Citigroup Inc. (NYSE:C.PK) Goldman Sachs 2022 US Financial Services Conference December 7, 2022 11:20 AM ET
Company Participants
Jane Fraser – Chief Executive Officer
Conference Call Participants
Richard Ramsden – Goldman Sachs
Richard Ramsden
So I’m delighted to welcome our next speaker, who is Jane Fraser, CEO of Citigroup. Jane I think has been at Citigroup for 18 years, is that correct?
Jane Fraser
At least we sound old Richard.
Richard Ramsden
I was going to say how long you have been in the banking industry, but I won’t. And she’s been the CEO since March of 2021. This is the first time that Jane has presented at this conference. So we’re delighted to have you. Hopefully, you will be with us for many.
Jane Fraser
Thanks for inviting me.
Question-And-Answer Session
Q – Richard Ramsden
No, so it’s a pleasure. And we’ve got a lot to talk about. So, we’re starting with the same question pretty much for everyone. But you obviously have a unique picture on what’s happening with the global economy just given your footprint.
So maybe you can talk a little bit about what you’re seeing maybe focus on some of the key geographies that you operate in, and maybe just talk broadly about what you’re expecting around the macroeconomic picture for next year. And how much of a diversity you could see between some of the regions that you operate in?
Jane Fraser
I actually think this year from a perspective played out largely as we had anticipated as we talked about different earnings calls. So we’re now in a phase of rolling country recessions rather than everyone coming at the same time. And I think that’s a good thing.
If we look around the world, let’s start with Europe because that’s where we’re in, in the U.K. and Europe a recession right now. We believe — and you’ve got the convergence of all of the stresses on the energy front together, obviously, driven by the war in Ukraine, red hot inflation. And it would be fine, but what I think we’re worried about for Europe, in particular, I think U.K., Germany, Eastern Europe, particular and Italy is we’re starting to see structural energy cost impact.
So we’re thinking that we may well be seeing a declining competitiveness for Europe because of the impact they’re talking about ’25, ’26 now before the power situation is really properly resolved, and that’s going to drive some more of the production to Asia and to the states. So good news for us here. So that’s one of the dynamics I think we’re a bit more worried about is that this is getting some more competitiveness impact for Europe.
When you go to the states, it’s compared to elsewhere in the world; it is good to be American. And I think we’ve seen the resiliency in the economy. Obviously, things are softening, but when we’re looking at the 2 most important pieces of data, which is services inflation, our economist puts it I think very nicely, which is it is painfully persistent.
And that’s obviously linked into the strength in the job market, which, again, we’re still seeing that resiliency and strength there. So we’re anticipating that the Chairman power is going to have the rates while they show, that they’re higher than the market would like for sure and for longer.
And that, that’s, therefore, more likely to be a recession in sometime in the second half of next year. But all else being equal, and that means no one does anything naughty on the geopolitical front that then looks like a fairly moderate one because banks are in good shape, corporates are very healthy. Consumers are healthy as we’ll talk about.
Then when we look at Asia, it’s interesting because it’s China that is the weaker one in all of Asia. We’re seeing the rest of Asia performing pretty strongly. That we’re seeing mobility again, people back traveling; they’re back out and about. And so the Asian consumer is coming back online in a more meaningful way. India is a particular bright spot that we get quite excited about.
They’ve got a 7%, 8% growth rate there going to have more people than China next year, and they’ve got a bit of swagger about them these days. And the entrepreneurship is just a living well there, it’s China. And we are worried on China and just a psychological impact, we see it from our people on the ground there, this long of the lockdown has an impact, we think, on the consumer behavior.
So the fact we’re seeing them looking at some opening up is a good thing, but I think this one is going to be — this is going to be a bump reopening. And you look at [Indiscernible] unemployment; you look at low labor force participation by women. You look at the aging of the population is in their housing market. I’m not sure this comes roaring back the way that some people hope it will.
