citigroup inc. equity research

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

16 February 2017Americas/United States

Equity ResearchLarge Cap Banks

Citigroup Inc. (C)

COMPANY VISIT Rating OUTPERFORMPrice (15-Feb-17, US$) 60.50Target price (US$) 63.0052-week price range (US$) 61.41 - 38.09Market cap (US$ m) 175,775.13Target price is for 12 months.

Research AnalystsSusan Roth Katzke

212 325 [email protected]

Athena Xie212 538 3253

[email protected]

Kenny Jen212 538 8116

[email protected]

Takeaways from our meeting with the CEO of Citi's Global Consumer BankWe recently had the opportunity to spend time with Citigroup’s Global Consumer Banking CEO Stephen Bird. Stephen Bird assumed leadership of the GCB in June of 2015; the business accounts for ~45% and ~40% of our aggregate revenue and EPS forecasts. We came in to the meeting skeptical with respect to organic growth prospects and competitive positioning. Exiting the meeting, we have a better sense for management's vision and strategy and are more confident in infrastructure readiness as well as ability/willingness to invest for growth. We'll keep expectations in check, relying on Card as the driver of near term growth; awaiting proof points with respect to accelerated growth potential in Retail Banking. Our estimates are unchanged and target price stands at $63.■ The Global Consumer Bank (GCB) in 2017… a fraction of its former self,

the GCB is now a more manageable entity, operating in half the countries it once competed, with a narrower product set dominated by Card (~60% of revenues) and Retail Banking; commercial banking is a smaller slice of that pie. Geographically, the business skews toward the U.S. (~60% of revenues), with Mexico and Asia at 15% and 21% of revenues, respectively.

■ Refocused to grow; what's reasonable… Our estimates rely on 2-3% revenue growth for the GCB into 2018. To put this into context, consider that revenues contracted 1% over the five-years through 2016. Our forecast relies on acceleration/the payoff on Citi's investment in Card; it is less reliant, near term, on accelerated growth in Retail Banking.

■ Financial Goals… targeting a 20% ROTCE for the GCB. Realization would be a material improvement from 14.2% in 2016. To be fair, 2016 results included significant investments. Management expects acceleration in earnings growth into the second half of 2017 as last year's investments support better revenue growth and efficiency is further improved; full year 2017 ROTCE is forecast at 15%. Longer term pretax margin improvement will tie to the leverage of technology and the stability of credit costs.

Share price performance

C.N S& P 5 0 0 IN D EX

A p r - 1 6 Ju l - 1 6 O ct - 1 6 Jan - 1 73 0

4 0

5 0

6 0

7 0

On 09-Feb-2017 the S&P 500 INDEX closed at 2307.87Daily Feb11, 2016 - Feb09, 2017, 02/11/16 = US$34.98

Quarterly EPS Q1 Q2 Q3 Q42016A 1.10 1.24 1.24 1.142017E 1.24 1.29 1.31 1.302018E 1.43 1.43 1.46 1.48

Financial and valuation metricsYear 12/16A 12/17E 12/18EEPS (CS adj.) (US$) 4.74 5.15 5.80Prev. EPS (US$) - - -P/E (x) 12.1 11.1 9.9Relative P/E (%) 61 57 57Revenue (US$ m) 69,875.0 70,480.1 71,825.9Preprovision Income (US$ m) 28,459 29,775 31,361Book Value (US$) 74.26 78.49 82.62Tangible book value (US$) 64.57 68.57 72.19ROE (%) 6.5 6.8 7.3ROA (%) 0.76 0.79 0.84

Book Value (Next Qtr., US$) 74.7 Tangible BV (Next Qtr) (US$) 65.08P/BV (x) (Next Qtr.) 0.77 P/TBV (Next Qtr) (x) 0.9Dividend (current, US$) .6 Shares Outstanding (m) 2,905Dividend yield (%) 0.7Source: Company data, Thomson Reuters, Credit Suisse estimates

