategic rationale of moving the retail bank into wealth and having the card business as a stand-alone business? What are you looking to achieve with that change?

Thank you. I think the -- a lot of it was -- well, first of all, it's an evolution or a revolution of how we're structured because when you think about maybe from both lenses from the first lens in terms of the retail bank and wealth as probably many of you know, we have a footprint that is very affluent leaning. So we have the highest level of deposits per branch. We operate in 6 urban centers across 650 branches. And those urban centers are accessing about 1/3 of the high net worth households in the U.S.

And so our footprint is designed that way you don't also -- you don't need to believe me only in a retail bank year-to-date alone. We've been -- we've upgraded about $12 billion of customers under deposits into the wealth business. So those synergies of customer footprint and platform we have seen in touch for the last several years. So for us, that contact point was very strong, and we felt that, that was -- that made a lot of sense.

The second lens is when you look at our cards businesses and we are kind of a full-spectrum provider of card services, right, all the way from proprietary to co-branded cards to private label cards and we have this significant scale with $600 billion plus of spend, $160 billion-plus of outstanding, serving the 70 million customers that you referenced before in an $18 billion-plus business.

When we look at how customers and partners are seeing the market evolve. There's definitely a convergence towards universal cards and co-branded cards. And so we think that this is an opportunity of bringing the businesses even more closely together, they were part of USPB, but even more closely together to be able to accelerate that transition right into the pockets of the market that are driving.

Okay. Great. So Mark, maybe we can talk about the macroeconomic outlook. I know it's always complex, and you don't just have to talk about the U.S. you've got to talk about globally. So what are you thinking about the economic outlook? And what are you hearing from corporate clients specifically?

Yes. I think if I had to summarize it in a word, I think the global economy continues to be resilient, right? And look, we're all here waiting for additional data out of the last couple of months that got caught up in the shutdown, and we'll see what that tells us. But I think, generally, we're likely to see that the fourth quarter GDP growth has slowed a bit that my expectation, our expectation is that 2026 probably has a continued slowing of growth at a moderate level. I suspect we'll get a rate cut tomorrow I suspect that next year, at least our economists are looking at maybe 2 to 3 more rate cuts.

When you look around the globe, I think central banks have acted appropriately in a responsive way with monetary actions that needed to have been taken to contain inflation. There's still a fair amount of uncertainty out there around tariffs and what that ultimately means for the consumer and how much kind of gets pushed out versus retained by by corporate clients. So that's part of the dialogue for sure.

And what ultimately happens with unemployment is a rich part of the dialogue, too, particularly in a business like ours, when we have a big consumer portfolio. Look, the client sentiment and dialogues around all of those things and AI, everything related to AI, whether it's data centers or energy or productivity out of companies that, that are investing in it or how to think about the return on investment. This is a hot thematic topic, including valuations and whether they're overvalued or not. The capital markets are wide open to some extent. We're seeing a lot of investment-grade activity. We're seeing good lift in activity despite the shutdown equity volumes and IPO volumes have held up.

And so I put all of that together, Richard, and I'd say the global economy is at large have generally been resilient despite continued bouts of uncertainty. And I think net-net, that's a good thing. Balance sheets are strong. And I think that's a good thing. They're going to be pockets, obviously, within the corporate sector and there's a consumer side to it as well, which, yes.

Yes. So Gonzalo, I was going to ask you on the consumer side. I mean if you look at what you're seeing in the card business through the lens of what it tells you about the economy and the trajectory heading into next year, what's your take?

Yes. I think consistent with what Mark was saying, we've seen continued resilience from U.S. consumers. They're more discerning in terms of their spend. But at the same time, we continue to see in terms of spend. We continue to see solid growth through October and November. We still -- you still have that 2-lane distinction between the affluent driver and a fair amount of the growth.

But there's stability on the other side. And then in terms of categories, we've seen travel. We've seen dining. We've seen discretionary retail to be relatively strong, even through the holiday season and Thanksgiving. We also saw good momentum, a lot of it driven through online. When you think about the resilience part and we've seen customers be pretty adept at financial management so far, and that's a continuation on the credit side, we see stability. So far, of course, we're looking out for the shifts in the labor market to the persistence of inflation, uncertainties in terms of trade as well. Some of those things could derail this picture. So there's definitely those 2 vectors of the hard data on consumers is still robust and resilient, and there's an element of uncertainty. So very important for us and folks to not be complacent. The element of being proactive, being alert, of course.

When we get to look at our delinquencies, you've seen this in the third quarter, you look at our branded cards business, the 30 plus, the 90-plus and the net credit losses. And the same is true for our retail services franchise. All 3 of those measures across both of our businesses down year-on-year for the first time in a few years.

And therefore, you kind of see that stability coming through. Of course, it's related to our risk appetite and the fact that we have an 85% plus time lean into credit, but also all the work we've been doing continuously to manage actions for a couple of years in terms of managing credit appropriately being operationally ready in case. There's a weather pattern that is rainier than we think. And so managing through that uncertainty with a proactive alert approach.

Okay, great. So let's talk about the near term. So fourth quarter. What are you seeing in terms of investment banking activity? Obviously, the government shutdown that's had an impact. But what are you seeing in markets? And is there anything else that we should be aware of for the quarter and I think it would also be useful to put that in the context of what it means for the full year guidance that you've given?

Sure. So first of all, we've been, I think, delivering really strong performance through the year. And you've seen the third quarter numbers, but the top line momentum year-to-date, up 7% with positive operating leverage across all 5 segments. And we see continued strength in each of the segments as we look at the fourth quarter.

To get to the specifics of your question, on the market side, I gave some guidance at the third quarter earnings. What we're seeing is generally consistent with that, which pretty much equates to markets revenues down kind of low to mid-single digits year-over-year on the heels of a strong fourth quarter last year. So good market activity, but again, some seasonality that you'd expect third to fourth quarter and year over that year down low to mid-single digits.

On the investment banking side, we're seeing continued momentum, particularly in M&A -- and when we look at the quarter and where it's likely to end, we're probably looking at revenues up or investment banking fees up in the mid-20s year-over-year. So good healthy growth there as well. I feel good about that. This has been doing a nice job with new talent and focused across many of the sectors that we have there.