Richard Ramsden
Okay. So a couple of questions. The first is what are the risks that you are most concerned about outside of credit normalization? And then I guess linked to that, how do you best prepare Citigroup for the economic outlook that you had, especially in the short term?
Jane Fraser
Yes. So I think the risk we’re seeing right now is much less on the credit side. And I look at our own loan portfolio, our corporate loan portfolio over the last two quarters that we announced. We had $22 million of losses over the portfolio, it is a few hundred billion.
I mean they just don’t. And now that is also testimony to the quality of the corporate client base that we have, and it’s obviously develop well focused. But we’re more worried about market liquidity, and we’re more worried about some of the counterparties so that we saw that with the metal exchanges. We saw it with London LDIs where is it that these different things pop up. So what’s the collateral like? Because there’s a lot of non-regulated financial players out there sitting on a lot of assets and they’re pretty opaque.
Richard Ramsden
So in terms of how you protect Citi against that? What are the things you do?
Jane Fraser
There are a lot of it or being very, very sensible around your client due diligence in the first place, which I think is one of the areas you’ve seen. I don’t want to tempt fate, but we’ve not been involved in many of the issues. I’m sure that’s didn’t go unnoticed. And that’s good judgment on client selection.
And the second piece is just being on top of where issues come up or where we see stresses acting swiftly, decisively and managing the risk. I know, as we did with Russia, for example, too.
Richard Ramsden
Okay. So before we go into the strategy, maybe we can talk a little bit about the current environment. Maybe you can talk about the fourth quarter, how that’s looking and other things that we should be aware of?
Jane Fraser
Well, Mark and I laid out a set of different expectations for the year at Investor Day back in March and it’s very important for us that we deliver what we say we will do and we have this year. So for this year, we’re looking at revenues for the full year coming in, in low single digits ex impact to the divestiture, the same to the expense guidance despite everything that’s going on in the world, we said 7% to 8% for this year – divestiture impacts and we will be delivering that as well.
At the same time, as we’ve obviously had to increase capital and we grew our CET1 by 90 basis points in two quarters. So we’re pretty disciplined around what we say we do, we will do. So if we look at the fourth quarter in that respect, how is it going? So we’re a little nervous answering that question, right, to the beginning of December, given what the lovely month of December always proves to be though. With that caveat, if we look at the trading side, for example. So October, November were good months in terms of trading activities.
So with the caveat of December is always an interesting month in the market. It’s particularly one where liquidity is where it is. We would expect to be at sort of the 10% mark in terms of revenue growth for this quarter in markets. Investment banking, they’ve had a tougher go there and I don’t — we have not seen the wallet recover in the capital markets, the way I think some of us had hoped we might in the fourth quarter.
So all eyes will turn to the first. And there, we expect to be roughly in line with where the wallet is and we’re just down sort of 60% or so from pretty extraordinary highs last year, it feels long time ago. And then expenses as I say, will be in line with what we said. And on the credit side, which I think has got a lot of attention on that one. You’ve got a few different things going on. We’re seeing the normalization of credit, and that is happening, albeit at levels that are well below the pre-COVID level.
So the — really the only area that we’re really seeing the movement in our consumer credit portfolios is in CRS where it’s starting to normalize our retail services. And where it is that it tends to be in the lowest FICOs and the areas which is the newer vintages that we’re seeing it, but again well below the levels. And on the corporate side it’s more anticipating where things go.
So you’ve got that normalizing. You’ve also got the volume growth, as people are borrowing and we’ve seen the demand on the corporate side for the lending books because the capital markets are shut as well and very robust growth in trade as well.
So that put all that together into CECL models and scenarios that we’re expecting the total cost of credit for the fourth is probably to be in the 17%, 19% range. And again, I will caveat that that we’re still expecting more data to come through in December. And some of those data flows are quite material ones. So that number could change, but that’s what we’re looking at on total cost of credit.