16 February 2017

Citigroup Inc. (C) 2

Citigroup Inc. (C)Price (15 Feb 2017): US$60.50; Rating: OUTPERFORM; Target Price: US$63.00; Analyst: Susan Roth KatzkeIncome Statement 12/16A 12/17E 12/18ENet interest income 45,616 45,476 45,817Fee income 24,259 25,004 26,009Trading income 15,880 16,230 16,900Total revenue 69,875 70,480 71,826Comp expense - - -Other expense - - -Total expenses 41,416 40,705 40,465Pre-provision profit 28,459 29,775 31,361Loan loss provisions 6,982 7,047 7,299Other non-recurring pre-tax 0 0 0Pre-tax profit 21,477 22,729 24,062Minority interest - - -Net profit (reported) 13,690 14,157 15,104Net profit (adjusted) 13,690 14,157 15,104Balance Sheet 12/16A 12/17E 12/18EGross loans 624,369 618,601 623,444Loan loss reserves 12,060 11,510 11,230Net loans 612,309 607,091 612,213Avg interest earning assets 1,585,456 1,596,585 1,594,855Goodwill & intangibles 26,845 26,234 25,934Total assets 1,817,105 1,800,317 1,814,411Total liabilities 1,590,962 1,572,332 1,588,691Preferred stock 19,253 19,253 19,253Shareholders' equity 226,143 227,985 225,720Key Ratios (%) 12/16A 12/17E 12/18EProfitability and marginsROE 6.5 6.8 7.3CS adj. ROTE 7.5 7.8 8.3ROA 0.76 0.79 0.84NIM 2.88 2.85 2.87EfficiencyEfficiency ratio 59.3 57.8 56.3Balance sheet gearingAsset qualityNet charge offs/Loans 1.0 1.1 1.2Net charge-offs 6,566 6,992 7,378Reserves/Loans 1.1 1.1 1.2Capital ratiosCET1 (B3) 12.5 12.8 12.6Capital distributionShare repurchases, net 9,186 9,075 13,225Dividend payout ratio 9 16 21Repurchase payout ratio 67 64 88Total payout ratio, net 76 80 109Per share 12/16A 12/17E 12/18EShares (wtg avg, mn) 2,888 2,749 2,605EPS (CS Adj.) (US$) 4.74 5.15 5.80Dividend 0.42 0.82 1.22Dividend yield 0.73 1.43 2.13Tangible book value 64.57 68.57 72.19Book value 74.26 78.49 82.62ValuationP/E (adj., x) 12.1 11.1 9.9P/TBV 0.9 0.8 0.8P/BV 0.8 0.7 0.7Quarterly EPS Q1 Q2 Q3 Q42016A 1.10 1.24 1.24 1.142017E 1.24 1.29 1.31 1.302018E 1.43 1.43 1.46 1.48

Company BackgroundCitigroup Inc. is a financial services holding co. It has two business segments. Citicorp contains Global Consumer Banking and Institutional Clients Group. Citi Holdings contains Brokerage and Asset Management, Consumer Lending and Special Asset Pool.

Blue/Grey Sky Scenario

Our Blue Sky Scenario (US$) 83.00Applying the 2000-2015 regression of price/tangible book value per dollar of ROTCE to our pro forma upside estimates (and estimated year end tangible book value per share) translates to our $83 valuation for C.

Our Grey Sky Scenario (US$) 36.00With an assumption that C sells off in a recession scenario, with valuations retracing toward their prior trough point, we gauge the valuation to be $36.

Share price performance

C.N S& P 5 0 0 IN D EX

A p r - 1 6 Ju l - 1 6 O ct - 1 6 Jan - 1 73 0

4 0

5 0

6 0

7 0

On 09-Feb-2017 the S&P 500 INDEX closed at 2307.87Daily Feb11, 2016 - Feb09, 2017, 02/11/16 = US$34.98

Source: Company data, Thomson Reuters, Credit Suisse estimates

16 February 2017


Continued from page 1…

■ The GCB Strategy… 2016 was a year of significant investment in the GCB including the acquisition of the Costco credit card portfolio, re-upping of the American Airlines and Home Depot card partnerships (management remains 100% committed to retaining its leadership position in cards), completion of Project Rainbow, and the rollout /re-launch of an enhanced Citigold offering into the New York City retail banking market (NYC was the test market for the U.S.). With investment increased and infrastructure in place, the focus has shifted in favor of growth---leveraging the bank's investment in mobile technologies, re-introducing Citigold into its six focus U.S. banking markets, investing in Mexico, and across all regions focused on improving efficiency to generate increasing returns.

