Q2 2024 Citigroup Inc Earnings Call
Participants
Jenn Landis; Head of Investor Relations; Citigroup Inc
Jane Fraser; Chief Executive Officer; Citigroup Inc
Mark Mason; Chief Financial Officer; Citigroup Inc
Mike Mayo; Analyst; Wells Fargo Securities, LLC
Glenn Schorr; Analyst; EVERCORE ISI
Jim Mitchell; Analyst; Seaport Global Securities LLC
Erika Najarian; Analyst; UBS Securities LLC
Gerard Cassidy; Analyst; RBC Capital Markets, LLC
Ken Usdin; Analyst; Jefferies LLC
Betsy Graseck; Analyst; Morgan Stanley & Co. LLC
Vivek Juneja; Analyst; J.P. Morgan Securities LLC
Matt O'Connor; Analyst; Deutsche Bank Securities Inc.
Saul Martinez; Analyst; HSBC Securities (USA) Inc.
Steven Chubak; Analyst; Wolfe Research LLC
Presentation
Operator
Hello, and welcome to Citi's Second 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 we would 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. Jenn Landis, you may begin.
Jenn Landis
Thank you operator. Good morning, and thank you all for joining our second 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. They 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. (audio in progress).
And with that, thank you, Jane.
Jane Fraser
Good morning to everyone. Before I discuss the results for the quarter, let me first address the regulatory action by the Federal Reserve and the Office of the Controller of the Currency, which were announced on Wednesday. These actions into the consent orders we entered into with both agencies in 2020, and those orders covered four primary areas risk management, data governance, controls, compliance. Addressing these areas is the primary goal of our transformation. Number one priority. It is a multiyear effort to modernize our infrastructure, UniFi disparate platforms and automate processes and controls. This week's actions focused primarily on data quality management. We've been public this year about the fact that we were behind in this particular area and that we had increased our investment a s a result.
The regulatory actions consisted of two civil money penalties and under the amended consent order with the OCC, a new process designed to ensure we're allocating sufficient resources to meet our remediation milestones , and that is called the resource (audio in progress) . Through the time. We are currently developing the plan for submission to the SEC.
Now by way of background, while the Federal Reserve is the primary regulator to Citigroup, our bank holding company OCC is a primary regulator for Citibank. NA. We call it CBNA., which is our largest banking vehicle with approximately 70% of our assets . [You mentioned] consent order with the SEC allows the N&A to continue paying to Citigroup at a minimum dividend necessary for debt service, preferred dividends and other nondiscretionary obligation.
While we're developing and seeking OCC consent for our results through [Theepan] dividend amount above that would require the OCC's non-objection. Now these dividends are into co-payment that I made from CB. and A. ultimately to the parent, Citigroup. They should not be confused with the common dividends. Citigroup pays to its shareholders. Indeed, there is no restriction on Citigroup's ability to pay common dividends to shareholders, nor is there a restriction to buying back shares.
And let me be very clear, even with the investments needed for our transformation, Citigroup has more than sufficient resources to also invest in our businesses and make the planned return of capital to our shareholders. We will increase our dividend from $0.53 to $0.56 a share as we announced in late June, and we will resume modest buyback this quarter. While these actions were not entirely unexpected to us, it is no doubt disappointing for our investors and for our people. We completely understand that .
At the same time, we're confident in our ability to get a specific areas where they need to be, as we have been able to do in other areas of the transformation. And we are pleased that it was acknowledged on Wednesday that we have made meaningful progress in executing our transformation and simplifying our firm . A multi-year undertakings such as this was never going to be linear, but I can assure you the investments we have been making as starting to come together to reduce risk, improve controls and deliver very tangible outcomes. The tech investments we have made are making a difference. We have reduced the time it takes to b[ook loans,] automated controls for our traders to reduce errors, move risk analytics to a cloud-based infrastructure and to increase the resiliency of our platforms to reduce downtime, []
The changes to our organization and our culture and making a difference. We have eliminated managerial contracts unless whilst empowering our leaders, we introduced new tools to better manage human capital needs. Our focus on culture has increased accountability and attracted great new talent such as base [Raghavan, Tim Ryan and Andy sake], you have my and the entire management team's commitment that we will address any or the consent order where we are behind, by putting the necessary resources and focus behind it. We will get this work where it needs to be as we have with the execution of our strategy and the simplification of our organization.
Now turning to what was another good quarter. Our results show the relentless focus we have in executing our strategy as we continue to drive towards our medium-term return target. We reported net income of $3.2 billion with an earnings per share of $1.52 and an ROTCE of 7.2%. Revenues were up 4% overall as well as up in each of our five core businesses for all, but one had positive operating leverage.
Expenses were down 2% year over year. The steps we're taking to simplify our organization right sized businesses such as market and well and reduced stranded costs are beginning to take hold even as we increase investment in our transformation. Over the medium term, we expect the simplification and stranded cost actions to drive $2 billion to $2.5 billion in annual run rate savings services grew 3%, driven by solid fee growth, which we have prioritized.
CPS. saw increased activity in cross-border payments and in commercial card. Security Services was up 10% with new client onboarding steepening with existing clients and markets valuations, helping increase our assets under custody by a preliminary 9%. At our recent services Investor Day, we very much enjoyed the opportunity to talk to you in depth. But how we're going to continue to grow is high returning business. And we're very pleased that people are starting to recognize why we describe it as our crown jewel.
Overall market had a strong finish to the quarter, leading to better performance than we'd anticipated. Fixed income was slightly down year on year due to lower [FX and rates.] So we had good issuing an area which generates attractive returns. Equities was up 37%, (audio in progress ) driven by strong performance in derivatives, which includes the gain on the Visa (audio in progress ). (audio in progress ) The exchange offer.
Banking was up 38% as the wallet rebound gain some momentum and we again grew share. Our clients continue to access debt capital markets with investment grade issuance near record levels. Equity issuance increased, particularly in convertibles as companies wait for a fuller opening of the IPO window. Investment banking fees were up 63% versus the prior year. And we've seen some healthy volumes associated with the now year over year to date, particularly in natural resources and technology, combined with a strong pipeline advisory activity looks promising as we think about the rest of the year and into next year. Wealth is starting to improve. Growth in client investment assets drove stronger investment revenue, especially in Citigold and was up a preliminary 15%. Our focus on rationalizing expense base is also starting to pay off with expenses down 4%. Andy and his team continue to attract top talent from the industry as a focus on our investment business and on enhancing the client experience. US Personal Banking revenue growth of 6% with all three businesses, again contributing to the top line, []
With good revolving balance and growth in both branded cards and retail services. And we continue to see differentiation in the credit segment with the lower income customers seeing pressure . Retail banking benefited from higher mortgage loans and improved deposit spreads while delivering strong referrals to wealth. Overall, while we saw operating margin expansion, our poor returns were pressured by the combination of credit seasonality and the normalization of certain vintages. We certainly expect to USBB.s returns to improve from here. The recent stress test again showcase the strength of our balance sheet. Our CET1 ratio now stands at 13.6%, and we expect our regulatory capital requirement to decreased to 12.1% as of October 1 given the reduction of our stress capital buffer,
Our tangible book value per share grew to $87 and $0.53. During the quarter, we returned $1 billion in capital to our common shareholders, and we are increasing our dividend by 6%. We expect to buy back $1 billion in common shares this quarter, and we will continue to assess the level of buybacks on a quarterly basis, particularly given the on certainty around the [Basel] three and game. Looking at the macro environment as we enter the second half of the year, US is still the world's most structurally sound economy. After breaking progress, inflation now appears back on a downward trajectory. Services spending has remained on an upward trend, although there are clear signs of softening labor market and the tightening of the consumer budget. And of course, you might have heard there isn't election in November .