Expenses or operating efficiencies is probably worth mentioning I gave some guidance around that. As we look at the quarter and the year coming to an end, we're probably looking at operating efficiency a little bit better than 63.5%, that's better than the guidance I gave last time, by the way. And that will include probably a couple of hundred million dollars of additional severance charge or cost in the quarter and more than I expected. So we're including that in that better than 63.5%.

Okay. So maybe moving to next year, what are the puts and takes around the continued growth in NII ex-market especially in the context of some of the uncertainty around the number of rate cuts that we could potentially see?

Yes. And it's probably worth mentioning for 2025, NII ex-markets, we're still looking at around 5.5%, up 5.5% year-over-year. So think about that as '25 as we go into 2026, I would expect to see continued growth in NII ex-markets, not at the same pace per se, but continued growth. I think there are a couple of tailwinds and headwinds that contribute to that.

So one is, I would expect to see continued growth in our operating deposits, particularly in our TTS franchise. Both with existing clients, the large multinationals that we cover, but also with middle market clients. I'd expect to see continued growth in trade lending activity, trade finance, and we've seen some of that through this year despite tariffs. We've seen good momentum there, and I'd expect that to continue.

I'd expect to see good loan growth on the card side, particularly in branded cards. So that will be an important factor as well. And then we also have the investment portfolio that we've talked about in the past, which as it's been maturing, we've had the opportunity to redeploy that into higher yielding earning assets, whether that's cash, loans or other securities. And so that, too, will be a tailwind for us as we look into '26, that will -- there obviously will be rate cuts. We're estimating somewhere around 2 to 3 cuts, but we think that will largely be offset by some of the pricing discipline that we have across the portfolio.

And then the efficiency ratio for next year, I mean, you previously talked about an efficiency ratio below 60%. So does that still hold? And then maybe you can talk a little bit about the drivers from the 63.5% that you just talked about down to the 60%...

Sure. And yes, it does still hold. So less than 60%, that's a full year operating efficiency target that we'd set for ourselves back when we did the last Investor Day, we talked about by the time we got to the medium term operating at less than 60%. So that would be in 2026. There'll be a number of drivers. Obviously, the top line drivers and will be revenue, both NII growth as well as NIR growth. And then there's obviously the expense piece. And the expense piece has a couple of components to it. So we still have stranded cost, about $1.2 billion or so of stranded costs. We'll look to bring that down as we go into 2026.

We have the transformation spend that we've talked about in the past, which went up this year to a little bit less than $3.5 billion. So we'll look to bring that down particularly given that you've heard us say we're roughly 2/3 at or near completion in the way of achieving some of those target state. So we'll look to see that cost come down. And then the other productivity savings that we'd expect to get on the heels of both technology investments and some of the transformation investments that we've made. So those are a number of the contributing factors to bringing costs down and contributing to that.

But I'd be remiss not to highlight the importance of us continuing to invest as well, right? And the investment is important, not just to drive the top line momentum that we see or expect to see in 2026, but to drive continued momentum beyond that so that we can deliver on returns at a north of 10% to 11% post 2026.

The thing I didn't mention that I should mention is that we've also talked about severance charges, right? And those coming down to a more normalized level. You just heard me mention a little while ago that we're taking those up this year, so that I would expect the severance charges next year to come down. They may not reach the normal level, but they should come down versus what we're spending this year for sure.

So just a couple of questions. I guess one for each of you. You mentioned 2/3 of the way through the transformation. What's left to do? And then I think, Gonzalo, for you a question is, maybe you can talk about how transformation has impacted the way your business operates. And I understand you've been in charge of some of the firm-wide AI initiatives. So maybe you can speak to some of the progress and use cases there. But maybe on the transformation side, first, what's left?

First of all, again, I think a significant amount of progress that we've made. And you heard us mention about 2/3 of the efforts are at or near completion or close to target state. That includes progress in risk and compliance controls as well. We've standardized controls across the globe for many of the activities that we have. And in many instances, we're at -- on par with peers as it relates to the controls that we have in place. We're monitoring both automated controls that we put in place versus manual as well as preventive controls.

I think the area where we're still really pushing for continued progress would be around data and specifically as it relates to reg reporting. And you've heard us talk about that in the past over the last past 12 months. We really leaned in on that. And in fact, some of the increased investment in investments went specifically towards data and reg reporting.

What I'd tell you, just inside of 12 months, we've made meaningful progress. And that's measurable progress in the reg reports that we produce on a monthly and quarterly basis and being able to measure the accuracy of the data that is hitting those reports that we then kind of send off to our regulators. And so very pleased with the approach that we've taken towards centralizing that oversight and responsibility and being able to drive execution using AI tools and other technology in order to accelerate the outcomes of those reports. But there's more work that we need to do around there. So that would be an area that I'd say we will have continued focus as we go through '26 and try to continue to deliver on the progress there.

Okay. So Gonzalo, impact of transformation AI and maybe you can talk about AI in the overall context of, I think, just process reengineering, which I think is kind of accelerating that so...

I think a couple of thoughts. In terms of U.S. personal banking and how we've been leaving the transformation, I think we're very much microcosm of what Mark was talking about. So we've definitely seen the marked improvements in our automated controls and preventative controls shifting more from detective to preventative. We've seen kind of end-to-end compliance risk management, operating how we do look horizontally at the risk.

Actually on data, to Mark's point, I actually have an example that you can fact check as well. So that is not only -- you have to believe me category. And so some of the work we've done on loan origination data has led -- if you look at the last few years in our DFAST results from the Fed, you would see that our junior and HELOCs distressed capital losses were the stress losses, sorry, were at 19% and then they went down to 5.1% between 1 year and the next.

And in first mortgages, they went from 3.7% to 3.1%. That was a direct result of the loan origination data improvement, and that has very much green dollars in terms of the stress capital buffer. So we can touch and feel the impact of what Mark was talking about at the enterprise level, right, in every corner of the firm. In terms of AI, and I'm glad you brought in the constant process because process is really the lens that we take.

