Citigroup at RBC Conference Notes

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John Gerspach

1Q business performing in line with expectations

“Sure, sure, sure. So first thing I’d say is that the businesses are largely performing in line with our expectations.”

Largest driver of FICC is the macro environment

“when you talk about what is the single largest driver on FICC, it’s the macro environment. And last year there was a lot of things going on in the macro environment that caused corporations and investors to look back and say, well, gee, I need to position my balance sheet this way, I think this is going to happen. And that gave us a good opportunity. I think the other thing that still holds true with FICC is that it’s a scale game.”

Make our equities business appropriate in size for our client base

“Equities, for us what we’re trying to do is we want to size our equities business appropriate with our client base. And, again, it means that you need to be able to put balance sheet to work. You need to be able to make the technology investments that you need to make. But we’re not looking in equities to be number one, two or three. That’s just not going to fit, because we don’t want to go for the same broad market that you need to have in order to get into that one, two or three level.”

Now running budgeting process from CCAR process

“I mean, I think the biggest change that we made would have been two years ago, when we really decided that rather than trying to have a separate CCAR process completely divorced from the way we would operate on a business as usual point of view. And we just decided that what we really needed to address was the fact that we needed to have a continuous capital planning cycle. And I think that that served as well, because it means that as we get into those discussions in the fall and we give the businesses, here the assumptions that we see in the environment for the next three years, let’s go out and build the budgets. Businesses used that information, those assumptions in the models that they used every day. ”

Asia is ahead of the US in digital banking

“I would say that we’re most advanced in digital right now in Asia as you might suspect. And Asia kind of leads the U.S. and the U.S. certainly leads Mexico. So we’ve got a lot of investments going on right now in enhancing our digital capabilities, both through our abilities to acquire customers digitally, but also our ability to service those customers digitally. And that serves a couple of purposes. One is it’s the way most of our clients want to do business right now. In Asia, if you didn’t have a great digital offering you would be dead. And clearly, the way the U.S. is going that’s the same way it is.”

People in Mexico like to bank at branches

“Certainly, the smartphone penetration is making – it’s growing, it’s definitely growing. But in Mexico it’s more of a cultural thing, people still like to do business in the branches. And we think though that if we offer them attractive easy-to-use digital channels, there is no reason to think that they won’t move onto those channels.”