In Europe, while rate cuts have become. The region's lack of competitiveness continues to be a drag on growth. In Asia, China is growing moderately, albeit with government stimulus. And that pivot to high tech manufacturing is being challenged by tariffs on EBs and semiconductors. Despite this uncertainty, as you saw at our services Investor Day, when we went through our performance over the last two years, our business model can produce good results in a wide variety of macro environment. And there is plenty of upside for us across our five businesses.
We have made an incredible amount of progress in simplification, both strategically and organizationally. We've completed most of the exit of our international consumer markets. We streamlined our organization to capitalize agility and faster decision making. We are Modernising using our infrastructure to improve our client service, and we are automating processes to strengthen controls. We are on a deliberate path, we will continue to execute our transformation and our strategy that we can meet our medium-term target. And then continue to further improve our returns over time.
With that, let me turn it over to Mark and then we will be delighted as always to take your questions.
Mark Mason
Thanks, Jane, and good morning, everyone. And we'll start with(audio in progress) the firm-wide financial results for the three-month Euribor refrigerated otherwise emerge in a little more pharma business. On Slide 6, we show financial results for the paper. For the quarter. We reported net income of approximately $3.2 billion, EPS of $1 52 million or 57.2% or $20.1 billion of revenue. Total revenues were up 4%, driven by growth across all businesses as well as an approximate $400 million gain related to the Visa the exchange offer. A significant portion of this gain is reflected in equity markets with the remainder, reflecting all other expenses were $13.4 billion, down 2% and 6% on sequential basis. The combination of revenue growth and expense decline drove positive operating leverage for the firm and the majority of our businesses. Cost of credit was $2.5 billion, primarily driven by higher card net credit losses, which were partially offset by a CR releases in all businesses except USPP where we built for loan growth.
At the end of the quarter, we had nearly $22 billion in total reserves for the reserved funded loan ratio of approximate the 2.7%. On slide 7, we show the expense trend over the past five quarters. This quarter, we reported expenses of $13.4 billion, down 2% and 6% sequentially, which includes the $136 million civil money penalties imposed by the Fed and OCC earlier this week. The decrease in expenses was primarily driven by savings associated with our organizational simplification, stranded cost reduction and lower repositioning costs, []
Partially offset by continued investment in transformation and the third and the OCC penalties . As we said over the past few months will come continued to invest in the transformation and technology to modernize our operations and risk and control infrastructure. We expect these investments to offset some of our sales and head count reduction going forward. However, based on what we know today, we will likely be at the higher end of the expense guidance range, excluding the FDIC special assessment and the civil money penalty.
With that said, we will, of course, continue to look for opportunities to absorb the civil money penalties, Before going into the balance sheet and the business results for the quarter. I'd like to ask, we'll give more color on the transformation and address with the Fed in OCC announced wins there. We made good progress in our transformation in certain areas over the last few years, and I want to highlight some of those areas before discussing the announcements.
First wholesale credit loan operations, where we implemented a consistent and operating model and consolidated multiple system with enhanced technology . This is not only reduce risks were enhanced operating efficiency and the client experience. We've also made improvements in risk and compliance as we enhanced our risk assessment and technology capabilities to increase automation for monitoring .
And in data. While there's a lot more to do who stood up a data governance process and streamline our data architecture for ultimately facilitate straight through process. Overall, we've improved risk management and consolidated and upgraded systems and platforms to improve our resiliency. These efforts represent meaningful example of how we're making progress against our transformation milestones. That said, we have fallen short and data quality management, particularly related to regulatory reporting, which we've acknowledged publicly since the beginning of the year.
As such, we've begun to put additional investments in resources in place. So not only address data quality management related to regulatory reporting and data governance were also stress testing capabilities, including [] and resolution recovered. We also reprioritize our efforts to ensure we're focused on data that impact these reports. f irst.
We take this feedback from our regulators very seriously, and we're committed to allocating all the resources necessary to meet your expectations.
Now turning back to the quarterly results, slide 9, we show net interest income deposits and loans were off peak to sequential variance. In the second quarter. Net interest income was roughly flat, excluding Markets net interest income was down 3%, largely driven by the impact of foreign exchange translation, seasonally lower revolving (audio in progress) card back currencies and lower interest rates in Argentina, partially offset by higher deposit spreads in well. Average loans were roughly flat as growth in cards in Mexico, consumer was largely offset by slight declines across business.
And average deposits decreased by 1%, largely driven by seasonal outflows and transfers to investments in wealth as well as non-operational outflows in TTS.
Here. On Slide 10, we show key consumer and corporate credit metrics, which reflect our disciplined risk appetite framework .Across our card portfolios a pproximately 86% of our card loans to consumers with fiber scores of 660 or higher. And while we continue to see an overall resilient US consumer, we also continue to see a divergence in performance and behavior across FICO and income[] . When we look across our consumer clients, only the highest income quartile has more savings than they did at the beginning of 2019. And it is the over 745 days for customers that are driving the spend growth and maintaining high payment rates. Motorcycle brand customers are seeing sharp drops in payment rates and borrowing more as they are more acutely impacted by high inflation and interest rates.
That said, as we will discuss later, we're seeing signs of stabilization in delinquency performance across our cards portfolio, and we've taken this all into account in our reserving. And we remain well reserved with a reserve for funded loan ratio of 8.1% for our [track record for failure,]
Our corporate portfolio is largely investment grade at approximately 82% as of the second quarter, and we saw a nearly $500 million sequential decrease in corporate non-accrual loans, largely driven by upgrades and repayments. Additionally, this quarter, we saw an improvement in our macro assumptions driven by our HPI oil prices and equity market valuations. And our credit loss reserves continue to incorporate a scenario weighted average unemployment rate of nearly 5% and the downside unemployment rate of nearly 7%.
As such, we feel very comfortable with the nearly $22 billion of reserves that we have in the current environment. (audio in progress)
Turning to slide 11, heavy capital and liquidity. It is this strength that allows us to support clients through periods of uncertainty and volatility, our balance sheet reflection of our risk appetite strategy and diversified business model. Our $1.3 trillion deposit base is well diversified across regions, industries, customers and account types. The majority of our deposits are core products at $807 billion and spend 90 countries. And as you heard at the services Investor Day, most of these deposits are held in operating accounts that are crucial to our clients on their daily operations around the world, making them operational in nature and therefore, very stable.