I would say our approach to AI is probably twofold. We think that it's important to have a top-down and a bottom-up approach by bottom up, what I mean is that you really want to empower right, all of the employees to be able to in there -- sometimes very narrow specific use cases and extract the maximum amount of productivity. And that's what we did by launching Stylus, which is our internal tool -- to 180,000 people in 80 countries, and we're seeing benefits, whether it's in small finance journeys or legal or HR or credit report writing, et cetera.

But then you also want to complement that, I think, with -- in some areas where you have very large pools that you can have scale impact, you really want the resourcing, the prioritization, the acceleration that can come with a big enterprise effort. So examples there would be technology writing and coding. And the fact that we've been able to do, I think, year-to-date, 1 million automated code checks and about that has released about 100,000 hours per week of coding that gives us 9% productivity on the coding front or in customer service in my business, in U.S. personal banking, right? We received 17 million calls a month. And not only can we increase the self-service ratio which we're already seeing and doing with our Gen AI. But in addition, we're able to assist real time, those calls that end up with a human, and they can be more productive. They can talk to clients about their issues as opposed to having to do 50 things in the surround system. So we really -- we can touch and feel it, and it is that combination of you want to enable innovation everywhere in the firm, and at the same time, really turbocharge the big scale efforts that give you the biggest payback.

Okay. So maybe we can talk about credit quality, maybe we could start with corporate credit, NBFI or NDFI, I guess depending on the focus in the last few months. How do you think about Citigroup's exposure? And how are you thinking about risk in that space in particular? And has it changed relative to the start?

Yes, I was just want to say, our risk appetite framework in many ways has not changed, right, in the sense that, as you know, we focus on the large multinationals, investment-grade names. We've been very disciplined about that. Many of these clients we've been working with for many, many, many years around the world in serving their needs. And the lending that we do is either to them or to their subsidiaries, which give us a strong sense for the protection around the exposure that we have. I would say when you look at the losses, they've been benign, right? And even any increase in NALs have been idiosyncratic in terms of the exposures that we have. So we feel very good about the exposure that we have there.

The MBFI work that we've done with clients, we've been very selective with the asset managers that we work with. It's largely in our markets business that we've done that activity in that selectiveness, we're obviously looking through to the underlying collateral. We're making sure that there are attachment points that make sense and give us comfort in the way of that exposure.

And so I would say, do we have exposure, yes. Is it material in the scheme of aggregate exposure? It's not. Is it an area that we are continuing to focus on selectively? We absolutely are, but I feel very good about our approach because it's consistent with that risk appetite framework and the discipline that we put around the structuring for these underlying types of exposure....

And then briefly, outside of corporate credit, anything else that you're monitoring, anything you're seeing in early delinquencies?

No. Okay. No. Okay. Gonzalo spoke to the consumer side and on the corporate side, there's nothing that we're seeing is outside of the norm.

Okay. So let's talk about capital. How are you thinking about the trajectory for reaching your 12.8% CET1, both from an opportunity to invest in the business versus capital return endpoint.

Sure. So I guess a couple of things. So one, you've heard me talk about bringing down our CET1 ratio first closer to the 13.1%. And then after a second year now of having a stress capital buffer that's come down, we're targeting the 12.8%, which is the average of the past 2 years. I'd expect that we'd get there over the next couple of quarters, 2 or 3 quarters that we'd kind of start to bring that down into 2026.

I am pleased with what we're hearing out of D.C. and some of the proposals or re-proposals that have been put on the table, including some of the recent information that's come out around the models that they're using, the coefficients that they're using. It's consistent with the rhetoric around seeing a reduction in capital requirements. There's a question of timing. And when all of that plays out and whether it impacts the next CCAR cycle or not, but I think it's directionally favorable towards capital requirements for the industry, which is a good thing.

I would expect and hope for clarity on averaging clarity on Basel III end game and GSIB, all of which I think will be value added for the industry and for Citi. And I think that one of the things that we will be managing towards is how to think about that deployment of capital, as you point out. And for us, it's going to be a balancing act. It's going to be deploying it where we can capture growth and accretive returns and continuing to return it to shareholders. We announced this year a $20 billion buyback program.

We've done $9 billion year-to-date. We'll continue to work towards that. And obviously, the stock often is trading a lot closer to where price to book is. But that trade-off becomes really, really important in the sense of how do we get the returns higher than 10 to 11. Some of that is going to be ensuring that we're fueling the growth for opportunities with clients that are accretive to the return profile and continuing to buy back shares.

Okay. So we've got a couple of minutes left. So I think what would be really helpful is if you could take a step back, maybe talk a little bit about the progress that you've made since the last Investor Day, which I think was 2022?

Yes, yes, yes.

I think obviously another one coming up next year, but also just talk a little bit about the priorities for both of you.

Sure. I'll start, and I'll try to be brief. But look, we've made a significant amount of progress. That's not to say there isn't a lot left to do. But if you think back to 2022 when we did at Investor Day, we could not have predicted the series of events that have occurred over the past 4 or 5 years. And I think if nothing else improves that our model is resilient. We announced exiting 14 consumer businesses. We got out of 9 rather quickly. We continue to make progress on the remaining ones. Just this year, we announced Poland.

We announced obviously the first tranche of Banamex in Mexico with 25% sale. And by the way, on that one, that is progressing very nicely from signing. I would expect that to close very soon. I talked about next year, I can envision it closing even sooner than that. I think that's a testament to the partner that we selected as well as the focus that we've put on making progress and exiting that. So progress on the exits.

Jane has accelerated the org simplification that we did, which I think was really important brought in additional management or new management for some of the key segments. And here we are with all 5 of those segments, as I mentioned earlier, with top line momentum, positive operating leverage. We're making measurable progress on the transformation. We're returning more capital. Our returns are improving versus last year. We've got a clear line of sight to 10% to 11%. Like I feel like we're making -- we've made significant progress since our last Investor Day. And as I mentioned, I'm excited about what the future holds beyond that.

And then priorities perhaps, Gonzalo, for you for next year.

