Citi 3Q16 Earnings Call Notes

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Citigroup’s (C) CEO Mike Corbat on Q3 2016 Results

Sold operations in Argentina and Brazil but making investments in Mexico

“ this month, we announced agreements to sell our retail banking operations in Argentina and Brazil and plans for significant investment in Mexico. As a sign of our commitment to Mexico, a market where we have real scale and confidence in its growth prospects, we’re integrating the local brand with Citi’s, and the franchise will be known as Citibanamex.”

Taking actions to improve standings in equity business but tough to take share in a challenged environment

“Steven, it’s Mike. The numbers, I would say, as we look at kind of where we are, which is in 8, 9 position going, as John described, to 5 6 is, it varies a bit by quarter and will vary a bit based on some of the volumes. We’re at about $250 million of revenue per quarter, so theoretically, about $1 billion of revenue a year. We feel that the investments that we’ve talked about in the investment — in the equities business are largely done and primarily focused on really two key areas, one is an investment in terms of technology, which is critical, certainly to the future of the equities business and second, it’s coming out of a resizing, rescaling that we’ve gone through in our equities business of making sure we’ve got the right people in the right positions and being out there and getting talent, both internally and externally, into the right seats. And I would describe that as largely done. So really, from here, it’s up to us and up to our team to execute. I would say, and I don’t put this out there as an excuse, but I think it is a reality that in a very challenged volume market, it’s tough to take share“

Right now credit feels pretty good

“Right now, credit feels pretty good, I have to admit. We don’t see — again, we think that rates may inch up a little bit next year, but again, we’re not seeing anything that would suggest some change in the cycle at this point in time. Part of that is, again, we’re focused on a very specific target client, and so we don’t exactly have this broad mass-market approach in most of our businesses, which might insulate us a little bit. But at this point in time, with the underwriting practices we have in place, we feel really good about credit in North America, in Latin America, in Asia.”

Loan demand is reasonable considering that clients are growing around the world

“ loan demand is reasonable. But again, as we think about the extension of loans, we’re facilitating a client relationship with the extension of that loan. And so as our clients need to expand and grow around the world, we’re there to support them. And so as you look at a business model that supports largely Fortune 500, Fortune 5000 types of companies, and you look at global growth rates in the world, I think that the growth rates we’re posting there make sense. And I think within the scheme of the environments are prudent and reasonable. And I would expect to continue to see, all things considered, similar types of growth rates into next year. If you look at the world next year, growth rates globally coming up a bit with probably parts of the emerging markets rebounding better or faster than parts of the developed economies. And I would expect loan growth to largely mimic that.”

Still a little unclear what we’re going to do w/r/t Brexit

“Matt, it’s Mike. From — we don’t have a lot of answers right now. And as the Prime Minister came out, I guess, it was last week or 1.5 weeks ago, Article 50 won’t be invoked until March of next year. That then starts to clock on a 2-year window. And I think it’s our own belief, based on a series of elections in Europe, the combination of France and Germany, that information is probably going to be more back-end loaded than front-end loaded. And so what we’ve been working for is making sure, as that information comes out, we’re in a position to continue to service our clients really no matter what. And when you think about our franchise, we not only have a sizable franchise in U.K., we also operate in 20 of the 27 EU countries.
And so we’ve got flexibility. We’ve got our passport bank already established in Ireland. We’ve got the pipes connected, to, certainly, the larger countries within the EU. So we’ve got flexibility around that. And what we’ve said in the meetings that I’ve had with both U.K. and other European officials, we’re going to watch and see this unfold, but our primary goal here is to make sure that in an undisrupted way, we can continue to serve our clients. And we think our structure today gives us time and flexibility. And when the time is right, we’ll make a decision of ultimately what we’re going to do. But we’d like to benefit as much information as possible before we make that decision, and we just don’t have it today.”

Yes some more opportunities in the energy space as oil prices have stabilized

“Clearly, as oil has stabilized and stabilized somewhere around the $50 area, we’ve seen the combination of M&A conversations to combination of financing, refinancing conversations and overall activity and people starting to engage coming back. Again, as we’ve described, our customer or client base remains consistent to. We are largely a multinational, global-type client energy player throughout the vertical. And we’re going to remain consistent to that.”