Citigroup Inc. (NYSE:C) Q4 2022 Earnings Call Transcript

Citigroup Inc. (NYSE:C) Q4 2022 Earnings Call Transcript January 13, 2023

Operator: Hello and welcome to Citi’s Fourth Quarter 2022 Earnings Review with the Chief Executive Officer, Jane Fraser; and Chief Financial Officer, Mark Mason. Today’s call will be hosted by Jen Landis, Head of Citi Investor Relations. Also as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Ms. Landis, you may begin.

Jen Landis: Thank you, operator. Good morning and thank you all for joining us. I’d like to remind you that today’s presentation, which is available for download on our website, citigroup.com, may contain forward-looking statements, which are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these statements due to a variety of factors, including those described in our SEC filings. With that, I will turn it over to Jane.

Jane Fraser: Thank you, Jen and Happy New Year to everyone joining us today. We are very much off and running as we start 2023. Today, I will share our perspective on the macro environment before recapping our performance in the fourth quarter. And then I will take a few minutes to reflect on our progress in 2022 and our strategic priorities for the coming year. The global macro environment played out largely as we anticipated during the second half of last year. As we enter 2023, environments have had better than we all expected for the time being at least, despite the aggressive tightening by Central Bank. In Europe, a warmer December reduced the stress on energy supplies and inflation is beginning to ease off its peak. That said we still expect softening of economic conditions across the Eurozone this year given some of the structural challenges it is grappling with.

In Asia, while the public health impact in China are unfortunately likely to be severe. The abrupt end of COVID Zero should begin to drive growth and improve sentiment generally. And here at home, the labor market remains strong and holiday spending was better than expected, in part because consumers have been dipping into their savings. The Fed remains resolute in tackling core inflation however and therefore, we continue to see the U.S. entering into a mild recession in the second half of the year. Now turning to how we performed. For the fourth quarter, we reported net income of $2.5 billion and EPS of $1.16. Our full year revenue growth of 3% ex-divestitures was in line with the guidance we gave you at Investor Day as was the case with our expenses.

We delivered an ROTCE of nearly 9% and a CET1 ratio of 13%. This quarter, our businesses performed similarly to how they did throughout the year and we are quite pleased with some and less happy with the performance of others. Services continues to deliver cracking revenue growth. Our markets businesses are navigating the environment very well and we are seeing good momentum in U.S. Personal Banking. On the flipside, investment banking felt the pain of a drastically smaller wallet in €˜22. And the environment for wealth remained a challenging one. Unpacking that a bit, services delivered another excellent quarter and we have gained significant share in both Treasury and Trade Solutions and security services. TTS, the business most emblematic of the power of our global network had revenues up 36% year-over-year as we execute on the strategy we laid out at Investor Day.

Thanks to strong business drivers, coupled with higher rates, TTS is performing ahead of our expectations. Likewise, Securities Services was up a strong 22%. We ended the year having onboarded $1.2 trillion of new assets under administration and custody. Markets had the best fourth quarter in recent memory, with revenues up 18% from 2021. We have the number one FICC franchise on the street during the first three quarters of the year and fixed income was up 31% in the final quarter. Equities was down as the mix of client activity, again, did not play to our strength in derivatives. With the wallet down significantly, our investment banking revenues were off by about 60% this quarter. While the pipeline looks more promising and client sentiment is improving, it would be hard to precisely predict when the tide will turn in €˜23.

Wealth Management’s performance was disappointing. Revenues were down 6% in the quarter, with the macro environment creating headwinds in investment fees and AUM globally, but most acutely in Asia. However, we have been steadily improving the business as demonstrated by continued momentum in client acquisitions across the spectrum and net new investment flows. Similarly, we continue to build our client advisor base albeit at a slower pace given this environment. We would expect to see these investments pay off as the markets recover. In U.S. Personal Banking, both cards businesses had double-digit revenue growth for the second straight quarter as purchase sales and revolving balances continued to grow strongly. Whilst in retail banking, we clearly have some more work to do.

As you know, we have been actively managing our balance sheet and risk. Our cost of credit increased in line with our guidance. We built reserves in Personal Banking this quarter on the back of volume growth as well as in anticipation of a mild recession. And in the U.S., net credit losses in cards continue to normalize as we had expected, still well below pre-COVID levels. Corporate credit remains healthy and our low overall cost of credit was similar to last quarter, reflecting the quality of our corporate loan portfolio. In terms of capital, we increased the CET1 ratio by about 70 basis points to 13% during the fourth quarter. And finally, our tangible book value per share increased to $81.65 and we returned $1 billion to our shareholders through our common dividend.

