Hello and welcome to Citi’s First Quarter 2022 Earnings Review with Chief Executive Officer, Jane Fraser; and Chief Financial Officer, Mark Mason. Today’s call will be hosted by Jen Landis, Head of Citi Investor Relations. [Operator Instructions] Ms. Landis, you may begin.

Thank you, operator. Good morning and thank you all for joining us. 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 SEC filings. With that, I will turn it over to Jane.

Thank you, Jen. And I’d like to start by reiterating my appreciation to those of you who participated in our Investor Day last month. We greatly value the opportunity to walk you through our refreshed strategy and our plans for the next few years. Given how much time we spent on our strategy that day, today, we will be focusing on the quarter. Nonetheless, as we committed, we will keep you updated on our progress and you can see the latest report card on Slide 2. Today is also the first time we are reporting quarterly results under our new segmentation, which will help you track our efforts. I have got to say it feels like an understatement to say that a lot has happened since Investor Day. So I am going to talk about the macro environment first. And then after I talk about the quarter, I will discuss how we are handling Russia and Mark is also going to go through it in more detail. We have been on the front foot since the potential for war first emerged and we intend to remain so. The Russian invasion of Ukraine and the sanctions it triggered unleashed an enormous supply shock on the world, further fueling inflation and placing global growth under considerable pressure. Back recently from seeing clients in Europe and the Middle East, it is security, energy, food, defense, cyber or operational resilience that has risen to the top of their strategic dialogue. The macro outlook for the rest of the year can only be described as complex and uncertain. And while my job is to prepare for all outcomes, our view is that strong nominal income growth and continuing momentum in the labor market will help support near-term growth in the U.S. economy in the face…

Thank you, Jane and good morning everyone. I’m going to start with the firm-wide financial results focusing on year-over-year comparisons for the first quarter, unless I indicate otherwise, then spend a little more time on expenses in Russia and end with the results of each segment. On Slide 4, we show financial results for the full firm. As Jane mentioned earlier, in the first quarter, we reported net income of $4.3 billion and an EPS of $2.02, with an RoTCE of 10.5% on $19.2 billion of revenues. Embedded in these results are Asia consumer divestiture-related impacts that are detailed in the appendix of the presentation. In the quarter, total revenues decreased 2% as strength in net interest income driven by Services and PBWM was more than offset by lower non-interest revenue across businesses. That said, we continue to see strong performance in the key business drivers we shared on Investor Day, which I will walk you through in detail shortly. Total expenses of $13.2 billion increased 15% or 10% excluding the Asia divestiture-related impacts I just mentioned. Cost of credit was $755 million as net credit losses of $872 million were partially offset by a net ACL release. Embedded in the net ACL release is a Russia-related build of approximately $1.9 billion. This includes $1 billion related to exposure to Russia and about $900 million to account for the broader impact on the macro environment. This was more than offset by a release related to a COVID-19 uncertainty reserve, primarily in U.S. Personal Banking, given the continued resilience of the underlying portfolio, specifically in the U.S. As of today, we have about $17.9 billion in total reserves, with a reserve to funded loan ratio of 2.35%. On Slide 5, we show an expense walk for the first quarter with the…

Thank you. [Operator Instructions] Our first question is from Glenn Schorr with Evercore. Your line is open.

Hi, there, how are you? Okay. So when I first looked at the reserve release, even including the $1.9 million Russian reserve, we’re like, wait, what economic scenario they are writing to, because everybody else added provisions. But now that you’ve given us some of the color, start to understand it. So it feels to me, and correct me if I’m wrong, you just were slower to release the COVID reserves, and it sounds like you still have a lot in the coffers with that 7.6% that you mentioned. So I just want to see if you can give a little more color between what you took reserves score? What you released reserves for? And if you tweaked your economic scenarios at all to get to the current reserve, if that’s not too much to ask?

