Citigroup Inc. (C) CEO Mike Corbat Presents at Bernstein's 36th Annual Strategic Decisions Conference (Transcript)

Citigroup Inc. (NYSE:C.PK) Bernstein's 36th Annual Strategic Decisions Conference May 29, 2020 10:00 AM ET

Company Participants

Mike Corbat - Chief Executive Officer

Conference Call Participants

John McDonald - Bernstein

John McDonald

Okay. Good morning, everyone. Ready to start with Citigroup up next. [Operator Instructions]

We're really happy to have Citigroup CEO, Mike Corbat returning this year. Mike has been a consistent supporter of this conference, and we thank him for that. Mike has been CEO of Citi since 2012. He has led the post-crisis turnaround and refocusing of the company on its core strengths and businesses since that time, and he has held numerous leadership positions at Citi in a career spanning over 30 years at the company.

Mike thanks for joining us today. We really appreciate you coming back.

Mike Corbat

Thanks for having me back. It's great to be back.

Question-and-Answer Session

Q - John McDonald

Thought it would be good to start at a high level with some historical perspective. Maybe you can start-off talking about how you feel Citi is better prepared to go through the COVID-19 macro challenges and credit cycle compared to past cycles, including great financial crisis?

Mike Corbat

Sure, well, it's certainly relatively speaking good to be in a crisis and not necessarily be at the center of it. And I think that what we've seen is that the banks -- the big banks and Citi are playing an important role, not just in terms of our day jobs, in terms of be in the bank and the usual things we do, but I think also playing a very important role as being that transmission mechanism between -- in some cases extraordinary, monetary and fiscal responses in the real economy. I think there's lots of examples of that.

From a Citi specific perspective, we come into this crisis or this challenge with a strength of balance sheet, both capital and liquidity. We come in with a refined set of businesses and risk management approaches. We come in with -- I think, very good operational resiliency as a consequence of significant investments that we've made. And obviously, we come into this with earnings power and a diversification of that earnings power, in fact, as you saw, coming to the end of the first quarter.

And so I think as each of those, we look at where we are, we feel good about where we are in this crisis. And I think we feel like we're in a position to be able to serve our clients, but at the same time, keep a real eye towards safety and soundness and the things that we need to do.

John McDonald

The Citi employs are much more branch like structure compared to peers and pandemic seems have accelerated the trend towards digital. Where have you seen that in the most rapid changes on that path?

Mike Corbat

Well, I think you know, one of the things that that this pandemic has done is, stay-at-home orders or stay in place orders or distancing orders have been out there. We've seen a significant move towards our digital channels in fact, that just last quarter, we talked about mobile users being up 20% year-over-year, that trend continues. A great example is in our private bank, we introduced last year a new digital platform. And we've seen a 40% increase in terms of utilization there.

So, I think the digital use -- and by the way, we've continued to see it on our institutional side in terms of our trading platforms, in terms of our settlement, in terms of our TTS platform so big moves towards digital and the investments that we've made there are serving as well.

John McDonald

There is something that we're asking all the CEOs are speaking at the conference this week across all industries. What do you see as some of the longer term implications of the pandemic for both the U.S. economy, the banking industry and in might it affect where Citi chooses to invest or maybe cut costs?

Mike Corbat

Well, I think, first, it absolutely reinforces the importance of the investments that we have been making in terms of technology. So, we're a company that employs slightly over 200,000 people around the world, all of those people are entitled into our systems.

And in fact, as I look at my dashboard on a daily basis, there are points of time during the day where we have over 150,000 of those people in our system simultaneously. And I think, the fact that we can do that, and that there's stability, there's reliability, there's low latency in that it is important, and I think it has completely changed the way we think about working remotely.

Second is what we really need to be responsive to is the needs of our clients. And if I just look at so far this week the things that I've done, I help host a industrials investment banking conference in our EMEA franchise earlier this week, where we had over 100 clients on remotely.

I've had several client interactions one last night with one of our large clients in Japan. The amount of employee communication in terms of reaching out and the number of venues that I'm going to, traditionally, probably most or all of those would have been plane trips and time coming and going. And so I found that the ways that we come to work and some of the efficiencies that we've created, likely have some permanence to them.

