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Citigroup confident it can hit 12% ROTCE target or be 'darn close'

Citigroup Inc. improved its return on tangible common equity to its 12% goal in the third quarter, a figure that CFO Mark Mason said the bank can maintain or be "darn close" to for the remainder of the year.

The company has stuck with its RoTCE target of 12% for the full year, despite some analyst skepticism, and executives reiterated their target on a conference call discussing Citigroup's third-quarter earnings.

Citigroup's RoTCE improved to 12.2% in the third quarter, up from 11.9% in the prior quarter, and is at the 12% mark year-to-date.

"That remains the target, and we feel as though we'll get to that number or darn close," Mason told analysts.

The company is also still targeting a 13.5% RoTCE goal for 2020, though the bank needs to factor in greater uncertainty to the economic outlook and the effects of rate reductions from the Federal Reserve, Mason said.

Mike Mayo, a bank analyst at Wells Fargo Securities, told executives on the call that they have made "tremendous progress" in improving RoTCE under the leadership of CEO Michael Corbat, who took on the role in 2012.

But Citigroup still lags its peers in that figure, and officials should be doing "everything that you can possibly do," including possible restructuring, to meet the 12% figure instead of saying they may end up close to it at the end of the year, Mayo said.

Corbat said Citigroup is "completely focused" on meeting its target, but officials do not want to commit to actions that "don't make sense" for the company's longer-run growth plan. Last year, Citigroup could have slashed its way to meeting its RoTCE target, but that would not have been the right decision, given the rebound that markets saw in 2019, Corbat said.

"Without a doubt, 12% is our target," Mason added. "People know that up and down this firm, but we're going to run the firm responsibly."