Citigroup Inc. (NYSE:C) Q1 2024 Earnings Call Transcript

Citigroup Inc. (NYSE:C) Q1 2024 Earnings Call Transcript April 12, 2024

Citigroup Inc. beats earnings expectations. Reported EPS is $1.58, expectations were $1.13. C isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Hello and welcome to Citi’s First Quarter 2024 Earnings Call. Today’s call will be hosted by Jenn Landis, Head of Citi Investor Relations. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question-and-answer session. 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.

Jennifer Landis : Thank you, operator. Good morning and thank you all for joining our First Quarter 2024 Earnings Call. I am joined today by our Chief Executive Officer, Jane Fraser and our Chief Financial Officer, Mark Mason. 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 earnings materials, as well as in our SEC filings. And with that, I’ll turn it over to Jane.

Jane Fraser : Thank you, Jenn, and good morning to everyone. Today, I’m going to touch on the macroeconomic environment before I update you on the progress we’re making, and then I’ll discuss the quarter. While global economic performance was surprisingly [desynchronized] (ph) last year, the overall story has been consistent of late, one of economic resiliency supported by tight labor markets and the consumer. Growth this year looks poised to slow in many markets, and conditions are generally disinflationary. We’re already seeing some Central Banks in the emerging markets starting to cut rates. In the U.S., a soft landing is viewed as increasingly, likely. But we continue to see a tale of two Europe’s, with Germany hurt by the weak demand for goods, while southern European countries such as Spain and Greece benefit from stronger demand in services.

In Asia, Japan is joining in the [areas of] (ph) bright spot, and China’s economy has gained some more traction, although its property market remains a concern. Amidst all these dynamics, we continue to focus on executing against our strategy and delivering the best of Citi to all our stakeholders. I said 2024 will be a pivotal year for us, as we put our business and organizational simplification largely behind us and we focus on two main priorities. The transformation and the performance of our businesses and the firm. Last month marked the end to the organizational simplification that we announced in September. The result is a cleaner, simpler management structure that fully aligns to and facilitates our strategy. We are now more client-centric.

We’re already seeing faster decision making and a nimbler organization at work. We have clear lines of accountability, starting with my management team. Fewer layers, increased spans of control and frankly much less bureaucracy and needless complexity. It will all help us run the company more efficiently, will enhance our clients’ experience and improve our agility and ability to execute. And while reducing expenses wasn’t the primary driver of the program, more roles were ultimately impacted than the 5,000 that we discussed in January. We also took a number of other steps to sharpen our business focus and improve returns by right-placing businesses to better capture synergies, exiting certain businesses in markets that just didn’t fit with our strategy, and right-sizing the workforce in wealth.

As a result of all these combined steps, which include the simplification, we are eliminating approximately 7,000 positions, which will generate $1.5 billion of annualized run rate expense saves. The combination of these actions and the measures we’re taking to eliminate our remaining stranded costs will drive $2 billion to $2.5 billion in cumulative annualized run rate saves in the medium-term. We are keeping a close eye on the execution of these efforts and overall resourcing to ensure we safeguard our commitment to the transformation. As you know, given its magnitude and scale, the transformation is a multi-year effort to address issues that have spanned over two decades. We’ve made steady progress as we retire multiple legacy platforms, streamline end-to-end processes, and strengthen our risk and control environment, all of which are necessary not only to meet the expectations of our regulators, but also to serve our clients more effectively.

A transformation of this magnitude, well it’s never linear. So while we’ve made good progress in many areas, there are a few where we are intensifying our efforts, such as automating certain regulatory processes and the data related to regulatory reporting. We’re committed to getting these right and we’ll look to self-fund the necessary investments to do so. Turning to the quarter, we had a good start to a pivotal year. We reported net income of approximately $3.4 billion, earnings per share of $1.58 and an RoTCE of 7.6% on over $21 billion of revenues. Our revenues were up over 3% year-over-year, excluding divestitures, which was primarily the $1 billion gain from the India consumer sale last year. Our expenses were slightly down quarter-over-quarter, excluding the FDIC special assessments.