The majority of our remaining deposits about quarter $4 billion are well diversified across the private bank, Citigold , retail and wealth and work offering as well as across regions and product. Our total deposits 68%, a US-dollar denominated with the remainder spanning over 60 currency. Our asset mix also reflects our strong risk appetite framework. Our $688 billion loan portfolio is well diversified across consumer and corporate loans and about one-third of our book balance sheet is held in cash and high quality short duration investments securities that contribute to our approximately $900 billion of available liquidity resources. We continue to feel very good about the strength of our balance sheet and the quality of our assets and liabilities, which position us to be a source of strength for the industry. And importantly for our clients.
On slide 12, we show a sequential walk to provide more detail on the drivers of our CET 1 ratio. This quarter. We ended the quarter with a preliminary 13.6% CET1 capital ratio approximately 130 basis points or approximately $15 billion, above our current regulatory capital requirement of 12.3%.
We expect our regulatory capital requirement to decreased to 12.1% as of October 1, which incorporates the reduction in our stress capital buffer from 4.3% to the indicative SC. being a 4.1%. We announced couple of weeks ago, we were pleased to see the improvement in our defense results and the corresponding reduction in our SCB. That said, even with the reduction of capital requirement does not yet fully reflect our simplification efforts, the benefits of our transformation or the full execution of our strategy, all of which we expect to reduce our capital requirements over time.
And as a reminder, we announced an increase to our common dividend from $0.53 per share to $0.56 per share following the SCB results. And as Jane mentioned earlier, we plan on doing $1 billion of buybacks this quarter.
So now turning to slide 13, before I get into the businesses. As a reminder, in the fourth quarter of last year, we implemented a revenue sharing arrangement within banking and between banking services and markets to reflect the benefit the 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 3% this quarter, reflecting continued underlying momentum across both CTS and Securities Services. Net interest income was down 1%, largely driven by lower earnings on our net investment in Argentina, partially offset by the benefit of higher US and non-US interest rates relative to the prior year period.
Non-interest revenue increased 11%, driven by continued strength across underlying fee drivers as well as a smaller impact from currency devaluation in Argentina, []
The underlying growth in both businesses as a result of our continued investment in product innovation, client experience and platform modernization that we highlighted during our services Investor Day last month. Expenses increased 9%, largely driven by in Argentina related transaction tax expense, a legal settlement expense and continued investments in product innovation and technology.
Cost of credit was a benefit of $27 million, driven by an ACO release in the quarter. Average loans were up 3%, primarily driven by continued demand for export and agency finance, particularly in Asia, as well as working capital loans to corporate and commercial clients i n Latin America and Asia.
Average deposits were down 1%, driven by non-operating deposit outflows. At the same time, we continue to see good at operating deposit inflows. Net income was approximately $1.5 billion and services continues to deliver a high ROTCE. coming in at 23.8% for the quarter.
On slide 14, we show the results for markets for the second quarter. Markets revenues were up 6%. Fixed income revenues decreased 3%, driven rates and currencies, which were down 11% on the back of lower volatility and tighter spreads. (audio in progress) This was partially offset by strength in spread products in the Merrill Lynch and by continued loan growth and higher securitization underwriting fees. In addition to a benefit from the B2B exchange offer, we continue to see good underlying momentum in equity, primarily driven by equity derivatives, and we continue to make progress in prime with balances up approximately 18%.
Expenses decreased 1%, driven by productivity savings, partially offset by higher volume-related expenses. Foster credit was a benefit of $11 million as at ACR released more than offset net credit loss. Average loans increased 11%, largely driven by asset-backed lending and spread products. Average trading assets increased 12%, largely driven by higher demand for treasuries and mortgage-backed securities . Markets generated positive operating leverage and delivered net income of approximately $1.4 billion with an ROTCE. of 10.7%.
On slide 15, we show the results for banking. For the second quarter. Banking revenues increased 38%, driven by growth in investment banking and corporate lending. Investment banking revenues increased 60%, driven by strength across capital markets and advisory. Given favorable market conditions. CCM continued to benefit from strong issuance activity is mainly an investment grade as issuers continued to de-risk funding plans in advance of what could be a more volatile second half in the context of a number of important global elections as well as the macro environment .
In ECM, excluding China A-shares, we're seeing a pickup in IPO activity led by the US as well as continued convertible issuanc e as issuers take advantage of strong equity market performance and expectations for rates to be higher for longer. And in advisory, we're seeing revenues from the relatively low announced activity in 2023 coming to fruition as those transactions close.
Year to date. And in the quarter, we gained share across ECM, DCM and advisory, particularly in technology where we've been investing. Corporate Lending revenues, excluding mark-to-market on loan hedges, increased (audio in progress) 7%, largely driven by higher revenue share. We generated positive operating leverage again this quarter as expenses decreased 10%, primarily driven by actions taken to rightsize the expense base.
[Faster] credit was a benefit of $32 million, driven by an ACO release, reflecting an improvement in the macroeconomic outlook, partially offset by net credit loss. Average loans decreased 4% as we maintain strict discipline around returns combined with lower overall demand for credit, net income was $406 million, and our ROTCE. was 7.5% for the quarter.
On slide 16, we show the results for wealth. The second quarter wealth revenues increased 2%, driven by 13% increase in NIR. from higher investment fee revenues, partially offset by a 4% decrease in NII from higher mortgage funding costs. We continue to see good momentum in, non-interest revenue benefited from double digit client investment assets growth both in North America and internationally, driven by net new client investment assets as well as market valuation.
Expenses were down 4%, driven by the initial benefit of expense reductions as we rightsize the workforce. It's an expense base. Foster credit was a benefit of $9 million as an ACR release more than offset net credit loss. Preliminary end-of-period client balances increased 9%, driven by higher client investment assets as well as higher deposits. Average loans were flat as we continue to optimize capital use. Average deposits increased 2%, largely (audio in progress) reflecting the transport relationships and associated deposits from USPB., partially offset by a show on field investment, our net new entire well generating leverage this quarter and delivered net income of $210 million with an ROTCE of 6.4% for the quarter.
On slide 17, we show the results for US Personal Banking. For the second quarter, US Personal Banking revenues increased 6%, driven by NII growth of 5% and lower partner payments. Branded Cards, revenues increased 8%, driven by interest earning balanced growth of 9% as payment rates continue to moderate, and we continue to see growth in spend volume up 3%, primarily driven by customers with FICO scores of seven 40 or higher retail services revenues increased 6%, primarily driven by lower payments from city to our partners due to higher net credit losses and interest earning balances grew 8%. Retail banking revenues increased 3%, driven by higher deposit spreads as well as mortgage and installment loan growth. USPB. also generated positive operating leverage this quarter with expenses down 2%, driven by lower technology and compensation costs, partially offset by higher volume related expenses. Cost of credit increased to $2.3 billion of one point and a strike deals this quarter.
Faster card loan vintages that were originated over the last few years are all maturing. at the same time, These vintages were delayed in their maturation due to the unprecedented levels of government stimulus during the pandemic. Second, we continue to see seasonally higher NPLs in the second quarter. Third, certain pockets of customers continue to be impacted by persistent inflation and higher interest rates resulting in higher losses.
However, across both portfolios, we are seeing signs of stabilization in delinquency performance, but we will continue to watch the impact of persistent inflation and high interest rates as the year progresses. Despite these factors, we still expect branded cards to be in the 3.5% to 4% NCLrange for the full year and retail services to be at the high end of the range of 5.75% to 6.25%. Average deposits decreased 18% as the transfer of relationship and the associated deposits to our wealth business more than offset the underlying growth.
