Jane Fraser. One minute. What happened? I'm sorry. This very important CNBC-TV18 conversation, perhaps most important we have had in a long time. My guest is the chair and CEO of Citi, Jane Fraser. Jane, thank you very much indeed for joining us.
Well, it is an absolute privilege and joy to be back in India again.
Well, I should have introduced you as not just chair and CEO of Citi. I should have said, 'I'm speaking to the most powerful woman in business,' voted by Fortune magazine. Many congratulations.
Oh, thank you very much indeed. That was certainly one for the team.
Okay. Of course, it's for the team, but I just wanted to ask you. Let me start there. Do you owe this absolute honor to all the travails you went through rising, breaking all glass ceilings, or do you owe it to what Citi has just accomplished? Highest revenue growth in 10 years.
I think it's a combination of a journey which many of our colleagues have gone through around the world, including here in India, and then delivering the results from it. Although, we're at a waypoint, we're not at the final destination as a firm. But I think it's a recognition that we now have a new Citi. We have transformed ourselves, but we're now demonstrating what we can do.
Okay. That's good to hear, and of course, I have more questions on that, but you have an Indian audience listening to you. So, you know, we are in a bit of a despondent situation now with 2 years of stock market index falling. So, we are in correction territory. The currency has fallen for 2 years. What is your sense about what you're picking up from your corporate clients and investors about India? Is it time to join the crowd, to bung in? What are you listening?
What I see in India, there was a discussion I had with Prime Minister Modi yesterday when we met him for nearly an hour, is that the long-term story in India is intact. And I certainly saw as well in him commitment to reform agenda, very thoughtful around energy security, looking at driving digitization and the potential of AI for the country. So, while there are headwinds, I'd note that the headwinds underlying some of the foreign exchange in the market are the same ones that the rest of the world is facing. They're not of India's doing. We're all facing some of these challenges. And I think for investors and for companies, it's play the long game. Because that's where really the strong fundamentals lie.
Yes, so there are some fund managers who are still sticking because they're playing the long game. But just anytime now, it's possible that the Indian government will remove the taxes, withholding tax and capital gains tax on debt investments coming into India. You think these things will move the needle?
Look, I certainly think they'll be helpful in easing some of the short-term headwinds that are being faced. But again, you look at the stock market here, a little bit of victim of one's own success. You know, the India stock market has been incredibly vibrant for a long time. The retail investors have been very active. You want the retail sector invested not in deposit accounts, but in the markets and investing for the long run. But the valuations are higher here than in some other countries. Some of the private investment has been lower on the FDI side, as well as lower on the private capital and the corporate side. So, the growth drivers are a little less clear in the short term. The long-term ones, this train keeps on moving. I see it in Citi's own results. I mean, we've got tremendous growth here connecting India to the world and the world to India, and that's why you hear me convey such confidence about this long-term story is intact.
I will come to the Citi India questions as well, but you know, sticking with markets, just the other day Jamie Dimon was telling on CNBC that there is exuberance. Would you say US markets and some of the markets are in irrational exuberance terrain? Are they looking through too many of the red flags in terms of crude oil or possible over-investment in AI? Do you worry about over-leverage of governments? Do you think they are not bubble terrain but irrational?
I think they're a tad optimistic if I could use a British understatement there for the moment. I think there's a lot of money in the world. That money wants to go to work because it knows that it creates value. It can drive growth. And there is a lot of transformation going on. So, there is also a bit of a fear of missing out in a lot of what's going on. But I do feel as if the markets think everything that can go right will go right and that companies who've done a fantastic job of being the source of resiliency, being so adaptable with everything that's been thrown at them in the last few years and have continued growing. There's a sense that that just continues to happen, and at some point something gives. None of us know when, and anyone who said something was going to give 2 years ago got that wrong. At some point inevitably there'll be further bumps in the road, and maybe some more dislocations. But again, I don't think the AI investment is overdone.
Oh, okay. I'll come back to that point as well. But you know, speaking of AI actually, there are programs or languages like CrowdStrike. Of course, you all have got an inside view, and now you're able to fix your bugs. But there will be zillions of your clients who won't get it. I mean, stock exchanges, shadow banks. What happens?
That's not true. That's actually not true. But what I'm saying is the players that do have access to the model and the technology in the different spaces, no one is competing on cyber. The different vulnerabilities that we identified will then be patched for all. So the work that those who have access to the models is looking at identifying where they are, but the solutions will be available to all. So this notion of there's a zero-sum game here is wrong.
Okay. No, I agree. Yes, CrowdStrike also reported their numbers, and they are very confident of their cybersecurity answers.
Yes, and the patches that will be delivered will be available to everybody, not just those with the model. So that I think is something people are missing.
No, I agree with you, but it's just a worry that some of us, even Indian companies have got a look in with CrowdStrike being available to us. There's just a worry that you may be lending money to people who perhaps are not up in the game and the hackers get hold of my personal phone. They get hold. Are these not worries or am I overstating them?
What we encourage everyone to do is to use the AI models that are available for everyone to make sure that you are not only looking at how do you make your customer service better, how do you make your growth potential there, product life cycle faster, make your company more efficient, but you also deploy it defensively to identify where there are potential vulnerabilities and get them fixed and to do so with urgency. Yes.
And that's what the order is. There's a word more on AI before I move on to other things macro and banking. Would you worry that AI, because of its ability to increase productivity, may lead to a world where more and more work is done by fewer and fewer people and it's an increasingly K-shaped economy? Are there worries about our global macros getting too unequal?
So, let's look at India. When I think of what AI could do in terms of health care, very positive. When I look at what AI could do, particularly on the back of the payments network that is here in India, enabling the incredible craftsmanship that women have or their cooking abilities or others to unleash more women's potential into the workforce as entrepreneurs and create a whole new raft of economic growth potential all for the young, the great leveler. Because one thing I look at India and what it will not do is sleepwalk into AI. Like this country and the people in the country are going to look at entrepreneurship opportunities and I look at it say it will unleash new growth that we haven't thought of, new opportunities that I hope will be much deeper in the economy than just the large corporates that are there. And I don't pretend that there won't be dislocations. There obviously will. We're all going to have to adapt, but let's put a lot of energy into where the new growth potential can be to counteract the area that make sure there are plenty of puts for the takes. It's got the potential for that.
But since you are sticking to India, let me ask about Citi India. This year, I mean not this year, over the past 5 years as part of your reorganization, you have sold off the consumer banking divisions in India and 13 other countries.
Yes, everywhere outside the States.
How has Citi India done? Have you been able to make up those revenues? Are you managing with lower revenues here?
So, we closed that transaction in India in the summer of '23. By March '25, which is when we last reported our results, we have seen a 35% growth in net income versus where we were when we owned the consumer franchise. Our revenues have grown 30% and our balance sheet 25%. And I think this is something that for all of us is to take confidence in the power of focus. We focused the franchise on clients who have cross-border needs, needs to tap into global markets, and we made sure that we are excellent and investing behind that and delivering that. And we've seen tremendous growth in the franchise here. We are still the most profitable foreign bank in India from the last audited results. So that is an example. Again, as economies get larger like here, there is a lot of value from scale, speed, and focus rather than just too much breadth.
You know, actually since you're speaking about reorganization of Citi under you, I went through your investor presentations, very interesting presentations. You're speaking about flattening of the levels and you have of course rationalization into five major verticals. You have new platforms, technology. To which one would you owe maximum returns, maximum bang for the buck?
