UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2010
Commission file number 1-9924
Citigroup Inc.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) |
52-1568099 (I.R.S. Employer Identification No.) |
|
399 Park Avenue, New York, NY (Address of principal executive offices) |
10043 (Zip code) |
|
(212) 559-1000 (Registrant's telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date:
Common stock outstanding as of October 31, 2010: 29,050,168,996
Available on the web at www.citigroup.com
1
THIRD QUARTER 2010FORM 10-Q
2
Introduction
Citigroup's history dates back to the founding of Citibank in 1812. Citigroup's original corporate predecessor was incorporated in 1988 under the laws of the State of Delaware. Following a series of transactions over a number of years, Citigroup Inc. was formed in 1998 upon the merger of Citicorp and Travelers Group Inc.
Citigroup is a global diversified financial services holding company whose businesses provide consumers, corporations, governments and institutions with a broad range of financial products and services. Citi has approximately 200 million customer accounts and does business in more than 160 countries and jurisidictions.
Citigroup currently operates, for management reporting purposes, via two primary business segments: Citicorp, consisting of Citi's Regional Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of Citi's Brokerage and Asset Management and Local Consumer Lending businesses, and a Special Asset Pool. There is also a third segment, Corporate/Other. For a further description of the business segments and the products and services they provide, see "Citigroup Segments" below, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 3 to the Consolidated Financial Statements.
Throughout this report, "Citigroup" and "Citi" refer to Citigroup Inc. and its consolidated subsidiaries.
This Quarterly Report on Form 10-Q should be read in conjunction with Citigroup's Annual Report on Form 10-K for the year ended December 31, 2009 (2009 Annual Report on Form 10-K), Citigroup's updated 2009 historical financial statements and notes filed on Form 8-K with the Securities and Exchange Commission (SEC) on June 25, 2010 and Citigroup's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010. Additional information about Citigroup is available on the company's Web site at www.citigroup.com. Citigroup's recent annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, as well as its other filings with the SEC are available free of charge through the company's Web site by clicking on the "Investors" page and selecting "All SEC Filings." The SEC's Web site also contains periodic and current reports, proxy and information statements, and other information regarding Citi at www.sec.gov.
Certain reclassifications have been made to the prior periods' financial statements to conform to the current period's presentation.
Within this Form 10-Q, please refer to the tables of contents on pages 2 and 94 for page references to Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statements, respectively.
Impact of Adoption of SFAS 166/167
Effective January 1, 2010, Citigroup adopted Accounting Standards Codification (ASC) 860, Transfers and Servicing, formerly SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140 (SFAS 166), and ASC 810, Consolidations, formerly SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS 167). Among other requirements, the adoption of these standards includes the requirement that Citi consolidate certain of its credit card securitization trusts and eliminate sale accounting for transfers of credit card receivables to those trusts. As a result, reported and managed-basis presentations are comparable for periods beginning January 1, 2010. For comparison purposes, prior period revenues, net credit losses, provisions for credit losses and for benefits and claims and loans are presented on a managed basis in this Form 10-Q. Managed presentations were applicable only to Citi's North American branded and retail partner credit card operations in North America Regional Consumer Banking and Citi HoldingsLocal Consumer Lending and any aggregations in which they are included. See "Capital Resources and Liquidity" and Note 1 to the Consolidated Financial Statements for an additional discussion of the adoption of SFAS 166/167 and its impact on Citigroup.
3
As described above, Citigroup is managed pursuant to the following segments:
The following are the four regions in which Citigroup operates. The regional results are fully reflected in the segment results above.
4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIRD QUARTER 2010 EXECUTIVE SUMMARY
During the third quarter of 2010, Citigroup continued its focus on (i) strengthening and investing in its core assets and businesses in Citicorp, (ii) building and maintaining its financial strength, including maintaining its capital, liquidity and continued expense discipline, and (iii) winding down Citi Holdings as quickly as practicable in an economically rational manner.
For the quarter, Citigroup reported net income of $2.2 billion, or $0.07 per diluted share. Results for the quarter included a $435 million (after tax) loss related to the announced sale of The Student Loan Corporation (SLC), which is reflected in discontinued operations for the third quarter of 2010. Revenues of $20.7 billion decreased 10% from comparable year-ago levels. The decline in revenues was due to lower revenues in Citi Holdings (driven by a declining loan balance in Local Consumer Lending and lower positive net revenue marks in the Special Asset Pool) and lower Securities and Banking revenues excluding Credit Valuation Adjustment (CVA), offset by positive CVA of $99 million in the third quarter of 2010 (versus negative CVA of $1.8 billion in the prior-year period). Citicorp's net income was $3.5 billion; Citi Holdings had a net loss of $1.1 billion.
In Citicorp, Securities and Banking revenues, excluding CVA, were $5.5 billion in the third quarter of 2010, down 17% from the prior-year period. While overall client market activity remained muted in the third quarter of 2010, Citi continued to benefit from consistent growth in Securities and Banking emerging markets revenues. Fixed income markets revenues excluding CVA were $3.4 billion compared to $4.9 billion in the third quarter of 2009. Equity markets revenues excluding CVA were $1.1 billion, compared to $1.3 billion in the prior-year quarter. Investment banking revenues declined 20% from the prior-year period to $930 million. Lending revenues were negative $18 million in the third quarter of 2010, compared with a negative $794 million in the third quarter of 2009.
Regional Consumer Banking revenues were up $241 million on a comparable basis from the prior-year quarter to $8.2 billion, driven by growth in Latin America and Asia.
Transaction Services revenues were up from year-ago levels by 3% to $2.5 billion, also driven by growth in Latin America and Asia.
Within Citi Holdings, Local Consumer Lending revenues of $3.5 billion in the third quarter of 2010 were down 33% on a comparable basis from the year-ago period, driven by a lower loan balance and continued asset sales, as well as the addition of $322 million of mortgage repurchase reserves related to North America residential real estate (compared to a build of $33 million in the prior-year period).
Revenues in the Special Asset Pool decreased to $0.3 billion in the third quarter of 2010, from $1.4 billion in the prior-year period, largely driven by lower positive net revenue marks of $567 million in the third quarter of 2010, compared to $1,517 million in the same quarter of 2009.
Citi's Net interest revenue increased 10% from the third quarter of 2009, primarily driven by the impact from the adoption of SFAS 166/167. Sequentially, Citi's net interest margin (NIM) of 3.07% decreased by 8 basis points primarily due to the continued run-off and sales of higher-yielding assets in Citi Holdings and investments in lower-yielding securities, given current rates.
Non-interest revenue decreased 11% from the year-ago period reflecting lower revenues on mortgage servicing rights, partially offset by higher realized gains on investment securities.
Operating expenses decreased 3% from the year-ago quarter and were down 3% from the second quarter of 2010. The decline in expenses from the year-ago quarter reflected the decrease in Citi Holdings expenses, which more than offset the increase in Citicorp expenses resulting from continued investments in the Citicorp businesses. The sequential decline in expenses primarily related to the absence of the U.K. bonus tax in the second quarter of 2010, partially offset by ongoing investments in Citicorp businesses. Citi's full-time employees numbered 258,000 at September 30, 2010, down 18,000 from September 30, 2009 and down 1,000 from June 30, 2010.
Net credit losses of $7.7 billion in the third quarter of 2010 were down 30% from year-ago levels on a comparable basis, and down 4% from the second quarter of 2010. Net credit losses (NCLs) improved for the fifth consecutive quarter. Consumer NCLs of $6.7 billion were down 29% on a comparable basis from the prior-year period and down 10% from the prior quarter. While North America NCLs continued to represent over 80% of Citi's total consumer NCLs, during the third quarter of 2010, losses in North America improved at a faster rate than in Citi's international consumer businesses. North America consumer NCLs were down 11% sequentially, while international consumer NCLs declined by 7%.
Corporate NCLs of $922 million were down 40% from the prior-year period and up 95% from the prior quarter. The sequential increase in corporate NCLs was principally due to a charge-off on a specific corporate credit in Citicorp, and, in Citi Holdings, higher cost of loan sales and the charge-off of loans for which Citi had previously established specific SFAS 114 reserves that were released during the third quarter of 2010 upon recognition of the charge-off.
Citi's total allowance for loan losses was $43.7 billion at September 30, 2010, or 6.73% of total loans. The percentage was essentially flat compared to June 30, 2010, which was 6.72% of total loans. During the third quarter of 2010, Citi had a net release of $2.0 billion to its credit reserves and allowance for unfunded lending commitments, compared to a net build of $802 million in the third quarter of 2009 and a net release of $1.5 billion in the second quarter of 2010. An improving to stabilizing credit environment contributed to the release during the current quarter. Citi experienced continued improvement in NCLs and 90 days or more delinquencies across its North America cards portfolios (both branded and Retail partner
5
cards) and North America mortgage portfolio in Citi Holdings during the third quarter of 2010.
The total allowance for consumer loan losses decreased $2.0 billion to $37.6 billion at the end of the quarter, but increased as a percentage of total consumer loans to 8.16%, compared to 7.87% at the end of the second quarter of 2010. The increase in the percentage was mainly due to the announced sale of SLC, which moved approximately $30 billion of loans to held-for-sale. The decrease in the total allowance was mainly due to a net release of $1.4 billion as well as reductions from asset sales in the U.S. real estate lending portfolio and certain loan portfolios moving to held-for-sale. The $1.4 billion net release was mainly driven by Retail partner cards in Citi Holdings, as well as the international Regional Consumer Banking businesses in Citicorp.