Net income was $121 billion, (audio in progress) our ROTCE. for the quarter was 1.9%. As we said before, for and efficient high return over the medium term.
On slide 18, we show results for all other on a managed basis, which includes corporate, other and legacy franchises and excludes divestiture related items. Revenues decreased 22%, primarily driven by the closed exit and wind down and higher funding costs, partially offset by growth in Mexico as well as the impact from the B2B exchange offer. And expenses decreased 7%, primarily driven by closed exit and wind down. Slide 19 shows our full year 2024 outlook and medium term guidance, both of which remain unchanged. We continue to remain laser-focused on executing on our transformation and enhancing the business's performance. And while we record as a lot more to do on transformation, we are pleased with the progress that we're making towards our 2024 and commited third-partythese target.
Jane and I would be happy to take your questions.
Question and Answer Session
Operator
(Operator Instructions)
Mike Mayo with Wells Fargo.
Mike Mayo
Hi. Could you elaborate more on the amended consent order? Jane, you said it was a disappointing to have gotten that week. It's almost four years into the consent order and a lot of it why hasn't been resolved and what time? And that's the last column and maybe a little bit more on the winter onto I mean, you have what, 12,000 people for. I have a problem billions dollars, but it's not enough people a lot of money. You need to look at it in a different way. Are you not talking the same line? We have John Dugan, Azure Lead Independent Director, OCC. And it seems like you guys report card, I guess you passed overall. They went out of the way to say some nice things that looks like you got the mine grades and in data and regulatory management. So your confidence going to be resolved, but it's already been for years and there hasn't been resolved. So what is it going to take from here? And how can you resolve the regulatory concerns while continuing are serving shareholders better? And then the wind column centered So nebulous as back office, where are you achieving? You mentioned some items, but you can put more meat on those bones. Thanks.
Jane Fraser
Yes thank you, Mike. That's a few different parts of that. So let's let's start by just taking a step back on our transformation is addressing decades of underinvestment in large part subsidies, infrastructure and in our risk and control environment. And when you unpack that, there's areas where we had an absence of in-force enterprise-wide standards and got and governance, we've had a siloed organization that's prevented scale, a culture where a lot of groups are allowed to solve problems in the same problem in different ways fragmented tech platforms, manual processes and controls and a weak first line of defense to fuse subject matter experts. So this is a massive body of work that goes well beyond the consent order. And this is not all city putting in Band-Aids come. This is City tackling the root issues head on. And it's a multiyear undertaking, as we've talked about, and you saw that statement by one of our regulators this week, we have made meaningful progress on our transformation to put excuse me and on our simplification.
Mark Mason
Y es, and so as James says, the progress that we've that we've made it spans multiple parts of the consent order and transformation work. Remember that consent order transformation work includes risk. It includes controls, it includes compliance. It includes data and data related to the right military reporting. And we've got evidence and proof points of progress against all of those things.
Jane Fraser
Thank you, Mark. And so transforming to answer your question about how the how do you think you said and serve our investors. At the same time, transforming City will drive benefits for our shareholders, our clients and our regulators. This business, not mutually exclusive, at the beginning of the year, we honed in on two priorities the transformation and improving our business performance. And we are able to do so because we've largely cleared the decks. We have a clear focused strategy. We've executed the divestitures. We've got a much simpler organization. So we can focus on these two priorities and we are able to do both. You can see that in our results again this quarter, multiple solid proof points on the execution of strategy, and we know what we need to do on both fronts. We have plans in place from the transformation and on the strategy, and we're executing against some we have been and we will be transparent when we have issues and how we are addressing them.
Mark Mason
Just to add a couple of data points to that, Mike, you've heard us mention some of these before, but we've retired platforms. We've reduced the number of data centers. Platforms are down some 300. We moved from 39 corporate loan platforms down to south of 20. We've got 20 cash equities execution platforms down to one. We reduced the six reporting ledgers down to 1, 11 sanction platforms down to one. And so we've been making considerable progress over the past last couple of years. With that said, there's a lot more work. Do you think about 30, we've got 11,000 global total read reports, right? So we've got to make sure that the data that's going into those reports is the quality of the data that we wanted to be. But more importantly that we're doing it efficiently, that it doesn't take thousands of people to [reconsole,] that information. And so this is an end to end process and the way we're approaching it. one example is the 2015 to a liquidity report that we have. It has 750,000 lines of data. And that data is it's important again that we're efficiently collecting it from multiple systems with standards and governance that ensures it's of the quality that we wanted to be without, again having to have manual activities supporting it.
Operator
Glenn Schorr, Evercore
Glenn Schorr
Hi, thank you. So Mark. I heard your comments on credit this year. I'm talking US presence, personal banking. I heard your comments for credit. The rest of this year. And I've been kind of physician knows that you're very conservative reserves, but right now you put up a 3% margin. Credit costs are almost half of what revenues are in the space?
Yes. My question is, as we roll forward in a slowing economy with likely a little bit lower some rate cuts, how does the P&L evolves? How does it improve from here? Because can we be expecting of credit costs to come in and a slowing economy? And I'm just trying to figure out the path the path forward for i t could be impactful. It used to be the taxes to leave you today?
Mark Mason
Yes. Look, like I said, we do think that there is certainly upside to USPB. We're looking for that upside in the medium term. Targets that we've set for ourselves. You've got to remember that when you look at the quarter and you look at the half, frankly that we're still in a period where we're seeing the normalization of the cost of credit.
And as I mentioned in the prepared remarks, you have kind of a compounding effect of multiple vintages now maturing at the same time that's playing through the P&L. And that's not just true for us. That's true for others as well. And so we'd expect and we are we do believe we're seeing some signs of a cresting when you look at delinquencies now. And so we would expect that was losses start to normalize and loss rates start to come down. You know, as we go go towards the medium term, []
At the same time, we're investing in the business and we're looking to see continued growth in volume and on the top line. And the combination of those things as we drive towards the medium term will help us to deliver both the top line growth and certainly improve returns from where we sit today. and in line with what we've guided to. So it's a combination of top line performance from volume and obviously the environment plays into that. But we feel like we've got a reasonable assumption around top line growth, their cost of credit normalizing continued discipline on the expense line, allowing for us to improve returns or cross that USPB. business.
Glenn Schorr
Okay. I appreciate all that. One quickie on DCM had amazingly good performance. There's been plenty of conversation about pull forward this year on just refi driving like three quarters of the activity. Could you just help us think through the second half when thinking about DCM, and just to make sure that we don't like start monitoring (inaudible) into perpetuity.
Jane Fraser
Look I think when we think about the back half of '24, we're going to see a different mix of activity in banking. We do still expect demand to be quite strong across our capital market products because you've got a wall of maturing debt securities coming up in the second half that carry [audience] for a couple of years but we did see some clients accelerating issuances into the first half, getting ahead of potential market volatility. So if you put it all together, I think we expect the rate environment and the financing market to continue to become more accommodative as well as to continue deal-making with M&A being a bit larger in the overall mix, although some of the regulatory elements have put a [damper] on part of that.