Now, let me step back and discuss what we accomplished in 2022. One of our major goals last year was to put in place a strategic plan designed to create long-term value for our shareholders and to get that plan swiftly off the ground. I am pleased with the significant progress we have already made. We simplified the bank, closing sales of our consumer businesses in 5 markets, including 3 in the fourth quarter. And we have made rapid progress winding down our consumer business in Korea as well as our franchise in Russia. We continue to invest in our transformation to address our consent orders and to modernize our bank. We are streamlining our processes and making them more automated whilst improving the quality and accessibility of our data.

This will make us a better bank. We brought in very strong talent, met our representation goals and strengthened our culture by increasing accountability and shareholder alignment. To that end, I am pleased we delivered against our financial guidance for the year. We also released our first plan to reach net zero emissions by 2050, expanded our impact investing and announced the findings from an external law firm, which reviewed our racial equity efforts in the U.S. Finally, I am very proud of how our people handled the macro and geopolitical shocks, which define 2022 and supported our clients and our communities with excellent and compassion throughout. Before I hand over to Mark, let’s turn to the next few years and in particular, the path to achieving our medium-term return targets that we laid out on Page 5.

At Investor Day, we talked about the path coming in three phases, with Phase 1 characterized by both disciplined execution and investment. 2023 is a continuation of Phase 1, laying the foundation for driving long-term shareholder value. We are focused on changing our business mix to drive revenues and returns with the expectation that our businesses will close out €˜23 competitively stronger. Services entered €˜23 with strategic momentum and a pipeline of major new innovation and market-leading product capabilities. Markets should continue to benefit from our active corporate client base with the franchise further advancing on the back of investments and the businesses focused on capital productivity. Banking and Wealth are well positioned for when the cycle turns.

Thanks o the investments we have made in top talent and technology as well as the synergies realized across the franchise. As you saw, we felt this was the right time to make a change in well and we started a search to identify the next leader of this business. I asked Jim O’Donnell to take on a new role focused on senior clients across the firm. This will leverage his deep expertise and relationships and when combined with the new GoG’s additional role as North America Head, it’s designed to help us capture more of what is a significant business opportunity in our home market. U.S. Personal Banking will continue to benefit from the recovery and borrowing, taking full advantage of our market leading digital platforms and new products, particularly in the card space.

We will make further progress on our international consumer exits, enabling us to simplify the firm and reduce our cost base. And we will, of course, focus on our clients, deepening relationship and bringing on new clients in line with our strategy. We will continue making disciplined investments in our franchise, including the investments in our transformation and controls. However, we will pace some of our business investments to reflect the operating environment. Looking further out, we will begin to bend the curve of our expenses to deliver against our medium-term targets. We will do so through a combination of our divestitures, realizing the financial benefits of our transformation and further simplification and Mark will cover this in more detail shortly.

We fully recognize this suppresses our returns in the near-term, but we are deliberately taking the tough strategic actions and the investments necessary to reach our medium-term return targets and to create long-term shareholder value. We are carrying not just our momentum, but our determination into 2023. Despite the macro headwinds, we are very much on track to reach the medium-term return targets we shared with you on Investor Day. We intentionally designed a strategy that can deliver for our shareholders in different environments. We are running the bank differently with a relentless focus on execution and we will continue to transparently share our proof points with you along the way. With that, I’d like to turn it over to Mark and then we will be delighted as always to take your questions.

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Mark Mason: Thanks, Jane and good morning, everyone. We have a lot to cover on today’s call. I am going to start with the fourth quarter and full year financial results, focusing on year-over-year comparisons, unless I indicate otherwise. I will also discuss our progress against our medium-term KPI targets and end with our guidance for 2023. On Slide 6, we show financial results for the full firm. In the fourth quarter, we reported net income of approximately $2.5 billion and an EPS of $1.16 and an ROTCE of 5.8% on $18 billion of revenue. Embedded in these results are pre-tax divestiture-related impacts of approximately $192 million, largely driven by gains on divestitures. Excluding these items, EPS was $1.10 with an ROTCE of approximately 5.5%.