The total allowance for loan losses for funded corporate loans declined by $552 million to $6.1 billion at September 30, 2010, or 3.22% of corporate loans, down from 3.59% in the second quarter of 2010. Corporate non-accrual loans were $9.9 billion at September 30, 2010, compared to $11.0 billion at June 30, 2010 and $14.7 billion in the year-ago period. The decrease in non-accrual loans from the prior quarter was mainly due to loan sales, write-offs and paydowns, which were partially offset by increases due to the weakening of certain borrowers.
The effective tax rate on continuing operations for the third quarter of 2010 was 21%, reflecting taxable earnings in lower tax rate jurisdictions, as well as tax advantaged earnings.
Total deposits were $850 billion at September 30, 2010, up 4% from June 30, 2010 and up 2% from year-ago levels. Citi's structural liquidity (equity, long-term debt and deposits as a percentage of assets) was 71% at September 30, 2010, unchanged as compared with June 30, 2010 and down slightly from 72% at September 30, 2009.
Total assets increased $46 billion from the end of the second quarter of 2010 to $1,983 billion. Citi Holdings assets decreased $44 billion during the third quarter of 2010, consisting of approximately $32 billion of asset sales and business dispositions, $9 billion of net run-off and pay downs and $3 billion of net cost of credit and net asset marks. Citi Holdings total GAAP assets of $421 billion at September 30, 2010, represented 21% of Citi's total GAAP assets. Citi Holdings' risk-weighted assets were approximately $370 billion, or approximately 37% of Citi's risk-weighted assets, as of September 30, 2010.
Citigroup's Total stockholders' equity increased by $8.1 billion during the third quarter of 2010 to $162.9 billion, reflecting net income during the quarter, $1.9 billion related to the ADIA share issuance and a $3.9 billion improvement in Accumulated other comprehensive income largely from foreign exchange translation (generally referred to throughout this report as "FX translation"). Citigroup's total equity capital base and trust preferred securities were $183.4 billion at September 30, 2010. Citigroup maintained its "well-capitalized" position with a Tier 1 Capital ratio of 12.50% at September 30, 2010, up from 11.99% at June 30, 2010. Citigroup's Tier 1 Common ratio was 10.33% at September 30, 2010, compared to 9.71% at June 30, 2010.
Business Outlook
Within Citicorp, overall trends in client activity and the global economic and capital markets environment are expected to continue to drive Citi's Securities and Banking revenues.
Citi expects continued headwinds in North America Regional Consumer Banking from The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), which will continue to have a negative impact on U.S. credit card revenues. Citi currently estimates that the CARD Act will have a net pre-tax impact on Citi-branded cards for the full year 2010 at the lower end of its previously disclosed range of $400 million to $600 million. As previously disclosed, for Retail partner cards in Local Consumer Lending, Citi's full-year 2010 estimate of negative net revenue impact resulting from the CARD Act is approximately $150 million to $200 million. Within the international businesses in Regional Consumer Banking, Citi believes revenues should begin to reflect the growth Citi is seeing in the underlying revenue drivers, such as new loan and deposit growth.
Within Citi Holdings, Citi currently believes Local Consumer Lending revenues should continue to decline given the shrinking loan balance resulting from paydowns and continued asset sales. Citi further believes that net revenue marks in the Special Asset Pool, which have been positive for the last six quarters, will remain episodic.
NIM will likely remain under pressure throughout the remainder of the year.
With respect to expenses, Citi expects quarterly expenses to continue to be in the range of $11.5 billion to $12 billion. As previously disclosed, Citicorp's expenses may continue to increase, reflecting ongoing investments in its core businesses, while in Citi Holdings expenses should continue to decline as assets are reduced.
As in recent prior quarters, credit costs are expected to remain a significant component of earnings performance in the fourth quarter. In North America cards, Citi expects NCLs will continue to improve modestly for both portfolios, but likely remain at elevated levels until employment recovers in the U.S. In North America mortgages, Citi remains cautious as the improvement in NCLs and delinquency metrics to date reflects asset sales and loss mitigation efforts. Mortgages also remain at risk to economic factors, including unemployment, home prices, government programs, and foreclosure regulations. Internationally, Citi believes consumer NCLs should remain fairly stable in the fourth quarter.
Consumer loan loss reserve balances will continue to reflect the losses embedded in Citi's consumer portfolios, given underlying credit trends and loss mitigation efforts. The recognition of credit losses and the build or release of loan loss reserves in Citi's corporate credit portfolio will continue to be episodic.
6
CITIGROUP INC. AND SUBSIDIARIES
SUMMARY OF SELECTED FINANCIAL DATAPage 1
|
Third Quarter | |
Nine Months Ended | |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
In millions of dollars, except per share amounts |
% Change |
% Change |
||||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||||||
Total managed revenues(1) |
$ | 20,738 | $ | 23,142 | (10 | )% | $ | 68,230 | $ | 83,210 | (18 | )% | ||||||||
Total managed net credit losses(1) |
7,659 | 10,982 | (30 | ) | 24,005 | 32,282 | (26 | ) | ||||||||||||
Net interest revenue |
$ | 13,246 | $ | 11,998 | 10 | % | $ | 41,846 | $ | 37,753 | 11 | % | ||||||||
Non-interest revenue |
7,492 | 8,392 | (11 | ) | 26,384 | 37,127 | (29 | ) | ||||||||||||
Revenues, net of interest expense |
$ | 20,738 | $ | 20,390 | 2 | % | $ | 68,230 | $ | 74,880 | (9 | )% | ||||||||
Operating expenses |
11,520 | 11,824 | (3 | ) | 34,904 | 35,508 | (2 | ) | ||||||||||||
Provisions for credit losses and for benefits and claims |
5,919 | 9,095 | (35 | ) | 21,202 | 32,078 | (34 | ) | ||||||||||||
Income (loss) from continuing operations before income taxes |
$ | 3,299 | $ | (529 | ) | NM | $ | 12,124 | $ | 7,294 | 66 | % | ||||||||
Income taxes (losses) |
698 | (1,122 | ) | NM | 2,546 | 620 | NM | |||||||||||||
Income from continuing operations |
$ | 2,601 | $ | 593 | NM | $ | 9,578 | $ | 6,674 | 44 | % | |||||||||
Loss from discontinued operations, net of taxes |
(374 | ) | (418 | ) | 11 | (166 | ) | (677 | ) | 75 | ||||||||||
Net income before attribution of noncontrolling interests |
$ | 2,227 | $ | 175 | NM | $ | 9,412 | $ | 5,997 | 57 | % | |||||||||
Net income attributable to noncontrolling interests |
59 | 74 | (20 | ) | 119 | 24 | NM | |||||||||||||
Citigroup's net income |
$ | 2,168 | $ | 101 | NM | $ | 9,293 | $ | 5,973 | 56 | % | |||||||||
Less: |
||||||||||||||||||||
Preferred dividendsBasic |
| $ | 272 | | $ | 2,988 | ||||||||||||||
Impact of the conversion price reset related to the $12.5 billion convertible preferred stock private issuanceBasic(2) |
| | | 1,285 | ||||||||||||||||
Preferred stock Series H discount accretionBasic |
| 16 | | 123 | ||||||||||||||||
Impact of the Public and Private preferred stock exchange offer(2) |
| 3,055 | | 3,055 | ||||||||||||||||
Dividends and earnings allocated to participating securities, net of forfeitures applicable to Basic EPS |
20 | | 78 | 2 | ||||||||||||||||
Income (loss) allocated to unrestricted common shareholders for basic EPS |
$ | 2,148 | $ | (3,242 | ) | NM | $ | 9,215 | $ | (1,480 | ) | NM | ||||||||
Less: Convertible Preferred Stock Dividends |
| | | | 540 | |||||||||||||||
Add: Incremental dividends and earnings allocated to participating securities, net of forfeitures applicable to Diluted EPS |
1 | | 2 | | ||||||||||||||||
Income (loss) allocated to unrestricted common shareholders for diluted EPS |
$ | 2,149 | $ | (3,242 | ) | NM | $ | 9,217 | $ | (940 | ) | NM | ||||||||
Earnings per share |
||||||||||||||||||||
Basic(3) |
||||||||||||||||||||
Income (loss) from continuing operations |
$ | 0.09 | $ | (0.23 | ) | NM | $ | 0.32 | $ | (0.10 | ) | NM | ||||||||
Net income (loss) |
0.07 | (0.27 | ) | NM | 0.32 | (0.19 | ) | NM | ||||||||||||
Diluted(3) |
||||||||||||||||||||
Income (loss) from continuing operations |
$ | 0.08 | $ | (0.23 | ) | NM | $ | 0.32 | $ | (0.10 | ) | NM | ||||||||
Net income (loss) |
0.07 | (0.27 | ) | NM | 0.31 | (0.19 | ) | NM | ||||||||||||
[Continued on the following page, including notes to table.]