■ Step 1—Project Rainbow; Step 2—Invest. Citi's consumer initiatives today follow on Project Rainbow with the bank's strategy now more customer-centric and the infrastructure built to support that. Project Rainbow was a multi-year undertaking finished mid-year 2016. From here, investments that leverage that infrastructure are meant to drive growth. Citi FinTech was launched in the fourth quarter of 2015, soon after the change in GCB management, with an intention of bringing cultural change to the consumer banking organization and delivering a best in class mobile experience. Citi now views itself as very competitive with its digital offering (third-party App ratings would support this view, see detail herein), and positioned with data, differentiation and digitalization, to capture a growing share of the consumer banking business, globally.

■ The Strategic Challenge in Retail Banking… Can Citi attract new customers and successfully incent single product (credit card) customers to broaden their relationships with the bank? Consider that >50% of Citi's retail banking customers have Citi credit cards, but <50% of Citi's card customers have broader retail relationships, therein lies the opportunity and the challenge. Management strongly believes that customers are migrating away from single product relationships and that its better value proposition will attract both new and expanded relationships. In pursuit of that, Citi is reintroducing an enhanced Citigold into the U.S. market, investing in its already-competitive mobile app, incenting customers with a single integrated rewards program (Thank You), and offering meaningfully expanded fee free ATM access (Citi more than doubled its free ATM access in January 2017, to ~60,000 (a mix of branded and unbranded units); this compares to 13,000-16,000 branded ATMs on average for nationwide peers, Bank of America, Chase and Wells Fargo). The jury is out on what physical presence Citi, like any bank, will ultimately need to support growth. We will look to proof points in retail banking metrics (organic account, deposit, revenue growth) to validate Citi's strategy/opportunity.

■ With respect to Mexico… fully committed. Recall that Mexico accounts for 13% of the GCB's earnings and 4% of Citigroup's aggregate earnings, based on our 2017 forecast; this is a relatively small business for Citi, though one very much in focus post-election. Simply put, investors are focused and concerned. Management's commitment to the Banamex franchise appears unchanged. Mexico is a fast growing banking market and Citi intends to bank these customers. Management is far from complacent—it is mindful of declining consumer confidence figures and will pace its intended $1bn, four-year investment in that franchise.

■ Technology spending… advantage Citi. As noted above, with the completion of Project Rainbow mid-year 2016 a lot of the heaviest lifting is done, now allowing a more significant shift toward growth and a shift in technology spending toward offensive/strategic initiatives. How much does Citi allocate to strategic technology spend? The GCB expense base is ~$18bn; its revenues stood at $32bn in 2016. If we assume that technology spend accounted for about 10% of GCB revenues or 18% of the $18bn GCB expense base, and then figure that 30-50% of that spending can now be more offensively or strategically oriented, that translates to an estimated $1.0-$1.6bn annually. Citi has the capacity—like its larger banking peers--to outspend

16 February 2017


small-to-mid cap bank peers, multiple times over. Therein lies the "unfair advantage" for Citi to exploit.

■ Operating efficiency improvement in focus. Management believes that Citi has room to improve the efficiency of its consumer banking operations, and not at the expense of investment to support growth. As detailed, the bank has significant capacity already for strategic technology spending. Automation and digitalization ought to drive further improvements in operating efficiency. Add to that the potential for more efficient control and compliance processes and together this ought to support efficiency gains; those gains will be all the more powerful to the degree that revenue growth accelerates.

■ No estimate changes. Our 2017 estimate is $5.15; we're at $5.80 for 2018E. Base case estimate risk/sensitivity is driven by more or less movement in interest rates (we're assuming one 25bps rate hike in each of 2017 and 2018, impacting the fourth quarters of each year with the 10-year Treasury hovering ~2.50%), commercial and consumer credit trends (later in the cycle), capital markets conditions, and this bank's ability to return >100% of its excess capital.

■ Target price unchanged at $63… applying our weighted average valuation methodology (using a 25% weight on our blue sky scenario, a 65% weight on our base case scenario, and a 10% weight on our grey sky scenario), our target price stands, at $63 translating to a price to forecast year-end 2017 book value of 0.8x (0.9x P/TBV); this valuation is consistent with the level and consistency of the returns this bank puts up; ROTCE now forecast at 8% in 2017; 8%+ in 2018E, on 12%+ CET 1.

■ What to do with the stock. We continue to recommend purchase, based on valuation relative to near and longer term return prospects. Sustained share price outperformance relies on improving ROE prospects--some revenue growth; more efficiency gains, manageable credit cost increases and a material increase in net capital returns.