And I think that puts us I feel very, very comfortable with the quality of our portfolios, and I feel very comfortable with the quality of the reserve we’re doing. And the fact, we’ve been very conservative around this. So hope to give it back.
Richard Ramsden
Okay. Great. So anything on spending trends, loan demand or deposit flows that you think turns off?
Jane Fraser
Yes. I just came back to Europe and they hate us there, because they say you’re American because we have a demand problem and Europe has it, they do not have a demand problem. They have not seen spending levels and other pieces return to the pre-COVID levels, whereas in the states, it’s still firing pretty strongly. So softening. If we look at the consumer first, we still see very strong growth in terms of our core portfolios like the Walmart, some activity it’s being strongly seen in the markets. I look at Costco, I look at American, the travel sectors at rest. The consumer is still spending heavily there, less spending in the luxury segments, less spending in some of the home entertainment, and I think there was a couple [ph] left in America that’s got room to put more of that equipment.
So you get a differentiated story as to where the spend is and isn’t, but our spend is very robust. Payment rates are very strong. They’re coming off a bit, as I said, in Citi retail services. But the branded card side, we’d like to see it come off a little bit more. And then on the corporate side, as I talked about, we’ve seen pretty strong growth on the demand on the lending side. Trade in particular, because I hear a lot of people say, oh is trade really happening? Yes, it is happening. There’s a lot of flows there and capital market is being shut I think is driving demand for corporate lending too.
So it’s quite great, it’s softening, but it’s robust out there. And the deposit side as well, I think we expect to be flat year-over-year, where the consumer and on the wholesale side. Wholesale, we were — I mean, deposits weren’t if the betas weren’t moving the way we thought they would. And I can suspect they will catch up faster now that that – because of the speed of the rate increase, but we feel very comfortable there. And on the consumer side, it’s really at the higher end, but more of the wealth clients are moving into some of the higher returning product suite within fixed income and cash. We’re seeing those movements, but feeling pretty healthy.
Richard Ramsden
Right. So the shorter — on the longer-term, and I know you had your first Investor Day after 5 years in March. I think like a [Indiscernible] but a lot has changed since then. So maybe you can talk a little bit about the progress that you’ve made since becoming CEO. And maybe look if you think you give yourself a scorecard, so far what would it look like?
Jane Fraser
Yes so let’s get through a few things. First of all, I’m really pleased with the progress we’ve made. And I think again, that theme of — we feel very strongly we have to — we’ve laid out a number of different drivers of the strategy. We’ve laid out a number of different targets guidance and the like. And this year, we deliver against them.
And that’s something that discipline of what we say we do. We do that. And this year, we have — we’ve certainly done that on multiple different dimensions of what we said at Investor Day. If we pass it apart, I think we’ve laid out a very clear strategy for the firm based on five interconnected businesses. And we deliberately put a strategy together that would withstand all sorts of macro conditions and geopolitical ones and it has. I’m delighted to say, and well we’ve seen that in the results so far this year because different businesses provide diversification amongst them as well as being interconnected. We feel good, we feel good about the strategy and how that’s progressing.
If I look at some of the areas in terms of that progression, transaction services and the security services that really — they’re firing on all cylinders. Both helped by the rates environment, but the driver of growth there are particularly strong.
And they’re ahead of the plan that we expected commercial banks and one ahead of the plan. On the flip side, wealth and the investment banking wallets, particularly Investment Banking one is further behind. So we’ve been repacing some of the investments there, as you expect us to, but we don’t really make quite a few investments. And we’ve seen those really paying off with client acquisition, new advisers and talent that we brought him. So you’d love a different macro environment there but how did it progress.
Markets doing a good job there in terms of the capital allocation, whilst making sure that we’re still very focused around the core client base that we serve and taking the client lens to how we think about returns rather than just the product lens, but very good progress on the revenue to our WA which is kind of the marker we use.
