Citigroup on Conference Call (70.28 -1.84)
- Digital use remains strong, up 13% in usage and 25% in new users.
- Credit Costs were in line with expectations. Reaffirms outlook for NCL rate in the rage of 5% in 2018; Credit remains favorable as it reflected some seasonality in cards but delinquencies were stable.
- NIR to grow by over $2.7 bln in 2018 (Original was $2.5 bln of growth).
- Expect top line growth to stay broadly in line with Q1 in following quarters (+/-3%).
- Reiterates tax rate being closer to 25%
- Markets revenue will reflect overall operating environment; Does expect a seasonal decline in trading revenue in Q2 from Q1; Expect revenue growth in accrual businesses.
- Looking forward to seeing CCAR results; Said 2018 goal of returning $20 bln to shareholders and remain on track to hit these returns.
- Efficiency Ratio- Accounting changes impacted rate by 50-60 bps which does not impact target of low 50s by 2020 (Reaffirm)
- Expects continued top line momentum for the rest of the year.
- Trading Liabilities cover 50% of Trading Assets which mitigates the LIBOR impact; NIM impact was very little; Was not a noticeable factor.
- Equity environment has been very strong.
- March rate hike was not in the previous outlook provided; Every 25 bps will add $80 mln of NIR for the year; As get more rate hikes will see some compression in the gains as beta increases; COntinues to expect positive impact on NIM from future rate hikes.
- Feel good about equities business, Q1 performance provides evidence that it built up market share in 2017; FICC, investors are the variable, good core foundation but it is the market that will determine the revenue flows in this business; IB saw volumes down and drop in IB is in line, says 'have not hit the stop button but the pause button'; notes some regulatory issues that are leading to taking pause.
- SLR Level- Has never been a binding constraint for it so has never optimized the SLR and getting to the leverage; A more standardized approach will not have as large of a gap as the advanced approach; Applauds the increased flexibility but it has not been something that has impacted its overall business; What impacts bank is focus on maintaining a 3% G-SIB score;