7
SUMMARY OF SELECTED FINANCIAL DATAPage 2
|
|
|
|
Nine Months Ended September 30, | |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Third Quarter | |
|
||||||||||||||||
|
% Change |
% Change |
|||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | |||||||||||||||
At September 30: |
|||||||||||||||||||
Total assets |
$ | 1,983,280 | $ | 1,888,599 | 5 | % | |||||||||||||
Total deposits |
850,095 | 832,603 | 2 | ||||||||||||||||
Long-term debt |
387,330 | 379,557 | 2 | ||||||||||||||||
Mandatorily redeemable securities of subsidiary Trusts (included in Long-term debt) |
20,449 | 34,531 | (41 | ) | |||||||||||||||
Common stockholders' equity |
162,601 | 140,530 | 16 | ||||||||||||||||
Total stockholders' equity |
162,913 | 140,842 | 16 | ||||||||||||||||
Direct staff (in thousands) |
258 | 276 | (7 | ) | |||||||||||||||
Ratios: |
|||||||||||||||||||
Return on common stockholders' equity(4) |
5.4 | % | (12.2 | )% | 8.1 | % | (2.3 | )% | |||||||||||
Tier 1 Common(5) |
10.33 | % | 9.12 | % | |||||||||||||||
Tier 1 Capital |
12.50 | 12.76 | |||||||||||||||||
Total Capital |
16.14 | 16.58 | |||||||||||||||||
Leverage(6) |
6.57 | 6.85 | |||||||||||||||||
Common stockholders' equity to assets |
8.20 | % | 7.44 | % | |||||||||||||||
Ratio of earnings to fixed charges and preferred stock dividends |
1.53 | 0.95 | 1.63 | 1.16 | |||||||||||||||
8
SEGMENT, BUSINESS AND PRODUCTINCOME (LOSS) AND REVENUES
The following tables show the income (loss) and revenues for Citigroup on a segment, business and product view:
|
Third Quarter | |
Nine Months | |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
|||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||
Income (loss) from Continuing Operations |
|||||||||||||||||||||
CITICORP |
|||||||||||||||||||||
Regional Consumer Banking |
|||||||||||||||||||||
North America |
$ | 147 | $ | 206 | (29 | )% | $ | 231 | $ | 702 | (67 | )% | |||||||||
EMEA |
22 | (23 | ) | NM | 99 | (166 | ) | NM | |||||||||||||
Latin America |
558 | 77 | NM | 1,438 | 412 | NM | |||||||||||||||
Asia |
505 | 444 | 14 | % | 1,655 | 971 | 70 | ||||||||||||||
Total |
$ | 1,232 | $ | 704 | 75 | % | $ | 3,423 | $ | 1,919 | 78 | % | |||||||||
Securities and Banking |
|||||||||||||||||||||
North America |
$ | 456 | $ | 7 | NM | $ | 2,719 | $ | 2,472 | 10 | % | ||||||||||
EMEA |
505 | 550 | (8 | )% | 1,892 | 3,467 | (45 | ) | |||||||||||||
Latin America |
266 | 219 | 21 | 735 | 1,158 | (37 | ) | ||||||||||||||
Asia |
180 | 71 | NM | 952 | 1,724 | (45 | ) | ||||||||||||||
Total |
$ | 1,407 | $ | 847 | 66 | % | $ | 6,298 | $ | 8,821 | (29 | )% | |||||||||
Transaction Services |
|||||||||||||||||||||
North America |
$ | 131 | $ | 152 | (14 | )% | $ | 456 | $ | 471 | (3 | )% | |||||||||
EMEA |
305 | 308 | (1 | ) | 929 | 984 | (6 | ) | |||||||||||||
Latin America |
171 | 148 | 16 | 481 | 458 | 5 | |||||||||||||||
Asia |
318 | 331 | (4 | ) | 934 | 904 | 3 | ||||||||||||||
Total |
$ | 925 | $ | 939 | (1 | )% | $ | 2,800 | $ | 2,817 | (1 | )% | |||||||||
Institutional Clients Group |
$ | 2,332 | $ | 1,786 | 31 | % | $ | 9,098 | $ | 11,638 | (22 | )% | |||||||||
Total Citicorp |
$ | 3,564 | $ | 2,490 | 43 | % | $ | 12,521 | $ | 13,557 | (8 | )% | |||||||||
CITI HOLDINGS |
|||||||||||||||||||||
Brokerage and Asset Management |
$ | (147 | ) | $ | 90 | NM | $ | (154 | ) | $ | 6,899 | NM | |||||||||
Local Consumer Lending |
(827 | ) | (2,142 | ) | 61 | % | (3,895 | ) | (8,060 | ) | 52 | % | |||||||||
Special Asset Pool |
(80 | ) | 58 | NM | 922 | (5,136 | ) | NM | |||||||||||||
Total Citi Holdings |
$ | (1,054 | ) | $ | (1,994 | ) | 47 | % | $ | (3,127 | ) | $ | (6,297 | ) | 50 | % | |||||
Corporate/Other |
$ | 91 | $ | 97 | (6 | )% | $ | 184 | $ | (586 | ) | NM | |||||||||
Income from continuing operations |
$ | 2,601 | $ | 593 | NM | $ | 9,578 | $ | 6,674 | 44 | % | ||||||||||
Discontinued operations |
$ | (374 | ) | $ | (418 | ) | $ | (166 | ) | $ | (677 | ) | |||||||||
Net income attributable to noncontrolling interests |
59 | 74 | 119 | 24 | |||||||||||||||||
Citigroup's net income |
$ | 2,168 | $ | 101 | NM | $ | 9,293 | $ | 5,973 | 56 | % | ||||||||||
NM Not meaningful
9
|
Third Quarter | |
Nine Months | |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
|||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||
CITICORP |
|||||||||||||||||||||
Regional Consumer Banking |
|||||||||||||||||||||
North America |
$ | 3,740 | $ | 2,017 | 85 | % | $ | 11,234 | $ | 6,702 | 68 | % | |||||||||
EMEA |
349 | 415 | (16 | ) | 1,130 | 1,169 | (3 | ) | |||||||||||||
Latin America |
2,233 | 1,971 | 13 | 6,427 | 5,845 | 10 | |||||||||||||||
Asia |
1,839 | 1,717 | 7 | 5,484 | 4,958 | 11 | |||||||||||||||
Total |
$ | 8,161 | $ | 6,120 | 33 | % | $ | 24,275 | $ | 18,674 | 30 | % | |||||||||
Securities and Banking |
|||||||||||||||||||||
North America |
$ | 2,203 | $ | 1,301 | 69 | % | $ | 8,383 | $ | 8,038 | 4 | % | |||||||||
EMEA |
1,733 | 2,202 | (21 | ) | 6,010 | 8,982 | (33 | ) | |||||||||||||
Latin America |
639 | 705 | (9 | ) | 1,804 | 2,554 | (29 | ) | |||||||||||||
Asia |
1,018 | 683 | 49 | 3,354 | 4,218 | (20 | ) | ||||||||||||||
Total |
$ | 5,593 | $ | 4,891 | 14 | % | $ | 19,551 | $ | 23,792 | (18 | )% | |||||||||
Transaction Services |
|||||||||||||||||||||
North America |
$ | 620 | $ | 643 | (4 | )% | $ | 1,895 | $ | 1,888 | | ||||||||||
EMEA |
835 | 845 | (1 | ) | 2,516 | 2,549 | (1 | )% | |||||||||||||
Latin America |
384 | 337 | 14 | 1,084 | 1,020 | 6 | |||||||||||||||
Asia |
696 | 632 | 10 | 1,979 | 1,857 | 7 | |||||||||||||||
Total |
$ | 2,535 | $ | 2,457 | 3 | % | $ | 7,474 | $ | 7,314 | 2 | % | |||||||||
Institutional Clients Group |
$ | 8,128 | $ | 7,348 | 11 | % | $ | 27,025 | $ | 31,106 | (13 | )% | |||||||||
Total Citicorp |
$ | 16,289 | $ | 13,468 | 21 | % | $ | 51,300 | $ | 49,780 | 3 | % | |||||||||
CITI HOLDINGS |
|||||||||||||||||||||
Brokerage and Asset Management |
$ | (8 | ) | $ | 525 | NM | $ | 473 | $ | 14,352 | (97 | )% | |||||||||
Local Consumer Lending |
3,547 | 4,362 | (19 | )% | 12,423 | 13,864 | (10 | ) | |||||||||||||
Special Asset Pool |
314 | 1,363 | (77 | ) | 2,426 | (3,547 | ) | NM | |||||||||||||
Total Citi Holdings |
$ | 3,853 | $ | 6,250 | (38 | )% | $ | 15,322 | $ | 24,669 | (38 | )% | |||||||||
Corporate/Other |
$ | 596 | $ | 672 | (11 | )% | $ | 1,608 | $ | 431 | NM | ||||||||||
Total net revenues |
$ | 20,738 | $ | 20,390 | 2 | % | $ | 68,230 | $ | 74,880 | (9 | )% | |||||||||
Impact of Credit Card Securitization Activity |
|||||||||||||||||||||
Citicorp |
$ | | $ | 1,800 | NM | $ | | $ | 4,928 | NM | |||||||||||
Citi Holdings |
| 952 | NM | | 3,402 | NM | |||||||||||||||
Total impact of credit card securitization activity |
$ | | $ | 2,752 | NM | $ | | $ | 8,330 | NM | |||||||||||
Total Citigroupmanaged net revenues |
$ | 20,738 | $ | 23,142 | (10 | )% | $ | 68,230 | $ | 83,210 | (18 | )% | |||||||||
NM Not meaningful
10
Citicorp is the company's global bank for consumers and businesses and represents Citi's core franchise. Citicorp is focused on providing best-in-class products and services to customers and leveraging Citigroup's unparalleled global network. Citicorp is physically present in approximately 100 countries, many for over 100 years, and offers services in over 160 countries and jurisdictions. Citi believes this global network provides a strong foundation for servicing the broad financial services needs of large multinational clients and for meeting the needs of retail, private banking, commercial and institutional customers around the world. Citigroup's global footprint provides coverage of the world's emerging economies, which Citi believes represent a strong area of growth. At September 30, 2010, Citicorp had approximately $1.3 trillion of assets and $757 billion of deposits, representing approximately 65% of Citi's total assets and approximately 89% of its deposits.