Services continues to perform well and generate very attractive returns. Revenue was up 8% for the quarter as both businesses won new mandates and deepened relationships with existing clients. Fees were up a pleasing 10% for services year-over-year driven by the investments we’ve made across our product offering platforms and client experience. In Securities Services, we took share again this quarter, and in TTS, cross-border activity continued to outpace global GDP growth and commercial card spend remained robust. We look forward to diving deeper into these two businesses at our investor presentation on services in June. Markets bounced back from a tough final quarter in ‘23. While revenues were down 7% as lower volatility impacted rates and currencies, that was off a very strong first quarter last year.

We saw good client activity in equities and in spread products, where both new issuance and securitization activity were particularly robust. We fully integrated our financing and securitization capabilities within our markets business and we started to see the benefits of having a unified spread product offering for our clients. The rebound in banking gained speed during the quarter, led by near record levels of investment grade debt issuance, as improved market conditions enabled issuers to pull forward activity. And after a bit of a slow start, ECM picked up in the second half of the quarter, notably in convertibles. Our strong performance in both DCM and ECM drove investment banking revenue growth of 35% and overall banking revenue growth of 49%.

While M&A revenues are still low across The Street, I was pleased that we participated in some of the significant deals announced in the quarter, such as Diamondback’s merger with Endeavor Energy and Catalent’s merger with Nova Holdings. We are cautiously optimistic that we could see a measured reopening of the IPO market in the second quarter in light of improved market valuation.

.: As you’ve seen, Andy continues to form his team and is focused on three areas. First, rationalizing the expense base. Second, turning on the growth engine by focusing on investment revenues. And third, enhancing our platforms and capabilities to elevate the client experience. Now these won’t happen overnight, but getting these things right will help us get more than our fair share of the $5 trillion of assets that our clients have away from us. And that will help us get our returns to where they need to be in this business in the medium-term. USPB had double-digit revenue growth for the sixth straight quarter. We feel good about our position and our resiliency as a prime lend-centric issuer and are seeing positive momentum across proprietary card and partner card businesses.

Healthy spend growth persists in branded cards, primarily driven by our more affluent customers. Across both portfolios, increased demand for credit continues to drive strong growth in interest earning balances. And while they’re only a small part of our portfolio, we are keeping an eye on the customers in the lower FICO bands. We also continue to see strong engagement in digital payment offerings, such as Citi Pay, as a point-of-sale lending product, which is easily integrated into merchants’ checkout processes. And we are driving more value from our retail branches, as well as getting the expense base right to increase returns there. Our balance sheet is strong across the board, an intentional result of our high quality assets, robust capital and liquidity positions, and rigorous risk management.

During the first quarter, we returned $1.5 billion in capital to our common shareholders and that includes $500 million through share buybacks. Our CET1 ratio ticked up to a preliminary 13.5% and we grew our tangible book value per share to $86.67. We have a great franchise around the world with great clients who are served by great colleagues. I’m pleased with where we are and I’m excited about where we’re going. With the organizational simplification behind us and a good quarter under our belt, we have started this critical year on the right foot. Now while there will be bumps in the road, no doubt, we will continue to execute with discipline and we are committed to reaching our medium-term targets. With that, I’d like to turn it over to Mark, and then we will both be delighted, as always to take your questions.

Thank you.

Mark Mason : Thanks, Jane, and good morning, everyone. I’m going to start with the firm-wide financial results focusing on our year-over-year comparisons for the first quarter, unless I indicate otherwise, and then spend a little more time on the business. On slide six, we show financial results for the full firm. In the first quarter, we reported net income of approximately $3.4 billion, EPS of $1.58, and an RoTCE of 7.6% on $21.1 billion of revenue. Total revenues were down 2% on a reported basis. Excluding divestiture-related impacts, largely consisting of the $1 billion gain from the sale of the India consumer business, in the prior year, revenues were up more than 3% driven by growth across banking, USPB, and services, partially offset by declines in markets and wealth.

Expenses were $14.2 billion, up 7% on a reported basis. Excluding divestiture-related impacts and the incremental FDIC special assessment, expenses were up 5%. Cost of credit was approximately $2.4 billion, primarily driven by higher card net credit losses, which were partially offset by ACL releases in wealth, banking, and legacy franchise. At the end of the quarter, we had nearly $22 billion in total reserves with a reserve to funded loan ratio of approximately 2.8%. On Slide 7, we show the expense trend over the past five quarters. We reported expenses of $14.2 billion, which included the incremental FDIC special assessment of roughly $250 million. Also included in this number are $225 million of restructuring charges, largely related to the organizational simplification.