16 February 2017


Citigroup Global Consumer Banking—Supporting Analysis

Dimensioning the BusinessFigure 1: Citigroup Aggregate and Global Consumer Banking Revenue Breakdown

46%48%

6%

Citigroup - Revenue Breakdown by Segment

Global ConsumerBanking

Institutional ClientGroup

Corporate/Other

63%

16%

21%

Citi Global Consumer Banking – Revenue Breakdown by

Region

North America

Latin America

Asia

41%

39%

20%

Citi Global Consumer Banking - Revenue Breakdown by

Product

RetailBanking

Citi BrandedCards

Citi RetailServices

Source: Company data, Credit Suisse estimates. Data based on 2016 reported revenues.

Historical and Forecast Revenue GrowthFigure 2: Citigroup --- Revenue Growth by Business Unit

Net Revenue 2011 2012 2013 2014 2015 2016 2017E 2018EGlobal Consumer Banking $34,022 $35,191 $34,395 $34,296 $32,495 $31,763 $32,633 $33,411Institutional Clients Group $32,309 $30,871 $33,580 $33,312 $33,991 $33,850 $35,631 $37,236Citi Holdings $10,400 $3,122 $8,427 $9,308 $8,960 $3,852 $1,936 $898Corporate/Other $904 $346 $322 $303 $908 $410 $280 $280Total Revenue $77,635 $69,530 $76,724 $77,219 $76,354 $69,875 $70,480 $71,826yr/yr growth -10% -10% 10% 1% -1% -8% 1% 2%

Yr/Yr Growth Rate 2011 2012 2013 2014 2015 2016 2017E 2018ECAGR

('11-'16)Global Consumer Banking -12% 3% -2% 0% -5% -2% 3% 2% -1%Institutional Clients Group -3% -4% 9% -1% 2% 0% 5% 5% 1%Citi Holdings -15% -70% 170% 10% -4% -57% -50% -54% --Corporate/Other -48% -62% -7% -6% 200% -55% -32% 0% --Total Revenue -10% -10% 10% 1% -1% -8% 1% 2% -2%

% of Total Revenue 2011 2012 2013 2014 2015 2016 2017E 2018EGlobal Consumer Banking 44% 51% 45% 44% 43% 45% 46% 47%Institutional Clients Group 42% 44% 44% 43% 45% 48% 51% 52%Citi Holdings 13% 4% 11% 12% 12% 6% 3% 1%Corporate/Other 1% 0% 0% 0% 1% 1% 0% 0%Total Revenue 100% 100% 100% 100% 100% 100% 100% 100%

Source: Company data, Credit Suisse estimates

16 February 2017


Figure 3: Citigroup GCB --- Revenue Growth by RegionUS$ in millions, unless otherwise stated

Net Revenue 2011 2012 2013 2014 2015 2016 2017E 2018ENorth America $20,370 $21,292 $20,075 $19,948 $19,718 $19,956 $20,922 $21,504Latin America $5,619 $5,889 $6,481 $6,557 $5,770 $4,969 $4,906 $5,023Asia $8,033 $8,010 $7,839 $7,791 $7,007 $6,838 $6,806 $6,884Total Revenue $34,022 $35,191 $34,395 $34,296 $32,495 $31,763 $32,633 $33,411yr/yr growth 3% -2% 0% -5% -2% 3% 2%

Yr/Yr Growth Rate 2011 2012 2013 2014 2015 2016 2017E 2018ECAGR

('11-'16)North America -6% 5% -6% -1% -1% 1% 5% 3% 0%Latin America -35% 5% 10% 1% -12% -14% -1% 2% -2%Asia -10% 0% -2% -1% -10% -2% 0% 1% -3%Total Revenue -14% 3% -2% 0% -5% -2% 3% 2% -1%

% of Total Revenue 2011 2012 2013 2014 2015 2016 2017E 2018ENorth America 60% 61% 58% 58% 61% 63% 64% 64%Latin America 17% 17% 19% 19% 18% 16% 15% 15%Asia 24% 23% 23% 23% 22% 22% 21% 21%Total Revenue 100% 100% 100% 100% 100% 100% 100% 100%

Source: Company data, Credit Suisse estimates. 2011-2013 Asia segment includes EMEA segment as well.