Yes. The -- 2 thoughts. First, on the progress we've made since the last time, just from the lens of running 1 of the 5 businesses. To me, that delayering, that increasing accountability across each of the 5 businesses have been, to me, has changed a lot the way we make decisions, the speed at which we make decisions, the ability to design ones and apply many, right, where we used to have to do that across a number of businesses. So that to me has been a big change, not only cultural test in terms of the operating model, and that's why you're seeing, I think, a lot of the building blocks that Mark was talking about.

And then priorities for 2026, execution, execution, execution, right, really delivering that way point of 10 to 11 so that we can go and with purpose say the next field we want to go after and really drive those increased returns and be able to create long-term share value.

Okay. I think with that, we're out of time. So thank you so much for joining us, and we'll see you next year.

Thank you.

Hello, and welcome to Citi's Third Quarter 2025 Earnings Call. Today's call will be hosted by Jen Landis, Head of Citi Investor Relations. [Operator Instructions] Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Ms. Landis, you may begin.

Thank you, operator. Good morning, and thank you all for joining our third quarter 2025 earnings call. I'm joined today by our Chief Executive Officer, Jane Fraser; and our Chief Financial Officer, Mark Mason. I'd like to remind you that today's presentation, which is available for download on our website, citigroup.com, may contain forward-looking statements, which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these statements due to a variety of factors, including those described in our earnings materials as well as in our SEC filings.

And with that, I'll turn it over to Jane.

Thank you, Jen, and a very good morning to everyone. This morning, we reported another very good quarter, with net income of $3.8 billion and earnings per share of $1.86, with an ROTCE of 8%. Now excluding the goodwill impairment from the Banamex transaction, our adjusted EPS was $2.24, with an adjusted ROTC of 9.7%. Revenues were up 9% and every business had record third quarter revenue and improved returns. We continue to generate positive operating leverage for the firm and in each of our 5 businesses.

The consistently strong results that we've been delivering are a consequence of how we have fundamentally changed the bank in recent years. We're running the businesses differently and capturing the synergies between them. We've added new senior leaders to complement the excellent talent we already had. We are disciplined stewards of our shareholders' capital, investing it where we should and returning what we don't deploy. And the best part is, there is much more upside ahead.

Turning to the businesses. Services had a record quarter with revenues growing by 7%. [indiscernible] growth in cross-border transactions and U.S. dollar clearing reflects the sharp focus we've put on increasing fee revenue. AUCA grew 13%, reaching nearly $30 trillion. New client wins and share gains demonstrate the confidence that our clients have in our ability to help them navigate a very dynamic global environment and to lead through innovation.

Despite low volatility, markets had a record third quarter. Revenues were up 15% as we continue to drive momentum and traction with clients. Activity in rates was particularly high and equities grew nicely, with continued progress in prime, where balances were up over 40%, complementing our historical strength in derivatives. In Banking, increased clarity around tariffs and record equity prices field CEO confidence. We capitalized on this with investment banking fees up 17%, with continued growth across all products. On the back of our investment in talent, we improved our position in tech, health care, consumer and responses. We continue to add talent to the team, which will help us deepen or establish relationships that will bear fruit over the next 2 to 3 years. Well, had another good quarter, with revenue up 8%, driven by Citigold and the Private Bank. Our emphasis on growing investment assets resulted in record net new investment assets of $18.6 billion and client investment assets increasing by 14%.

We announced a new partnership with BlackRock where they will manage $80 billion of our client asset fully aligning to an open architecture strategy. USPB had record quarterly revenue of $5.3 billion reaching 12 straight quarters of positive operating leverage and delivered an ROTCE of over 14%. We drove momentum in branded cards with the well-received launch of our City Strata Elite card. And this quarter, we will introduce a new mid-tier product to round out the City Advantage portfolio. It will innovate the travel experience for American Airlines' customers and create access to premium benefits.

In the retail bank, we continue to innovate including by the launch of Instant Payments through FedNow and enabling digital issuance for Citibank debit cards. And retail bank continues to strengthen as a pipeline to our wealth business with $4 billion in deposits transferred in the quarter. Wealth is capitalizing on those transfers, and we continue to see improved investment penetration and significantly higher investment-related revenue from those customers.

We returned over $6 billion in capital to our common shareholders during the third quarter, the $5 billion in share repurchases, with $ 1 billion more than we guided, and this reflects our commitment to returning capital. Year-to-date, we have repurchased $8.75 billion of shares as part of our $20 billion repurchase plan. We ended the quarter at a common equity Tier 1 capital ratio of 13.2%, over 100 bps above our regulatory requirement at quarter end.

The agreement with Fernando Chico Pardo, to purchase a 25% equity stake is a very significant step towards the divestiture of Banamex and progresses the overall time line to deconsolidation and beyond. We are confident that this path is in the best interest of our stakeholders in terms of certainty and value, and we could not be more pleased to Fernando with this proven track record for investors as our partner.

As we simplify, we continue to invest in technology to catalyze our transformation and become a more agile and modern bank. We have been relentless in our execution, and it is creating results. Over 2/3 of our transformation programs are at or are close to our target state, and we're making very good progress in the remaining areas. I'm particularly pleased with the improvement in our controls this year through standardizing, automating and digitizing them.

We continue to lead in digital payments innovation, enabling payments, clearing and settlement capabilities to operate on an always-on basis across multiple borders and currencies. As networks evolve towards an always-on future, we are taking the next step by integrating Citi token services with our 24/7 clearing platform. Now this integration will allow Citi clients to seamlessly send funds to third-party banks real time within our U.S. dollar tiering network and that's delivering true interoperability across more than 250 institutions.

We are committed to embedding AI into how we work. Nearly 180,000 colleagues in 83 countries now have access to our proprietary AI tools and have used them almost 7 million times this year. These tools have hours each day by automating routine work, analyzing data and creating materials in minutes instead of hours.

Our services and USPB teams are using AI to resolve client inquiries faster. In Wealth, advisers are gaining real-time insights that help them deliver more personalized advice. And AI-driven automated code reviews have exceeded 1 million so far this year and are dramatically improving our developers' productivity. This innovation alone saves considerable time and creates around 100,000 hours of weekly capacity as a very meaningful productivity uplift.