Mark Mason
The only thing I'd add to that is, look, the wallet for the year is obviously going to depend on a couple of things. So one, the return of a more normalized IPO market. Two, the direction and volatility of interest rate. The ongoing global conflicts that we're all seeing and witnessing and then finally, as Jane mentioned in her remarks, the elections and what those outcomes look like, not just in the US but abroad. And so there are a number of factors there that will will play to the wallet. But as we said, we believe we're well positioned to be there to serve our clients and do so in a way that makes good economic sense.
Operator
Jim Mitchell, Seaport Global.
Jim Mitchell
Just Mark, maybe on NII down almost 4% year over year seemed a little bit more than the guidance of down modestly for the year. So can you discuss sort of the puts and takes this quarter and how we should think about the quarterly trajectory for the rest of the year?
Mark Mason
Yeah. So I'd say a couple of things. So one, as I mentioned in the quarter, and if you look -- you see it on slide 9, ex-markets, we're down about 3%. That's largely driven by some FX translation that played through buy also some seasonally lower revolving card balances and then lower interest rates in Argentina. And what that is is in Argentina, we have capital there. The policy rate was adjusted downward. And as that happened, we obviously earn less on that capital that flows through the NII line.
As I think about the back half of the year and the guidance we have of modestly down there, a couple of puts and takes to keep in mind. So one is going to be rates, right? So as I think about the higher yield that we can earn on reinvestment, that will be a tailwind that plays through from an NII point of view.
The second would be volume growth, particularly in our card loans portfolio. And we do expect to see continued volume growth across the -- certainly the branded portfolio. And so that will be another tailwind for us on the NII line.
In terms of the headwinds, you've got the lower NII earned in Argentina from rates that'll continue to play through. We've got assumed higher average betas in 2024, specifically on the non-US side. We still have in our forecast the impact of CFPB late fees. So assuming that that goes into effect for this year, that will have an impact and it's in the forecast. And then the impact of lost NII from the exit that we have. And so the combination of those things will probably mean that NII in the back half of the year is a little bit higher than the first half, but again, consistent with the guidance that we gave of modestly down.
Jim Mitchell
That' helpful.
And maybe just quickly, just a similar question on expenses better than expected this quarter, but there was no restructuring or repositioning charges. I think to get to the high end of your range, you'd have to be up a little bit in the back half from 2Q run rate. Is that because you expect more repositioning, restructuring, in the second half? Or maybe just talk through expense trajectory from here?
Mark Mason
Yeah. So that's right. When I talked about at the first quarter, I talked about a downward trend for each of the quarters after Q1. The second quarter came in a bit lower than we were expecting. I'm sticking with the guidance. And it does mean that the back half of the year will likely come in -- will come in higher than the second quarter.
That's a combination of a couple of things, including on the pace of hiring and investment that we will do in the transformation work that has to be done. It also includes repositioning charges that we might take or need to take as we continue to work through our businesses across the firm and the franchise.
And then the second quarter -- or the second quarter did have a one-time or so in some delayed spending that will pick up in the third and fourth quarter around advertising and marketing and some of the other line items. So yes, the second quarter will -- the third and fourth quarter, the back half will be higher than the second quarter, but consistent with the guidance that I've given.
Operator
Erika Najarian, UBS.
Erika Najarian
I have two questions and I'll [answer the] first one on expenses first, since it's a good follow-up to the previous. Mark, just to clarify, I have to say take the highest end of your range at $[53.8] billion. Just trying to think about how consensus will move. So we take that $53.8 billion and then add the $[285] of FDIC expenses year to date so far and add the civil money penalties of $136 million, so that gets us to $[54.2] billion for the year and any other repositioning charges in the second half of the year would already be included in the $53.8 billion?
Mark Mason
So yes, the answer to your last part of your question is, yes. So in the range that I've given $53.5 billion to $53.8 billion, that includes our estimate for the full year of repositioning and any restructuring charges. That range excludes the FDIC special assessment that we saw earlier in the year, and it excludes CMP of $136 million.
Erika Najarian
Got it.
And my second question is for Jane, and I'm sure you're getting [tons] of the question on capital return. So you're buying back $1 billion (technical difficulty) or you plan to buy back $1 billion this quarter. It looks like you didn't buy back any in the second quarter and I'm asking this question in this context because consensus has a buyback of nearly $1 billion in the fourth quarter and staying at this rate for the first half of next year and ramping higher?
And I guess is the $1 billion number, a catch-up pace because you didn't buyback any in the second quarter. And I fully appreciate that you also have the Banamex IPO coming, which is different from peers that are also waiting for (inaudible) clarification. But I'm just wondering, do we need to wait for that box -- for that Banamex IPO for the company to feel comfortable moving away from that quarter-to-quarter guidance. And also, of course, I just wanted to readdress the beginning of the question when I asked specifically about the pace.
Jane Fraser
Okay, so we are not going to be giving guidance going forward around our buybacks. We are going to continue to give quarterly and make it a quarterly determination as to the level. And a lot of that is to do with the uncertainty about the forthcoming regulatory changes. I think we were delighted to see a slight reduction in our stress capital buffer, reflecting the financial strength and resiliency of our business model. And also good to see the benefits of our strategy playing out. But with the regulatory changes uncertain, we are -- that's one of the major factors for us to continue with the quarterly guidance.
Mark Mason
Yeah, that's right.
On the first part of your question, Erika, I'd say, look, we were in discussions with our regulators and we made a prudent call as it relates to buybacks in the quarter for Q2. So Q3, as we talked about, we would be at $1 billion, and that should not be necessarily viewed as a run rate level. As Jane mentioned, we'll take it quarter by quarter from here.
Operator
Gerard Cassidy, RBC.
Gerard Cassidy
Mark, regarding the comments you made about the higher credit losses, the three factors that you gave us. Can you also talk about if this was a factor at all for you folks. Was there any FICO score inflation back during the pandemic that might be playing into these credit losses? And as part of the credit card question, you mentioned the CFPB -- the fees that you -- have factored them, the lower fees, you factor that into your forward look. Where do we stand on that? Do you guys have any color on that as well?
Mark Mason
Yeah, so on the first part of the question, look, we all have talked about in the past the prospect of FICO inflation factor in the COVID period of time. We've been very, very focused on ensuring that acquisitions that we've made have been appropriately analyzed in the underwriting of that to get comfortable with the quality of new customers that we've been bringing on in light of the environment, we have looked at moving towards higher FICO scores for new account acquisitions.
But as I think about what we're seeing now there is that dichotomy that I mentioned, where we have the higher FICO score customers that are driving the spend growth and that, frankly have still continued strong balances and savings and it's really the lower FICO band customers where we're seeing the sharper drop in payment rates and more borrowing and so the FICO inflation has effectively fizzled out when we look at the mix and dynamic of the customer portfolio that we have at this point.
And in terms of CFPB late fees, I don't have an update on that. Like I said, we've built in an assumption in our forecast but in terms of the timing, I don't have a formal update on the certainty of it.
Operator
Ken Usdin, Jefferies.