But at the same time, John, what I would say is that, I think a number of firms have come out and said that their employees don't have to come back to the office. I think in our case, it is our goal to get our employees back. And so, over time we'll be implementing a plan, obviously, safely being driven by data, not by dates, but we want to get our people back in the office.

John McDonald

You have a unique global franchise. What insights can you share about the progress of COVID-19 and the path to recovery that you've seen in Asia and elsewhere now that you apply to what we might -- what might happen in the U.S. and elsewhere?

Mike Corbat

Yeah, as you describe our global franchise and in particular, our Asia franchise in this case has really given us an interesting insight. So, one is, we saw this pandemic potentially coming. We started taking actions as early as January. And I think as the pandemic move west, we tried to get ahead and stay head. And I think, that allowed us to get our employees working remotely. It allowed us, I think as an example to be the first to put forbearance programs in our consumer business in place in the U.S. with the hindsight or the things that we saw in Asia.

And I think the one thing that we've got to recognize about this challenge is that, it's uneven. It's not moving. The responses haven't been the same. And the pace is different. And I think what Asia has taught us is it needs to be granular, because if you look today, we've had a slow and measured response today. We've got about 75% of our people back in office in Taiwan. We've got about 50% of our people back in office in Hong Kong and we've got significantly less than that in Singapore and other places.

And so again for us, it's been about the data, not about a date. And we've tried to -- I think be very prescriptive. And in here with this, as I describe unevenness, you've got to get granular really site by site, client by client, industry by industry. And I think Asia has very much shown us that.

I think the other thing that's really resonated itself nicely in this, is our global model and the flexibility that it's given. And so with this uneven nature as example, we've been able to move workloads and do different things from different places in the world to supplement others. And so that ability to shift, I think gives us great flexibility.

John McDonald

Great. Let's shift and talk about some of the dynamics you're seeing across your businesses. We saw on the consumer side, are you seeing some of the stabilization of cards spending as a talked about after that precipitous drop that we saw in mid March and end of April?

Mike Corbat

Yes. I would say, we are seeing and again -- going back to my last point, you've really got to take it at a granular level. So, as an example, in essentials, we’re seeing -- actually spending up on a year-over-year basis. And obviously, we're continuing to see depressed levels in terms of travel and dining. And so I think it's mixed.

And again as I talked about, we're seeing some of the trends coming from Asia as those economies start to reopen. And again, it's country-by-country. It's sector-by-sector, but we are seeing – starting to see some pickup, but it remains down on a year-over-year basis.

John McDonald

I think in mid-April, you were trending kind of down 35% or so on total spending, any updates to share from where things stand today in terms of credit card spend?

Mike Corbat

No. I’ll just kind of reiterate what I said in terms of things starting to pick up, but still down and I think later in the quarter, we'll try and give some insight in that.

John McDonald

Okay, great. And how about on the forbearance and deferral, what kind of trends you're seeing there in terms of new deferral requests and the behavior of people that have requested in card deferrals?

Mike Corbat

It's really interesting because again, we were first out of the blocks in the U.S. in terms of forbearance again with the ability to kind of have seen Asia in some other places. And we put our programs out there in mid March. So far, we've had about a 1.5 million of our consumer client’s sign up for those programs that makes up about 4% to 5% of our outstanding balances.

But what's really interesting, John is a pretty significant portion of those people that have signed up, actually haven't taken advantage of the programs or at least as of yet. And so, I think that talks about or speaks to potentially the significance and the positive effect that a number of these government programs have had. And whether that's been the checks, or whether that's been the payroll protection programs coming out at the SBA and others.

And so again, it creates challenges around the measure in some of the credit models in terms of what performance is going to look and feel like in an extraordinary move like this, because you just don't know exactly what the impact of those or as an example, you know, we're seeing higher balances and those higher balances are not only what we described, but also the government's actions in terms of allowing people to delay tax payments.

And so again, we've seen -- I think pretty positive reaction to the programs that we've put in place. And I think we still see, certainly amongst our consumer demographic, people with pretty ample resources.