In the quarter, total revenues increased by 6% or 5% excluding divestiture-related impacts, as strength across services, market and U.S. Personal Banking was partially offset by declines in investment banking, wealth and the revenue reduction from the closed exit. Our results include expenses of $13 billion, a decrease of 4% versus the prior year. Excluding divestiture-related costs from both the fourth quarter of this year and last year, expenses increased by 5%, largely driven by investments in our transformation, business-led investments and higher volume-related expenses partially offset by productivity savings and the expense reduction from the exit. Cost of credit was approximately $1.8 billion, primarily driven by the continued normalization in card net credit losses, particularly in retail services and an ACL build of $645 million, largely related to growth in cards and some deterioration in macroeconomic assumptions.

And on a full year basis, we delivered $14.8 billion of net income and an ROTCE . Now turning to the full year revenue walk on Slide 7. In 2022, we reported revenue of approximately $75 billion, up 3%, excluding the impact of divestitures and in line with our guidance of low single-digit growth. Treasury and Trade Solution revenues were up 32%, driven by continued benefit from rates as well as business actions such as managing deposit repricing, deepening with existing clients and winning new clients across all segments. Higher wins have accelerated due to the investments that we have been making in market leading product capabilities. These products include the first 24/7 U.S. dollar clearing capability in the industry, the 7-day cash suite product that we launched earlier this year, and instant payment, which is live in 33 markets, reaching over 60 countries.

So while the rate environment drove about half of the growth this year, business action and investments drove the remaining half. In Security Services, revenues grew 15% as net interest income grew 59%, driven by higher interest rates across currency, partially offset by a 1% decrease in non-interest revenue due to the impact of market valuation. For the full year, we onboarded approximately $1.2 trillion of assets under custody and administration from significant client wins and we continue to feel very good about the pipeline of new deals. In markets, we grew revenue 7%, mainly driven by strength in rates and FX as we continue to serve our corporate and investor clients while optimizing capital. This was partially offset by the pressures in equity markets, primarily reflecting reduced client activity in equity derivatives.

On the flipside, banking revenues, excluding gains and losses on loan hedges, were down 39%, driven by investment banking as heightened macro uncertainty and volatility continued to impact client activity. In cards, we grew revenues 8% as we continue to see benefits from the investments that we made in 2022 along with the rebound in consumer borrowing levels. And in wealth, revenues were down 2%, largely driven by market valuations in China lockdown. Excluding Asia, revenues were up 3%. Corporate Other also benefited from higher NII in part as the shorter duration of our investment portfolio allowed us to benefit from higher short-term rates. And as you can see on the slide, in legacy franchises, excluding divestiture-related impacts, revenues decreased by about $1.3 billion as we closed 5 of the exit markets and continue to wind down Russia and Korea consumer.

Going forward, we would expect legacy franchises to continue to be an offset to overall revenue growth as we close and wind down the remaining exit market. On Slide 8, we show an expense walk for the full year with the key underlying drivers. In 2022, excluding divestiture-related impacts, expenses were up roughly 8% in line with our guidance. Transformation grew 2%, with about two-thirds of the increase related to risk, control, data and finance program and approximately 25% of the investments in those programs are related to technology. About 1% of the expense increase was driven by business-led investments, which include improving and adding scalability to our TTS and Security Services platform, enhancing client experiences across all businesses and developing new product capabilities.

We also continue to invest in front office talent, albeit at a more measured pace, given the environment. And volume-related expenses were up 1%, largely driven by market and cards. The remainder of the growth was driven by structural expenses, which include an increase to risk and control investments to support the front office as well as macro impacts like inflation. These expenses were partially offset by productivity savings as well as the benefit from foreign exchange translation and the expense reduction from the exit market. Across the firm, technology-related expenses increased by 13% this year. On Slide 9, we show our 2022 results versus the medium-term KPI targets that we laid out at Investor Day, which we will continue to show you as we make progress along the way.

Macro factors and market conditions, including those driven by monetary tightening at levels we didn’t anticipate at Investor Day, impacted some KPIs positively and others negatively. However, we were able to offset some of the impacts as we executed against our strategy. In TTS, we continue to see healthy underlying drivers that indicate consistently strong activity from both new and existing clients as we rollout new product offerings and invest in the client experience, which is a key part of our strategy. Client wins are up approximately 20% across all segments. And these again include marquee transactions where we are serving as the client’s primary operating bank. For the third quarter year-to-date, we estimate that we gained about 70 basis points of share and maintained our number one position with large institutional clients.