In September, we launched a pilot of agentic AI for 5,000 colleagues. It allows complex multistep tasks to be completed with a single prompt, and the early results are very promising and we'll expand access to this in the months ahead.

Finally, we have launched a firm-wide effort to systematically embed AI in our processes end-to-end to drive further efficiencies, reduce risk and improve client experience.

Taking a step back, the macro environment reflects the global economy that's proved more resilient than many anticipated. The U.S. continues to be a pace setter, driven by consistent consumer spending as well as tech investments in AI and data centers. That said, there were pockets of valuation frothiness in the market. So I hope discipline remains. But overall, while growth is cooling somewhat, and we're keeping an eye on the labor market, America's economic engine is indeed still coming.

In Asia, China's domestic spending has slowed. However, the investments they are making in technology are staggering, and the world should take notice. India's fundamentals of the young tech-savvy labor force and robust domestic consumption continued to drive high growth there. But in Europe, structural challenges still need to be dealt with for the continent to escape this low growth cycle. One certainty through all of this is our commitment and ability to serve our clients with excellence no matter what challenge they face.

As you can see, the steady and disciplined execution of our strategy is delivering better business performance quarter after quarter and improving our returns. The cumulative effect of what we have done over the past years, our transformation, our fresh strategy, our simplification, have put Citi in a materially different place in terms of our ability to compete. We know success isn't linear, but I am so proud of the progress our people have made and how things are coming together.

We intend to end the year with momentum into 2026 as we close in on our medium-term return target. In terms of what will come next, we very much look forward to sharing that with you at our next Investor Day, which will be on May 7 of next year. There is still so much upside left for us to capture, and we look forward to laying out how we are going to do it.

With that, I will turn it over to Mark, and then we'll be happy to take your questions.

Thanks, Jane, and good morning, everyone. I'm going to start with the firm-wide financial results, focusing on year-over-year comparisons, unless I indicate otherwise, and then review the performance of our businesses in greater detail. On Slide 6, we show financial results for the full firm. This quarter, we reported net income of $3.8 billion, EPS of $1.86 and an ROTCE of 8% on $22.1 billion of revenues, generating positive operating leverage for the firm and each of our 5 businesses. On an adjusted basis, excluding the impact of a notable item consisting of the goodwill impairment that Jane mentioned earlier, we reported net income of $4.5 billion, EPS of $2.24 and an ROTCE of 9.7%. Total revenues were up 9%, driven by growth in each of our businesses and legacy franchises, partially offset by a decline in corporate other. Net interest income, excluding markets, which you can see on the bottom left side of the slide, was up 6%, driven by USPB, services, wealth, legacy franchises and banking, partially offset by a decline in corporate other.

Noninterest revenues, excluding markets, were up 12% as better results in banking, wealth and legacy franchises were partially offset by declines in Corporate/Other, services and USPB. And total markets revenues were up 15%. Expenses of $14.3 billion were up 9%, largely driven by the goodwill impairment I just mentioned. On an adjusted basis, expenses of $13.6 billion were up 3%.

Cost of credit was $2.5 billion, primarily consisting of net credit losses in U.S. card as well as a firm-wide net ACL build.

Looking at the firm on a year-to-date basis, total revenues were up 7%, driven by growth in each of our 5 businesses, along with the benefit of foreign exchange translation, partially offset by a decline in all other. Expenses, which have also been impacted by foreign exchange translation, were up 2% and flat on an adjusted basis. We've generated positive operating leverage for the full firm and each of our 5 businesses and reported an ROTCE of 8.6% and 9.2% on an adjusted basis.

On Slide 7, we show the expense and efficiency trend over the past 5 quarters. On an adjusted basis, this quarter, we improved our efficiency ratio by approximately 360 basis points. The increase in adjusted expenses was driven by higher compensation and benefits along with the impact of foreign exchange translation. As you can see on the bottom right side of the slide, the increase in compensation and benefits was driven by performance-related compensation, higher severance and investment in transformation and technology, [indiscernible] productivity and stranded cost reduction partially offsetting continued growth in the businesses. Year-to-date, we have incurred approximately $650 million of severance, slightly above our original expectation for the full year.

As we've said in the past, we are very focused on managing our expense base in a disciplined manner, reducing stranded costs and generating productivity savings to largely self-fund investments in transformation, technology and the businesses. This discipline, combined with top line revenue momentum, will continue to drive improvement in our operating efficiency.

On Slide 8, we show consumer and corporate credit metrics. As I mentioned, the firm's cost of credit was $2.5 billion, primarily consisting of net credit losses in U.S. card as well as a firm-wide net ACL build. Our reserves continue to incorporate an 8-quarter weighted average unemployment rate of 5.2%, which includes a downside scenario average unemployment rate of nearly 7%. At the end of the quarter, we had nearly $24 billion in total reserves with a reserve to funded loan ratio of 2.7%. We continue to maintain a high credit quality card portfolio with approximately 85% consumers with FICO scores of 660 or higher, and a reserve to funded loan ratio in our card portfolio of 8%. And it's worth noting that across our U.S. card portfolios, delinquency and NCL rate continue to perform in line with our expectations.

Looking at the right-hand side of the slide, you can see that our corporate exposure is primarily investment grade. And while corporate nonaccrual loans increased in the quarter, resulting from idiosyncratic downgrade, they remain low as do corporate net credit losses. We feel good about the high-quality nature of our portfolios, which reflect our risk appetite framework and our focus on using the balance sheet in the context of the overall client relationship.

Turning to capital and the balance sheet on Slide 9, where I will speak to sequential variance. Our $2.6 trillion balance sheet increased 1%, driven by growth in cash and loans. End-of-period loans increased 1%, driven by markets and service. Our $1.4 trillion deposit base remains well diversified and increased 2%, driven by services and wealth. We reported a 115% average LCR and maintained over $1 trillion of available liquidity resources. We ended the quarter with a preliminary 13.2% CET1 capital ratio, which is 110 basis points above our 12.1% regulatory capital requirement during the third quarter.