John McDonald

And how about on the commercial side, what have you seen in terms of corporate line draw demand and pay down activity as it interacts with capital markets?

Mike Corbat

Well, clearly in the first quarter and in particular through March, we saw in the system and as Citi significant draws coming through, we spoke to that in terms of the first quarter. I think the programs that the government has put in place have been very effective. And at the same time, I think not just that the program's been effective, but I think in their messaging, really what we've seen is the capital markets really wide open and running -- in many cases unprecedented volumes in terms of new issuance. And so, we've seen a lot of those companies, as opposed to drawing on lines or taking advantage of government facilities, actually out raising significant monies, which we've been a big part of in the debt capital markets.

And so, we've seen, certainly, our big caps out there significantly raising liquidity. And, again, I think, the combination of the SBA programs. And I think the movement that we're going through the program, in terms of the Main Street facilities has put ample liquidity and resources out there, really for businesses of all size. And so, I think, you've seen the pressure, in many cases coming off the banking -- the banks and that's certainly what we've seen in city.

John McDonald

Deposit activity seems to continue to be very robust across the industry. Mike, are you still seeing that as well?

Mike Corbat

We are. We are and when -- you just think about, whether it's the checks going to people or the Payroll Protection Program, or the debt raising, where some of the other programs that I just mentioned, a lot of that money is kind of working its way right back to coming on deposit and, obviously, extraordinary monetary actions that the fed and other central banks. And so, the system is certainly awash with liquidity. And we certainly have been a beneficiary of that liquidity, as it's coming into the system.

John McDonald

How about in terms of capital markets? We've heard from a number of bank CEOs this week, that the favorable conditions for markets revenues, both in terms of client activity and wider spread, seems to have carried through to April and May. What are you seeing in your bank and equities businesses?

Mike Corbat

Well, we've seen, again, I think, great momentum coming to a strong close to the first quarter. I think that momentum has largely continued in particular, on the fixed income side. And I think you see a lot of portfolio rebalancing. I think a lot of people kind of rethinking different trajectories of the yield curve and credit and where they want be.

As I spoke to, there's been a very active debt capital markets business. And I think the new issue calendar always leads to more secondary activity, in particular, on the credit side of things. And so it's been an active period. And, again, we'll give some numbers, later in the quarter. But I think very good momentum sustained and continuing to build coming out of the first quarter.

John McDonald

Yes. You mentioned the debt issuance, the broader investment banking, maybe just kind of the color between M&A and ECM, DCM and just general trends there, what you've been seeing?

Mike Corbat

Yeah. I think that, the clear outperformer has been the Debt Capital Market side of things. And you can look at the volumes and what's going on there. And, again, I think that there is a real desire, out of many, many of our clients to build into how ample or excess liquidity, obviously, as we go through this.

And I think that the markets have been opened. We talked about the amount of liquidity that's out there. We've talked about people kind of looking to rebalance. And really what's been good about it is, the markets have been open across a range of issuers. It hasn't been just limited to the top echelon of investment grade.

And, again, as you said, spreads and pricing has changed, to reflect that. But the good news is, those markets are open. And they're receptive. I would say, on the M&A side of things that the closing deals has slowed. But I would say, that conversations remain very active.

And I think as we start to see our way through to the other side of this. As we've spoken about, we're going to see various shapes of recovery. And I think that, those that are positioned, will likely look to take advantage of this situation in terms of looking things from a strategic perspective that are out there and might not have been out there otherwise. And so I think on the backside of this, we're going to see a pretty significant pickup in terms of M&A activity.

John McDonald

Okay. So shift gears, talk a little bit about credit quality. The industry is obviously going to go through a cycle. What have you done at Citi in terms of taking action to reduce tail risks, both in the consumer and in the commercial books that you have?

Mike Corbat

Well, as you know, we coming out of the last financial crisis, significantly restructured or changed the underlying dynamics and demographics of our company. So we shed about $800 billion of non-core assets ranging from auto finance to student lending to many different things.

We reduce the number of countries that we operate our consumer business in from 40 to down to 19. We've significantly reduced the number of institutional clients that we deal with. So I think one is just really refining and tightening what our target market is, at same time really kind of thinking about risk appetite around that and kind of going back and thinking about as an example, our cards business, and really where we are and our exposures that are there continuing to move up in terms of FICOs, continuing to look at the open to buy lines and kind of where those are looking at our partners in our portfolio, who we represent.