Glenn, [why don’t] [ph] I kick off and I’ll pass it to Mark. So you are absolutely right. We had taken a rather conservative approach to releasing our COVID-related reserves in the U.S. Personal Banking business last year compared to some. We were comfortable that this quarter, that was the appropriate thing to do given the state of COVID and the U.S. economy. And with – as you can see from the numbers, with a 2.35% ACL coverage ratio and with the ratio that we have in cards, 7.6% in particular, I’m very comfortable that we have a prudent and appropriate reserve level. But let me hand it over to Mark for the down and the dirty.

Yes. Good morning, Glenn, I think you captured it right in the sense we obviously did a build, a meaningful build related to Russia, the majority of the release was, in fact, tied to the COVID-19 management adjustment that Jane referenced. As we thought about these scenarios, as you know, we run a base scenario. We did tweak that a bit in bringing the GDP assumptions down from what they would have been in the fourth quarter, and that obviously also impacted kind of the outer years in our assumption. And the other piece is, when we look at the downside scenario, so our analysis for CECL is a combination of a base scenario and a downside scenario. Under the downside scenario, we did increase the severity of the downside to account for again a bit of the current environment that we’re all managing through. So those puts and takes kind of netted out to what you see that we’ve reported, which is a net release, but largely driven by those two drivers.

And I’d just add in, as Mark talked about in his prepared remarks, we took an additional reserve of $900 million for the second and third order impacts of the war and the impacts on supply chains and other pieces that are – as we look forward, we were concerned about for the global economy. It’s a huge source of uncertainty as to what that will be.

Yes. That’s part of the $1.9 billion, obviously. I would point out that when you look through at the underlying performance of the portfolio, they are still holding up quite nicely when you look at the performance of our consumer customers, whether you’re looking at the NCL rate and where that’s trending or you look at the 90-day delinquency and where that’s trending still very strong. Even when you look on the corporate side, if you adjust for the Russia-related build and those drove a bit of the NAL increase, but still very strong performance there, too.

Your next question comes from Erika Najarian with UBS. Your line is open.

Hi, good morning.

Good morning.

I just wanted to ask you a question, Jane and Mark on CET1. And wanted to make sure we get your investors get the message correctly. So from the 11.4, you said that net income capital release from divestitures and DTA utilization are going to be the drivers to build a 12% CET1 by year-end 2021. Obviously, AOCI is a wildcard, unpredictable. Perhaps give us a sense of should we then think about the buyback as just a fallout in terms of that equation, right? Is the first question. Number two, what is the desire to increase the dividend even nominally in this stress test year? And third, how does the DTA impact that was negative in the first quarter turned to a positive impact? And Mark, nice job on the RWA. I think that everybody was scared if that was going to be a big negative number this quarter.

Thank you. You got a lot there, that we’ve got to unpack. So I’ll try to capture it all and you’ll point to whatever I may miss. But let’s start with the beginning of your question, just kind of the 12% and how we build back up to the 12%. So we ended the quarter at an estimated 11.4 to get to the 12%, that would be somewhere between $7 billion and $8 billion of capital that will be required. Jane mentioned, I mentioned there are a number of puts and takes that play through that. You pointed out a few of them. So you all have estimates for our net income between the second and fourth quarter. So you can forecast that what that would be. There is probably another $1.6 billion or-so of a benefit from the DTA. So what I mean by that, there is the $800 million that I’ve referenced in the past of utilization of the DTA. And the balance would be the elimination of the amount that we tripped above the threshold this quarter. So there are two components that carry forwards that impact the DTA. And then there is the timing difference, which has equated to about 10% of our capital. So this quarter, we actually tripped that timing difference portion of the disallowed DTA, in part because of how the OCI reduction play through. So as that bleeds back in over time, we would expect to have capital buildup, which increases that threshold and therefore, be able to back off the increase that we saw in the quarter related to the DTA. The third component would be the capital from exits. So you didn’t mention that one. As you know, there are a number of exits that we’re looking to close at…

And your next question comes from Mike Mayo with Wells Fargo. Your line is open.

Hi. Could you talk some about Treasury and Trade Solutions, both at the first quarter level? I guess, security services did better, what you are seeing is a combination of rates and more corporate demand and the complexity around the global situation? And then just more generally, the joint calling efforts you guys are doing with lending and payments, so specific to the general.