In total, we’ve incurred approximately $1 billion of restructuring costs over the last two quarters. As part of these actions we expect approximately $1.5 billion of annualized run rate saves over the medium-term related to our headcount reduction of approximately 7,000. In addition to the restructuring, we took approximately $260 million of repositioning costs largely related to our efficiency efforts across the firm, including a reduction of stranded costs associated with the consumer divestitures. The expected savings from these actions will allow us to continue to fund additional investments in the transformation this year. And relative to the prior year, the remainder of the expense growth was largely driven by inflation and volume-related expenses, partially offset by productivity savings.

In the remainder of the year, we expect a more normalized level of repositioning, which is already embedded in our guidance. Therefore, you can expect our quarterly expense trend to go down from here in-line with our $53.5 billion to $53.8 billion ex. FDIC expense guidance. On Slide 8, we show net interest income, deposits, and loans where I’ll speak to sequential variances. In the first quarter, net interest income decreased by $317 million, largely driven by markets, which resulted in a 4 basis point decrease in net interest margin. Excluding markets, net interest income was relatively flat. Average loans were up $4 billion, primarily driven by loans in spread product in markets, as well as card and mortgage loans in U.S. Personal banking, partially offset by declines in service.

And average deposits were up nearly $7 billion, primarily driven by services, as we continue to grow high quality operating deposits. On Slide 9, we show key consumer and corporate credit metrics. This quarter we adjusted our FICO distribution to be more aligned with the industry reporting practices and now show our FICO mix using a 660 threshold. Across branded cards and retail services, approximately 85% of our card loans are to consumers with FICO scores of 660 or higher. And we remain well-reserved with a reserve-to-funded loan ratio of 8.2% for our total card portfolio. In our corporate portfolio, the majority of our exposure is investment grade, which is reflected in our low level of non-accrual loans at 0.5% of total corporate loans.

As a reminder, our loan loss reserves incorporate a scenario-weighted average unemployment rate of approximately 5%, which includes a downside scenario unemployment rate of close to 7%. As such, we feel very comfortable with the nearly $22 billion of reserves we have in the current environment. Turning to Slide 10, I’d like to take a moment to highlight the strength of our balance sheet, capital and liquidity. We maintain a very strong $2.4 trillion high-quality balance sheet, which increased 1% sequentially. Despite this increase, we were able to decrease our risk-weighted assets, reflecting our continued optimization efforts and focus on capital efficiency. Our balance sheet is a reflection of our risk appetite, strategy, and diversified business model.

The foundation of our funding is a $1.3 trillion deposit base, which is well diversified across regions, industries, customers, and account types. The majority of our deposits, $812 billion, are corporate and span 90 countries. Most of our corporate deposits reside in operating accounts that are crucial to how our clients fund their daily operations around the world. In most cases, we are fully integrated in our client systems and help them efficiently manage their operations through our three integrated services, payments and collections, liquidity management, and working capital solutions, all of which greatly increased the stickiness of these deposits. The majority of our remaining deposits, about $423 billion, are well diversified across the private bank, Citigold, retail, and wealth at work, as well as across regions and products.

Now turning to the asset side. Over the last several years, we’ve maintained a strong risk appetite framework and have been very deliberate about how we deploy our deposits and other liabilities into high quality assets. This starts with our $675 billion loan portfolio, which is well diversified across consumer and corporate loans. And the duration of the total portfolio is approximately 1.2 years. About one-third of our balance sheet is held in cash and high quality, short duration investment securities that contribute to our nearly $1 trillion of available liquidity resources. And for the quarter, we had an LCR of 117%. So to wrap it up, we are active and deliberate in the management of our balance sheet, which is reflected in our high-quality assets and strong capital and liquidity position.

On Slide 11, we show the sequential CET1 walk to provide more detail on the drivers this quarter. First, we generated $3.1 billion of net income to common shareholders, which added 27 basis points. Second, we returned $1.5 billion in the form of common dividends and share repurchases, which drove a reduction of about 13 basis points. Third, we saw an increase in our disallowed DTA, which resulted in a 10 basis point decrease. And finally, the remaining 6 basis point benefit was largely driven by a reduction in RWA. We ended the quarter with a preliminary 13.5% CET1 capital ratio, approximately 120 basis points, or over $13 billion above our regulatory capital requirement of 12.3%. That said, our current capital requirement does not yet reflect our simplification efforts, the benefits of our transformation, or the full execution of our strategy, all of which we expect to bring down capital requirements over time.