I think all of those things across the board. So, going into this, I think we go in with a very clear position in terms of where we are, the customers we're serving and how we think about that portfolio.

John McDonald

Yeah. And honestly, we're all dealing with a new accounting regime with CECL. Just at a high level, how do you deal with the kind of complexity of working under CECL, which requires you to front load, at the same time you've got a shifting economic environment, a lot of government stimulus and forbearance going on. How do you meld all those together? Maybe just talk about that challenge?

Mike Corbat

Yeah, I think it is – it's a – an interesting and challenging time around the implementation of CECL. Obviously, we're in an unprecedented period in terms of what's happening coming as a consequence of the pandemic. And as you described John, that when you look at the traditional drivers, cost of credit and whether it's GDP, whether it's unemployment or whether it's housing crises and the models certainly have sensitivities to those.

The assumptions that you make around each of those when you're calculating and projecting out expected lifetime losses have big ramifications and so as we've gone through it, obviously we are continuing to update those assumptions in terms of real time. And again from the unprecedented perspective, it's very hard to read or to extrapolate what the benefits exactly are or will be in terms of all of these extraordinary programs and not just in the U.S. but around the world.

And again, kind of going back to my earlier point, we had 1.5 million people sign up for the ability to use forbearance programs and we had a number significantly lower than that, that have actually today chosen to take advantage of that. And again, we think that a lot of that is because of some of these programs.

And so it's, difficult right now to forecast that. And I think the other piece that's really important as we talk about this uneven recovery, it's got to be very granular, right? Because we're going to see, again, I think within the recovery, we will see some things that have V-shaped recovery. We will see some things that have a U-shaped recovery, and we'll see other things, obviously, that have a much longer or actually have a significant impairment challenge. And so it's going to be granular, really sector-by-sector, name-by-name in terms of how that is. And again, we're working in real-time to try and project that.

John McDonald

Yeah. And we've heard from a number of banks, including yourself that it's likely the industry will need to take sizeable reserve bills again in the second quarter due to the evolving economic situation since March. A number of folks have pointed to the first quarter level of reserve though as a, kind of, a proxy for what the second quarter might shake out. I know it's still early, but is that a decent frame of reference in your mind?

Mike Corbat

Yeah. I think to your point, John, that we -- as we approached the end of the first quarter, we made our projections, and I would say again around those things, those sensitivities, in particular unemployment and GDP, we have seen a deterioration since those numbers.

And so, from our perspective, it is likely that we will continue to build and our levels will probably be above -- a bit above where we were in terms of the first quarter. But again, it's early and/or evolving. And these things have real sensitivities too, in terms of projections. So, as things get better that -- and as we see some recoveries that can help and obviously the same goes to the other side.

John McDonald

Yeah. There's been a lot of investor focus in this environment on Citi’s. It's due to the credit cards and you've got a large business both between the branded card business and the retail services portfolio. What actions have you taken to improve the credit quality of both of those books over the years?

Mike Corbat

Yeah. So going back to coming out of the last crisis in the way that we had repositioned the company, one, is that about 85% of our exposure is in the U.S. to the combination of our branded and retail services portfolio.

If you look at that portfolio and as we've talked about, over 60% of that portfolio in-branded is to consumers with FICO scores greater than 720. I would say pre-crisis, that number was probably less than 40%, so significant movement there.

On the other end of the credit spectrum, we've got only about 15% of our portfolio in branded that has FICO’s of less than 660. That number was somewhere north of 30% last crisis. And retail services, again, similar relative tight moves, 40% of our portfolio, they're greater than 720, only 25% less than 660. And again, to remind people in the retail services piece of things, while we take the reserve, we actually share those losses with our partners. So again, I think from a business perspective, an appealing aspect to that.

John McDonald

And there are often are questions about the retail services business. It's unique. There's only a few players, and you're one of the large players there. Any other unique challenges that COVID environment presents, given the nature of your partners there, maybe just what makes you feel good about the business in positioning longer term?