Citicorp consists of the following businesses: Regional Consumer Banking (which includes retail banking and Citi-branded cards in four regionsNorth America, EMEA, Latin America and Asia) and Institutional Clients Group (which includes Securities and Banking and Transaction Services).
|
Third Quarter | |
Nine Months | |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
|||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||
Net interest revenue |
$ | 9,475 | $ | 8,727 | 9 | % | $ | 29,087 | $ | 26,012 | 12 | % | |||||||||
Non-interest revenue |
6,814 | 4,741 | 44 | 22,213 | 23,768 | (7 | ) | ||||||||||||||
Total revenues, net of interest expense |
$ | 16,289 | $ | 13,468 | 21 | % | $ | 51,300 | $ | 49,780 | 3 | % | |||||||||
Provisions for credit losses and for benefits and claims |
|||||||||||||||||||||
Net credit losses |
$ | 3,020 | $ | 1,734 | 74 | % | $ | 9,127 | $ | 4,560 | 100 | % | |||||||||
Credit reserve build (release) |
(427 | ) | 522 | NM | (1,426 | ) | 2,751 | NM | |||||||||||||
Provision for loan losses |
$ | 2,593 | $ | 2,256 | 15 | % | $ | 7,701 | $ | 7,311 | 5 | % | |||||||||
Provision for benefits and claims |
38 | 43 | (12 | ) | 109 | 127 | (14 | ) | |||||||||||||
Provision for unfunded lending commitments |
1 | | | (32 | ) | 115 | NM | ||||||||||||||
Total provisions for credit losses and for benefits and claims |
$ | 2,632 | $ | 2,299 | 14 | % | $ | 7,778 | $ | 7,553 | 3 | % | |||||||||
Total operating expenses |
$ | 8,883 | $ | 8,422 | 5 | % | $ | 26,458 | $ | 23,889 | 11 | % | |||||||||
Income from continuing operations before taxes |
$ | 4,774 | $ | 2,747 | 74 | % | $ | 17,064 | $ | 18,338 | (7 | )% | |||||||||
Provisions for income taxes |
1,210 | 257 | NM | 4,543 | 4,781 | (5 | ) | ||||||||||||||
Income from continuing operations |
$ | 3,564 | $ | 2,490 | 43 | % | $ | 12,521 | $ | 13,557 | (8 | )% | |||||||||
Net income (loss) attributable to noncontrolling interests |
30 | 25 | 20 | 71 | 25 | NM | |||||||||||||||
Citicorp's net income |
$ | 3,534 | $ | 2,465 | 43 | % | $ | 12,450 | $ | 13,532 | (8 | )% | |||||||||
Balance sheet data (in billions of dollars) |
|||||||||||||||||||||
Total EOP assets |
$ | 1,283 | $ | 1,075 | 19 | % | |||||||||||||||
Average assets |
1,252 | 1,096 | 14 | $ | 1,245 | $ | 1,076 | 16 | % | ||||||||||||
Return on assets |
1.12 | % | 0.89 | % | 1.34 | % | 1.68 | % | |||||||||||||
Total EOP deposits |
757 | 731 | 4 | ||||||||||||||||||
Total GAAP revenues |
$ | 16,289 | $ | 13,468 | 21 | % | $ | 51,300 | $ | 49,780 | 3 | % | |||||||||
Net impact of credit card securitization activity(1) |
| 1,800 | NM | | 4,928 | NM | |||||||||||||||
Total managed revenues |
$ | 16,289 | $ | 15,268 | 7 | % | $ | 51,300 | $ | 54,708 | (6 | )% | |||||||||
GAAP net credit losses |
$ | 3,020 | $ | 1,734 | 74 | % | $ | 9,127 | $ | 4,560 | 100 | % | |||||||||
Impact of credit card securitization activity(1) |
| 1,876 | NM | | $ | 5,204 | NM | ||||||||||||||
Total managed net credit losses |
$ | 3,020 | $ | 3,610 | (16 | )% | $ | 9,127 | $ | 9,764 | (7 | )% | |||||||||
11
Regional Consumer Banking (RCB) consists of Citigroup's four regional consumer banking businesses that provide traditional banking services to retail customers. RCB also contains Citigroup's branded cards business and Citi's local commercial banking business. RCB is a globally diversified business with over 4,200 branches in 39 countries around the world. During the third quarter of 2010, 54% of total RCB revenues were from outside North America. Additionally, the majority of international revenues and loans were from emerging economies in Asia, Latin America, and Central and Eastern Europe and the Middle East. At September 30, 2010, RCB had $311 billion of assets and $300 billion of deposits.
|
Third Quarter | |
Nine Months | |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
|||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||
Net interest revenue |
$ | 5,689 | $ | 4,216 | 35 | % | $ | 17,380 | $ | 12,198 | 42 | % | |||||||||
Non-interest revenue |
2,472 | 1,904 | 30 | 6,895 | 6,476 | 6 | |||||||||||||||
Total revenues, net of interest expense |
$ | 8,161 | $ | 6,120 | 33 | % | $ | 24,275 | $ | 18,674 | 30 | % | |||||||||
Total operating expenses |
$ | 4,087 | $ | 3,778 | 8 | % | $ | 12,006 | $ | 10,985 | 9 | % | |||||||||
Net credit losses |
$ | 2,731 | $ | 1,442 | 89 | % | $ | 8,693 | $ | 4,022 | NM | ||||||||||
Credit reserve build (release) |
(403 | ) | 356 | NM | (991 | ) | 1,661 | NM | |||||||||||||
Provision for unfunded lending commitments |
| | | (4 | ) | | | ||||||||||||||
Provisions for benefits and claims |
38 | 43 | (12 | )% | 109 | 127 | (14 | )% | |||||||||||||
Provisions for credit losses and for benefits and claims |
$ | 2,366 | $ | 1,841 | 29 | % | $ | 7,807 | $ | 5,810 | 34 | % | |||||||||
Income from continuing operations before taxes |
$ | 1,708 | $ | 501 | NM | $ | 4,462 | $ | 1,879 | NM | |||||||||||
Income taxes |
476 | (203 | ) | NM | 1,039 | (40 | ) | NM | |||||||||||||
Income from continuing operations |
$ | 1,232 | $ | 704 | 75 | % | $ | 3,423 | $ | 1,919 | 78 | % | |||||||||
Net income (loss) attributable to noncontrolling interests |
(4 | ) | 2 | NM | (9 | ) | 2 | NM | |||||||||||||
Net income |
$ | 1,236 | $ | 702 | 76 | % | $ | 3,432 | $ | 1,917 | 79 | % | |||||||||
Average assets (in billions of dollars) |
$ | 311 | $ | 248 | 25 | % | $ | 308 | $ | 239 | 29 | % | |||||||||
Return on assets |
1.58 | % | 1.12 | % | 1.49 | % | 1.07 | % | |||||||||||||
Average deposits (in billions of dollars) |
296 | 279 | 6 | % | |||||||||||||||||
Managed net credit losses as a percentage of average managed loans |
4.90 | % | 5.97 | % | |||||||||||||||||
Revenue by business |
|||||||||||||||||||||
Retail banking |
$ | 4,005 | $ | 3,760 | 7 | % | $ | 11,735 | $ | 11,086 | 6 | % | |||||||||
Citi-branded cards |
4,156 | 2,360 | 76 | 12,540 | 7,588 | 65 | |||||||||||||||
Total GAAP revenues |
$ | 8,161 | $ | 6,120 | 33 | % | $ | 24,275 | $ | 18,674 | 30 | % | |||||||||
Net impact of credit card securitization activity(1) |
| 1,800 | NM | | 4,928 | NM | |||||||||||||||
Total managed revenues |
$ | 8,161 | $ | 7,920 | 3 | % | $ | 24,275 | $ | 23,602 | 3 | % | |||||||||
Net credit losses by business |
|||||||||||||||||||||
Retail banking |
$ | 333 | $ | 395 | (16 | )% | $ | 926 | $ | 1,161 | (20 | )% | |||||||||
Citi-branded cards |
2,398 | 1,047 | NM | 7,767 | 2,861 | NM | |||||||||||||||
Total GAAP net credit losses |
$ | 2,731 | $ | 1,442 | 89 | % | $ | 8,693 | $ | 4,022 | NM | ||||||||||
Net impact of credit card securitization activity(1) |
| 1,876 | NM | | 5,204 | NM | |||||||||||||||
Total managed net credit losses |
$ | 2,731 | $ | 3,318 | (18 | )% | $ | 8,693 | $ | 9,226 | (6 | )% | |||||||||
Income (loss) from continuing operations by business |
|||||||||||||||||||||
Retail banking |
$ | 778 | $ | 698 | 11 | % | $ | 2,510 | $ | 1,983 | 27 | % | |||||||||
Citi-branded cards |
454 | 6 | NM | 913 | (64 | ) | NM | ||||||||||||||
Total |
$ | 1,232 | $ | 704 | 75 | % | $ | 3,423 | $ | 1,919 | 78 | % | |||||||||
12
NORTH AMERICA REGIONAL CONSUMER BANKING
North America Regional Consumer Banking (NA RCB) provides traditional banking and Citi-branded card services to retail customers and small- to mid-size businesses in the U.S. NA RCB's approximately 1,000 retail bank branches and 13.3 million retail customer accounts are largely concentrated in the greater metropolitan areas of New York, Los Angeles, San Francisco, Chicago, Miami, Washington, D.C., Boston, Philadelphia, and certain larger cities in Texas. At September 30, 2010, NA RCB had approximately $29 billion of retail banking and residential real estate loans and $144 billion of deposits. In addition, NA RCB had approximately 21 million Citi-branded credit card accounts, with $77 billion in outstanding card loan balances.