So now turning to slide 12. Before I get into the businesses, let me remind you that in the fourth quarter we implemented a revenue sharing arrangement within banking and between banking services and markets to reflect the benefits that businesses get from our relationship-based lending. The impact of revenue sharing is included in the all-other line for each business in our financial supplement. In services, revenues were up 8% this quarter, driven by continued momentum across both TTS and Securities Services. Net interest income increased 6%, driven by higher deposit and trade loan spreads. Non-interest revenue increased 14%, largely driven by continued strength across underlying fee drivers. In TTS, cross-border volumes increased 9%. U.S. Dollar clearing volumes increased 3%, and commercial card spend volumes increased 5%, all of which was driven by strong corporate client activity.

In Securities Services, our preliminary assets under custody and administration increased 11% benefiting from higher market valuations, as well as new client onboarding. The growth in both businesses is a direct result of our continued investment in product innovation, the client experience, and platform modernization to gain share across all client segments. TTS continues to maintain its Number One position with large corporate and FI clients, and see good momentum in the commercial client segment, and we continue to gain share in Securities Services. Expenses increased 11%, largely driven by continued investments in technology and product innovation. Cost of credit was $64 million as net credit losses remain low. Net income was approximately $1.5 billion.

Average loans were up 4% primarily driven by strong demand for working capital loans in TTS. Average deposits were down 3% as the impact of quantitative tightening more than offset new client acquisitions and deepening with existing clients. However, it is worth noting that we continue to see good operating deposit inflow. And services continues to deliver a high RoTCE of 24.1% for the quarter. On slide 13, we show the results for markets for the first quarter. Markets revenues were down 7% as lower fixed income revenues more than offset growth in equities. Fixed income revenues decreased 10% driven by rates and currencies, which were down 21% on the back of lower volatility and a strong quarter in the prior year. This was partially offset by strength in spread products and other fixed income, which was up 26% driven by an increase in client activity, particularly in asset-backed lending.

And we continue to see good underlying momentum in equities, with revenues up 5% driven by growth across cash trading and equity derivatives. And we continue to make progress in prime with balances up more than 10%. Expenses increased 7%, largely driven by the absence of a legal reserve release last year. Cost of credit was $200 million, primarily driven by macroeconomic assumptions related to loans and spread products that impacted reserves. Net income was approximately $1.4 billion. Average loans increased 8%, primarily driven by asset-backed lending and spread products due to an improvement in market activity. Average trading assets increased 4% sequentially, largely driven by seasonally stronger activity in the first quarter. Markets delivered an RoTCE of 10.4% for the quarter.

On slide 14, we show the results for banking for the first quarter. Banking revenues increased 49% driven by growth in investment banking and corporate lending and lower losses on loan hedges. As I previously mentioned, corporate lending results include the impact of revenue sharing from investment banking, services and markets. Investment banking revenues increased 35% driven by DCM and ECM, as improved market sentiment led to an increase in issuance activity, particularly investment grade, which is running at near record levels. Advisory revenues declined given the low level of announced merger activity last year. However, in the quarter, we participated in the pickup and announced M&A across sectors, including those where we’ve been investing, such as technology and healthcare.

Corporate lending revenues, excluding mark-to-market on loan hedges, increased 34%, largely driven by higher revenue share. We generated positive operating leverage this quarter as expenses decreased 4%, driven by actions taken to right size the expense base. Cost of credit was a benefit of $129 million, primarily driven by changes in portfolio composition. The [NPL] (ph) rate was 0.3% of average loans, and we ended the quarter with a reserve-to-funded loan ratio of 1.5%. Net income was approximately $536 million. Average loans decreased 6%, as we maintained strict discipline around capital efficiency as we optimized corporate loan balances. RoTCE was 9.9% for the quarter, reflecting a rebound in activity, reserve releases, and continued expense discipline.