In addition, we have onboarded over 8,700 suppliers this year, helping our clients manage their supply chain to address the evolving global landscape. And in Security Services, we onboarded new client assets, which offset some of the decline in market valuation. And we estimate that we have gained about 50 basis points of share in Security Services through the third quarter of this year, including in our home market. In markets, we strengthened our leadership position in fixed income by gaining share while making progress towards our revenue to RWA card. In cards, loan growth exceeded our expectations in both branded cards and retail services. Card spend volumes were up 14%, end-of-period loans up 13% and most importantly, interest-earning balances up 14%.

That said, in areas like investment banking, we lost share this year, but maintained our market position. And in wealth, while we have brought on new advisors and new client assets, given the impact of market valuation, this didn’t translate into growth in client assets or top line growth at this point. So in summary, we made good progress against our medium-term KPI targets despite the significant changes in the macroeconomic backdrop since Investor Day. This highlights that our diversified business model is adaptable to many environments and we have the right strategy to achieve our return targets over the medium-term. Now turning back to the fourth quarter on Slide 10, we show net interest income, deposits and loans. In the fourth quarter, net interest income increased by approximately $710 million on a sequential basis, largely driven by services, cards and markets.

Average loans were down as growth in cards was more than offset by declines in ICG and legacy franchise. Excluding foreign exchange translation, loans were flat. And average deposits were down by approximately 1%, largely driven by declines in legacy franchises and the impact of foreign exchange translation. Excluding foreign exchange translation, deposits were up 2%. Sequentially, average deposits were up driven by growth in ICG and PBWM and our net interest margin increased by 8 basis points. On Slide 11, we show key consumer and corporate credit mix. We are well reserved for the current environment with over $19 billion of reserves. Our reserves to funded loan ratio, is approximately 2.6%. And within that, PBWM and U.S. card is 3.8% and 7.6% respectively, both just above Day 1 CECL level.

And we feel very good about the high quality nature of our portfolio. In PBWM, 45% of our lending exposures are in U.S. cards. And of that, branded cards makes up 66% and retail services makes up 34%. Additionally, just over 80% of our total card exposure is to prime customers. And NCL rates continue to be well below pre-COVID levels. In our ICT portfolio, of our total exposure, over 80% is investment grade. Of the international exposure, approximately 90% is investment grade or exposure to multinational clients or their subsidiaries. And corporate non-accrual loans remain low and are in line with pre-pandemic levels at about 39 basis points of total loans. That said we continuously analyze our portfolios and concentration under a range of scenarios.

So while the macro and geopolitical environment remains uncertain, we feel very good about our asset quality, exposures and reserve levels. On Slide 12, we show our summary balance sheet and key capital and liquidity metrics. We maintain a very strong balance sheet. Of our $2.4 trillion balance sheet, about a quarter or just under $600 billion consists of H3LA and we maintained . And our tangible book value per share was $81.65, up 3% from a year ago. On Slide 13, we show a sequential CET1 wall to provide more detail on the drivers this quarter and our targets over the next few quarters. Walking from the end of the third quarter, first, we generated $2.3 billion of net income to common, which added 19 basis points. Second, we returned $1 billion in the form of common dividend, which drove a reduction of about 9 basis points.

Third, the impact on AOCI through our AFS investment portfolio drove an 8 basis point increase. And finally, the remaining 56 basis point increase was largely driven by the closing of exits, RWA optimization and market moves towards the end of the quarter. We ended the quarter with a 13% CET1 capital ratio, approximately 70 basis points higher than the last quarter. As you can see, we hit our 13% CET1 target, which includes 100 basis point internal management book. That will allow us to absorb any temporary impacts related to the Mexico consumer exit at signing while continuing to have ample capacity to serve our clients. And as it relates to buybacks this quarter, we will remain on pause and continue to make that decision quarter-by-quarter.

On Slide 14, we show the results for our Institutional Clients Group for the fourth quarter. Revenues increased by 3% this quarter, with TTS up 36% on continued strength in NII; Security Services revenues up 22%; Markets revenue, up 18% on strength in fixed income, partially offset by a decline in equity; and Investment Banking revenues down 58%, which is in the range of the overall decline in industry volume. Expenses increased 6%, driven by transformation, business-led investments, specifically in services and volume-related expenses partially offset by FX translation and productivity savings. Cost of credit was $56 million, driven by net credit losses of $104 million, partially offset by an ACL release. This resulted in net income of approximately $1.9 billion, down 18%, driven by higher cost of credit and higher expenses.

