Message from Mark Mason on Citi Financial Disclosure

Note to colleagues below from Citi Chief Financial Officer:

Colleagues,

Today, Citi disclosed information about our financials including items impacting the fourth quarter of 2023, in addition to recasted financial results for our five core businesses for 2021 and 2022, and quarterly results from first quarter 2021 through third quarter 2023. I would like to provide some additional context for both and explain how they relate to our upcoming earnings announcement this Friday. While we rarely provide information about the results of the quarter in advance of scheduled earnings announcement dates, we thought this was a prudent step in our commitment to building credibility and being transparent with our stakeholders, including our colleagues.

1. Items impacting the fourth quarter

The most significant item was the addition of $1.3 billion to our reserves to protect our bank against the increase in transfer risk associated with our exposures to Argentina and the ongoing economic and political instability in Russia.

We also provided additional information about previously disclosed headwinds that will have an impact on our financials in the fourth quarter of 2023. 

• An approximate $880 million decrease in revenues in Argentina as a result of the devaluation of the Argentine peso, which was an action the country’s government announced in mid-December to try to stabilize its ailing economy. 
• A $780 million charge due to severance and other related costs resulting from our organizational restructuring. While there are upfront costs to the organizational changes we’re implementing, there are clear benefits that will allow us to reduce our future expense base, as well as simplify our bank and strengthen our focus on clients. 
• An approximate $1.7 billion charge to operating expenses in the quarter related to a previously disclosed special assessment by the FDIC. This is an assessment that the FDIC also levied on our peers in the industry as a result of the bank failures that took place in 2023.

While these items are meaningful for our 2023 results, we remain on track to meet the 2023 expense guidance (excluding FDIC and divestitures) and all of our medium-term targets.

As you’ve heard me say before, we are a bank for all seasons. Our ability to digest these charges and take reserves against potential future challenges is a testament to the strength and stability of our firm and how we continue to weather all types of market environments. 

2. Financial results for our five core businesses for the past two years

As previously announced, we made changes to our financial reporting structure to align with our new operating model and increase transparency into our business performance, effective for our fourth quarter of 2023 earnings. This updated structure includes five reportable operating segments for Services, Markets, Banking, Wealth and U.S. Personal Banking and an All Other category comprising Legacy Franchises and Corporate/Other. The financial disclosure we made today includes Summary Historical Financial Information under these reporting segments for full year results for 2021 and 2022, and each quarter from the first quarter of 2021 through the third quarter of 2023. 

This provides a greater level of transparency to our business performance and highlights our progress and key areas of required focus — especially around our returns. While there are some areas where we’re clearly disappointed with our current returns, we’re confident that the strategy we’re implementing for the firm overall and each of these five businesses, as well as right sizing the expense base, will continue to drive improved returns.

What this means for our go forward

The items we disclosed today do not change our strategy. At our 2022 Investor Day, we set the course for the medium-term targets for revenue, expenses and overall returns. 2024 will be a pivotal year to deliver on our commitments and set up the company for enhanced performance and returns. As always, delivering on these commitments and our Transformation requires all hands. Our strategy is the right one, and with everyone behind it doing their part, we’ll transform our firm to realize its full potential.