Ken Usdin
Hy, Mark. Talking about the NII outlook and the fact that now we've got a little bit of a discrepancy starting between US rates, maybe higher for longer, and then the beginnings of some of the non-US curve starting to at least put forth their first cut. I know we've got that good chart that you have in the Q's about the relative contributions. Can you just help us understand a little bit of like just generally how you're thinking through that discrepancy and how that informs the difference between US-related NII and non-US-related NII as you go forward?
Mark Mason
Yeah. Thank you.
So look, I think that as we look at it out through the -- certainly through the medium term, we expect to see continued NII growth at obviously a modest level, certainly lower than what we've seen historically. And that's in large part because -- or in part I should say, because of how we've been managing the balance sheet and that has allowed for us to reinvest as securities have rolled off and earn a higher yield on them relative to what we were earning in some instances, they were five-year terms on some of these investments.
And so we still think there's some upside from a reinvestment point of view. The point you make around non-US dollar or US rates coming off that will play through a little bit as we think about the beta increases that we're expecting outside of the US. And so we would assume that we have [higher betas tick-up] outside of the US if rates come off in a more substantive way than we could see a little less NII pressure than we're forecasting there.
But net-net, as I think about a combination of volume growth that we're expecting between loans and deposits over that medium term, the higher yield we can earn on our assets combined with on, the pricing capabilities that we have across the portfolio, offsetting some of that beta, we believe will have continued NII growth.
As I think about what I often point to in terms of the IRE analysis. And you have to remember that that is a shock to the current balance sheet and it assumes that the full curve is moving simultaneously cross currencies. And in that case, the 100-basis-point parallel shift downward would be a negative $1.6 billion with about $1.03 billion of that coming from non-US dollar. But again, it does assume that all of those currencies come down at the same time and doesn't account for the rebalancing of the balance sheet and things that I mentioned, like the reinvestment, higher yields that we'd be able to [earn].
Ken Usdin
Got it. Okay.
And just one follow-up on the OCC amendment and that's specifically related to the resource review plan. Do you have a line of sight on how long that will take you guys to finish? Because it seems like -- and is that what we should be thinking about in terms of just understanding like what's the side of what you need to get done in terms of the other language that's written in the order.
Jane Fraser
Ken, look. The resource review plan is just that it's a plan to ensure that we have sufficient resources allocated towards achieving a timely and sustainable compliance with the order. Essentially, if an area is delayed or looking as if it could be, we'll determine what additional resourcing, if any is required to get back on track, and then we'll share that with the OCC in a more formalized way than we do today. We obviously review this pretty constantly ourselves.
We're already working on the plan. After (technical difficulty) to the OCC, (technical difficulty) it will be a confer -- it will be confidential supervisory information that we can't disclose. So we won't be able to tell you that the plan is -- whether the plan -- what the nature of the plant is going to be. But it is it won't be much more complicated than what we talked about (multiple speakers) and we're expecting to get a bit of -- we're not expecting this to take long.
Operator
Betsy Graseck, Morgan Stanley.
Betsy Graseck
Okay, so I know we talked a lot about expenses. I just have one overarching question here which is on how we should think about the path of expenses between now and the medium term as we have come quite a long way in the simplification process.
Maybe you could give us a sense as to how far along simplification impact on expenses we are and overlapping with the regulatory requirements to these net out or are we skewed a little bit more towards regulatory requirements being a bit heavier than what's left on simplification from here?
Thanks.
Mark Mason
So thank you, Betsy.
I guess I'd say a couple of things. So I think we've said in the past, so the target for the medium term, I think 2026 is somewhere around $51 billion to $53 billion of expenses. As we've said, we'll have about a $1.5 billion in savings related to the restructuring that we've done and another $500 million to $1 billion related to net expense reductions from eliminating the stranded costs as well as additional productivity over that medium-term period.
And so we've made -- I think, very good headway as Jane has mentioned in the org simplification and the restructuring charges associated with that, those saves will have started to generate, some of those saves in the early part of that, meaning this year will likely be offset by continued investment that we're making in areas of the business like transformation, but also in business-led or -driven growth. And you should expect in terms of the trend that we would have a downward trend towards 2026 and achieving that range.
Jane Fraser
And I just want to reiterate, we remain confident that we will meet our 11% to 12% ROTCE target over the medium term. And we've got the -- we have the ability to manage the different elements we've been talking about today, making sure that we're investing sufficient resources into the transformation, so we can be on track with that as well as in our businesses as well as the return of capital to our shareholders and so we feel confident around that and good about that we can manage this.
Mark Mason
Yeah, I think that's a great point, Jane.
Look, the reality is as was pointed out earlier, we spent about $3 billion last year, a little bit under that on the transformation-related work. And the plan is called for us to spend a little bit more than that this year. And frankly, in the first half of the year, as we work through the transformation work and some of the things that Jane and I have mentioned earlier in the year that we've been focused on live data and data regulation -- and data related to regulatory reporting, we've had to spend more than we had planned for in the first half, right?
And we've done that and we funded that. We've been able to find productivity opportunities that allow for us to still stay within the guidance that we've given for the full year. So we are managing this entire expense base, right? So not the whole $53 billion-plus of it. We are actively managing that with an eye towards what's required from a transformation point of view, to keep it on track, to accelerate in areas where we are behind, and to shore up areas where we are tracking in accordance to what the order requires and where are there other inefficiencies that can allow for us to free up the expense base.
And so things like the work that Andy Sieg has done with the finance team around that expense base and finding efficiencies there are opportunities that we've been able to [achieve] out of the business, things that we have done in parts of USPB and that we have continued to get up there in parts of banking, which you see in the down 10% this quarter, our areas where we've been keenly focused on where they're duplicative roles, where they're inefficient processes that we can actually drive greater efficiency out of. So long-winded way of saying and we understand the expense guidance that we've given. We also understand and stress the importance of funding the transformation with what's required and we're doing both.
Betsy Graseck
Okay, great. Thank you very much. Appreciate that.
Operator
Vivek Juneja, JPMorgan.
Vivek Juneja
Let me just clarify this, Mark and Jane just to make sure that we all have it right.
The [$53.5] billion to $53.8 billion does not include anything thus far on what do you think you may need to spend on the resource review plan, meaning what additional resources you would have to put to fix the consent order. Am I right there?
Jane Fraser
No, you're not right. So as you've heard us talk about, Vivek for a while now that we knew there [would be] areas that we were behind now elements of our transformation program and that we began addressing those and making the investments some of that is in people, some of that is in technology spend. It's using different tools and capabilities to get areas addressed earlier. We began that earlier in the year. And you saw that acknowledge as well by our regulators who pointed to the fact that we've already begun addressing the areas that we're behind.
Mark?
Mark Mason
That's right, Jane.
And what you have heard is that despite having to spend more some $250 million or so more, we're not changing the guidance, right? And so we have -- as Jane mentioned, we have worked on areas already that we've needed to and we have looked for ways to absorb that and are doing so within our guide.
Vivek Juneja
Okay. So going forward, even though this plan is still to be sort of put together and approved by the regulators, we should not expect any change to this expense.