And COGS is it’s as I say, it’s nice to see people borrowing again and actually some credit normalization is good for our business there. And there’s some really good innovation that’s happened that’s driving, that driving that franchise forward. And we’ve got to move on with divestitures. They’ve really — that one has been head down, get those things done and so happy there.
So from the strategic perspective, I think we’re all pleased with the progress and how we’re beginning to see some of the early results come through in the data. The most important piece, I think though is that we are running this firm very differently from how it was run in the last couple of years? We’re very mindful that we have to address the issues that have held us back in the past and at the same time, make sure that our people have embraced not just the new strategy, but also a new way of working.
And that tone has been set at the top myself and the management team. So we are — I’d say the difference is how we’re doing, it’s very hands on in terms of the management approach. I mean it sleeves rolled up, and it is there in the details, making sure things are getting executed.
We have a very, very rigorous and disciplined approach to how we’re looking at how investments are being made, whether are they being made in the right places, they did over what they should be, if they’re not, what we do about them simply with the transformation. Are we getting the outcomes that we’re expecting from it? Are the resources in the right place? Are they delivering what it should be, if not, how do we get different.
Different elements moved around so that we’re really executing well or blockages out the way. Similarly, with the other — the day-to-day running of the bank. So it’s the hands on management team, it’s enterprise-wide. And that’s another big difference.
Everyone is getting in the room together. So when we’re going through the data plans and what we’re putting in place there, you have risk, you have finance, you have the institutional business. You have the technology team. You have the data team there. They are all in the rooms together, working together, putting horizontal plans together and holding each other to account. That silo braking is really different from how we used to operate before, which was much more down in individual swim lanes.
So the operating rhythm of the bank is sleeves rolled up, hands on from the management team. We’re in the details, and we’re micromanaging this to drive the changes in how the place works. Third piece, very important is the culture. Is culture of excellence and accountability? And there in terms of the progress we – while I was chatting with Mark earlier, our voice of employee results this quarter for the last year are outstanding, I mean really, really strong.
And that’s a reflection of a few different pieces. It’s telling us our people embrace the strategy. They’re probably our toughest critics. Our investors are very tough critics, but our toughest critics are our people. If this place, this bank isn’t simpler, they’re letting us now, if things are moving faster, they are letting us know about it. And we can see that the organization is getting nimbler and more agile addressing the different issues and the simplification agenda is coming through. And the talent we bought in is just spectacular. I mean, I like shopping, but I mean we brought in some really great, there’s no time for any day job, just saying am I not contributing to GDP this year. But the – it’s we’ve really got strong talent and I looked down the three layers beneath me, nearly the majority of people are new enrolled. Many of them are new to the bank or other people that we’ve moved around. Attrition is way down again. And I think that side of things, this culture of excellence, of accountability, but also getting behind delivering for clients, delivering to the regulators on the risk control, delivering for the shareholders. This buy-in in the organization momentum you can feel that behind us.
So it’s a long answer to question because it’s a really important question that for us, we are absolutely determined that we will be addressing the issues that held us back in the past. We are excited by the strategy, and we are running the place very differently in how we’re executing so that we’re really delivering on everything that we say that we will do, and this is and what gets us up every day is this for our clients, this is for the safety – of the bank and this is ultimately for the shareholders, because we’re all shareholders and we want that price to book ratio very differently from where it is today and we are determined to make sure that you will buy into this and get behind it, too.
Richard Ramsden
So let me ask you on two pieces of the strategy. The first is the divestiture. You mentioned that and you’ve actually done quite a lot this year. So I think it strike a lot. So Australia, Philippines, Malaysia and Thailand. You’re Bahrain, you’re winding down career.
Jane Fraser
Bahrain just now. Well it’s just ahead of plan, and we just were closing this week the sale of the Hill [Ph] portfolio, which is the majority of the credit and non-Russia too.
