Citigroup (NYSE:C) executive Gonzalo Lucchetti, head of U.S. Personal Banking (USPB) and the company’s incoming chief financial officer, outlined priorities centered on improving returns and execution discipline while offering an update on consumer credit trends, business strategy, and firm-wide efficiency initiatives during a conference discussion.
Incoming CFO priorities: higher returns and execution focus
Lucchetti said his priorities as he prepares to assume the CFO role are “twofold”: driving “consistent higher returns” and pursuing “excellence in execution.” He emphasized durability and sustainability of results, which he tied to “strong risk and control management practices,” a strong balance sheet, and robust liquidity.
Consumer outlook: resilience, prime focus, and less bifurcation
On the macro environment, Lucchetti said the company expects a continuation of “constructive dynamics” in 2025, citing moderate growth in Europe supported by prior European Central Bank cuts and Germany’s infrastructure focus, along with demand-driven growth in parts of emerging markets and continued strength in U.S. conditions.
For the U.S. consumer, Lucchetti said Citi continues to see resilience in spending trends consistent with recent quarters, and stability in credit performance and delinquency. He attributed some of that stability to Citi’s customer mix, noting the franchise is “prime centric” with “85%+” prime FICO lending. He also said the company is monitoring potential risks, including geopolitics, policy changes, equity markets, and unemployment, adding that those factors can change quickly.
Asked about the “K-shaped economy,” Lucchetti said Citi is seeing “a little bit less bifurcation than we saw 2–3 years ago,” with behavior becoming more similar across income segments in terms of delinquency and spend growth, while still reflecting some K-shaped characteristics.
Credit card APR cap proposal: Citi opposed, cites economic ripple effects
Lucchetti addressed debate around proposals to cap credit card annual percentage rates, saying Citi does not support APR caps and believes the “detrimental impact on the economy would be really material.” While he said Citi is aligned with efforts to support consumers facing affordability challenges, he argued a cap could reduce credit lines and the availability of credit, particularly for lower-income and lower-FICO borrowers, because it could become “completely unprofitable.”
He framed the potential impact in terms of broader commerce, noting that credit card spend represents about $6 trillion of a $30 trillion economy, and said reduced credit access could ripple through retail, hospitality, and travel.
USPB performance and card strategy: revenue growth, efficiency gains, and platform investment
Lucchetti described USPB as serving 70 million U.S. consumer customers. He said the business grew revenue at a little over 8% annually over the last three years, rising from “mid-$16 billion” to $21 billion. He also cited improvement in operating efficiency, declining from 57% to 53% to 49% and “last year it was 46%,” adding that the team views the work as ongoing.
Lucchetti attributed progress to three main factors:
- Foundation: strengthening risk and controls, balance sheet management, and data capabilities supported by firm-wide transformation.
- Clear strategy: focusing on customer experience and simplicity, including “Simplified Banking,” and concentrating the retail bank on six core U.S. markets.
- Cards focus: growing higher-return proprietary cards while maintaining discipline on partnerships to drive scale with returns.
On the U.S. cards business, Lucchetti said it is an $18 billion revenue franchise with about $175 billion in outstandings and that Citi holds the “number three” position in the market. He characterized the competitive landscape as “very, very competitive,” pointing to competition in product innovation, customer experiences, and ecosystems.
Lucchetti highlighted recent initiatives including the launch of Citi’s Strata family as a re-entry into rewards and affluent proprietary cards, a refreshed Costco product, and an extended and broadened American Airlines partnership. He said Citi saw “record acquisitions” across the Costco and American Airlines portfolios in the last year. He also described investments in loyalty and digital platforms such as Citi Travel, Citi Shop, merchant offers, and flexible ThankYou points usage at merchants including Walmart, Amazon, PayPal, Walgreens, CVS, as well as point-of-sale and post-purchase installment options.
Firm-wide guidance themes: NII drivers, efficiency goals, and AI deployment
Lucchetti discussed company guidance for net interest income (NII) excluding Markets of 5%–6% year-over-year, describing it as driven primarily by “client-driven activity,” including volume and mix. He said Citi expects mid-single-digit growth in operating deposits in Services and in Wealth, as well as mid-single-digit growth in card loans and Wealth lending. He added that rate cuts were incorporated into assumptions and that reinvestment in the investment portfolio as securities roll into higher-yielding assets is another contributor.
On expenses and efficiency, Lucchetti said Citi’s objective for the year is delivering its 10%–11% ROTCE commitment, which he described as a “waypoint, not a destination.” He said the company is shifting from an earlier period focused on simplification and transformation to an emphasis on growth in client franchises, while balancing further efficiency opportunities with investment flexibility. He noted Citi reported 63% operating efficiency last year, down from roughly 66% in 2024, and said guidance implies moving to “in and around 60%.”
Lucchetti said the peak of transformation costs was last year and expects temporary transformation-related cost surges to begin rolling off as programs reach completion, alongside reductions in stranded costs from business exits. He also said Citi has identified more than 50 core processes where further automation—using technology and AI—could provide multi-year efficiency gains.
On AI, Lucchetti described a dual approach: broad access for employees to drive “bottom-up” productivity improvements and focused, “top-down” efforts on scaled processes. He said 182,000 employees across more than 84 markets have access to AI tools, with over 70% adoption. As an example from USPB, he described “Agent Assist” in customer service, including improved intent recognition in automated systems, summarization for human agents to reduce repetition, live transcripts to improve call clarity, and automated call summaries to save time.
About Citigroup (NYSE:C)
Citigroup Inc is a global financial services company headquartered in New York City with roots tracing back to the City Bank of New York, founded in 1812. The modern Citigroup was created through the 1998 merger of Citicorp and Travelers Group and has since operated as a diversified bank holding company that provides a broad range of banking and financial products and services to consumers, corporations, governments and institutions worldwide.
Citi’s principal businesses include retail and commercial banking, credit card and consumer lending products, wealth management and private banking, and a full suite of institutional services.