Effective October 1, our new standardized CET1 capital ratio requirement is 11.6%, which incorporates the reduction in our SCB from 4.1% to 3.6%. That said, we're still waiting for clarity from the Federal Reserve on whether the averaging of SCB results from the previous 2 consecutive years will become effective in the next few months. Given this uncertainty, we will be targeting a standardized CET1 ratio closer to 12.8%, which incorporates a 2-year average SCB of 3.8% as well as a 100-basis-point management buffer.

As we've said in the past, we remain very focused on efficient utilization of both standardized and advanced RWA while providing the businesses with the capital needed to pursue accretive growth opportunities. And we will continue to prioritize returning capital to shareholders through buybacks as evidenced by the $5 billion of buybacks in the third quarter and nearly $9 billion year-to-date.

Turning to the businesses on Slide 10. We show the results for Services in the third quarter. Revenues were up 7%, driven by growth across both TTS and security services. NII increased 11%, primarily driven by the increase in average deposit balances as well as higher deposit spreads. While NIR was down 3% due to the impact of higher lending revenue share, total fee revenue was up 6%. We see very strong activity and engagement with corporate clients and momentum across underlying fee drivers with cross-border transactions up 10% and U.S. dollar clearing volume up 5% and assets under custody and administration, up 13% as we continue to roll out our innovative products and services with digital capabilities into new markets.

Expenses increased 5%, primarily driven by higher compensation and benefits, including severance as well as higher volume and other revenue-related expenses. Average loans increased 8% driven by continued demand for trade loans as we continue to support clients as they plan for potential shifts in trade corridors. Average deposits also increased 8% and with growth across both North America and International, largely driven by an increase in operating deposits. Services generated positive operating leverage for the fifth consecutive quarter and delivered net income of $1.8 billion, with an ROTCE of 28.9% in the quarter and 26.1% year-to-date.

Turning to markets on Slide 11. Revenues were up 15%, driven by growth across both fixed income and equity. Fixed income revenues increased 12% with rates and currencies up 15%, largely driven by growth in rates amid policy uncertainty and elevated client activity. And spread products and other fixed income was up 8%, largely driven by higher mortgage trading, higher financing activity and lower commodities activity. Equities revenues were up 24%, driven by higher client activity in derivatives and increased volumes in cash as well as continued momentum in prime with balances up approximately 44%. Expenses increased 5%, primarily driven by higher compensation and benefits along with the impact of FX translation. Transactional and product servicing expenses were down as growth in transaction volumes was more than offset by efficiency actions.

Average loans increased 24%, primarily driven by financing activity and spread products. Markets generated positive operating leverage for the sixth consecutive quarter and delivered net income of $1.6 billion with an ROTCE of 12.3% in the quarter and 13.5% year-to-date.

Turning to banking on Slide 12. We revenues were up 34%, driven by growth in corporate lending and investment banking. Investment banking fees increased 17% with growth across all products. M&A was up 8% with momentum across several sectors and with continued share gains with financial sponsors and more sell-side activity.

ECM was up 35%, with growth across all products, notably in convertibles given the favorable environment. And DCM was up 19%, driven by leverage finance. Corporate lending revenues, excluding mark-to-market on loan hedges, increased 39%, driven by an increase in lending revenue share. Expenses increased 2%, driven by higher volume-related transactional and product servicing expenses as well as compensation and benefit, which includes recent investments we've made in the business. Cost of credit was $157 million, which included a net ACL build of $148 million driven by changes in portfolio composition, including exposure growth.

Banking generated positive operating leverage for the seventh consecutive quarter and delivered net income of $638 million with an ROTCE of 12.3% in the quarter and 10.7% year-to-date.

Turning to Wealth on Slide 13. Revenues were up 8%, driven by growth in Citigold and the Private Bank partially offset by a decline in wealth at work. NII, which you can see on the bottom left side of the slide, increased 8%, driven by higher deposit spreads, partially offset by lower mortgage spreads. NIR increased 9%, driven by higher investment fee revenues as we grew client investment assets by 14% despite a reduction of approximately $33 billion related to the sale of our trust business. We had record net new investment assets of $18.6 billion in the quarter and over $52 billion in the last 12 months, representing approximately 9% organic growth. Expenses increased 4%, driven by investments in technology and volume-related transactional and product servicing expenses, partially offset by continued productivity savings.

End-of-period client balances continued to grow, up 8%. Average loans were up 1% as we continue to be strategic in deploying the balance sheet to support growth in client investment assets. Average deposits were flat as operating outflows and a shift from deposits to higher-yielding investments on Citi's platform were offset by net new deposits as well as client transfers from USPB. Wealth had a pretax margin of 22%, generated positive operating leverage for the sixth consecutive quarter and delivered net income of $374 million, with an ROTCE of 12.1% in the quarter and 12.5% year-to-date.

Turning to U.S. Personal Banking on Slide 14. Revenues were up 7%, driven by growth in branded cards and retail banking, partially offset by a slight decline in retail service. Branded cards revenues increased 8%, driven by higher loan spreads, higher interest-earning balances, which were up 5%, and higher gross interchange partially offset by higher rewards costs. We continue to see strong customer engagement with spend volume also up 5%. Retail banking revenues increased 30%, largely driven by the impact of higher deposit spreads and balances. And retail services revenues were down 1%, largely driven by higher partner payment accruals.

Expenses were flat as lower advertising and marketing expenses as well as compensation and benefits, were offset by higher volume-related transactional and product servicing expenses. Cost of credit was $1.8 billion, driven by net credit losses in card. Average deposits increased 6% as net new deposits were partially offset by the client transfers to wealth that I mentioned earlier. USPB generated positive operating leverage for the 12th consecutive quarter and delivered net income of $858 million with an ROTCE of 14.5% in the quarter and 12.9% year-to-date. Turning to Slide 15, we show results for all other on a managed basis, which includes corporate other and legacy franchises and excludes divestiture-related items. Revenues were down 16% and with a decline in corporate other, partially offset by an increase in legacy franchise. The decline in corporate other was driven by lower NII resulting from actions that we've taken over the past few quarters to reduce the asset sensitivity of the firm in a declining rate environment as well as lower NIR. Growth in legacy franchises was driven by Mexico, which included the impact of Mexican peso appreciation partially offset by the impact of continued reduction from our exit and wind down market.