Mike Corbat

So, what is it? It's a business that we've been in for a long time. And again, unlike the branded business where your customer or your consumer is the client, in the case of retail services, our partner is our client. And we think about the things that we can do together in terms of marketing and other types of campaigns and drive a utilization of the card, usage of the card. I think it's actually quite powerful.

As I said, the economics are, are a bit different in that, we, in the good times share the revenues and in the more challenged times, we share the credit costs. And when we look at the business through a CCAR lens or stressed environment, it actually performs well. And in there, part of what we've been focused on is the diversification of that portfolio.

So, we've got a combination of terrific partners, some retail, non-retail many or some in the crisis here actually essential purveyors of goods out. As an example, a Home Depot through this has been obviously very active and things. And by the way, the portfolio has had its challenges in terms of the retail sector, but imbalanced through the cycle. It's a good portfolio, we've got very good partners, and we've had solid performance.

John McDonald

Great. That's helpful context. So, with bank shares buybacks on hold, obviously, investor interest is turned to the dividend. Mike you've made some comments publicly about supporting the dividend still and being cognizant of the risks out there for banks.

So, how do you as a management team and the Board think about the dividends in a year where you've got a lot of capital, but earnings have been compressed at least for the first half of the year with provisions. How do you wrap that all together and think about this question?

Mike Corbat

So, again, John as you alluded to, we've made the decision as did some of our industry peers to go ahead and suspend buybacks for now. If you look historically at the monies that we've put, about 80% of our capital return over the last several years has been in the form of buyback.

We've been continuing to walk the dividend up over time. And I think we've got a competitive yield in terms of our dividends. But in terms of the earnings power that we have, we feel comfortable that our dividend is not overwhelming. We're paying a very close eye and the Board is obviously watching closely in terms of our capital trajectory.

And as I said, we went into this from a strong capital position and we went in -- we ended the year to 11.8% common equity Tier 1. We finished a quarter one at about 11.2%. Again, using some of those buffers and to remind people or let people know that's against a minimum of about 10%, so again, today ample cushion against that.

And again, so resources, we've got to watch this play forward and from the Board's perspective, it's a quarter-by-quarter decision. But again, I think we feel like we've gone into this from a position of strength and so far I feel pretty good about the trajectory.

John McDonald

Yes. And do you think the industry as it looks at that question, the dividend needs to be earned every quarter, or is it a broader question about earnings power a multi quarter basis and the broader capital strength that you talked about?

Mike Corbat

I think it's a great question, John. And in some ways, I think it goes back to CECL, right. CECL likely is frontloading your cost of credit. And so again, if you've got in any particular quarter pressures around CECL builds, but you see a diminution of those bills as you go forward, you're obviously going to take that lens and look at it.

So, I think you've got to look at it in the round and I think CECL, I won't say complicated, but maybe CECL changes some of the ways that historically the industry has looked at dividends. And, again, we'll have to see what that looks like as we go forward.

John McDonald

Yeah. And looking beyond the near term issues, how do you see capital management evolving over time with the new SCB methodology, incorporating a stress test results into your everyday capital requirements that already has a gist of surcharge as well in there and got a bunch of factors together?

Mike Corbat

Yes. So, I think, one is, I think, the Fed has been pretty clear that they view what we're in as a real life stress test and they are in fact kind of reassessing -- reapproaching what that means. And they are looking at the overlay of the SCB on that. I would say, at this point, we don't have much information, but again, against that 10% that we have currently in terms of minimum capital, we have been running, right.

We've historically said, we want to run somewhere around that 11.5% level. So, we went into this, recognizing that there would be some adjustments to the stress capital buffer. But, I think, as an industry, we don't know exactly what that is going to look and feel like, but we feel like we go into it from a position of trying to have estimated what that impact might look like for Citi.

John McDonald

Okay. Mike, I'd like to talk about a topic you and I have discussed at this conference for many years. It's really about Citi's profitability gap to peers. If we looked at RoTCE, Citi has lagged peers for most of the post-crisis years. Yet, you set out an agenda to improve and close that gap and you've made good progress closing and narrowing it, I should say, up until the end of last year. So, when we look beyond the current issues around the crisis to streamline this, what are the drivers of that profitability gap? What's Citi's commitment to narrowing that and what are your strategies for doing that over a couple of year timeframe?

