Hello everyone and welcome to At Barrens and welcome to our guest Jane Fraser, CEO of Citigroup. Jane, great to see you. Thank you for having us again to your headquarters.
Oh, it's wonderful to have you here. Thank you for coming on a glorious spring day.
It really is a beautiful day. So, we're heading very rapidly towards the midyear point of 2026 and I'm wondering what your goals are for this year and how far along you are to achieving them.
So, we've got goals for different time frames for the year. So, obviously one of our main commitments is delivering improved returns to our shareholders and so we're looking at 10 to 11% ROTCE and a strong commitment and after a very good start to the year confidence around that. But we've also got the goal of making sure we continue to execute against our transformation. So been a priority for a number of years and we are 90% through with being at our target states. And then our third priority is around growth. We are very focused around making sure that we are setting up the firm for the next medium-term and longer term. So what are the investments we're making? AI, what are the investments we're making in business growth, the momentum so that we're putting the firm in the position to have continued improvement in our financial performance.
Now, you've been CEO for just over five years and the stock just with this latest burst has just now exceeded the S&P 500 over your tenure. You've also exceeded the bank index. It's trading at a 17 and a half year high. It's trading above book value. So, Jane Fraser, how do you feel about that? And is this the beginning, middle, or end of things?
I feel like we're only just getting started. And I truly mean that. I think the upside that lies ahead for us is very significant. I'm excited about the potential for each of our five businesses. But also when we look at the enterprisewide dynamics that lie ahead I just I see a lot more runway ahead for the firm and runway that's in our control that's independent of where the world heads in the next few years. So I'm delighted to see the improvement in the performance but there's no victory lap and we aren't even we're at the way point my eyes are on the destination.
Is this a matter of going from can Jane Fraser fix this problem to what is Citi's new ceiling? Would you characterize it that way?
No. I think we've been demonstrating that we can both transform the bank as well as grow at the same time. And I think that that's the dimension I feel the most proud about. As we think about the journey that Citi is on that we've been able to do a lot of things at the same time while significantly growing the firm and driving a lot of innovation. So I think that's I would characterize it that way.
You mentioned the return on tangible common equity for Q1 being over 13% which was above your 11% target. Is that because of specific conditions in Q1 or is that sort of a new normal the 13 versus the 11?
Well, we hope to be driving to higher results than that in the medium term, but the first quarter is typically the strongest quarter in the financial services industry. Clients are extremely active in that first quarter. So one quarter does not a full year make and that's why we're expressing a lot of confidence around the 10 to 11% ROTCE for this year. But unquestionably with a strong start to the year but there's a lot of uncertainty in the macro environment there's a lot of questions around the world at the moment so that's how I look at it.
For years the story here has been about restructuring, delayering, divestitures. Now that the surgery is largely done what is the core organic growth engine or engines that will drive this company forward, Jane?
Look, if I just take a step back, Andy, when I started as CEO, I looked at this very much not as a story of how do I fix the bank, but I was very clear about how did we position the bank and change the bank to position it for the decade ahead. It was never from one to another. Whereas we were looking at transformation rather than remediation. We were looking at where do we have businesses we have the right to win in and make sure we were positioned for them. So for me it's not we've done one and we're moving to the other. It's all been part of the same consistent journey and eye on the destination. And we're done with a lot of the tough decisions we took early on. We've completed a lot of the work. We've still got a bit more to do in terms of the final legs of divestitures and completing the transformation work. So that the end of those tunnels are in sight but it was never a move from one to the other. We were doing both simultaneously. I'm looking forward to and I've always said this I look forward to the bank running the bank that is at more of that end state of simplified in terms of transformation exits the organization restructuring work we've done has put us in a strong position the modernization of our infrastructure has put us in a strong position for AI and what lies ahead and so I very much look forward to the next few years on the back of the heavy lifts that we've done, but it was always being done together.
Understood. I want to ask you about some specific parts of the business, Jane. Services, a crown jewel of the bank, 17% growth there. How do you keep competitors though from encroaching on that business and how are you going to keep it strong?
Yeah, I mean when you think about the businesses that will win in an AI world, in the geopolitical world, the other dimensions, the one word that's critical is scale. And we have massive scale in this business. And it is everywhere in the world and it is connected to everything in the world. It's moving trillions of dollars a day around the world for multinationals. We keep innovating on it. We added in huge capabilities in e-commerce. So now the e-commerce juggernauts are major clients of ours around the world and that's a Mercado Libre in Latin America as well as the famous Chinese clients there as well as those in India as well as the ones obviously like the Amazon and the like here. We've done a huge amount of investment in tokenization and blockchain and digital assets over the last several years quietly getting on with it. And we're the leader in tokenization globally at the moment. That will continue because we have moats that are impossible to overcome for peers. And I just look at the scale. You know, some of the best players in the fintech world and in payments are moving a trillion dollars a year. We are doing multiples of that a day.
Right. Scale. And wealth though has been a little slower growing. And what are you going to do to sort of get that growing as fast as your institutional business?
Look, I'm really proud of what the team's done in wealth so far because they put in it was a lot of different foundations that needed to get put in place because we brought multiple different businesses together to form a single platform and putting things onto a single investment platform, lending platform, deposits platform takes quite a bit of work particularly globally because this is a global franchise. And at the same time a lot of talent change that was put through and he was given a tough mandate which he's executed very well getting all of the infrastructure into position on the technology front and operations. So that's been a heavy lift. I think what you'll certainly be hearing when we have our investor day is those foundations are in place. Many of them are very distinctive compared to our competitors because of the globality. But also we don't have our own asset manager. So for a client the investment proposition at Citi is truly in the client's interest. We're not confused as whether we're a manufacturer or on the client's side of the table here. And the growth has been good. If I look at our client investment assets, they grew 14% the last year. That included the divestiture of our trust business which is a good $30 billion worth of assets. So when you look through a lot of this the growth has been strong, the foundations are in place and now it's really about how we use some of the new technologies are available as well as investment to drive the frontline growth. That's a lot of what we'll be focused on.
Right. Over the past few years, you've had to do a lot of job cuts, Operation Bora Bora, and I'm wondering if you feel like you're right sized right now in terms of headcount, and if you're sanguine about the quality of employees and talent in terms of retention and being able to attract those employees.
We I think the facts speak for themselves. We have attracted extraordinary talent to the firm and we have extraordinary talent in the firm like the depth of the bench here is very impressive. I think it was evident to the street for example and our services investor day is evident around who we've brought in in wealth an incredible diversity of talent from the buy side and with different experiences globally a very very strong team same in banking you know Vis has brought where we had gaps the best of the talent on the street to the firm so Citi's ability to bring extraordinary talent and create a hungry team that doesn't just want to sit there with a mindset of okay I can just sit here on an annuity business and run it. They want to win. They want to build, they want to win. They're hungrier. They're a little bit scrappier. I like that. So that's a real strength of the firm and you can see it when you walk around our building. Our talent loves our firm. We've had to put the firm through a lot of hard change the last five years, right? The organizational simplification was very hard. I think what the people see now is the benefits it's given us. We're a simpler firm. It's easier to get things done in the firm. We're a more decisive firm. We're making decisions much faster. Got better information around it. We're a better connected firm. We're able to deliver for clients better. So that pride is coming through and I think when I speak to our people we don't shy away from the fact there's been a lot of change we've put through but I'm really happy to see they can see the benefits and the results.