ICG delivered a 7.9% ROTCE for the quarter. And average loans were down slightly, largely driven by the impact of foreign exchange translation and our continued capital optimization efforts. Excluding FX, loans were up 1%. Average deposits were roughly flat. Excluding the impact of foreign exchange translation, deposits were up 3%, and sequentially, deposits were up 4%. As for the full year, ICT grew revenues by 3% to $41 billion and delivered approximately $10.7 billion of net income, with an ROTCE of 11.1%. Now turning to Slide 15, we show the results of our Personal Banking and Wealth Management business. Revenues were up 5% as net interest income growth was partially offset by a decline in non-interest revenue driven by lower investment product revenue in wealth and higher partner payments in retail services.

Expenses were up 7%, driven by investments in transformation and other risk and control initiatives. Cost of credit was $1.7 billion, which included a reserve build driven by card volume growth and a deterioration in macroeconomic assumptions. NCLs were up, reflecting ongoing normalization particularly in retail services. Average loans increased 6%, while average deposits decreased 1%, largely reflecting clients putting cash to work in fixed income investments on our platform. And PBWM delivered an ROTCE of 1.4%, driven by the ACL build this quarter and higher expenses. For the full year, PBWM delivered an ROTCE of 10.2% on $24.2 billion in revenue. On Slide 16, we show results for legacy franchise. Revenues decreased 6%, primarily driven by the closing of five exit markets as well as the impact of the wind down.

Expenses decreased 38%, largely driven by the absence of divestiture-related impact last year related to Korea. On Slide 17, we show results for Corporate/Other for the fourth quarter. Revenues increased largely driven by higher net revenue from the investment portfolio. Expenses were down driven by lower consulting expenses. On Slide 19, we summarize our guidance for 2023. As Jane mentioned earlier, 2023 is a continuation of Phase 1. We will continue to execute and invest, laying the foundation for the future with an eye towards driving long-term shareholder value. With that as a backdrop, we expect revenue to be in the range of $78 billion to $79 billion, excluding any potential 2023 divestiture-related impacts, expenses to be roughly $54 billion, also excluding 2023 divestiture-related impact.

Net credit losses in cards are expected to continue to normalize. And as we said earlier, we met our 13% CET1 target, and we will continue to evaluate the target as we go through the next DFAST cycle and close additional exit and announce others. On Slide 20, on the right side of the page, we show our revenue for 2021 and 2022 and our expectations for 2023, excluding the impact of divestitures. In 2023, we expect the revenue growth I just mentioned to be driven by NII and NIR. In TTS, we expect revenues to grow but at a slower pace, driven by interest rates and business actions. And for Security Services, we expect a bit of a tailwind from increased market valuation and onboarding of additional client assets. We also assumed somewhat of a normalization in wealth as lockdowns in China and market valuations start to rebound.

And we expect investment banking to begin to rebound as the macroeconomic backdrop becomes more conducive to client activity. As for market, we expect it to be relatively flat given the level of activity we saw in 2022. Now turning to the NII guidance for 2023, we expect both ICG and PBWM to contribute to NII growth as we grow volumes, particularly in cards, and we continue to get the benefit of U.S. and non-U.S. rate hikes in our services business. As a reminder, the guidance for revenue includes the reduction of revenue from the exit and legacy franchises that we closed in 2022, and we expect to close this year in 2023. Turning to Slide 21. In 2023, the increase in expenses that I just mentioned reflects a number of decisions that we’ve made to further our transformation and execute on our strategy.

And the main drivers are, first, transformation as we continue to invest in data, risk and control and technology to enhance our infrastructure and ultimately make our company more efficient. Second, business-led investments as we execute against our strategy. Third, volume-related expenses in line with our revenue expectations. And fourth, elevated levels of inflation mainly impacting compensation expense, partially offset by productivity savings and expense benefits from the exit. And we are investing in technology across the firm with total technology-related expenses increasing by 5%. While we recognize this is a significant increase in expenses. These are investments that we have to make and I am certain that these investments will make us a better, more efficient company in the future.

And finally, let’s talk a little bit about the medium-term targets. At Investor Day, we said the medium term was 3 to 5 years. That time frame represented 2024 to 2026. So while a lot has changed in the macro environment since Investor Day, our strategy has not, and we are on a path to the 11% to 12% ROTCE target in the medium term. We continue to expect top line revenue growth, material expense reduction and capital levels largely consistent with our medium-term CET1 target range to contribute to the achievement of our 11% to 12% ROTCE target. So let me walk you through where we stand today. From a revenue perspective, rates have moved much higher and at a faster pace across the globe, which accelerated NII growth. And that, coupled with the execution of our strategy, has allowed certain businesses to accelerate.