Expenses increased 4% with growth in Corporate/Other, which included higher severance, largely offset by a decline in legacy franchise. And cost of credit was $331 million, primarily consisting of net credit losses of $297 million, driven by consumer loans in Mexico. As you can see on the bottom right side of the slide, divestiture-related expense items in the quarter included the $726 million goodwill impairment, which is capital neutral, and based on the fair value of 100% of the entity.

On Slide 16, we provide an overview of the agreement with Fernando Chico Pardo, to purchase a 25% equity stake in Banamex. This transaction progresses the overall time line to exit Banamex, but is subject to certain closing conditions and local regulatory approvals. Before I walk through the financial impacts related to this stake at closing, I'd like to ensure you understand the net capital impact at a full exit.

The cumulative capital benefit to Citi upon full exit will be driven by 2 things: one, the capital release associated with the RWA reduction; and two, the cumulative impact of any potential gains and losses on sales. However, between now and then, there will be a few steps to get there. And it starts with this transaction. So looking at the right-hand side of the page, at the time of close and subject to the book value of Banamex at closing, we expect assets to increase by approximately $2.3 billion for the total consideration paid for the 25% stake, which reflects the fixed price-to-book value multiple of 0.8. And total equity will also increase by a net $2.3 billion, but it will be driven by a few factors. First, there will be a temporary benefit to stockholders' equity due to the reclassification of the negative cumulative translation adjustment from stockholders' equity to noncontrolling interest, which will be slightly offset by the loss on sale. Second, the noncontrolling interest will increase by the 25% of the Banamex book value sold, but this will be largely offset by the CTA that was reclassified as part of this transaction. So net-net, a $2.3 billion increase in assets, and on the equity side, a $1.8 billion increase in stockholders' equity and a $500 million increase in noncontrolling interest.

At deconsolidation, there will be balance sheet impacts and P&L impact. As it relates to the balance sheet, all of Banamex assets and liabilities will be removed from our balance sheet and be partially offset by any remaining equity stake.

In terms of the P&L, the entire amount of the cumulative translation adjustment related to Banamex, which is approximately $9 billion, will flow through the P&L as a loss and will reverse the temporary capital benefit from prior sales. Therefore, at deconsolidation, the cumulative impact of CTA is capital neutral.

So to wrap it up, while there are a number of accounting nuances between now and full exit, the cumulative capital impact to Citi will be the full release of RWA associated with Banamex and the cumulative impact of any potential gains and losses on sales.

Turning to the full year 2025 outlook on Slide 17. Before I get into the outlook, I want to say how proud I am of the company as we execute against our strategy and drive top line revenue growth, which continues to be fueled by our investments across the businesses and in key areas such as technology and data. We've made significant progress in terms of improving return with an adjusted year-to-date ROTCE of 9.2%.

So now with regard to the outlook. Given the very strong year-to-date top line revenue growth of 7%, we remain confident in our ability to exceed $84 billion in revenues for the year. We now expect NII ex markets to be up around 5.5% for the full year, incorporating stronger performance as well as the impact of FX relative to our previous expectations. For NIR ex markets, we expect continued momentum in underlying fee drivers. And in markets, historically, we've seen revenues decline 15% to 20% from the third to fourth quarter. However, given the strong performance in the third quarter, the sequential decline could exceed that range this year.

Now turning to expenses. Our year-to-date expense base incorporates both the level and mix of revenue we've seen as well as the impact of FX. And given what I just mentioned about revenues, full year expenses will come in higher than we previously guided. However, you should expect the efficiency ratio for the full year to be consistent with the revenue and expense guidance that we provided during the course of the year, which is slightly below 64% excluding the impact of the goodwill impairment this quarter. In terms of credit, our expectations for the year remain unchanged, and we will continue to repurchase shares in the fourth quarter under our $20 billion program.

As we take a step back, the performance in the quarter and so far this year represents significant progress towards our goal of improved firm-wide and business performance. We remain steadfast and focused on executing our transformation, achieving our ROTCE target of 10% to 11% next year and further improving returns over time. And with that, Jane and I would be happy to take your questions.

[Operator Instructions] Our first question will come from Mike Mayo with Wells Fargo.

So I think you said you're at least 2/3 done with a lot of the transformation, and I assume that relates to the consent order. So can you just give us an update on your actions with the consent order as it relates to risk, compliance, controls and reg data? And if you can elaborate on the reg data part because in this current regulatory environment, I don't know why so much effort needs to go to something that's more process-oriented, which they're trying to get away from as opposed to just financial strength.

So yes, I do feel good about the progress we've made. And as you refer, over 2/3 of our programs are at or mostly at Citi's target state. And some of the biggest bodies of work are now embedded just into how we run the bank and operate it on a BAU basis. So you've heard me talk about risk and the progress we've made in compliance. And those are 2 areas where we are largely at the target state and are running through sustainability. But we're also now at the back end of the working controls. And this is a big body of work this year to drive automation to implement more preventative controls. So we now have preventive controls for any large and anomalous payments in 85 countries. That covers about $1.3 trillion in payments daily, covers [ 35 ] payment apps. We also have preventive controls covering over 99% of manual payment flows in our institutional businesses. We've standardized controls to common processes across the firm. That was very much enabled by the AUG simplification that we did.

And we're now in line with peers in terms of level of automation preventative controls. And all of this work is going to help us implement AI across our processes, as I referred to in the earlier remarks. Now data for reg reporting is going to take more time, but we have made significant progress in the last 12 months. through our own testing, we're seeing really improved -- dramatically improved accuracy for our most critical regulatory reports reports to ensure we sustain these improvements on a BAU process and basis.

In terms of regulatory environment, we are clearly seeing changes in the reg environment coming from D.C. And I think like everyone, we welcome the proposed changes, including recalibration to center on safety and soundness. But for us, we're on track with what we're doing across all the programs, including data. We're focused on getting over the finishing line for our work. And we're looking forward to the transformation expense coming down next year because as we complete the different bodies of work, the associated expense comes off, both as a result of the implementation, but also from the efficiencies that we're gaining.