Absolute and Relative Profitability MetricsFigure 4: Consumer Banking Business Metrics Comparison

2014 2015 2016 2017E 2018ECorporate

Targets

Business Unit % of

2016 Earnings

Efficiency Ratio:BAC: Consumer Banking 60.9% 59.4% 56.2% 52.8% 48.0% not disclosed 39%C: Global Consumer 54.5% 53.0% 55.1% 53.7% 52.9% 49-52% 34%JPM: Consumer Bank 57.7% 56.8% 55.4% 54.9% 51.4% 50% 39%WFC: Community Banking 55.2% 54.7% 56.1% -- -- not disclosed 57%Pretax Margin:BAC: Consumer Banking 31.3% 33.2% 35.2% 37.9% 42.0% -- --C: Global Consumer 29.5% 30.2% 24.6% 25.9% 26.0% -- --JPM: Consumer Bank 34.0% 36.2% 34.5% 33.4% 35.9% -- --WFC: Community Banking 41.5% 40.4% 38.4% -- -- -- --ROA:BAC: Consumer Banking 1.06% 1.07% 1.03% -- -- -- --C: Global Consumer 1.70% 1.68% 1.28% 1.32% 1.35% -- --JPM: Consumer Bank 2.03% 2.07% 1.88% -- -- -- --WFC: Community Banking 1.54% 1.48% 1.27% -- -- -- --ROTCE:BAC: Consumer Banking 18.4% 20.1% 20.2% 23.2% 26.5% -- --C: Global Consumer 18.6% 18.2% 14.2% 14.9% 14.9% 20% --JPM: Consumer Bank 17.8% 19.2% 19.0% 18.1% 19.5% 20% --WFC: Community Banking -- -- -- -- -- -- --

2016/ 2017E/Operating Expenses ($mn): 2015 2016BAC: Consumer Banking 19,390 18,716 17,652 18,034 17,574 -6% 2%C: Global Consumer 18,681 17,220 17,516 17,539 17,665 2% 0%JPM: Consumer Bank 25,609 24,909 24,905 25,712 25,912 0% 3%WFC: Community Banking 27,670 26,981 27,422 -- -- 2% --

Source: Company data, Credit Suisse estimates. ROTCE metrics based on allocated capital to business units. Efficiency ratios are shown on an "as reported basis" inclusive of CVA/DVA and other charges, hence some differential versus mgmt. articulated near term targets.

16 February 2017


Retail Banking Growth Metrics; Relative Mobile Banking Metrics/App Reviews

Figure 5: Mobile Banking Application User Reviews--Citigroup Versus Large Cap Bank Peers

Current Version Historic




Number of Reviews 1,052 43,748 5,987 110,793 176 222,476 423 42,442Rating out of 5.0 4.5 3.5 4.5 3.5 4.0 4.5 2.5 3.0

Citigroup Bank of America JPMorgan Chase Wells Fargo

Source: Company data. Apple applications store reviews current through Feb 15, 2017.

Figure 6: CS Large Cap Banks - North America Consumer Banking Deposit Growth

Figure 7: CS Large Cap Banks - North America Consumer Banking Branch Growth

5 Year CAGR (2011-2016)

5%4%

9%

5%

6%

0%1%2%3%4%5%6%7%8%9%

10%

BAC C JPM WFC USCommercial

Banks

5 Year CAGR (2011-2016)

-1%

-7%

-1% -1%

1%

-8%-7%-6%-5%-4%-3%-2%-1%0%1%2%


Banks

Source: Company data, Credit Suisse estimates. Source: Company data, Credit Suisse estimates.

Figure 8: CS Large Cap Banks - North America Consumer Banking Deposits Per Branch

Figure 9: CS Large Cap Banks - North America Consumer Banking Deposits Per Branch

US$ in millions, unless otherwise stated

BAC C JPM WFCCS Large Cap

Banks

US Commercial

Banks2011 98 150 69 87 101 1002012 87 162 74 94 104 1092013 95 178 81 99 113 1112014 106 211 87 101 126 1172015 117 232 98 104 138 1222016 131 258 112 113 153 127

5 Yr CAGR 6% 11% 10% 5% 8% 5%

US$ in millions, unless otherwise stated

131

258

112 113 127

0

50

100

150

200

250

300


Banks

Source: Company data, Credit Suisse estimates. CS Large Cap Banks include BAC, C, JPM, and WFC.

Source: Company data, Credit Suisse estimates. Figures as of year-end 2016.

