The American bank has set itself a new objective of return on tangible equity of 11% to 12% over the next three to five years.
A year following taking the helm of the American bank Citigroup and beginning to offload certain activities, Jane Fraser presented on Wednesday a new strategy aimed at improving the performance of the establishment while warning that it would take time.
The bank also confirmed that it had approximately $9.8 billion in total exposure to Russia at the end of 2021.
“We have worked hard to reduce this amount” since then, said CFO Mark Mason during the presentation. In one of the most severe scenarios anticipated by the bank, “a little less than half” might be at stake, he added.
“Relatively speaking, for a G-20 country, it’s not a big show,” said Jane Fraser.
The company also has more than 200 employees in Ukraine and tries to help those who want to leave the country, in particular by paying their salaries in advance or finding them accommodation in Poland, she said.
On the strategy side, the manager acknowledged that the bank was less efficient than its competitors, which investors have already noted: the action of Citigroup is displayed at regarding the same level as five years ago, when that of Goldman Sachs rose by nearly 50%, that of JPMorgan Chase by nearly 60%, and that of Bank of America by more than 85%.
We must now “transform our bank”, hammered Jane Fraser on Wednesday in a presentation to investors broadcast online. “We know it won’t be easy, we know it will take time.”
The company has set a new return on tangible equity target of 11% to 12% over the next three to five years – an important indicator in the world of finance.
This is a little better than the 8.9% achieved in 2021, without taking into account the reserves set aside at the start of the pandemic to protect once morest possible defaults by its customers.
But in its last presentation to investors in 2017, the bank promised 14% over the long term. It is also less than the objective of JPMorgan Chase (17%) or Goldman Sachs (15% to 17%).
Simplify
To simplify its activities, Citi has already announced during the past year to withdraw from retail banking activities in 14 countries, including Mexico.
The company will continue to assess its portfolio but “now we are focusing on execution,” said Jane Fraser.
The establishment wants in particular to expand its banking services to medium-sized companies and strengthen its wealth management activity, detailed the boss during a presentation to investors.
While the bank was sanctioned in 2020 by regulators for its poor risk management, it is also taking steps to improve this aspect of its business, including investing in new technologies.
“The change in the balance between our different activities will take time to show its results,” warned Jane Fraser. And we must also take into account the mistakes of the past.
“In the longer term, when our work begins to bear fruit, we obviously have the ambition to increase our output,” she said.
In the immediate future, the group wants to “build its credibility”, underlined the manager.
After starting the session down sharply, the bank’s stock ended up 1.6% on Wall Street.