There’s a lot to be optimistic about in 2025: Citi Australia CEO Mark Woodruff

Mark Woodruff, the local boss of US banking giant, says market conditions are turning positive for the coming year.

Citi Australia Chief Executive Mark Woodruff in Sydney. Picture: Jane Dempster/The Australian.

CEO SURVEY: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view? What are you seeing around inflation in your own business?

Consumer activity remains challenged, however the strength of corporate balance sheets, strong population growth and significant State and Federal government expenditure programs have supported aggregate demand, and we expect this to continue in 2025.

Citi’s view is that economic momentum should slowly increase as we move into the new year, with slower inflation allowing real activity to increase. We also expect more fiscal support to households on account of the upcoming State and Federal Government elections.

Citi’s view on interest rates is that households will also have the prospect of Reserve Bank of Aus rate cuts from May 2025. Citi economists expect 75 basis points of rate cuts next year taking the cash rate target to 3.6 per cent by the December quarter of 2025.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

The falling interest rate environment and the global pro-growth surge that has occurred since the US election has us feeling optimistic about 2025. Australia’s connection with the US through capital flows, our strategic alliance and at a corporate level will enable us to benefit from the clear post-election increase in activity.

Additionally, momentum has picked up in the last months of the year, with M&A and our debt capital markets business having strong quarters. We anticipate this momentum will continue into 2025, where many clients who have been waiting on the sidelines to do deals will make the decision to move forward in an environment of falling rates and greater political certainty out of the US.

We are also looking to our commercial bank for growth into the new year. We see the mid-size business segment in Australia continuing to thrive and turn to Citi for help with financing and advice for their expansion both locally and offshore via our global network, where we serve clients in 180 countries.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity? This could be across any area from labour market, tax reform, training or other areas to encourage investment.

Tax is a difficult policy issue to prosecute, and a policy issue that has been cause for concern across multiple governments for decades now. Appreciating these factors, the current tax structure is a hand brake on productivity in a number of ways. For example, stamp duty is discouraging labour force mobility, income tax thresholds and marginal tax rates are discouraging labour participation, and an internationally high level of company tax is making Australia less competitive as an investment destination. We recognise tax reform is difficult, but meaningful change here would have strong, positive impact on productivity and economic growth. It can also serve, alongside reform to training and education, as a catalyst to address the widening generational wealth gap.

Geopolitics

Will a Donald Trump presidency have a potential impact on your business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger part of your decision-making?

Geopolitics is integral to our decision making as it impacts our operations and those of our clients. As the world’s most global bank, we pride ourselves on being at the cutting-edge of global trends and sharing insights with our clients accordingly. With our global networks, clients look to us increasingly for this perspective to connect the dots.

In terms of the Trump presidency, we think the market is pricing in his pro-growth agenda and this is spurring on deal making. M&A is cyclical in nature, and we’ve seen a softened environment since the previous ‘peak year’ of 2021. As corporations and private equity anticipate supportive macro conditions in 2025, we anticipate that M&A will pick up.

People

Has your organisation’s approach to flexible working – including working from home – evolved during the year. Is this likely to change further into 2025?

We offer a hybrid work environment for most of our employees, with at least 3 days per week in the office. We appreciate the importance of offering flexibility to help with work life balance, but we are finding many of our team want to be in the office more often to build stronger, more personal relationships with their colleagues and clients.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

At Citi we believe that AI, and specifically Generative AI (Gen AI), has the potential to revolutionise the banking industry. At the end of this year, we took the first steps to put the power of this technology into the hands of all of our people in a phased-out approach, starting in eight markets and moving to Australia in the new year. Gen AI will help our colleagues make faster decisions, automate repetitive tasks, and increase productivity and efficiency in their working lives. Our developers have already been leveraging the technology and we’re exploring how Gen AI can help support our businesses. As massive as the potential is, we’re being deliberate about managing the risks and putting the right governance and risk framework in place.