Citigroup Inc. (NYSE:C) Q3 2018 Earnings Conference Call - Final Transcript

Oct 12, 2018 • 11:30 am ET

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Citigroup Inc. (NYSE:C) Q3 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Hello, and welcome to Citi's Third Quarter 2018 Earnings Review with CEO, Mike Corbat and CFO, John Gerspach. Today's call will be hosted by Susan Kendall, Head of Citi IR. (Operator Instructions)

Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time.

Ms. Kendall, you may begin.

Executive
Susan Kendall

Thank you, Natalia. Good morning and thank you all for joining us. On our call today, our CEO Mike Corbat will speak first then John Gerspach, our CFO, will take you through the earnings presentation, which is available for download on our website, citigroup.com. Afterwards, we'll be happy to take questions.

(Forward-Looking Cautionary Statements)

With that said, let me turn it over to Mike.

Executive
Michael Corbat

Thank you, Susan, and good morning, everyone. Earlier today, we reported earnings of $4.6 billion for the third quarter of 2018 or $1.73 per share. We continued to see solid growth this quarter in many areas including our accrual businesses and ICG, Fixed Income and Mexico Consumer. And despite a drag of net one-time gains that affected our top line comparisons, we still achieved positive operating leverage for the quarter, driving our efficiency ratio down to 56.1%. Loans and deposits both grew year-over-year and our return on assets increased to 95 basis points.

We're on track to achieve our 2018 financial targets. On a year-to-date basis, we generated 4% underlying growth in aggregate across our consumer and institutional businesses. Our efficiency ratio is 57.3%, and we achieved return on tangible common equity of 11.2% keeping us on track to exceed our original target of 10.5% for the full year.

We returned $6.4 billion of capital to common shareholders through buybacks and dividends during the quarter, and over the past 12 months, we've reduced our common shares outstanding by over $200 million or 8%. Combined with our operating performance, our earnings per share were 22% higher than one year ago.

Turning to the businesses. In Global Consumer Banking, we saw solid growth in Mexico even when you back out the gain on the sale of our asset management business. In Asia, we saw some headwinds in our more market sensitive investment products. But the remainder of the franchise showed consistent growth. And in the US, we're starting to see the impact of the L.L.Bean portfolio in Retail Services where revenue continued to grow.

Branded Cards had sequential revenue growth and given the strong growth in interest earning balances, we remain on course to achieve 2% underlying revenue growth for the year.

Our Institutional Clients Group grew by 4%, excluding a one-time gain from last year. Fixed income and equities were up 7% in total and as in the past, our accrual business, TTS, Securities Services, Corporate Lending and the Private Bank all showed strong year-over-year growth. Investment banking was down versus last year, as continued growth in M&A was more than offset by slower underwriting activity across the industry. The client dialogues remain solid and we feel good about the pipeline