Well, maybe I’ll kick off with a couple of pieces and then hand it over to Mark. I think what we’ve seen, frankly, Mike, across the board this quarter has been the value of our global network that we talked about, be it in Markets, we had a lot of strong corporate activity and FX, that we saw tremendous activity for TTS, great with our commercial banking clients, and we saw a lot of linkages across. And obviously, it was a strong quarter for us in trade because again, with the global network, the ability to provide clients with end-to-end solutions in this interesting world that we’re living in is something they really rely upon us. So you saw trade loans up 16%. You saw really many of the drivers that we laid out for you at Investor Day performing particularly strongly. But Mark, why don’t I pass to you?

Yes. I’d make a couple of comments. So one, I’d point out that, again, we had a strong quarter in TTS. The revenues were up 18% versus the prior quarter up – that was year-over-year versus the prior quarter up 8%. And yes, some of that was due to rates playing through. So, net interest income was up 18%, but would look at the non-interest revenue that was up 19%. So to your point, Jane, we’re seeing good fee revenue growth play through as well. Security Services had a good quarter. It was up 66% revenue year-over-year and part of that was through fee revenue growth as well. So as you said, good, strong engagement with clients and helping them think through some of the uncertainty that’s out here, particularly as it relates to supply chains, helping them work through with their partners through the trade lending growth that we’re seeing and making good headway with the commercial client offering as well. So I would say a very good quarter, a very strong quarter for TTS, and we expect that momentum to continue.

And to your question about sort of joint calling effort, we’re quite making sure that we’re forensically managing the synergies that we talked about cross calling efforts. And I think Paco and I are both pleased with how those are going. And this quarter was an example of that.

And your next question comes from Matt O’Connor with Deutsche Bank. Your line is open. Matt O’Connor: Hi. I was hoping to follow-up on the Russian slide here, update on Russian Slide 6. I guess first question, why don’t you take just a bigger kind of stab at reserving for maybe the severe stress scenario? I’m not really an expert on what’s going on. But from what I read, it feels kind of pretty severe and it seems like broadly speaking, kind of other corporations, not necessarily banks, but just corporations are taking kind of more material losses versus a $1 billion on $10 billion? And then just a related question, if you could elaborate on what the broader impact is? I guess I’m a little surprised that the reserve for that was as big as the direct Russian reserve were roughly the same?

Sure. Why don’t I take that? So the first thing I’d say is that we’re not at 10, right? So we ended the year last year, 2021 at $9.8 billion. We ended the quarter at $7.8 billion of exposure. So we brought the exposure down by $2 billion inside of the last 3 months. I’d also point out that a number of things were important components of that. So if you look at Slide 6, you’ll see that the loans, and these are both ICG and consumer loans, largely ICG, largely corporate loans have come down by $600 million. And that’s really been a reduction in our risk exposure, right? So borrowers paying down, us limiting the extension of new credit, etcetera. The AFS securities have come down $600 million. And that is really a reduction mostly driven by sales. So we’ve gotten out of those securities. Yes, there are some mark-to-market losses, but they are not material. That flows through OCI, not material. You can see that the off-balance sheet unfunded commitments have trended down as well. Deposits and cash equivalents have gone up because we’ve actually seen the repayment of those loans come back, and we’ve been – we’ve had to put that cash with the Central Bank just given some of the restrictions that are there. We’ve been actively working down the reverse repo assets, which are really secured with sovereign bond exposure. And we’ve been bringing down the third-party cross-border exposure. So a lot of hard work has gone into bringing that exposure down to 7.8%. And if you think about the $1 billion that I referenced is kind of a net of $6.8 billion, right? So the second part of your question was, how do we think about reserves and what are those different components.…

And our next question – thank you. Our next question comes from Gerard Cassidy with RBC Capital Markets.

Hi, Jane. Hi, Mark.

Hi. Good morning.

Hi.