|
Third Quarter | |
Nine Months | |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
|||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||
Net interest revenue |
$ | 2,734 | $ | 1,387 | 97 | % | $ | 8,466 | $ | 3,909 | NM | ||||||||||
Non-interest revenue |
1,006 | 630 | 60 | 2,768 | 2,793 | (1 | )% | ||||||||||||||
Total revenues, net of interest expense |
$ | 3,740 | $ | 2,017 | 85 | % | $ | 11,234 | $ | 6,702 | 68 | % | |||||||||
Total operating expenses |
$ | 1,501 | $ | 1,499 | | $ | 4,611 | $ | 4,479 | 3 | % | ||||||||||
Net credit losses |
$ | 1,971 | $ | 279 | NM | $ | 6,254 | $ | 843 | NM | |||||||||||
Credit reserve build |
40 | 54 | (26 | )% | 35 | 456 | (92 | )% | |||||||||||||
Provisions for benefits and claims |
6 | 14 | (57 | ) | 19 | 42 | (55 | ) | |||||||||||||
Provisions for loan losses and for benefits and claims |
$ | 2,017 | $ | 347 | NM | $ | 6,308 | $ | 1,341 | NM | |||||||||||
Income from continuing operations before taxes |
$ | 222 | $ | 171 | 30 | % | $ | 315 | $ | 882 | (64 | )% | |||||||||
Income taxes (benefits) |
75 | (35 | ) | NM | 84 | 180 | (53 | ) | |||||||||||||
Income from continuing operations |
$ | 147 | $ | 206 | (29 | )% | $ | 231 | $ | 702 | (67 | )% | |||||||||
Net income attributable to noncontrolling interests |
| | | | | | |||||||||||||||
Net income |
$ | 147 | $ | 206 | (29 | )% | $ | 231 | $ | 702 | (67 | )% | |||||||||
Average assets (in billions of dollars) |
$ | 118 | $ | 75 | 57 | % | $ | 119 | $ | 74 | 61 | % | |||||||||
Average deposits (in billions of dollars) |
145 | 142 | 2 | ||||||||||||||||||
Managed net credit losses as a percentage of average managed loans(1) |
7.40 | % | 7.31 | % | |||||||||||||||||
Revenue by business |
|||||||||||||||||||||
Retail banking |
$ | 1,372 | $ | 1,333 | 3 | % | $ | 3,975 | $ | 4,005 | (1 | )% | |||||||||
Citi-branded cards(2) |
2,368 | 684 | NM | 7,259 | 2,697 | NM | |||||||||||||||
Total GAAP revenues |
$ | 3,740 | $ | 2,017 | 85 | % | $ | 11,234 | $ | 6,702 | 68 | % | |||||||||
Net impact of credit card securitization activity(2) |
| 1,800 | NM | | 4,928 | NM | |||||||||||||||
Total managed revenues |
$ | 3,740 | $ | 3,817 | (2 | )% | $ | 11,234 | $ | 11,630 | (3 | )% | |||||||||
Net credit losses by business |
|||||||||||||||||||||
Retail banking |
$ | 90 | $ | 78 | 15 | % | $ | 242 | $ | 222 | 9 | % | |||||||||
Citi-branded cards(2) |
1,881 | 201 | NM | $ | 6,012 | 621 | NM | ||||||||||||||
Total GAAP net credit losses |
$ | 1,971 | $ | 279 | NM | $ | 6,254 | $ | 843 | NM | |||||||||||
Net impact of credit card securitization activity(2) |
| 1,876 | NM | | 5,204 | NM | |||||||||||||||
Total managed net credit losses |
$ | 1,971 | $ | 2,155 | (9 | )% | $ | 6,254 | $ | 6,047 | 3 | % | |||||||||
Income (loss) from continuing operations by business |
|||||||||||||||||||||
Retail banking |
$ | 189 | $ | 193 | (2 | )% | $ | 598 | $ | 676 | (12 | )% | |||||||||
Citi-branded cards |
(42 | ) | 13 | NM | (367 | ) | 26 | NM | |||||||||||||
Total |
$ | 147 | $ | 206 | (29 | )% | $ | 231 | $ | 702 | (67 | )% | |||||||||
3Q10 vs. 3Q09
Revenues, net of interest expense, increased 85% primarily due to the consolidation of securitized credit card receivables pursuant to the adoption of SFAS 166/167 effective January 1, 2010. On a managed basis, revenues, net of interest expense, decreased 2%, primarily reflecting the impact of the CARD Act on branded cards revenues, partially offset by improved revenues in mortgages due to an increase in originations in the current quarter (the vast majority of which were originated for sale).
Net interest revenue was down 11% on a managed basis driven by the impact of the CARD Act as well as lower volumes in cards, where average managed loans were down 8% from the prior-year quarter. This decline was partially offset by lower write-offs of accrued interest in cards as credit continued to improve. A decrease in deposit spreads in the current interest rate environment was partially offset by higher deposit volumes, up 2% from the prior-year quarter.
Non-interest revenue increased 33% on a managed basis primarily due to higher gains on mortgage sales resulting from
13
increased originations, which were up 56% from the prior-year quarter.
Operating expenses were flat compared to the prior-year quarter as increased investment spending was offset by the one-time benefit related to the renegotiation of a third-party contract.
Provisions for loan losses and for benefits and claims increased $1.7 billion primarily due to the consolidation of securitized credit card receivables pursuant to the adoption of SFAS 166/167. On a comparable basis, Provisions for loan losses and for benefits and claims decreased $206 million, or 9%, from the prior-year quarter primarily due to lower net credit losses in cards as underlying credit trends in the cards portfolio continued to improve. The cards managed net credit loss ratio decreased 16 basis points to 9.82%.
3Q10 YTD vs. 3Q09 YTD
Revenues, net of interest expense, increased 68% primarily due to the consolidation of securitized credit card receivables pursuant to the adoption of SFAS 166/167 effective January 1, 2010. On a managed basis, revenues, net of interest expense, declined 3% from the prior-year period, mainly due to lower volumes in branded cards, as well as the net impact of the CARD Act on cards revenues. This decrease was partially offset by better servicing hedge results in mortgages.
Net interest revenue was down 7% on a managed basis driven primarily by lower volumes in cards, with average managed loans down 6% from the prior-year period. The increase in deposit volumes, up 5% from the prior-year period, was offset by lower spreads in the current interest rate environment.
Non-interest revenue increased 9% on a managed basis from the prior-year period mainly driven by better servicing hedge results in mortgages.
Operating expenses increased 3% from the prior-year period. Expenses were fairly flat excluding the impact of a litigation reserve in the first quarter of 2010.
Provisions for loan losses and for benefits and claims increased $5.0 billion primarily due to the consolidation of securitized credit card receivables pursuant to the adoption of SFAS 166/167. On a comparable basis, Provisions for loan losses and for benefits and claims decreased $237 million, or 4%, primarily due to a lower loan loss reserve build, down $421 million from the prior-year period, offset by higher net credit losses in the branded cards portfolio, which increased $187 million. The cards managed net credit loss ratio increased 98 basis points to 10.43%.