16 February 2017


Valuation and Target PriceApplying our weighted average valuation methodology (using a 25% weight on our blue sky scenario, a 65% weight on our base case scenario, and a 10% weight on our grey sky scenario), our target price stands, at $63 translating to a price to forecast year-end 2017 book value of 0.8x (0.9x P/TBV); this valuation is consistent with the level and consistency of the returns this bank puts up; ROTCE now forecast at 8% in 2017; 8%+ in 2018E, on 12%+ CET 1. DCF target price of $60 is derived using 10.5% discount rate and 2.5% terminal growth rate.

Valuation HistoryFigure 10: C Historical Price/Book Value Figure 11: C Historical Price/Tangible Book ValueAverage monthly basis

0.8x1.0x

0.0 x

1.0 x

2.0 x

3.0 x

4.0 x

5.0 x

6.0 x

7.0 x

Jan-

00

Jan-

02

Jan-

04

Jan-

06

Jan-

08

Jan-

10

Jan-

12

Jan-

14

Jan-

16C

CS Large Cap Banks

Average monthly basis

0.9x

2.1x

0.0 x

1.0 x

2.0 x

3.0 x

4.0 x

5.0 x

6.0 x

7.0 x

Jan-

00

Jan-

02

Jan-

04

Jan-

06

Jan-

08

Jan-

10

Jan-

12

Jan-

14

Jan-

16

C

CS Large Cap Banks

Source: Company data, Credit Suisse estimates. As of Feb 2017 Source: Company data, Credit Suisse estimates. As of Feb 2017

Figure 12: C 12-Month-Forward P/E History Figure 13: C Dividend Yield HistoryAverage monthly basis

11.1x11.0x

0x

10x

20x

30x

Jan-

00

Jan-

02

Jan-

04

Jan-

06

Jan-

08

Jan-

10

Jan-

12

Jan-

14

Jan-

16

CCS Large Cap Banks

1.08%

2.68%

0%

2%

4%

6%

8%

10%

12%

1Q99 3Q01 1Q04 3Q06 1Q09 3Q11 1Q14 3Q16

C

CS Large Cap Banks


16 February 2017


Figure 14: Price/Tangible Book Value vs. 2017E ROTE

Figure 15: Price/Tangible Book Value vs. 2018E ROTE

BAC

C

GS

WFCPNC

CFGMS JPM

STI

USB

0.40x

0.90x

1.40x

1.90x

2.40x

2.90x

6.0% 8.5% 11.0% 13.5% 16.0%

BAC

C

GS

WFCPNC

CFG MS

JPMSTI

USB

0.40x

0.90x

1.40x

1.90x

2.40x

2.90x

6.0% 8.5% 11.0% 13.5% 16.0%


16 February 2017


Companies Mentioned (Price as of 15-Feb-2017)American Airlines Group Inc. (AAL.OQ, $47.54)Bank of America Corp. (BAC.N, $24.58, OUTPERFORM, TP $26.0)Citigroup Inc. (C.N, $60.5, OUTPERFORM, TP $63.0)Costco Wholesale Corporation (COST.OQ, $175.0)Home Depot (HD.N, $142.19)JPMorgan Chase & Co. (JPM.N, $90.59, OUTPERFORM, TP $94.0)Wells Fargo & Company (WFC.N, $58.55, OUTPERFORM, TP $56.0)

Disclosure AppendixAnalyst Certification I, Susan Roth Katzke, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Bank of America Corp. (BAC.N)

BAC.N Closing Price Target Price Date (US$) (US$) Rating 04-Mar-14 16.73 16.00 N 07-Jan-15 16.94 21.00 O * 15-Apr-15 15.64 20.00 24-Feb-16 12.13 18.00 05-Oct-16 16.11 19.00 05-Dec-16 21.84 23.00 13-Jan-17 23.01 26.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price BAC.N

01- Jan- 2015 01- Jan- 2016 01- Jan- 201710

15

20

25

30

N EU T RA LO U T PERFO RM

3-Year Price and Rating History for Citigroup Inc. (C.N)

C.N Closing Price Target Price Date (US$) (US$) Rating 04-Mar-14 48.83 65.00 O 07-Apr-14 46.55 62.00 30-Sep-14 51.82 NR 07-Jan-15 51.17 60.00 N * 16-Apr-15 54.02 62.00 28-Sep-15 49.03 62.00 O 15-Jan-16 42.47 58.00 26-Feb-16 39.50 57.00 08-Mar-16 41.05 55.00 05-Dec-16 57.28 63.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price C.N

01- Jan- 2015 01- Jan- 2016 01- Jan- 201730

40

50

60

70

O U T PERFO RMN O T RA T ED

N EU T RA L

16 February 2017


3-Year Price and Rating History for JPMorgan Chase & Co. (JPM.N)