Mark, you did a good job in describing the CET1 ratio walk for us. What’s new that none of us have experienced yet on an ongoing basis. Is the SACR, the 49 basis points that reduced your CET1 ratio? Can you share with us how does that work on an ongoing basis? Is that a number that’s going to stay constant or does that change every quarter based upon increase or lower risk in this area?

It’s an increase in our risk-weighted assets that’s really tied largely to the derivative exposures that we have. What I would say is, obviously, how one manages their exposures and balance sheet and engagement with clients will impact that. But importantly, it’s a market dynamic that needs to play out as well. So, as more RWA and capital is required for these types of positions, there has to – it’s going to impact returns, and it ultimately will impact pricing as the market starts to incorporate this now higher requirement. And so it will continue to evolve. The thing I would point you to is that as we think about managing our businesses and in particular markets. You would have heard us mention at Investor Day that we are looking – continually looking for opportunities to optimize the balance sheet, optimize RWA, right. And so we talked about targeting a revenue to RWA for our markets business, and we are actively working at that now. And that’s going to be important as we continue to manage not only the balance sheet requirements that we have, but our intent to try and return more capital to shareholders and improve our returns.

Your next question comes from Ebrahim Poonawala with Bank of America.

Good morning Jane and Mark.

Good morning.

Just sticking with capital, two-part question. One, if it continued to move higher, Mark, is there anything you can do to hedge the AOCI? And secondly, if you can walk us through around Banamex, if you do strike a deal at some point this year, what are the implications on capital at deal announcement versus deal close? I would appreciate that.

Sure. So look, I mean there – what we have built in – what we have got built into the forecast and the walk back to 12% is the forward curve as of the end of the quarter. So, that’s what we have built in. As we think about that, that was a pretty sudden move through the quarter of 160 basis points on the 2-year in the quarter. That’s now in the expectation. We have built in an assumption around more rate moves that could happen just as a bit of cushion as I think about the outlook and as I think about the walk. We do have hedges in place as it relates to some of the positions that we have and as it relates to OCI, and we will continue to manage that to ensure we reduce the risk from rate increases, which, by the way, we have been actively doing over the past couple of years. If you look at kind of how the balance sheet has evolved, we have been moving from out of AFS and into held to maturity over the past couple of years, reducing that risk of a negative impact to OCI. And if you look at the DVO 1, we have cut that down from as high as $60 million to about $30 million or so. So, we have been actively managing with an eye towards how do we reduce that sensitivity if you will. Why don’t I let Jane kind of touch on the Mexico piece.

Yes. So, as I said, it’s quite a complex separation and transaction as we are going to be separating our market-leading and sizable ICG franchise in Mexico from the consumer and the small business that we will be selling. It will take a bit of time as we work through this. It’s a fantastic franchise. And as we are starting some very preliminary conversations with the buyers, it’s attracting a lot of attention. Because it is a once-in-a-lifetime opportunity here, and we have a range of options, I am sure, ahead from IPO sale, etcetera. But this is going to take time. We want to do it properly. And by time, I mean a few quarters. So, I think we are not anticipating at this very early stage, whether that would be this year or early next year. But Mark, why did I pass to you in terms of how we look at the CTA impact of that one?

Yes. So look, I mean as you said, Jane, what’s going to be important is that we make the right decision for the people, for the business and equally important for our shareholders, and we are going to absolutely make sure we do that. In terms of the way this plays out is I think you are aware and I have mentioned before that we have got roughly $2.8 billion, $2.9 billion currency translation adjustment related to our consumer Mexico franchise. And so when we sign the deal, we will have that flow through the P&L ultimately gets offset at closing. And so again, you would have another timing difference between the accounting impact and the ultimate economic impact, but that’s kind of the component that would play through it signing whenever that were to occur.

And your next question comes from Betsy Graseck with Morgan Stanley. Your line is open.

Hi. Good morning.

Good morning.

A couple of questions. One, a little bit ticky-picky, but on your NIM sensitivity that you have given the 10-Q, 10-K, it would be helpful to understand how much of that NIM sensitivity is coming from the non-legacy businesses? How much of that NIM sensitivity is going to be retained after you sell out the businesses that you have identified?

