Citigroup’s (C) CEO Michael Corbat on Q3 2014 Results – Earnings Call Transcript

Citigroup Inc. (NYSE:C)

Q3 2014 Earnings Conference Call

October 14, 2014 11:30 am ET


Mike Corbat – Chief Executive Officer

John Gerspach – Chief Financial Officer

Susan Kendall – Head of Investor Relations


Jim Mitchell – Buckingham Research

John McDonald – Sanford Bernstein

Glenn Schorr – ISI

Brennan Hawken – UBS

Guy Moszkowski – Autonomous Research

Matt O’Connor – Deutsche Bank

Mike Mayo – CLSA

Betsy Graseck – Morgan Stanley

Gerard Cassidy – RBC Capital Markets

Steven Chubak – Nomura Securities

Erika Najarian – Bank of America

Ken Usdin – Jefferies & Company

Matt Burnell – Wells Fargo Securities

Chris Kotowski – Oppenheimer & Co.

[Brian Klein-Hansel] – KBW


Hello, and welcome to Citi’s Q3 2014 Earnings Review with Chief Executive Officer Mike Corbat and Chief Financial Officer John Gerspach. Today’s call will be hosted by Susan Kendall, Head of Citi Investor Relations. (Operator instructions.) Also this call is being recorded today. If you have any objections please disconnect at this time. Ms. Kendall, you may begin.

Susan Kendall

Thank you, Brett. Good morning and thank you all for joining us. On our call today our CEO Mike Corbat will speak first, then John Gerspach, our CFO, will take you through the earnings presentation which is available for download on our website, Afterwards we’ll be happy to take questions.

Before we get started I would like to remind you that today’s presentation may contain forward-looking statements which are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results in capital and other financial condition may differ materially from these statements due to a variety of factors including the precautionary statements referenced in our discussion today and those included in our SEC filings, including without limitation the “Risk Factors” section of our 2013 Form 10(k).

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With that said let me turn it over to Mike.

Mike Corbat

Thank you, Susan. Good morning, everyone. Earlier today we reported earnings of $3.4 billion for Q3 2014. Excluding the impact of CVA/DVA net income was $3.7 billion or $1.15 per share.

Before I address the quarter I’d like to discuss the actions we announced regarding Global Consumer Banking. As you know, we’re committed to simplifying our company and allocating our finite resources to the business where we can generate the best returns for our shareholders. Consistent with these priorities we intend to exit our consumer businesses in eleven markets – among them Japan, Egypt and Peru. We’ll continue to serve our institutional clients in these markets which remain important to our global network.

While these consumer franchise have real value we didn’t see a path for meaningful return. We believe our Consumer business will achieve stronger performance by focusing on the countries where our scale and network provide a competitive advantage. Sales processes are already underway in most of these markets and I expect these actions to be substantially completed by the end of 2015. At that point we’ll have reduced our Consumer footprint by 19 markets since 2012 and Global Consumer Banking will be serving 57 million clients across 24 markets.

I’d also like to address the announcement we issued earlier this morning regarding a legacy Banamex unit which provided personal security and protective services. While the fraud is not financially material, in light of the conduct we found in the interest of transparency we thought it was best to inform you. As you know we’ve been reviewing our franchise in Mexico and have already made meaningful changes to strengthen our processes and controls, and will continue to take whatever steps are necessary to make sure that every part of our global franchise lives up to the standards all of us rightfully expect.

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Now turning to the quarter: we achieved solid performance across our Institutional businesses. Both Banking and Markets saw improved revenue from prior-year period assisted by a better trading environment and a strong M&A pipeline. Treasury and Trade Solution revenues increased slightly despite spread compression.

Global Consumer Banking had a strong quarter as well and saw loan growth throughout the regions. In North America we had revenue improvement in each of our businesses both quarter-on-quarter and year-on-year while we continued to optimize our branch network. Internationally we saw revenue improvements across every region compared to Q3 last year.

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