Richard Ramsden
So I guess the question specifically is look, has any of the macroeconomic uncertainty or just the volatility we’ve seen in markets impacting your ability?
Jane Fraser
Yes, I’m glad we’ve got to move on. That’s for sure. We have got about $3 billion of capital that we have contributing divestitures this year. And then the wind downs are going, you never expect to say the winddowns are going faster than planning in Korea, but they’re going fast in planning Korea. And I have to say the team has done an outstanding job in Russia. It’s doing well, and we look to next year. We’ve got a lot on the plate as well for next year, but we feel good about it.
Richard Ramsden
Okay. And then on the risk control side, I know it’s difficult to talk about some of these things because a lot of it is confidential supervisory information, but maybe you can just update us on where you’ve got to on the transformation part of the strategy and just talk about how the work is progressing from your perspective?
Jane Fraser
And again, I think the importantly, we think of the transformation, not just a consent order, it’s the broader modernization of the bank. And if we look at what — where we’ve underinvested in the past, frankly, around some of the operational and other areas. So we — where are we. The first phase of work that you do is we lay out the target date of when that we want to be for each of the different strands of the bank.
And that’s one where we have our target state for technology. We have it for data as well as the different risk and control, finance other areas. Then you put the plan together through the different phases of its multiyear for what are the different paces of work? And then — that first phase took quite a few consultants. And then it was also a phase where you then build the execution capacity to do, so you bringing in more heads.
A lot of that. We got about 10,000 or so people focused on the transformation alone in addition to the BAU teams that are working as well around it. A lot of the headcount is ops and take. It’s about — we probably had about 6,000 incremental technologies this year, for example. Then that, that’s got done and now as we work through the different phases of execution, we update the plans as we go, we get input from the regulators as we go, which we incorporate and we learn.
And new technologies, new pieces come in. So it’s sort of living, this is a living transformation rather than something stuck in a point in time. And the next phases of work will be replacing people with the technology. So as we are automating processes as we’re automating controls, then that replaces means people who are doing the make a checker roles for example, things like that.
So we’re at the beginning of that phase, that’s a big wave of execution where you’re literally rolling through different data sets in the bank, and it’s we call it a wash win through peak process of just making this almost industrialize as to how do we go through the data, get onto the new technology platforms, integrate multiple platforms into one, sometimes new ones and simplify the bank and it’s just — it’s multiyear, but head down, get on that. That’s where we are.
Richard Ramsden
So let’s talk about expenses in that context. I think you mentioned you’re on track for the 7% to 8% expense growth ex-divestitures for this year. Look I think one of the bigger questions investors have is what’s the longer-term trajectory for the efficiency ratio for the firm? What are the efficiency initiatives that you think that you can pursue longer term? And — but when that does that actually start to show up in terms of number, especially in an environment where inflation is running at high single digit?
Jane Fraser
Yes. And again, we didn’t think inflation would be where it was, and we’re delivering expense target we said at the beginning of the year. So of the different environment, we’re very disciplined around this. We will, of course, give guidance in Q4 around what we look at for the next year for 2023. So I won’t be commenting on that.
But if you break down what happens to our expense base. As we say, in the near term, so we laid out the near term and medium term, 3 to 5 years and then the longer term at Investor Day. In the near term, the expense base plateaus. And then it begins to arc down and there are a few different dimensions to that.
First of all, is the investment. So you can imagine if you’re investing in technology, you’ll have — you’re keeping the old existing platforms running while you’re migrating on to the new one, and then you start shutting the old ones down.
You’re investing in the technology teams who are automating processes and then you’re able to take the expenses down. So there is a natural arc to the investments that we’re making that will drive the expense base down in the medium term.
And we’ll see signs of that in the near term as well, it will plateau. Then you’ve also got divestitures. So we are making good progress. And that one’s both the costs you sell, then you have the TSA because some of the costs that they buy us pay you full while you go through the migration process, so that’s the nice news is that gets compensated for.