Mike Corbat

Yeah, as you described, yes, we have made good progress. If you go back to 2016, we had a return on tangible common of about 9%; 2017, 9.6%; 2018 was 10.9% and 2019, we got it to 12.1%. So, I think there's been good, steady, significant progress in terms of that path. And, I think, the levers along the way is that we've tried to really hit the different levels, in terms of the combination of solid risk adjusted revenue growth.

And, again, in a world with slower growth, we've said that's kind of GDP like, and it's kind of been in that 2% to 3% range, at the same time creating good operating leverage out of that growth in terms of expense discipline. And as we continue to grow those revenues, we have largely held expenses flat and as part of that, continue to make some pretty significant investments in our business, which again, I think, today are serving us extremely well.

The smart and prudent, in terms of cost of credit and continue to go at the denominator in terms of the share account and, again, our ability to drive high levels of capital and capital return and really hitting all those leverage and doing that through a diversified business model in terms of our two main businesses, consumer and institutional, again, different franchises and geographies and really trying to create balance out of that.

And, I think, what you've seen is both in our institutional and consumer businesses, good breadth of earnings generation across many, many, many of our businesses. And, again, we talk about the quality and consistency of earnings. And I would say that, that is as we come out of this, the playbook. I think that the great news coming through this, I think we absolutely served our customers and clients well. I think we've distinguished ourselves. We see and feel in our numbers that we continue to take share in many or most of our businesses. And so in here, in terms of never wasting a good crisis, I think as we come out of this, I think we've got the ability to consolidate some of those gains and get back to accelerating that path in terms of competitive returns.

John McDonald

One of the things we've noticed that we've stacked up returns across the banks is, you know, Citigroup is asset rich everywhere, but you're on under-indexed in deposits in some obvious regions -- at the obvious places like the U.S., you've got some strategies to improve deposit growth, digital is enhancing that. Maybe we could just talk about the progress you've made there. And maybe some of that gets accelerated in this post-crisis world?

Mike Corbat

Yeah. Well, as we talked earlier on is; one is I think we have been a very good repository or depository around deposits and excess liquidity in the system. So I think we have been seen as a safe place to come with those monies. And as you cited, John several years ago, we really started on the investments and the structuring of the businesses around in particular in the U.S., capturing more consumer deposits. And again what you saw in the first quarter was about 8% year-over-year deposit growth. So from a standing start a few years ago, we've been continuing to accelerate in a pretty competitive environment.

And I would say not at all overpaying for those deposits of the value proposition that we have, digital has been a big part of that. And I think one of the things that we've tried to do is to take advantage of our branch like footprint and actually go into MSAs where we've got many, many hundreds of thousands of card users in different cities around the world where we may not have a presence, but we've had a long relationship. We know them. We know their habits. And by the way, if it's not us, we know who their bank is.

And so I think we've been really trying to be targeted in terms of those offerings. And I think the early returns around this has shown that we really started to get a foothold into this. And again, through this we've taken deposits and I expect as we come out of this that we'll continue to accelerate that.

John McDonald

And just a somewhat related question to the returns, as Citi’s valuation multiple has lagged here, even adjusting for the ROE differential, is there anything about the company's longer term prospects or improvements in risk management that maybe under appreciated by investors you think as you have conversations with both?

Mike Corbat

Yeah, I think, as part of that we talked about the significant restructuring and refocusing that we put the company through. And I think many investors want to see how the company performs through challenged environments. And so, you know, in many ways that, this will be a good and interesting test for people, and again, as we come through this, we hope to convert some of those skeptics in terms of the company and its trajectory.

John McDonald

One topic I wanted to ask about was ESG, Citi’s really taken a leadership role in ESG in the financial space. You recently put out an ESG report, which builds on your citizenship report that you've done for many years. How has ESG factoring into the decision making at Citi? And how is this becoming a more important issue for financial institutions?