Managed Presentations
|
Third Quarter | ||||||
---|---|---|---|---|---|---|---|
|
2010 | 2009 | |||||
Managed credit losses as a percentage of average managed loans |
7.40 | % | 7.31 | % | |||
Impact from credit card securitizations(1) |
| (4.91 | )% | ||||
Net credit losses as a percentage of average loans |
7.40 | % | 2.40 | % | |||
14
EMEA REGIONAL CONSUMER BANKING
EMEA Regional Consumer Banking (EMEA RCB) provides traditional banking and Citi-branded card services to retail customers and small- to mid-size businesses, primarily in Central and Eastern Europe, the Middle East and Africa. Remaining activities in respect of Western Europe retail banking are included in Citi Holdings. EMEA RCB has generally repositioned its business, shifting from a strategy of widespread distribution to a focused strategy concentrating on larger urban markets within the region. An exception is Bank Handlowy, which has a mass market presence in Poland. The countries in which EMEA RCB has the largest presence are Poland, Turkey, Russia and the United Arab Emirates. At September 30, 2010, EMEA RCB had approximately 300 retail bank branches with approximately 4 million customer accounts, $5 billion in retail banking loans and $9 billion in average deposits. In addition, the business had approximately 3 million Citi-branded card accounts with $3 billion in outstanding card loan balances.
|
Third Quarter | |
Nine Months | |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
|||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||
Net interest revenue |
$ | 222 | $ | 262 | (15 | )% | $ | 700 | $ | 729 | (4 | )% | |||||||||
Non-interest revenue |
127 | 153 | (17 | ) | 430 | 440 | (2 | ) | |||||||||||||
Total revenues, net of interest expense |
$ | 349 | $ | 415 | (16 | )% | $ | 1,130 | $ | 1,169 | (3 | )% | |||||||||
Total operating expenses |
$ | 303 | $ | 270 | 12 | % | $ | 848 | $ | 808 | 5 | % | |||||||||
Net credit losses |
$ | 65 | $ | 139 | (53 | )% | $ | 247 | $ | 349 | (29 | )% | |||||||||
Provision for unfunded lending commitments |
| | | (4 | ) | | | ||||||||||||||
Credit reserve build (release) |
(51 | ) | 67 | NM | (107 | ) | 297 | NM | |||||||||||||
Provisions for benefits and claims |
| | | | | | |||||||||||||||
Provisions for credit losses and for benefits and claims |
$ | 14 | $ | 206 | (93 | )% | $ | 136 | $ | 646 | (79 | )% | |||||||||
Income (loss) from continuing operations before taxes |
$ | 32 | $ | (61 | ) | NM | $ | 146 | $ | (285 | ) | NM | |||||||||
Income taxes (benefits) |
10 | (38 | ) | NM | 47 | (119 | ) | NM | |||||||||||||
Income (loss) from continuing operations |
$ | 22 | $ | (23 | ) | NM | $ | 99 | $ | (166 | ) | NM | |||||||||
Net income (loss) attributable to noncontrolling interests |
(1 | ) | 2 | NM | (1 | ) | 2 | NM | |||||||||||||
Net income (loss) |
$ | 23 | $ | (25 | ) | NM | $ | 100 | $ | (168 | ) | NM | |||||||||
Average assets (in billions of dollars) |
$ | 10 | $ | 11 | (9 | )% | $ | 10 | $ | 11 | (9 | )% | |||||||||
Return on assets |
0.91 | % | (0.90 | )% | 1.34 | % | (2.04 | )% | |||||||||||||
Average deposits (in billions of dollars) |
9 | 10 | (4 | ) | |||||||||||||||||
Net credit losses as a percentage of average loans |
3.53 | % | 6.34 | % | |||||||||||||||||
Revenue by business |
|||||||||||||||||||||
Retail banking |
$ | 186 | $ | 237 | (22 | )% | $ | 613 | $ | 676 | (9 | )% | |||||||||
Citi-branded cards |
163 | 178 | (8 | ) | 517 | 493 | 5 | ||||||||||||||
Total |
$ | 349 | $ | 415 | (16 | )% | $ | 1,130 | $ | 1,169 | (3 | )% | |||||||||
Income (loss) from continuing operations by business |
|||||||||||||||||||||
Retail banking |
$ | (18 | ) | $ | (23 | ) | 22 | % | $ | (15 | ) | $ | (140 | ) | 89 | % | |||||
Citi-branded cards |
40 | | | 114 | (26 | ) | NM | ||||||||||||||
Total |
$ | 22 | $ | (23 | ) | NM | $ | 99 | $ | (166 | ) | NM | |||||||||
3Q10 vs. 3Q09
Revenues, net of interest expense, decreased 16%. A majority of the decrease was due to lower results from Citi's equity investment in Akbank, lower lending revenues due to credit tightening and FX translation. This was partially offset by higher revenues in wealth management. Cards purchase sales were up 5% and investment sales were up 20%. Assets under management increased 10% primarily due to market valuations and the introduction of new, regional initiatives.
Net interest revenue decreased 15%, primarily due to lower volumes due to tighter origination criteria and various promotions aimed at client acquisition.
Non-interest revenue decreased 17% due to lower results from Citi's equity investment in Akbank.
Operating expenses increased 12% reflecting increased investments and marketing expenditures in the business.
Provisions for credit losses and for benefits and claims decreased 93% mainly due to the impact of a $51 million loan loss reserve release in the current quarter, compared to a $67 million build in the prior-year quarter, and a 53% decline in net credit losses, driven by credit improvements across most markets. The release of loan loss reserves in the current period was driven by improvement in credit in most countries coupled with a decline in receivables. The cards net credit loss ratio improved to 4.39% in the current quarter from 7.27% and there was a 7% improvement in the net credit margin. The retail banking net credit loss ratio decreased from 5.85% in the prior-year quarter to 3.00% in the current quarter.
3Q10 YTD vs. 3Q09 YTD
Revenues, net of interest expense, decreased 3%. The decrease in revenue was primarily attributable to lower retail bank lending revenues as a result of lower volumes, which were due to tighter origination criteria. This was partially offset by FX translation and higher revenues in cards due to higher volumes. Cards purchase sales increased 10%.
Net interest revenue decreased 4%, mainly due to a decline in volumes as a result of tighter origination criteria.
Non-interest revenue decreased 2%, primarily driven by a litigation reserve build in the first half of 2010.
Operating expenses increased 5% driven by the impact of FX translation and increased investment in the business, largely offset by cost savings from branch closures, headcount reductions and re-engineering benefits.
15
Provisions for credit losses and for benefits and claims decreased 79% mainly due to the impact of a $107 million loan loss reserve release in the first nine months of 2010, compared to a $297 million build in the prior-year period, as well as a 29% decline in net credit losses. The release of loan loss reserves in the current period was driven by an improvement in credit in most countries coupled with a decline in receivables.
16
LATIN AMERICA REGIONAL CONSUMER BANKING
Latin America Regional Consumer Banking (LATAM RCB) provides traditional banking and Citi-branded card services to retail customers and small- to mid-size businesses, with the largest presence in Mexico and Brazil. LATAM RCB includes branch networks throughout Latin America as well as Banco Nacional de Mexico, or Banamex, Mexico's second largest bank with over 1,700 branches. At September 30, 2010, LATAM RCB had approximately 2,215 retail branches, with 27 million customer accounts, $21 billion in retail banking loan balances and $41 billion in average deposits. In addition, the business had approximately 12 million Citi-branded card accounts with $13 billion in outstanding loan balances.
|
Third Quarter | |
Nine Months | |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
|||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||
Net interest revenue |
$ | 1,501 | $ | 1,366 | 10 | % | $ | 4,430 | $ | 4,009 | 11 | % | |||||||||
Non-interest revenue |
732 | 605 | 21 | 1,997 | 1,836 | 9 | |||||||||||||||
Total revenues, net of interest expense |
$ | 2,233 | $ | 1,971 | 13 | % | $ | 6,427 | $ | 5,845 | 10 | % | |||||||||
Total operating expenses |
$ | 1,258 | $ | 1,127 | 12 | % | $ | 3,666 | $ | 3,175 | 15 | % | |||||||||
Net credit losses |
$ | 450 | $ | 657 | (32 | )% | $ | 1,416 | $ | 1,808 | (22 | )% | |||||||||
Credit reserve build (release) |
(300 | ) | 141 | NM | (677 | ) | 463 | NM | |||||||||||||
Provision for benefits and claims |
32 | 29 | 10 | 90 | 85 | 6 | |||||||||||||||
Provisions for loan losses and for benefits and claims |
$ | 182 | $ | 827 | (78 | )% | $ | 829 | $ | 2,356 | (65 | )% | |||||||||
Income from continuing operations before taxes |
$ | 793 | $ | 17 | NM | $ | 1,932 | $ | 314 | NM | |||||||||||
Income taxes |
235 | (60 | ) | NM | 494 | (98 | ) | NM | |||||||||||||
Income from continuing operations |
$ | 558 | $ | 77 | NM | $ | 1,438 | $ | 412 | NM | |||||||||||
Net (loss) attributable to noncontrolling interests |
(3 | ) | | | (8 | ) | | | |||||||||||||
Net income |
$ | 561 | $ | 77 | NM | $ | 1,446 | $ | 412 | NM | |||||||||||
Average assets (in billions of dollars) |
$ | 74 | $ | 66 | 12 | % | $ | 73 | $ | 64 | 14 | % | |||||||||
Return on assets |
3.01 | % | 0.46 | % | 2.65 | % | 0.86 | % | |||||||||||||
Average deposits (in billions of dollars) |
41 | 36 | 13 | ||||||||||||||||||
Net credit losses as a percentage of average loans |
5.48 | % | 8.99 | % | |||||||||||||||||
Revenue by business |
|||||||||||||||||||||
Retail banking |
$ | 1,300 | $ | 1,114 | 17 | % | $ | 3,732 | $ | 3,252 | 15 | % | |||||||||
Citi-branded cards |
933 | 857 | 9 | 2,695 | 2,593 | 4 | |||||||||||||||
Total |
$ | 2,233 | $ | 1,971 | 13 | % | $ | 6,427 | $ | 5,845 | 10 | % | |||||||||
Income (loss) from continuing operations by business |
|||||||||||||||||||||
Retail banking |
$ | 277 | $ | 154 | 80 | % | $ | 808 | $ | 580 | 39 | % | |||||||||
Citi-branded cards |
281 | (77 | ) | NM | 630 | (168 | ) | NM | |||||||||||||
Total |
$ | 558 | $ | 77 | NM | $ | 1,438 | $ | 412 | NM | |||||||||||
3Q10 vs. 3Q09
Revenues, net of interest expense, increased 13% mainly due to higher lending and deposit volumes as well as better margins in retail banking and, in cards, higher ANR and fees from new account acquisitions as well as the impact of FX translation.