Mark Mason
Look, the plan -- the resource review plan, as Jane mentioned, is what we're working through now with the regulators. That will be a process for demonstrating to them that we are spending and allocating the appropriate resources to accomplishing the commitments that we have. Appropriate resources can range from people, to technology, to enhancing our processes, and ensuring better execution.
If you think about what that will entail, it will entail areas where we are delayed or behind as we identify those areas being able to tease out the root cause of any delay and ensure that we've got proper funding, allocated to get it back on track. And that's me framing out how I think about what something like this might look like.
And so what we're saying is that if we identify issues in the quarters to come that we haven't identified already that's the process we're going to apply to those issues and as you've heard us say repeatedly, we're going to spend whatever is necessary to then get those things back on track and as we've done thus far this year, we're going to look for opportunities to absorb those headwinds.
I hope that's clear.
Operator
Matt O'Connor, Deutsche Bank.
Matt O'Connor
Hi. Apologies if I missed it in the opening remarks, but what drove the decline in credit card revenues from 1Q to 2Q? It looks like they're down about 6% in aggregate, even though average loans went up, spending went up. What was the driver of that?
Mark Mason
Credit card revenues -- seasonality (multiple speakers)--
Jane Fraser
Yeah, seasonality (multiple speakers)--
Mark Mason
Seasonality playing through there (multiple speakers) yeah, sequentially.
Jane Fraser
I think if you look year over year, you'll be up to see a pretty common trend there. The consumer is slowing in some of the -- in the spend as Mark had referred to, Matt, but and a lot of the spending and the growth areas we are seeing and the underlying numbers is being driven by the affluent customer.
Mark Mason
Yeah, I think (multiple speakers)--
Matt O'Connor
Okay. And then (multiple speakers)--
Mark Mason
--(multiple speakers) also the dy -- there's also the dynamic on the CRS of the reward on par across the portfolio of rewards playing through from one quarter to the other. So the combination of those things are playing through the revenue line there.
Jane Fraser
But nothing that's particularly worrying us, Matt.
Matt O'Connor
Okay. And then just [separately] on the very early part of the prepared remarks, you talked about the dividends being capped in terms of what can be upstreamed from the bank to the holding company because of the OCC thing that came out this week. Were all intents and purposes like, does that impact how you run the company or subsidiary or impact liquidity or capital. I understood the comment, no change to dividends or buybacks at the holding company, but is there any impact from that that we would notice on the outside?
Thank you.
Jane Fraser
Look, let's be clear. This action does not impact our ability to return capital to our shareholders. The dividends that I referenced just inter-company payments from CBNA to the parent. So don't confuse what a dividend is here and we will -- it's not going to impact how we run the company, the subsidiary, the capital, or the liquidity at all and the dividends are not capped?
Mark Mason
Yeah, I think the -- Jane, that's right.
And I think we let's not lose sight of the purpose of the orders that are there. And the purpose of the orders that are there are to ensure that we're funding and allocating the effort appropriately, right. So the regulators want essentially the same thing we want, right, is for us to get this done, right? And so that is the primary objective.
The reference to the dividending from out of CBNA up to the parent is certainly referenced there between now and establishing that resource review plan. But as Jane mentioned, that does not constrain the parent from doing the things that it would need to do. And as opposed to the -- it's not a cap what it is, is that anything above the debt service of the parent or the preferred dividends and other nondiscretionary obligations would require a non-objection from the OCC.
Jane Fraser
Until the resource plan is agreeing (multiple speakers) and as you'll have seen, the resource plan needs to be submitted within 30 days. And as I indicated, we're working on that one and not anticipating that to be a problem.
Operator
Saul Martinez, HSBC.
Saul Martinez
I guess I just want to follow up on the latter question. I just want to be very clear. So what you're saying is that the requirement that CBNA receive a non-objection to -- before dividend upstream to the parent. That does not impact how you think about your capital flexibility, how you think about -- it doesn't restrict you in any way and shouldn't impact, for example, your ability to benefit from, for example, a Basel end-game rule that is soft and for some of the benefits, Mark, that you've talked about in terms of simplification. So you don't see this impacting your ongoing level of capital flexibility in your ability to repurchase stock going forward, if some of these things actually do play out.
Mark Mason
No (multiple speakers) thank you.
Saul Martinez
A second question on I just wanted to follow up on USPB. I mean, I still -- I get the point that you're seeing a normalization in losses in cards. But even if I adjust for reserve builds, you (technical difficulty) single digits. I would think even at these [NCO] levels, your cards business is pretty profitable. Your [shale] player, when you're above pre-pandemic levels, but not (technical difficulty) it does seem like it's that much higher by dramatic amounts.
It would seem to imply that the retail bank is a huge drag on profitability, even maybe even losing money, I don't know, but can you just talk about what you can do to improve the retail bank profitability and just give any more color that you can in terms of the path to get to that high-teen [ROC] you talked about?
Jane Fraser
Yeah, let me kick off that. And clearly, we're very focused on improving the returns in USPB to get us to the high-teens level over the medium term. And you've seen us generating healthy positive operating leverage this quarter. We've had a number of quarters of good revenue growth.
And as Mark said, we're at the low point of the credit cycle and we knew this year, we would see the pressure on returns from the elevated NCLs and some of the industry headwinds you talked about. But as the NCL rates approach steady-state levels and the mitigating actions that all of us have been putting in place against the industry headwinds as those take hold, we expect the returns will improve and support the medium -- the firm-wide medium term target.
In the retail bank, we're continuing to focus on growing share in our six core markets. And we're doing that leveraging our physical and digital assets. And it plays an important role in enabling the wealth continuum and the growth that we are looking at in our wealth franchise. We're continuing to improve our operating efficiency, being very disciplined in expense management and managing carefully the branch and digital productivity of the retail bank network. But the -- we're at the high point of the credit cycle. It's driving the low point for USPB and as I said in my remarks, we're expecting to see those returns improve from here.
Operator
Steven Chubak, Wolfe Research.
Steven Chubak
So Mark, I have a fairly technical question on the DTA utilization and specifically the NOLs. The deduction is still fairly significant at $12 billion and it roughly equates to about 10% of your market cap. And the good news here I suppose is that it should come back into capital over time, but we've seen very little utilization over the past two years despite the firm being profitable. And so I wanted to better understand is what's constraining your ability to utilize those DTAs? And are there catalysts on the horizon that can actually help accelerate that utilization beyond organic earnings generation?
Mark Mason
Yeah. Thank you.
So I'm going to give you a very simple answer to a very complicated question. It really comes down to driving US income, right? And so we are focused on not just all of the things that we've mentioned, but driving higher income in the US that allows for us to utilize the disallowed DTA. We saw some of that in the quarter, and we expect to see more of it as we move through the medium term. But that is the major driver of that utilization.
Jane Fraser
And we have many of our business heads very much focused around that opportunity as well. So winning in the US is a very important leg, for example, of the strategy that this is refreshing. Similarly, we see opportunities in -- from the commercial bank, we see it in wealth. We see it in, obviously, in US personal banking and in services. So we're very focused from a business strategy point of view on this, not just from the financial side.
Steven Chubak
Thank you both for that color.