JPM.N Closing Price Target Price Date (US$) (US$) Rating 21-Feb-14 57.61 70.00 O 30-Sep-14 60.24 NR 07-Jan-15 59.07 75.00 O * 14-Oct-16 67.52 78.00 05-Dec-16 83.26 88.00 17-Jan-17 83.55 94.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price JPM.N

01- Jan- 2015 01- Jan- 2016 01- Jan- 201750

60

70

80

90

100

O U T PERFO RMN O T RA T ED

3-Year Price and Rating History for Wells Fargo & Company (WFC.N)

WFC.N Closing Price Target Price Date (US$) (US$) Rating 07-Apr-14 48.66 50.00 N 06-Jul-14 53.00 56.00 30-Sep-14 51.87 NR 07-Jan-15 52.40 65.00 O * 15-Jan-16 48.82 62.00 26-Feb-16 48.07 60.00 22-Apr-16 50.62 58.00 05-Jul-16 46.21 56.00 23-Sep-16 45.74 50.00 05-Dec-16 54.35 56.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price WFC.N

01- Jan- 2015 01- Jan- 2016 01- Jan- 201740

45

50

55

60

65

N EU T RA LN O T RA T ED

O U T PERFO RM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activitiesAs of December 10, 2012 Analysts’ stock rating are defined as follows:Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months.Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011.Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time.Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products.Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.

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Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings DistributionRating Versus universe (%) Of which banking clients (%)Outperform/Buy* 45% (64% banking clients)Neutral/Hold* 38% (60% banking clients)Underperform/Sell* 14% (52% banking clients)Restricted 2%*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

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Target Price and RatingValuation Methodology and Risks: (12 months) for Bank of America Corp. (BAC.N)

Method: We arrive at our $26 target price for BAC using a weighted average of our blue sky scenario (25% weight; $29 target price applying 1.6x to our blue sky scenario 2017E tangible book value), downside scenario (10% weight; $14 target price applying 0.8x to our downside scenario 2017E tangible book value), and base case discounted cash flow analysis (65% weight; $26 target price applying 10.5% cost of capital and 3% terminal growth rate). Valuation and total return potential drive our Outperform rating. Beyond valuation and implied total return, additional qualitative factors supporting confidence in the assumptions underlying our valuation and Outperform rating include reduced revenue volatility and improved revenue growth prospects, operating efficiency initiatives, and improved capital management.

Risk: Primary risks to our $26 target price and Outperform rating include macroeconomic risk, increasing regulatory pressure (industry-wide and BAC specific), litigation and related costs, and cybersecurity. More specific to BAC, risks include management turnover and successful management of the CCAR process.

Target Price and RatingValuation Methodology and Risks: (12 months) for Citigroup Inc. (C.N)

Method: We arrive at our $63 target price for C using a a weighted average of our blue sky scenario (25% weight; $83 target price applying 1.2x to our blue sky scenario 2017E tangible book value), downside scenario (10% weight; $36 target price applying 0.6x to our downside scenario 2017E tangible book value), and base case discounted cash flow analysis (65% weight; $60 target price applying 10.5% cost of capital and 2.5% terminal growth rate). Valuation and total return potential drive our Outperform rating.

Risk: Primary risks to our $63 target price and Outperform rating include macroeconomic risk, increasing regulatory pressure, litigation and related costs, and cybersecurity. Additional risks specific to C include the successful wind down of Citi Holdings, deterioration in emerging markets growth prospects, and lackluster organic revenue growth aspects.

Target Price and RatingValuation Methodology and Risks: (12 months) for JPMorgan Chase & Co. (JPM.N)

Method: We arrive at our $94 target price for JPM using a weighted average of our blue sky scenario (25% weight; $105 target price applying 1.9x to our blue sky scenario 2017E tangible book), downside scenario (10% weight; $57 target price applying 1.1x to our downside scenario 2017E tangible book), and base case discounted cash flow analysis (65% weight; $97 target price applying 10% cost of capital and 3% terminal growth rate). Valuation and total return potential drive our Outperform rating. Beyond valuation and implied total return, additional qualitative factors supporting confidence in the assumptions underlying our valuation and Outperform rating include balance sheet optimization progress and prospects, above-average organic revenue growth, operating leverage, and above-average returns.