On slide 15, we show the results for wealth for the first quarter. Wealth revenues decreased 4%, driven by a 13% decrease in NII from lower deposit spreads and higher mortgage funding costs, partially offset by higher investment fee revenue. We’re seeing good momentum in non-interest revenue, which was up 11% as we benefited from higher investment assets across regions, driven by increased client activity, as well as market valuation. Expenses were up 3% driven by technology investments focused on risk and controls, as well as platform enhancements, partially offset by the initial benefits of expense reduction as we continue to right-size the workforce. Cost of credit was a benefit of $170 million, driven by a reserve release of approximately $200 million, primarily related to a change in estimate, as we enhanced our data related to margin lending collateral.

Net income was $150 million. End of period, client balances increased 6% driven by higher client investment assets. Average loans were flat as we continue to optimize capital usage. Average deposits decreased 1%, largely reflecting lower deposits in the private bank and Wealth at Work, and the continued shift of deposits to higher yielding investments on Citi’s platform, which more than offset the transfer of relationships and the associated deposits from USPB. Client investment assets were up 12%, driven by net new investment asset flows and the benefit of higher market valuation. RoTCE was 4.6% for the quarter. Looking ahead, we’re going to improve the returns of our wealth business by executing on our three foundational priorities. As Jane mentioned, this will take time, but over the medium to longer term, we view this as a greater than 20% return business.

On Slide 16, we show the results for U.S. Personal Banking for the first quarter. U.S. Personal Banking revenues increased 10% driven by NII growth of 8%, and lower partner payments. Branded Cards revenues increased 7%, driven by interest earning balance growth of 10%, as payment rates continue to moderate. And we continue to see healthy growth in spend volumes up 4%, primarily driven by our more affluent customers. Retail services revenues increased 18%, primarily driven by lower partner payments due to higher net credit losses, as well as interest earning balance growth of 9%. Retail banking revenues increased 1% driven by higher deposit spreads, loan growth, and improved mortgage margins. Expenses were roughly flat due to lower compensation costs, including repositioning, offset by higher volume related expenses.

Cost of credit of approximately $2.2 billion increased 34%, largely driven by higher NCLs of $1.9 billion as card loan vintages that were originated over the last few years were delayed in their maturation due to the unprecedented levels of government stimulus during the pandemic and are now maturing. In branded cards, the NCL rate came in at 3.65%, in-line with our expectations. In retail services, the NCL rate of 6.32% was slightly above the high end of our guidance range for the full year and will likely remain above the range in the second quarter, reflecting historical seasonality patterns. However, given the persistent inflation, higher interest rates, and continued sales pressure at our partners, we now expect to be closer to the high end of the full year NCL guidance range for retail service.

This expectation, along with the continued mix shift from transactors to revolvers across both portfolios, led to an ACL build of approximately $340 million. Net income decreased to $347 million. Average deposits decreased 10% and as the transfer of relationships and the associated deposits to our wealth business more than offset the underlying growth. RoTCE for the quarter was 5.5%. We recognize that this business is facing a number of headwinds from a regulatory perspective and from higher credit costs given where we are in the credit cycle, both of which are putting pressure on returns for the quarter and for the full year 2024. However, this doesn’t impact our longer-term view of the business. We feel good about our position as a prime and lend-centric issuer.

We will continue to take mitigating actions to manage through the headwinds, [lap] (ph) the credit cycle, and drive more value from retail banking and retail services, while improving the overall operating efficiency of the business, all of which will ultimately result in a higher returning business over the medium-term. On Slide 17, we show results for All Other, on a Managed Basis, which includes corporate other and legacy franchises, and excludes divestiture-related items. Revenues decreased 9%, primarily driven by closed exits and wind-downs, as well as higher funding costs, partially offset by higher revenue in Mexico. And expenses increased 18%, primarily driven by the incremental FDIC special assessment and restructuring charges, partially offset by lower expenses from the wind-down and exit markets.

Slide 18 shows our full year 2024 outlook and medium-term guidance, both of which remain unchanged. We have accomplished a lot over the past few years and have made substantial progress on simplifying our business and organizational structure. The year is off to a good start as we are laser focused on executing the transformation and enhancing the business performance. These two priorities will not only enable us to be a more efficient, agile company, but a client-centric one that brings together the best of Citi to drive revenue growth and improve return. And we are on the path to reach our 11% to 12% return target over the medium-term. With that, Jane and I will be happy to take your questions.

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Q&A Session

Operator: At this time, we will open the floor for questions. [Operator Instructions] Our first question will come from Mike Mayo with Wells Fargo. Your line is open. Please go ahead.