And a short follow-up, the transformation expense for 2025, maybe this is for you, Mark, you said it was going to be more than $3 billion, so it was like $3.5 billion, $4 billion, $5 billion? Any kind of range for that?

Mike, I'd say it's a little bit under $3.5 billion in 2025. And again, as Jane mentioned, a lot of work being put in place to execute on that more efficiently, which is going to help bring that number down in '26.

Your next question will come from Betsy Graseck with Morgan Stanley.

I did just -- Jane, I did just want to understand how you're thinking about the Banamex transaction. I heard all the prepared remarks and we understand that you prefer to go with IPO route in ultimate value for shareholders. And I guess I wanted to understand how you're thinking about the timing between the offers that you've received versus the IPO timing that you are planning on executing? And is there a time frame in mind for ultimate value determination?

Yes. Yes. so first, I'd just say, look, the 25% stake is a very significant part of step in our path towards deconsolidation and ultimately a full exit, which is what everyone is focused on. We firmly believe that this transaction and subsequent IPO, is going to both maximize value for our shareholders and critically has a high degree of certainty around it. And those 2 have been our North Stars as we've been going through this process. And I would also just point to [indiscernible] President and our government have been publicly very supportive of this investment and our path forward. And that obviously gives us a higher degree of comfort around the certainty of close.

Now when we look at this path forward, I think the investment by Fernando is a real show of support for Banamex, and we believe his partnership is going to be very valuable as we move towards an IPO deconsolidation and ultimately, full exit. And there's a couple of big reasons for that. One, he's a highly reputable business leader. He's got a 50-year track record of really driving value in his investments. So he's going to be a strong partner in realizing greater value from Banamex. He also brings a lot of experience and credibility that is very attractive to other investors, and his investment alone is a strong endorsement of Banamex relevance and potential. And that's also going to be very helpful as we look at bringing other investors and through the IPO and the like into the mix here.

So in terms of the next steps, the 25% stake requires regulatory approval in Mexico. That typically takes 9 to 12 months. And then, for obvious reasons, it makes a lot of sense to get Fernando's regulatory approval ahead of the IPO. So where he has filed his regulatory approval is already in with the government. So that will go through the process. He is not dillydallying and hanging around on this, I'm delighted to say. And we will be ready to move forward once we get those approvals. And we're not hanging around either in terms of getting all the work done for that.

Okay. And the 9 to 12 months approval timing, when does that commence?

That's already started because his regulatory approval filing was put in this week.

Your next question will come from Glenn Schorr with Evercore.

I want to get at with this question is, is the evolution versus revolution and stable client adoption. So I've seen some press releases. I've seen you join the euro stable coin banking coalition. I saw your announcement on Citi Payments Express. I'm assuming you're making a lot of investments towards this evolution. So what I want to do is take your pulse on what is the pace of stable coin adoption? How important is it to your traditional banking and payments pipelines? Do you feel like you're ahead of the curve and you can make more money, not less as this all plays out?

Yes, of course, Glenn. Look, I want to take a step back on this 1 because, frankly, for our client base, the institutional client base, we see tokenized deposits as delivering what the client needs, and this is an area that we've invested in most heavily. And what the clients are after is real-time money movement with minimal to no friction and low cost. And as we talked about last earnings call, we've been driving innovation around digital assets for many years. What is it our clients want? They want interoperable, multibank, cross-border, always on payment solutions. They want it provided in a safe and sound manner, and they want all the complexities solved for them: compliance, reporting, accounting, tax, AML. That, frankly, is best done by tokenized deposits. And we are that one-stop shop for our clients.

We're constantly linking new capabilities, emerging technologies, we're bringing in partners. So we offer that holistic killer app for the institutional clients. You saw us this earnings call, we're talking about linking our Citi tokenized services to the 24/7 dollar clearing network. Now that means we can facilitate transactions across 250 banks in 40-plus markets, and that allows clients to frictionlessly transfer funds 24/7 to suppliers and third parties who hold accounts within Citi's extensive 24/7 dollar clearing network.

We are seeing demand and adoption increasing, but frankly, the gating factor is our clients' treasuries departments being ready for an always-on environment. And they just aren't at the moment. So what does that mean for stable coin? We will stand ready to support our clients' needs, whatever they are. We view stable coin as another option in the overall digital asset tool kit. It's got more friction because of the on-off ramp. It's got more friction because of the tax, the accounting, the AML, these are the requirements that our tokenized deposit capabilities avoid. But we will continue to provide the 1 ramp solutions for stable coin exchanges. We will be providing and are providing custodial solutions to crypto acid to our asset manager clients. And we'll be providing corporate cash management services to the stable coin providers. We're about to go live with a number of new capabilities in that. And we're considering issuing our own true Citi stable coin. But I think when we -- there's I think is an overfocus on stable coin at the moment, whereas as a major payments player, most of this is going to get sold by the tokenized deposit capabilities.

[indiscernible]

I'm passionate about it. Sorry, Glenn.

Can maybe just -- this is a super quick follow-up is you're fired up about tokenized deposits and what that can mean and way ahead of that. Does the potential -- is there a potential for the tokenization of all securities? Does that change how financial markets operate in general? I just wonder if you could just expand that to and then...

Absolutely. I was just talk about the payments piece. In the future, clients are going to want solutions that seamlessly offer financing, securities issuance and settlement in a regulated trusted environment. If you can imagine oil, you can imagine equities, like this is going to go much more broader and we will be providing that as part of our toolkit. So that that is definitely in the equation here. And it's really terrific that the regulators are now letting us innovate in a responsible way because I think that is going to help the development of the market as we and other banks participate in this space. It will really help scale up.

Your next question will come from John McDonald with Truist.

I wanted to ask about the efficiency path for next year. It seems like you have some potential tailwinds to drive expenses lower next year, potentially lower severance, transformation spend and stranded costs. So Mark, I wanted to ask, is that fair that you see a path for directionally down expenses next year even if revenues are strong and do you still see the potential to exit next year at an efficiency ratio of below 60?