Net interest revenue increased 10%, mainly driven by higher lending and deposit volumes in retail banking and the impact of FX translation. Average retail banking loans and deposits increased 20% and 13%, respectively. The increases were also spurred by better spreads and positive FX translation.
Non-interest revenue increased 21%, primarily due to higher fees in the cards business and the impact of FX translation.
Operating expenses increased 12%, mainly due to the investments initiatives for account acquisitions in cards, the prior-year quarter's release of legal reserves and excess restructuring provisions, and the impact of FX translation.
Provisions for loan losses and for benefits and claims decreased 78%, mainly due to the impact of a $300 million loan loss reserve release in the current period, compared to a $141 million build in the same period last year, and a 32% decline in net credit losses, reflecting improved credit conditions, especially in Mexico cards. The cards net credit loss ratio declined across the region during the period, from 17.80% to 10.39%, reflecting continued economic recovery. The retail banking net credit loss ratio dropped from 2.68% to 2.50%.
3Q10 YTD vs. 3Q09 YTD
Revenues, net of interest expense, increased 10%, mainly due to higher lending and deposit volumes in retail banking aided by a moderate increase in cards loans volumes and the impact of FX translation.
Net interest revenue increased 11%, mainly driven by higher lending and deposit volumes in retail banking. Average retail banking loans and deposits increased 21% and 13%, respectively. Additionally, cards ANR moderately increased and there was a positive FX translation.
Non-interest revenue increased 9%, due to higher fees in the cards business and the impact of FX translation.
Provisions for loan losses and for benefits and claims decreased 65%, mainly due to the impact of a net loan loss reserve release of $677 million year-to-date 2010, compared to a $463 million build in the same period last year, and a 22% decline in net credit losses, reflecting improved credit conditions, especially in Mexico cards. The cards net credit
17
loss ratio declined from 16.36% to 12.14%, while the retail banking net credit loss ratio declined from 3.01% to 2.17%.
18
ASIA REGIONAL CONSUMER BANKING
Asia Regional Consumer Banking (Asia RCB) provides traditional banking and Citi-branded card services to retail customers and small- to mid-size businesses, with the largest Citi presence in South Korea, Japan, Taiwan, Singapore, Australia, Hong Kong, India and Indonesia. At September 30, 2010, Asia RCB had approximately 707 retail branches, 16 million retail banking accounts, $101 billion in average customer deposits, and $59 billion in retail banking loans. In addition, the business had approximately 15 million Citi-branded card accounts with $19 billion in outstanding loan balances.
|
Third Quarter | |
Nine Months | |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
|||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||
Net interest revenue |
$ | 1,232 | $ | 1,201 | 3 | % | $ | 3,784 | $ | 3,551 | 7 | % | |||||||||
Non-interest revenue |
607 | 516 | 18 | 1,700 | 1,407 | 21 | |||||||||||||||
Total revenues, net of interest expense |
$ | 1,839 | $ | 1,717 | 7 | % | $ | 5,484 | $ | 4,958 | 11 | % | |||||||||
Total operating expenses |
$ | 1,025 | $ | 882 | 16 | % | $ | 2,881 | $ | 2,523 | 14 | % | |||||||||
Net credit losses |
$ | 245 | $ | 367 | (33 | )% | $ | 776 | $ | 1,022 | (24 | )% | |||||||||
Credit reserve build (release) |
(92 | ) | 94 | NM | (242 | ) | 445 | NM | |||||||||||||
Provisions for loan losses and for benefits and claims |
$ | 153 | $ | 461 | (67 | )% | $ | 534 | $ | 1,467 | (64 | )% | |||||||||
Income from continuing operations before taxes |
$ | 661 | $ | 374 | 77 | % | $ | 2,069 | $ | 968 | NM | ||||||||||
Income taxes |
156 | (70 | ) | NM | 414 | (3 | ) | NM | |||||||||||||
Income from continuing operations |
$ | 505 | $ | 444 | 14 | % | $ | 1,655 | $ | 971 | 70 | % | |||||||||
Net income attributable to noncontrolling interests |
| | | | | | |||||||||||||||
Net income |
$ | 505 | $ | 444 | 14 | % | $ | 1,655 | $ | 971 | 70 | % | |||||||||
Average assets (in billions of dollars) |
$ | 109 | $ | 96 | 14 | % | $ | 106 | $ | 90 | 18 | % | |||||||||
Return on assets |
1.84 | % | 1.83 | % | 2.09 | % | 1.44 | % | |||||||||||||
Average deposits (in billions of dollars) |
101 | 91 | 11 | ||||||||||||||||||
Net credit losses as a percentage of average loans |
1.29 | % | 2.21 | % | |||||||||||||||||
Revenue by business |
|||||||||||||||||||||
Retail banking |
$ | 1,147 | $ | 1,076 | 7 | % | $ | 3,415 | $ | 3,153 | 8 | % | |||||||||
Citi-branded cards |
692 | 641 | 8 | 2,069 | 1,805 | 15 | |||||||||||||||
Total |
$ | 1,839 | $ | 1,717 | 7 | % | $ | 5,484 | $ | 4,958 | 11 | % | |||||||||
Income from continuing operations by business |
|||||||||||||||||||||
Retail banking |
$ | 330 | $ | 374 | (12 | )% | $ | 1,119 | $ | 867 | 29 | % | |||||||||
Citi-branded cards |
175 | 70 | NM | 536 | 104 | NM | |||||||||||||||
Total |
$ | 505 | $ | 444 | 14 | % | $ | 1,655 | $ | 971 | 70 | % | |||||||||
3Q10 vs. 3Q09
Revenues, net of interest expense, increased 7%, reflecting higher cards purchase sales, investment sales, loan and deposit volumes, and the impact of FX translation, partially offset by lower spreads.
Net interest revenue was 3% higher than the prior-year period, mainly due to higher lending and deposit volumes and the impact of FX translation, partially offset by lower spreads. Average loans and deposits were up 15% and 11%, respectively.
Non-interest revenue increased 18%, primarily due to higher investment revenues, higher cards purchase sales, and the impact of FX translation.
Operating expenses increased 16%, primarily due to the increase in volumes and higher investment spending, and the impact of FX translation.
Provisions for loan losses and for benefits and claims decreased 67%, mainly due to the impact of a $92 million loan loss reserve release in the current quarter, compared to a $94 million loan loss reserve build in the prior-year quarter, and a decrease in net credit losses of 33%. These declines were partially offset by the impact of FX translation. Delinquencies and net credit losses continued to decline from their peak level in the second quarter of 2009 as the region benefitted from continued economic recovery and increased levels of customer activity. The cards net credit loss ratio decreased from 5.89% in the prior-year quarter to 3.54% in the current quarter. The retail banking net credit loss ratio decreased from 0.96% in the prior-year quarter to 0.56% in the current quarter.
3Q10 YTD vs. 3Q09 YTD
Revenues, net of interest expense, increased 11%, driven by higher cards purchase sales, investment sales and loan and deposit volumes, and the impact of FX translation, partially offset by lower spread.
Net interest revenue was 7% higher than the prior-year period, mainly due to higher lending and deposit volumes and the impact of FX translation, partially offset by lower spreads.
Non-interest revenue increased 21%, primarily due to higher investment revenues, higher cards purchase sales, and the impact of FX translation.
Operating expenses increased 14%, primarily due to increase in volumes, continued investment spending, and the impact of FX translation.
19
Provisions for loan losses and for benefits and claims decreased 64%, mainly due to the impact of a net loan loss reserve release of $242 million in the first nine months of 2010, compared to a $445 million loan loss reserve build in the prior-year period, and a 24% decline in net credit losses. These declines were partially offset by the impact of FX translation. The decrease in provisions for loan losses and for benefits and claims reflects continued credit quality improvement across the region, particularly in India and South Korea.