Yes. I don’t have that breakout, Betsy. I mean I – we will have to kind of get back to you. I don’t have that breakout.

Your next question comes from Vivek Juneja with JPMorgan. Your line is open.

Hi, Mark, Jane, a quick question, probably more for Mark. The RWA increased from the higher volatility that you would have seen in your trading assets in the first quarter? What was the offset to that?

So, look, in the first quarter, the major driver that we have seen is really on the credit risk side from an RWA point of view, and that was really tied to SACR. That’s the biggest driver of the fourth quarter, the first quarter RWA increase that we have seen. So, the RWA from a market risk point of view was mostly flat due to reductions in trading book securitizations, that was kind of – those are the kind of the main drivers there.

And what I would say is, and you certainly heard this loud and clear from Paco at Investor Day, a lot of the strategy here is also making sure that we are optimizing our capital. We are very mindful around the returns that we are generating and how we allocate and deploy capital. And this is a quarter that Andy and Paco is running the businesses have been very mindful around that. So, that also helped.

Yes. So, like I said, securitizations would be an offset as would some of the equity derivatives.

[Operator Instructions] Our next question is from Steven Chubak with Wolfe Research. Your line is open.

Hi. Good morning. So, it was encouraging certainly to hear you guys reaffirm the ‘22 guidance for low-single digit revenue growth, mid-single digit expense growth. But just given the positive surprise on revenues in the quarter, the number of rate hikes getting baked into the forward curve has increased since your last update. I wanted to get some perspective on just why you didn’t revise the revenue forecast higher? And just given the pace and timing of investments, as we look ahead to 2023 and beyond, how should we think about the timing for when you guys can get back to positive operating leverage?

Yes. Look, on the – let me kind of take that. So, on the revenue side, as you would have heard us describe, there have been puts and takes that have played through the quarter, and there is still a fair amount of uncertainty that’s out there. And so while there have been increases as it relates to rates, and we have seen and expect to see some benefit play through for that, there has also been an impact on banking revenues as we see the uncertainty creating a dynamic where corporate clients are pausing, particularly as it relates to equity capital markets and debt capital markets. And so as I mentioned, there are offsets that play out. And so we felt comfortable kind of maintaining the guidance on the revenue top line. In terms of the expenses, as I mentioned at Investor Day, the spend that we have going on in expenses is critically important. And we are still growing them as it relates to transformation and as it relates to business-led investments. On the business-led investment side, the good news is that we are starting to see some of the top line strength play out, not just driven by rates, but also driven by things like fees, which is what we forecasted. On the transformation side, we continue to make progress. And we have talked about how critically important that is to our operations going forward. We expect that, that will peak or arc, if you will, as we talked about at Investor Day, and that will occur in the near-term and will be an important offset, if you will, to the structural expense base that we have as the efficiencies from those spending – from that spending, excuse me, plays through.

And just to chip in as well, we are committed to the investments on our transformation and on our growth. We think they are both critically important. We are equally committed to managing our expense base prudently and forensically. And I think the piece there, if there is any comfort from our numbers is we are getting on with it. We are not hanging around here. You have seen us do that with the divestitures. We are doing the same on our transformation and on our investment side, getting very focused on making sure we deliver the results you would expect from them. You will see something similar when we start divesting and closing the different transactions, and we will talk to you about what we are doing on getting those – any stranded expenses out and getting focused on that. So, you can expect us to see us going pretty aggressively after different elements of our cost base as the timing is appropriate.

And your next question comes from Ken Uston with Jefferies. Your line is open. Ken please check your mute button. Next question is from Jim Mitchell with Seaport Global. Please go ahead.

Hey. Good morning Mark and Jane. Maybe just a question on – just following up with the last question, do you have a specific update for NII growth this year, given the forward curve is substantially higher than 100 basis points? And how you are thinking about NII overall? And then as a subset of that, how do we think about your deposit base or mostly your more institutional deposit base acting in an aggressive QT environment? Thanks.