And then you have some stranded expense. That can be at a country that can be at the regional level that can be at the global level. And that’s the expense that we have micro plans for how do we eliminate it. And to start off with this year, it’s mainly been getting rid of the expenses in the countries and at the region level for the divestitures we’ve made. But we will be selling approximately 25% of our employee base. That’s 10% of the revenues of the bank. That affords us that statement alone should show you the simplification opportunity ahead, right?
So no, if this bank will say, when I say this bank will be simpler once you’ve got more of the divestitures done, that is the case that we’ll be focusing on more of the organizational and operational simplification that will also bring the headcount down. In the meantime, we’re being microscopic and disciplined about making sure any money is spent is being done robustly. And then as you say, recessions coming will also be pacing investment sensibly and we’ll be taking managing expenses the right way.
Richard Ramsden
So let’s talk about some of your individual businesses, let’s start off with the services business because that’s been a real bright spot, and that’s obviously the TTS business new security services business. You made a big investment in that business, but it’s also been a great environment for that business.
So maybe you can just parse out how the strategy there is progressing? How much of the growth that we’ve seen this year is market share gains just versus the environment? And how sustainable is that growth rate as we think about the next few years?
Jane Fraser
It’s interesting is one of the areas, a lot of investors, I think you’re trying to get their arms around what is TTS and why does it have such an enduring competitive advantage because we’re obviously seeing the benefit of rates. But this thing is really, really growing of the core drivers of talent and technology investments made over the last few years. It’s capturing share versus the competition. And we’re also getting very good client acquisition where we are a year ahead for a plan, for example, with the commercial bank, which is bringing a lot of mid-market companies.
So maybe if I just spend a minute on, let me take a client example. So I am thinking of a very large technology firm presence in over 60 countries. And this is — yes, this type of client we’ll be making well over $100 million of revenues from just in TTS. They have 1,000 accounts in 60 different countries around the world with this. We do all of their payments and their receivables. We do their liquidity management. We do all their supplier and procurement and value chain. We do all their payroll around the place and we do there yes, the commercial cards in there, so it’s everything in working capital and into running the guts of really running the institutions.
So if we’re not there, they don’t open. And it’s the breadth and depth [Ph] of that relationship and those capabilities throughout the treasury suites and broader in so many countries the data that affords and how that platform all comes together to enable a treasurer, a CFO, sometimes business development actually operate their institution.
That is insanely sticky. And this takes more than five root canals to get that out of there. It’s growing enormously because we’ve seen the numbers in terms of the cross-border flows. What’s happening with trade, all these pieces, they’re changing in there, they’re changing around different parts of the world, but we’re everywhere.
So it’s not that you lose it in one place, but you’re growing it somewhere else in the network. And you add up for 5,000 multinationals that constitutes $4 trillion worth of volume every single day. We moved German’s GDP daily, just 4,000, 5,000 multinationals around the world.
And we’re often in countries that nobody else is in. That is an unsalable advantage. And that’s why the fintechs love working with us. So when we look at this, this is growing from — we tend — we’re getting a very high win rate. In this type of global environment, you want somebody who understands everything that is happening in all these different geographies, and we know how to manage the risk and help them with it.
So a lot of new client acquisition, a lot of wallet deepening and then obviously, the rates employment is helping us. So this thing, when I say — this is the hidden gem of Citi, this thing extraordinary and it swipes the marginal strategy behind it. And then – if I didn’t mention that we’ve had $1 trillion of new assets on the costs and assets on the management that we’ve unboarded this year in security services. So that’s another pretty extraordinary platform. So yes, I’m excited about those ones.
Richard Ramsden
So let me ask you a couple of questions about capital and also about just the value proposition of the Citigroup, because I think we’ve got a few minutes left. But on CET1, obviously, there’s been a significant increase in the requirement over the course of the year. I think you’re targeting 13% now.