Mike Corbat

Well, I think it's a -- it's really driven by the expectations of society. People want to work for; people want to do business with institutions that they respect. And so if I just kind of look at and use this health crisis as an example, we really kind of thought about things through the lenses of our employees. How do we keep our people safe? How do we make the right decisions? We chose around about 60,000 of our people to send them an incremental stipend. We send them an extra $1,000 to help them with child care or spouses out of work or whatever that may be.

We've from a community perspective, been very active, right? We've so far donated over $100 million in monies and in TPE, a great idea out of our people was to repurpose our headquarters eatery. We've already made and delivered over 35,000 meals around New York to people. And again, I think food supply, food shortage is a real issue.

And obviously, the things that we're always focused on in terms of our clients and the things that we do. And so I think the expectation is out there is that's just what good companies do. And I think banks play an important societal role in that expectations there.

So for us, we think it's just good business in terms of the ability to attract and retain great people, our ability to be viewed as responsible and a good firm in society. And obviously, as a firm, a bank that our customers and clients can count on, have trust in, have respect for and want to do business with. So I think it pays dividends across the board, John.

John McDonald

Right. We've got a few more minutes. I just want to remind folks, if you want to ask a question or vote on a question, you can click on the pigeonhole link. Mike, one question that's come up is about your Latin American franchise. What kind of business environment are you seeing in Mexico? What are some of the near-term challenges there that you see in long-term opportunities for Citi in that region?

Mike Corbat

I think going back, John, to my comment on of unevenness. We've seen governments respond differently in terms of health. We've seen governments respond differently in terms of fiscal and monetary economic response. And I think in Mexico's case, what we've seen in particular is a response that they haven't necessarily put the big stimulus programs in place. And so we have seen a slowdown, certainly in terms of new clients to new customers into the bank. We've seen a slowdown in terms of card usage and lending as part of it.

And so I think Mexico is kind of one of those places that is still probably in the earlier stages of its recovery or relatively speaking, earlier stages. But again, we like the debt, the demographics of the business and the population there. And I think through the cycle, see good things and good returns in the business.

John McDonald

You've been investing a $1 billion in Mexico, your franchise there over the last few years. Where are you in that process? Are you seeing some of the benefits from that layout?

Mike Corbat

Absolutely. We're in the later stages of that investment. And again, I think that the big thing is that, when you go to Mexico and looked at historically, it has been largely an analog society and banking approach that I – that a lot of our traffic has traditionally gone through the branch and would stay at home and distancing and does the investments that we've made in mobile and digital there, I think have served us really well. And again, I hope, in Mexico and the rest of the places that we've talked about, that there is likely some permanence to that. And that -- the acceleration that we did in terms of those investments, I think that's served us and will continue to serve us really well.

John McDonald

And last question Mike, I want to ask about the treasury and trade solutions business within ICG. Both maybe you can comment on the near-term trends that you're seeing, obviously you had some revenue pressure there coming through March. How is that transit in April and May?

And then just longer term, what's unique about your franchise there? Obviously, you've got some competitors looking to build there and you've got a real unique position competitively.

Mike Corbat

Yes, I think near-term, John, what we've seen and you saw it coming out of the first quarter, is that without a doubt, topline has been under pressure, really exclusively from the reduction in interest rates, not just in the U.S., but around the world. And there's no way to escape that. But on the other side, to the intermediate longer, our levels and types of engagement in the business have never been higher.

You see that manifesting itself in terms of deposits, you see that -- and you'll continue to see that manifest itself in terms of the things that we're doing. So, you think of the world today in terms of supply chain disruptions and our ability to work with our clients, as they rethink those. That actually is a C-suite that is a board room discussion in this environment.

And I think our ability to bring that global perspective, as people look to diversify their supply chains as they look to diversify their own manufacturing or places and ways they do business. Citi is the best partner out there in terms of being able to give them advice and to be able to implement the changes that they need and want to make very quickly. And so the business on its underlying metrics is performing really well.

John McDonald

Great, sounds like a great business and a great opportunity. Mike thanks so much. As always, we appreciate your insights and your perspective and we thank you for participating in the conference.

Mike Corbat

John, thank you and everybody stay healthy. Have a good day.

John McDonald

Have a great weekend.