Yes, sure. Look, I am not giving kind of guidance kind of broken out, if you will, for the revenues. We are standing by the full year guidance that we have talked about. Obviously, with rates moving the way that they have, we would expect that we would see some improvement on the NII line, but I haven’t given specific guidance broken out for the two lines. In terms of the deposit base we have, as you know, we have got a mix of consumer and corporate client deposits. We skew a bit more heavily towards the corporate client deposit base. That comes with – generally comes with a higher beta. And so they are likely to be more reactive to and reactive sooner to the increase in interest rates. And quantitative tightening will certainly have a longer term impact on the level of deposits that’s out there. But with that said, our plans both in the near-term and as we have played out the Investor Day forecast, don’t hinge upon significant growth in deposits. We would expect some growth, but growth consistent with kind of pre-pandemic levels, but that’s not outsized growth, and we believe our strategy, which is broader than just going after deposits, but really is around solutions for corporate clients and the full spectrum of financial services for the consumers that we focus on will allow for us to capture an appropriate level consistent with how the economy evolves.

And your next question comes from Erika Najarian with UBS. Your line is open.

Hi. Actually, Chubac and Jim asked my question. I think it might be helpful to consider, Mark for next quarter to break out the NII guide, given the – obviously, the uncertainty that we all have on forecasting trading and investment banking? Thanks so much.

Thanks, Erika.

Your next question comes from Betsy Graseck with Morgan Stanley.

Hi. I just wanted to ask about how you are thinking about the U.S. card business. This is an area where it feels like in some areas, you have been lagging a bit and in other areas accelerating. And I just wanted to get a sense as to how you are thinking about the trajectory this year in particular, since it’s one of the better margin businesses that you have got, and it also obviously keys into the reserve ratio a bit? Thanks.

Yes. I am surprised you thought we were lagging because we don’t – we certainly don’t see that. I have been really pleased with how the cards franchise has been performing on multiple different drivers on client acquisition, on the spend, on some of the new propositions that we have been bringing in. You heard from Anand about the growth on proprietary cards. The installment lending growth, 75% up, albeit from a small base this quarter. So, there are multiple different dimensions. So, I think it’s – we are very pleased to see the business actually picking up. And as I said, Betsy in my prepared remarks, I like where the business is headed. I think part of it is I am more positive around the U.S. economy and the U.S. consumer than really any other geographies around the world. And that helps with so much momentum in the labor market. We are seeing still quite a bit of excess liquidity sitting there in the back pocket of our consumers and very healthy balance sheet. I think we have peaked in the payment rates. So, we are just starting to see the first signs of that coming down. And I think that’s good because it’s a return to be – it should be the return this year to a more healthy behavior. The spend has obviously been quite remarkable. It’s up in the mid-20%. Also great to see the experience side and that services side coming back in again. And that’s we have been seeing it in travel. We have been seeing it in apparel. People like getting dressed up to go to dinner again in a restaurant. Those different things, it’s nice to see things coming back to normality. So, I am pretty positive both from cyclically where this is headed, the recovery from COVID, where it’s headed. And I am also pretty happy with the strategy that Anand laid out and the progress we are making against it. So, I think some good things ahead here.

Yes. And the only thing I would add is a couple of numbers, right. So, the sales are up 24% year-over-year, exceeding pre-pandemic levels across the categories. Acquisitions are up 23% year-over-year. Again, bringing on new card customers into our family, if you will. Revenues are down 2%, but you really have to look through the investments that we are making in acquisitions and the rewards costs associated with those that impact that revenue being down 2%. If you adjust for the acquisition costs, actually, our revenues would be up 1% year-over-year. So, I agree completely with you, Jane, which is we are very pleased with the progress here. We are seeing similar momentum start to play through on the retail services side as well. The sequential performance on average interest earning balances is a good signal for how things will play out. And we continue to feel good about the growth we forecasted towards the back half of the year.

And our next question comes from Andrew Lim with Société Générale. Your line is open.