And maybe just a quick follow-up just on the retail services business. We are seeing some evidence that your competitors in this space have been more aggressive leading with pricing effort to win some new mandates. So maybe you could just speak to what you're seeing across the competitors and your appetite or willingness to potentially offer better economics in response to increase competition from some of your peers?
Jane Fraser
Well, I think you'll be delighted to hear that we're very focused on returns rather than just on revenues. So when we enter into discussions with a partner who maybe a new RFP for there that portfolio or looking at new ones such as the one we just agreed with Dillard's. It's all about the returns and the profile of the business rather than the revenue side of things and it's the shift to probably from some of the ways in the past. But I'm very pleased with how disciplined the team has been around this, and we're seeing the benefits of it.
Mark Mason
And that maybe different from what you hear and see from other players in the space. But as Jane mentioned, we're keenly focused on ensuring that yes, we have a good partnership, but that we're generating an appropriate return, that's part of achieving our medium-term targets.
And as you know, since you brought up retail cards, I mean when we think about how CECL works and the reserves you have to establish for these partnerships, we're establishing full lifetime reserves that's on the balance sheet where ultimately we end up splitting those through the partner-sharing economics. So it's another important consideration as we think about expanding and taking on these relationships and renegotiating partnerships to making sure that returns make good sense for us.
Jane Fraser
Yes, and Mark and I have no problem saying no to revenue that doesn't come at the right return and being very disciplined around that.
Operator
Vivek Juneja, JPMorgan.
Vivek Juneja
Hi, sorry. Just to follow up on this whole consent order stuff, Jane.
What do you think this does in terms of timing? How much longer for you to get this past due? Is that are you talking couple of years as of now longer by year? Any sense of that? Any sense of helping us think through that?
Jane Fraser
Look, in terms of the consent order and the areas we've had delays, there are four areas to the consent order. It's risk management. It's data governance. It's around compliance and it's around control. As we've said, we were falling behind and in certain areas related to data and we've been investing to address the areas that we were behind. We also saw an increase in the scope related to regulatory reporting, so we added some more bodies of work there, and we are well underway.
So we are not expecting this to extend the original expectations that we have on when we will complete the body of work for the consent order. We have a target state for the different areas of it. We have the plan to achieve those target states. We'll make the investments necessary to ensure that we do so. We will try and get this done as quickly, but as robustly as possible, and we're doing this by making strategic fixes and investments rather than what I would call the old city way, which is a series of Band-Aids that remediate, but don't actually fix the underlying issue. And that way we are delivering for our shareholders as well as our regulators and our clients because we're putting in this -- we are putting in strategic solutions that will benefit all but I'm not expecting this to change the timeframe.
Operator
Mike Mayo, Wells Fargo.
Mike Mayo
Just two clarifications. So this is a very high profile amendment to the consent order. And I think what I hear you saying that if you can confirm, your risk compliance and controls are again passing grade, it's really the data. And as it relates to the data, you're talking about 11,000 regulatory reports on which had 750,000 lines of data. Is that really the scope of what you need to fix because people see this externally and say, hey, you're failing in terms of overall controls and resiliency. But I think I hear you saying it's really more about just the data and the regulatory reporting, which is important, but more of a slice of broader picture. Is that correct?
Jane Fraser
Yeah, Mike, maybe I just -- maybe I -- you're asking a great and it's an important question. So maybe I try and explain what we -- the data elements because it's an area that Mark and I have pointed to.
So first of all, we use data all over the firm. We've used it to (inaudible) 72 million customer statements every month. Our corporate clients, as you heard about at our service Investor Day access account data real time across multiple countries from CitiDirect and when moving $5 trillion roughly per day for those clients around the world. We trade billions of dollars in a millisecond on our trading platforms. We can see our liquidity positions real-time around the world. This can only be done if you've got pretty pristine data and highly automated ecosystems.
So but what is the transformation doing? What it is doing is simplifying how data moves through the firm. And it is about upgrading the management and governance over those flows. And as I've said, we're doing a strategic overhaul of large parts of our infrastructure.
So what are we doing? We're making sure we're capturing data accurately using smart tools and automation. We'll often talk about this smart system, make sure there's no errors when we book a trade. We've seen our error rate down 85% as a result of it.
We're housing our upstream data into standardized repositories. They are the golden sources and [in-person] data hub, which you've heard me talk about a few times and very golden source now for all of the downstream data use, populating thousands of regulatory reports Mark talked about and other areas.
And what a single repository means is that the data models, the data quality rules, the controls you put in place that govern and manage that data, they all sit in one place rather than being distributed all over the [firm] as they have been historically.
Mark's been investing in building a standardized reporting infrastructure. You've heard us talk about a single full suite reporting ledger versus the six or so reporting ledgers that we had in the past. And we're delivering all of this through consolidated systems, through the automation and streamlining of data flows. So instead of being in multiple pipes, the flows go through single pipes. It's a -- sorry to get a bit plummer on you for a moment. But I think it's important to understand what it is because it's a lot of work. It's a strategic overhaul. It's not a series of tactical fixes.
Where we're behind as we do the work on data, we identify specific issues we need to fix as we execute the plan that we have in place is the more areas to address than we knew back when we did the plan. So we've -- and we've also accelerated to work on improving the accuracy of our regulatory reports, and we increased the scope of this work as well. It's more comprehensive than originally planned.
So what we're doing? We're adding resources and data experts. We're learning from best practices. And we're using some great AI and other data tools that are helping to identify anomalies and data and data flows much quickly. We're also to -- to some of the culture side, we're learning from pilot. How do we accelerate broader deployment at scale across the (technical difficulty) consistent enterprise-wide manner.
So all of these things in the data side are going to enable us to leapfrog competitors, more revenue opportunities, better client service, fewer buffers, drive more efficiencies. And at the end is the end goal here is it becomes a competitive advantage for the firm. That is the data plan. Clearly, there's been a very important element of it related to the consent orders we're behind in a few areas. We're investing. We've already begun that investment as Mark and I've talked about to get it done, we'll get it done.
Mark Mason
And the only thing I'll (multiple speakers)--
Mike Mayo
-- (multiple speakers) real shortfall.
Mark Mason
Sorry, what was that, Maike?
Mike Mayo
I wanted just to say real shortfall after that. So you're doing all this great stuff, but you still fell short, just like one sentence (technical difficulty) despite doing all this great stuff that you described. The regulators still said you didn't get it done. Why after doing all that didn't get it done in the eyes of the regulators? And why will it be fixed now? Just like a one sentence explanation for that if we have it.
Jane Fraser
I always said that a transformation of this magnitude over multiple years would not be linear. We have many steps forward. We have setbacks. We adjust. We learn from them. We move forward and we get a contract.
Mark Mason
And Mike, if I could just put one number into context because you played back the 11,000, which was a number of global regulatory reports to cross the landscape here. They arounde probably 15 to 30 that are core US reports that are pivotal to our US regulators. And a lot of what we're discussing here is about ensuring that we're prioritizing the data that impacts those 15 to 30 reports as we work through this.
Operator
There are no further questions. I'll now turn the call over to Jenn Landis for closing remarks.
Jenn Landis
Thank you all for joining us. Please let us know if you have any follow-up questions.
Thank you.
Operator
This concludes Citi's second quarter 2024 earnings call. You may now disconnect.