At the same time, other businesses such as wealth and investment banking have slowed. Despite this, consistent with Investor Day, we expect a 4% to 5% revenue CAGR in the medium term, including the ongoing reduction of revenue from the closing of the exit. From an expense perspective, as we showed at Investor Day, expenses will need to normalize over the medium term. And we now expect to bend the curve on expenses towards the end of 2024. The three main drivers of the necessary expense reduction will be benefits from the exit, which will be included in legacy franchise the benefits from our investments in transformation and control and the simplification of the organizational structure. First, let me remind you, at this point, the ongoing expenses in legacy franchises are approximately $7 billion.

Of the $7 billion, roughly $4 billion is transferred to the buyer upon closing or through a transition services agreement that typically lasts about a year. The remaining $3 billion relates to potentially stranded costs and wind down, which takes time to eliminate. Second, as our investment in transformation and control initiatives mature, we expect to realize efficiency as those programs transition from manually intensive processes, the technology-enabled one. And finally, we remain focused on simplifying the organization, and we expect to generate further opportunities for expense reduction in the future. From a credit perspective, we still expect net credit losses to continue to normalize and any future ACL build or releases will be a function of macro assumption and volume.

So to wrap up, while the world has changed significantly and the components have shifted, we remain on our path to achieve the 11% to 12% ROTCE in the medium term. And Jane, the rest of the firm and I, are prepared to continue to show proof points along the way and demonstrate our progress. With that, Jane and I will be happy to take your questions.

Q&A Session

Operator: Thank you. Our first question will come from Glenn Schorr with Evercore. Your line is now open.

Glenn Schorr: Thanks so much. Definitely appreciate all these outlooks. They are very helpful. So my question on the outlook is if you take a look at the current medium-sized return on tangible and getting to your target. I heard many comments about the path to getting there is on track. Is it the expense spend at the end of €˜24, that is the material step up from here to there, if you will, and/or is credit like a really big determinant in the process. So I’m trying to bridge the gap just in numbers from today’s return on tangible targets. Thanks.

Mark Mason: Yes, sure. Good morning, Glen, thanks for the question. So we did give you some guidance here we gave it to you both on the top line and the middle line for €˜23. And then importantly, when we talk about the medium term, it’s both the continued revenue growth, the 4% to 5% CAGR that I referenced, but it’s also bringing the expenses down from this €˜23 forecast. And I mentioned in the prepared remarks, the drivers of what’s going to bring these expenses down. The combination of the exit of the businesses and the expenses going away associated with that with the benefits that we start to generate from the transformation spend and then org simplification that this type of strategic restructuring, if you will, in exiting all these countries will create an opportunity for.

And so it’s a combination of revenue growth, expense bending of that curve and coming down. The cost of credit is kind of as we’ve been talking about for some time now, which is it normalizes over the next couple of years at levels that are consistent with what we’ve seen kind of prior to this COVID cycle that we’ve been managing through.

Glenn Schorr: I appreciate that. Thank you. Just one quick follow-up on poly, not my norm, but I normally try to respect this type of process. But Mark, we consider your super important part of this transformation. there is been news out there that you talking to one of my other companies, but would you be able to make any comments? You mentioned just some moment staying on €“ sorry to put you on the spot, but I think a lot of people care.

Mark Mason: I appreciate that, Glenn. Citi is an important firm. I’m the CFO of this firm and this strategy is something that I’m focused on with Jane, ensuring that we execute on right and in a way that creates shareholder value for our investors. And so we’re committed to getting that done.

Jane Fraser: Together.

Mark Mason: Together.

Operator: Thank you. Our next question will come from John McDonald with Autonomous Research. Your line is now open.

John McDonald: Hi, Mark. I wanted to dig into the revenue outlook for 2023. You’ve got about the midpoint it kind of implies about 4% revenue growth this year, kind of consistent with what you talked about for that 4% to 5%. So for this year, the 2023 guide, it looks like the NII is guided to be up about 3.5%. And the markets you are assuming kind of flat. So what’s enabling you to get to the 4%? Where are the drivers that are above 4%? Is it some of those fee businesses? And just a little more color there would be helpful?