Jane Fraser: Hi, Vivek.
Vivek Juneja: A couple of quick clarifications. On your NII guide, you talked about you’re assuming three to six cuts. That’s US, I presume. So are you assuming flat unchanged rates outside the US since you’re more sensitivity outside?
Mark Mason: Modest declines outside, but yes, declines outside as well, but not nearly of the magnitude of what we’re talking about in the US.
Vivek Juneja: Okay. And then, Jane, to your point about the 20,000 headcount cuts, and I heard you just mentioned 5,000 from managerial positions. Where are the rest 15,000 coming from?
Jane Fraser: Let me just — so let me just be clear about where the ones that we’ve just done and that we’re working on through the organization simplification. So when I think about that effort, it will close at the end of the first quarter, as we said, we’re expecting to get about $1 billion of run rate saves from the org simplification work alone. That constitutes about 5,000 heads. We’re just about to, at the end of this month, finish Phase III, which will mean the first four layers of the organization have been addressed. That’s been a net reduction of about 1,500 managers out of a total of 12,000 roles. So it was about 13%. And these are mainly manager roles, as I talked about earlier. Then when we think about where are other expense opportunities on top of this, as Mark was talking about earlier, I mean, the stranded costs will be completing the elimination of the stranded costs from the divestures, we’ll be continuing, and you’ve seen it been doing that, exiting marginal businesses and hobbies and the like and being very disciplined about that.
We’ve got some businesses where we feel we need to right-size the core expense base. Andy Sieg is going to be kicking off that in Wealth, and you will begin to see some of the impact of that in the first quarter. He’s off to a strong start. And then we’ve got other areas where we’ll be creating more utilities. We’ve got — still got different fragmented activities across the firm that the organization simplification as highlighted we’ll be aggregating those, creating utilities or consolidating some of those different functions. And that is before we get to beginning to get benefits from the transformation where there will be efficiencies that come through. We’ll still have areas that we’re investing. These are going to be, as we talked about, core business investments, it’s going to be expense growth still in the top — from volume growth that we’ve got, and we will be investing in our transformation.
And all of this is happening over the medium term to get us to the 11% to 12% RoTCE target we talked about. So that 20,000 is — it’s the number that we estimate at the headcount. I don’t love thinking headcount and I’m thinking about expenses. I think it’s a more meaningful number. So as Mark laid out in his presentation, we’ve got a net expense saves that we’re expecting to achieve in the medium term, and these are the raft of different areas that we will be contributing to it, and we’re working hard at it.
Operator: Our next question will come from Steven Chubak with Wolfe Research. Your line is now open.
Steven Chubak: Hi. Thanks for taking my questions. Really some ticky-tack modeling questions on the revenue side. Does the revenue guidance for the full year include any reduction in credit card late fees? And how large of a contributor is that to revenues overall at Citigroup?
Mark Mason: So let’s see. So obviously, the proposals out there, and we’ve factored in what’s knowable as it relates to that. We haven’t given guidance externally on what that impact is, but we do believe there offsets and mitigants that over time, we’ll be able to kind of bring into play. And so long-winded way of saying our revenue forecast does assume some basic level of late-fee adjustment.
Steven Chubak: Got it. And just on the earlier comments you made, Mark, around services NII. I am struggling to reconcile the 50-50 NII contribution from rate and volume components just given average loan and deposits were essentially flat year-on-year. NII grew $3 billion it does imply a much larger contribution from rates. I know there’s deposit fund transfer pricing and other noise. So I was hoping you can maybe unpack that a little bit further.
Mark Mason: I mean there are a lot of factors in there. There’s obviously as well the mix as it relates to what we have in the US versus outside of the US. So it’s — there are a number of factors there and probably too much to kind of take you through on the call here, but we’re happy to kind of follow-up with you off-line and take you through it.
Operator: Our final question comes from Mike Mayo with Wells Fargo. Your line is now open.
Mike Mayo: Yeah. Just a clarification, when you said medium term in this call as it relates to employee reductions, expense savings, revenue targets and 11% to 12% lastly, does medium term mean by 2026, or does it mean something different?
Mark Mason: Yes, it’s —
Jane Fraser: 2026.