Maybe you can talk a little bit about how you’re thinking about capital returns when you get to that level. There’s also a lot of uncertainty around where capital requirements could go because uncertainty about the macro environment. So when you get to that level, are you going to revisit and say, look, should we keep some of that capital just because of the uncertainty of the requirement over the environment? So…
Jane Fraser
Look, I think, as Mark said, we’re going to — you take it — we have a very clear plan and direction and target on capital, but we take it quarter by quarter when it comes to the buybacks. I would point out, it was we’ve grown our capital by 90 basis points in 2 quarters. So when we say we’re going to do something, we put heads down, get it done. We’ve set a target of 13%, which includes 100 basis points of management buffer, which we’re looking at probably in the second — in the end of the second quarter. I will check with Mark, I’ve got that one right, for next year.
And we are extremely focused about making sure that we get capital back into our shareholders’ hands. But we’re just not going to cut corners, right? I think you’re seeing us. We’ll take the tough decisions, we’ll get things done, we get things executed and we just make steady progress and move forward. So our commitment is to get as much capital as we can to our shareholders. But in meantime, we’re just — we’re building. We’ve got some divestitures next year, one of which we’ll have some CTAs associated with it and we’re building all these things into the plan. But I feel very good about the earnings power of the bank and everything else that we’ve got behind it. It’s really just a question of time.
Richard Ramsden
So let me ask you then from your perspective, when you think about the path for Citigroup, when you think about the valuation, I mean what do you think the market is missing? I mean what do you think is the most underappreciated part of the Citigroup story from your perspective, when we talk to investors?
Jane Fraser
So I would think it’s bad to say from my perspective because I’ve what’s relevant is the investors’ perspective. So what am I hearing from our investors about when they look at us. I mean we have pretty candid discussions, as you can imagine. What I hear the first piece is I think people are comfortable with the strategy that we’ve laid out, but we’re hearing that this makes sense, the five interconnected businesses that will drive us to better returning mix, address the business mix.
And the reset that we did at Investor Day about these – Citi is that, I think, is well understood. The two bits in that, I’d say that I would highlight that we just talked about TTS. I think investors don’t fully appreciate on quite that enduring competitive advantage there. And the growth potential and how sticky that is for our deposits, a range of other things and the growth.
The second bit I’d say is there’s also a tendency to equate our global footprint with where we take credit risk, do not. We do not do that. We take our credit mix. When we look at our corporate loan portfolio, over 80% of that is investment grade. It is heavily in those 5,000 multinationals that we talked about.
And I think, again, I’d point to $22 million of credit actual credit losses in a sorry, $18 million, my apologies of actual credit losses in a 2-quarter period. In this type of bumpy macro and geopolitical environment, where there’s all hell breaking news in various parts of the world, I think takes some comfort around the quality of that credit portfolio.
Then the other piece which I think is I totally appreciate the proof is going to be in the pudding for Citi in terms of our execution. The management team, we are fully aware of that. I am fully aware of it. We are trying to demonstrate that pudding in terms of we deliver what we say we will do. We’re making progress with urgency around simplifying the bank around, getting the strategy executed, running the bank differently from before changing the culture, and we’re trying to make sure that you can see as we go, that while this is multi-year, well this is not a linear journey that you can see that this is a management team that is building the credibility and the execution around it.
So I think the under appreciation, I don’t know if I call it under appreciation of that, but I think we are very aware that we have to deliver, and it’s been a good year.
Richard Ramsden
So I think we’re out of time, but just 1 very quick clarification question just been asked on the trading in New York banks that’s a year-on-year?
Jane Fraser
Year-over-year. So as we say, we’re hoping 10% in our market based on what we’ve seen in October, November and on the Investment Banking side, the year-over-year the wallet street is down about 60%. We expect to be roughly in line.
Richard Ramsden
Okay. Fantastic. Thank you so much for your time, very, very helpful.
Jane Fraser
Thank you.
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