Risk: Primary risks to our $94 target price and Outperform rating include macroeconomic risk, increasing regulatory pressure, litigation and related costs, and cybersecurity. Additional risks specific to JPM include competing with a higher GSIB capital surcharge, a forced reduction in complexity, and management succession.

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Target Price and RatingValuation Methodology and Risks: (12 months) for Wells Fargo & Company (WFC.N)

Method: We arrive at our $56 target price for WFC using a a weighted average of our blue sky scenario (25% weight; $60 target price applying 1.9x to our blue sky scenario 2017E tangible book value), downside scenario (10% weight; $44 target price applying 1.4x to our downside scenario 2017E tangible book value), and base case discounted cash flow analysis (65% weight; $56 target price applying 10.0% cost of capital and 3% terminal growth rate). Valuation and total return potential drive our Outperform rating. Beyond valuation and implied total return, additional qualitative factors supporting confidence in the assumptions underlying our valuation and Outperform rating include the consistency and quality of Wells Fargo's earnings growth and returns.

Risk: Primary risks to our $56 target price and Outperform rating include macroeconomic risk, increasing regulatory pressure, litigation and related costs, and cybersecurity. Additional risks specific to WFC include lower oil prices and its energy credit exposure, as well as increased competition in auto finance.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names The subject company (C.N, BAC.N, JPM.N, WFC.N, HD.N) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.Credit Suisse provided investment banking services to the subject company (C.N, BAC.N, JPM.N, WFC.N, HD.N) within the past 12 months.Credit Suisse provided non-investment banking services to the subject company (C.N, BAC.N, JPM.N, WFC.N) within the past 12 monthsCredit Suisse has managed or co-managed a public offering of securities for the subject company (C.N, BAC.N, JPM.N, WFC.N, HD.N) within the past 12 months.Credit Suisse has received investment banking related compensation from the subject company (C.N, BAC.N, JPM.N, WFC.N, HD.N) within the past 12 monthsCredit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (C.N, BAC.N, JPM.N, WFC.N, COST.OQ, HD.N) within the next 3 months.Credit Suisse has received compensation for products and services other than investment banking services from the subject company (C.N, BAC.N, JPM.N, WFC.N) within the past 12 monthsCredit Suisse has a material conflict of interest with the subject company (C.N) . Credit Suisse is acting as a financial advisor for Springleaf in relation to the acquisition of OneMain Financial from CitiFinancial Credit Company, a wholly-owned subsidiary of Citigroup.Credit Suisse has a material conflict of interest with the subject company (WFC.N) . Credit Suisse is acting as a financial advisor to General Electric Co. (GE) in relation to their potential sale of GE Capital’s Commercial Distribution Finance, North American Vendor Finance and Corporate Finance platforms to Wells Fargo & Co. (WFC).As of the date of this report, an analyst involved in the preparation of this report has the following material conflict of interest with the subject company (C.N). As of the date of this report, an analyst involved in the preparation of this report, Susan Katzke, has following material conflicts of interest with the subject company. The analyst or a member of the analyst's household has a long position in the common and preferred stock Citigroup (C).As of the date of this report, an analyst involved in the preparation of this report has the following material conflict of interest with the subject company (BAC.N). As of the date of this report, an analyst involved in the preparation of this report, Susan Katzke, has following material conflicts of interest with the subject company. The analyst or a member of the analyst's household has a long position in the preferred stock Bank of America Corp (BAC).As of the date of this report, an analyst involved in the preparation of this report has the following material conflict of interest with the subject company (JPM.N). As of the date of this report, an analyst involved in the preparation of this report, Susan Katzke, has following material conflicts of interest with the subject company. The analyst or a member of the analyst's household has a long position in the common and preferred stock JPMorgan Chase & Co (JPM).As of the date of this report, an analyst involved in the preparation of this report has the following material conflict of interest with the subject company (WFC.N). As of the date of this report, an analyst involved in the preparation of this report, Susan Katzke, has following material conflicts of interest with the subject company. The analyst or a member of the analyst's household has a long position in the preferred stock Wells Fargo & Company (WFC).For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683. For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=284757&v=-kr2szo9brqt07a9i6lmklrnv . Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. 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Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (C.N, BAC.N, JPM.N, WFC.N, HD.N) within the past 3 years.Principal is not guaranteed in the case of equities because equity prices are variable.Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.This research report is authored by:Credit Suisse Securities (USA) LLC ...................................................................................................Susan Roth Katzke ; Athena Xie ; Kenny JenFor Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

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