Hi. Thanks for taking the questions. So, I get the impression that maybe keep you are surprised by your NII guidance because in the past, you have officially given it as based on a runoff balance sheet or is it appears based on a static balance sheet. And I think you mentioned a few quarters ago that if it was on the same basis, static balance sheet that your NII uplift will be about $2.5 billion to $3 billion for 100 basis point parallel shift. Is that something you are still sticking to? And then within the shape of that, how much was that is due to the short-term increasing by 100 basis points? I think you are much more sensitive to the short-term going up. Is that something that you can disclose a rough figure on?

Sure. And good morning and I would like to separate kind of NII guidance from the IRE sensitivity and disclosure that we have. And so you are absolutely right, and I am not moving – we are not moving off of our IRE disclosure at all. The analysis is such that with a parallel shift in rates of about 100 basis points that we see somewhere around $2.5 billion to $3 billion of an increase kind of play through. And as you know, as I have said before, that’s cross currencies, with about two-thirds of that being to non-U.S. currencies and the other third obviously being U.S. So, that is still our view from an ROE point of view. We are not – we haven’t changed that view.

And our next question comes from Mike Mayo with Wells Fargo.

Hi, a follow-up. I guess this is not new, but the expenses are just so high, and we haven’t heard the 4% inflation number from others and, maybe others are able to offset that a little bit more. And the 1% due to volume-related when Jane, you mentioned you don’t expect this level of capital markets to be sustained. So, I guess I am just – I am grappling about something that’s been around for a while. I get it. You have the right order, you have the transformation, you have business sales. You said you underinvested in the past and everything else. But I mean, you have 1,200 basis points between your expense and revenue growth and just seems so high. But you are also guiding for what I think is like 300 basis points of that spread for the full year. So, does that mean this is as bad as it gets, and that spread should be narrowed? And just some of those other inflation, volume expenses, expenses generally because it’s frustrating for investors.

Yes. So, why don’t I take that and kind of try and talk through it. So, the first thing I would say is that the 10% growth that we have in the quarter is consistent with the guidance. I just want to be clear that at Investor Day, that’s what we talked about. We would love for the number to be different, but we understand and we know that this is what’s required to get the franchise to where it needs to be. And so we are taking those hard decisions. We are spending the money where we need to spend it. We are being diligent about that to make sure that we are not being wasteful in that effort. But we don’t want to create or go through the things that we have gone through in the past in the way of under-investing. And so we are going to avoid that. The second thing is, and you acknowledge that kind of in your reference to transformation and business-led investments. On the structural investments spend, I should say, about half of that is from inflation, so not the full 4%. A portion of it is also from non-consent order risk and control spend that we are making, things like the financial crime unit, things like cyber spend, things like the work we are doing around our wholesale credit operations, important things. And there are some productivity savings that play through that. And then the final piece on the volume related is their transactional costs that are associated with the activity that we do on the trading side, their spend that we make in order to drive that activity. And the mix matters. And so while revenues kind of play out in one way for the quarter, the mix of the market’s activity impacts the level of volume-related expenses that’s generated through those transactions. So, those are a couple of things. Again, we are consistent with guidance. We believe we are on track for the guidance we gave for the full year of mid-single digits. And we are looking forward to generating the efficiencies that come out of this spend and put a dent in our structural expense base over time.

Yes. And let me jump in as well, Mike, because this is something Mark and I have – we are very, very aware of. We are managing it in excruciating detail on multiple dimensions. We are taking the lessons that we have got – we have got to take some of the short-term pain here in order to get us into the position we need to be in the medium-term and the long-term. And from be it the stranded costs and the divestitures, we know we will have opportunities there. We talked about Investor Day also being in a position to simplify the management structure and take out some of the structural expenses there. So, this is going to be an area of continued focus from Mark and I, that we make sure that not only are we managing the arc and ensuring there is one, but also that we generate the benefits from our shareholders from all of this. And it’s something I feel exceedingly high accountability for as does the management team. We get it.

And there are no more further questions, I will turn the call over to Jen Landis for closing remarks.

Thank you, everyone, for joining us today. If you have any follow-up questions, please reach out to IR. Enjoy the day. Thank you.

And this concludes Citi’s first quarter earnings call. You may now disconnect.