Mike Mayo: Hi. Well, you just finished your seven months of your org simplification and you said 7,000 positions go away with $1.5 billion of expense savings. So that’s very concrete, but more generally after 20 years, 30 years, 40 years of matrix structure down to five lines of business, you’re reporting these differently, you’re talking about them differently. But the question that I think a lot of people have is, are you simply reporting these lines of business differently or are you actually running them differently? Thanks.

Jane Fraser: Thank you, Mike, for the question. The simplification that we’ve just gone through, it is what we said it is. It is the most consequential set of changes, not only to the organization model that we have, but how we run the bank. It’s aligned the structure with the strategy. It’s simplified the bank, it’s eliminated needless complexity. It’s created greater transparency into the five businesses and their performance, as you can see. It’s increased accountability. And very simply, it’s just easier for our people to focus on our clients, but also getting things done and the execution that we have ahead of us. So maybe if I try and bring this a bit more alive. The first thing we did was we elevated the five businesses and that eliminated the ICG and PBWM layer.

And we brought all the elements that the businesses needed to run end-to-end under the direct management of those five business heads, an example being operations. And — it’s enabled transparency, greater accountability, and this end-to-end and total P&L focus, so focus on the bottom-line and the returns, driving growth, expense discipline, et cetera. We also right place businesses to align with the strategy. So banking, all being under one umbrella, the investment bank, the corporate bank, commercial bank, really helping us drive synergies there. Putting finance, F&S and securitization into markets so that we have a unified spread product there, also beginning to see the benefits of that this quarter. So that’s an example on the businesses, but I do want to highlight a couple of other areas around this change.

So by eliminating the regional layer and putting in a far slimmer, lighter management structure in place in the geographies. That’s enabled us to make sure that our countries are focused on client delivery and legal entity management. And we’ve eliminated the whole shadow geographic P&L. We’ve eliminated a large number of committees in the geographies. And this is where a lot of the functional and management roles were streamlined and eliminated through the last seven months. And we also broke the regions into smaller, lighter clusters. And that allows us to much better capture the big changes in trade flows and financial flows, et cetera, we’re seeing around the world. It’s just much nimbler. The third piece, we created the client organizations.

So that organization makes sure that our core capabilities and disciplines are being applied firm-wide to drive revenue synergies. And then the governance has got a lot easier. It took up a lot of time. And we’ve given much clearer mandates in that we’ve more than halved the number of committees. That’s 200 committees plus that we’ve eliminated in the firm, either by consolidating them or eliminating them. The spans and layers, if you exclude me, 98% of the firm now operates within eight layers. That is a much, much faster decision-making. It’s much quicker to get execution done. It also means that you can very quickly get closer to where the engine [room] (ph) of the firm is. We’ve got clearer accountabilities, we’ve eliminated most co-heads, we’ve reduced matrix reporting, we’ve got the producer to non-producer ratio improved.

So all of this really means, as I’ve said, a clearer deck, so we can be laser-focused on business performance in those five businesses and the transformation. It already feels different. Around my table, I’m much closer to the businesses and the clients. It makes it much easier for Mark and I and the rest of the team to run the bank like an operator versus the head of a holding company. You don’t have to go through these aggregator layers to get things done. And we’re done, as we said we would be at this point, we’re wrapping up the final consultation period, not an easy few months with the organization. We’ve had to say goodbye to some very good people. We put a lot of change through the organization. And now as we close the chapter on this, we look forward to being back in BAU mode, again continuing to drive improvements in simplification and processes and alike.

But now the focus is going to be really getting the full benefit from all the changes we’ve made in business and organization and moving forward.

Operator: Our next question is from Glenn Schorr at Evercore. Your line is open. Please go ahead.

Glenn Schorr: Thanks very much. Yes, so I think it shows how much you’ve helped us, see the simpler organization. I think people have totally bought into the expense story, so a lot of credit for you guys. I think where I personally and others still have questions on is, on the revenue side and getting to those 4% to 5% medium-term targets. So could you take us just conceptually where we’re going to — where you think you’ll drive that growth from this baseline where we’re at now? And if you want, you can totally use my second question in there and tell us what good things you’re doing inside the Investment Banking line to help tease out one of the [industry] (ph)?