20
Institutional Clients Group (ICG) includes Securities and Banking and Transaction Services. ICG provides corporate, institutional and ultra-high net worth clients with a full range of products and services, including cash management, trading, underwriting, lending and advisory services, around the world. ICG's international presence is supported by trading floors in approximately 75 countries and a proprietary network within Transaction Services in over 95 countries. At September 30, 2010, ICG had approximately $963 billion of assets and $457 billion of deposits.
|
Third Quarter | |
Nine Months | |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Commissions and fees |
$ | 1,016 | $ | 1,122 | (9 | )% | $ | 3,210 | $ | 3,100 | 4 | % | ||||||||
Administration and other fiduciary fees |
672 | 702 | (4 | ) | 2,008 | 2,122 | (5 | ) | ||||||||||||
Investment banking |
829 | 1,066 | (22 | ) | 2,374 | 3,247 | (27 | ) | ||||||||||||
Principal transactions |
982 | (571 | ) | NM | 5,958 | 7,259 | (18 | ) | ||||||||||||
Other |
843 | 518 | 63 | 1,768 | 1,564 | 13 | ||||||||||||||
Total non-interest revenue |
$ | 4,342 | $ | 2,837 | 53 | % | $ | 15,318 | $ | 17,292 | (11 | )% | ||||||||
Net interest revenue (including dividends) |
3,786 | 4,511 | (16 | ) | 11,707 | 13,814 | (15 | ) | ||||||||||||
Total revenues, net of interest expense |
$ | 8,128 | $ | 7,348 | 11 | % | $ | 27,025 | $ | 31,106 | (13 | )% | ||||||||
Total operating expenses |
4,796 | 4,644 | 3 | 14,452 | 12,904 | 12 | ||||||||||||||
Net credit losses |
289 | 292 | (1 | ) | 434 | 538 | (19 | ) | ||||||||||||
Provision for unfunded lending commitments |
1 | | | (28 | ) | 115 | NM | |||||||||||||
Credit reserve build (release) |
(24 | ) | 166 | NM | (435 | ) | 1,090 | NM | ||||||||||||
Provisions for benefits and claims |
| | | | | | ||||||||||||||
Provisions for credit losses and for benefits and claims |
$ | 266 | $ | 458 | (42 | )% | $ | (29 | ) | $ | 1,743 | NM | ||||||||
Income from continuing operations before taxes |
$ | 3,066 | $ | 2,246 | 37 | % | $ | 12,602 | $ | 16,459 | (23 | )% | ||||||||
Income taxes |
734 | 460 | 60 | 3,504 | 4,821 | (27 | ) | |||||||||||||
Income from continuing operations |
$ | 2,332 | $ | 1,786 | 31 | % | $ | 9,098 | $ | 11,638 | (22 | )% | ||||||||
Net income attributable to noncontrolling interests |
34 | 23 | 48 | 80 | 23 | NM | ||||||||||||||
Net income |
$ | 2,298 | $ | 1,763 | 30 | % | $ | 9,018 | $ | 11,615 | (22 | )% | ||||||||
Average assets (in billions of dollars) |
$ | 941 | $ | 848 | 11 | % | $ | 937 | $ | 837 | 12 | % | ||||||||
Return on assets |
0.97 | % | 0.82 | % | 1.29 | % | 1.86 | % | ||||||||||||
Revenues by region |
||||||||||||||||||||
North America |
$ | 2,823 | $ | 1,944 | 45 | % | $ | 10,278 | $ | 9,926 | 4 | % | ||||||||
EMEA |
2,568 | 3,047 | (16 | ) | 8,526 | 11,531 | (26 | ) | ||||||||||||
Latin America |
1,023 | 1,042 | (2 | ) | 2,888 | 3,574 | (19 | ) | ||||||||||||
Asia |
1,714 | 1,315 | 30 | 5,333 | 6,075 | (12 | ) | |||||||||||||
Total revenues |
$ | 8,128 | $ | 7,348 | 11 | % | $ | 27,025 | $ | 31,106 | (13 | )% | ||||||||
Income from continuing operations by region |
||||||||||||||||||||
North America |
$ | 587 | $ | 159 | NM | $ | 3,175 | $ | 2,943 | 8 | % | |||||||||
EMEA |
810 | 858 | (6 | )% | 2,821 | 4,451 | (37 | ) | ||||||||||||
Latin America |
437 | 367 | 19 | 1,216 | 1,616 | (25 | ) | |||||||||||||
Asia |
498 | 402 | 24 | 1,886 | 2,628 | (28 | ) | |||||||||||||
Total income from continuing operations |
$ | 2,332 | $ | 1,786 | 31 | % | $ | 9,098 | $ | 11,638 | (22 | )% | ||||||||
Average loans by region (in billions of dollars) |
||||||||||||||||||||
North America |
$ | 66 | $ | 49 | 35 | % | ||||||||||||||
EMEA |
38 | 43 | (12 | ) | ||||||||||||||||
Latin America |
22 | 22 | | |||||||||||||||||
Asia |
37 | 27 | 37 | |||||||||||||||||
Total average loans |
$ | 163 | $ | 141 | 16 | % | ||||||||||||||
21
Securities and Banking (S&B) offers a wide array of investment and commercial banking services and products for corporations, governments, institutional and retail investors, and ultra-high net worth individuals. S&B includes investment banking and advisory services, lending, debt and equity sales and trading, institutional brokerage, foreign exchange, structured products, cash instruments and related derivatives, and private banking. S&B revenue is generated primarily from fees for investment banking and advisory services, fees and interest on loans, fees and spread on foreign exchange, structured products, cash instruments and related derivatives, income earned on principal transactions, and fees and spreads on private banking services.
|
Third Quarter | |
Nine Months | |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Net interest revenue |
$ | 2,353 | $ | 3,118 | (25 | )% | $ | 7,488 | $ | 9,560 | (22 | )% | ||||||||
Non-interest revenue |
3,240 | 1,773 | 83 | 12,063 | 14,232 | (15 | ) | |||||||||||||
Revenues, net of interest expense |
$ | 5,593 | $ | 4,891 | 14 | % | $ | 19,551 | $ | 23,792 | (18 | )% | ||||||||
Total operating expenses |
3,566 | 3,503 | 2 | 10,901 | 9,601 | 14 | ||||||||||||||
Net credit losses |
288 | 294 | (2 | ) | 431 | 540 | (20 | ) | ||||||||||||
Provisions for unfunded lending commitments |
1 | | | (28 | ) | 115 | NM | |||||||||||||
Credit reserve build (release) |
(8 | ) | 171 | NM | (366 | ) | 1,089 | NM | ||||||||||||
Provisions for benefits and claims |
| | | | | | ||||||||||||||
Provisions for credit losses and benefits and claims |
$ | 281 | $ | 465 | (40 | ) | $ | 37 | $ | 1,744 | (98 | )% | ||||||||
Income before taxes and noncontrolling interests |
$ | 1,746 | $ | 923 | 89 | % | $ | 8,613 | $ | 12,447 | (31 | )% | ||||||||
Income taxes (benefits) |
339 | 76 | NM | 2,315 | 3,626 | (36 | ) | |||||||||||||
Income from continuing operations |
1,407 | 847 | 66 | 6,298 | 8,821 | (29 | ) | |||||||||||||
Net income attributable to noncontrolling interests |
29 | 18 | 61 | 65 | 19 | NM | ||||||||||||||
Net income |
$ | 1,378 | $ | 829 | 66 | % | $ | 6,233 | $ | 8,802 | (29 | )% | ||||||||
Average assets (in billions of dollars) |
$ | 869 | $ | 788 | 10 | % | $ | 869 | $ | 778 | 12 | % | ||||||||
Return on assets |
0.63 | % | 0.42 | % | 0.96 | % | 1.51 | % | ||||||||||||
Revenues by region |
||||||||||||||||||||
North America |
$ | 2,203 | $ | 1,301 | 69 | % | $ | 8,383 | $ | 8,038 | 4 | % | ||||||||
EMEA |
1,733 | 2,202 | (21 | ) | 6,010 | 8,982 | (33 | ) | ||||||||||||
Latin America |
639 | 705 | (9 | ) | 1,804 | 2,554 | (29 | ) | ||||||||||||
Asia |
1,018 | 683 | 49 | 3,354 | 4,218 | (20 | ) | |||||||||||||
Total revenues |
$ | 5,593 | $ | 4,891 | 14 | % | $ | 19,551 | $ | 23,792 | (18 | )% | ||||||||
Income (loss) from continuing operations by region |
||||||||||||||||||||
North America |
$ | 456 | $ | 7 | NM | $ | 2,719 | $ | 2,472 | 10 | % | |||||||||
EMEA |
505 | 550 | (8 | )% | 1,892 | 3,467 | (45 | ) | ||||||||||||
Latin America |
266 | 219 | 21 | 735 | 1,158 | (37 | ) | |||||||||||||
Asia |
180 | 71 | NM | 952 | 1,724 | (45 | ) | |||||||||||||
Total income from continuing operations |
$ | 1,407 | $ | 847 | 66 | % | $ | 6,298 | $ | 8,821 | (29 | )% | ||||||||
Securities and Banking revenue details |
||||||||||||||||||||
Fixed income markets |
$ | 3,501 | $ | 4,024 | (13 | )% | $ | 12,594 | $ | 19,616 | (36 | )% | ||||||||
Investment banking |
930 | 1,164 | (20 | ) | 2,661 | 3,308 | (20 | ) | ||||||||||||
Equity markets |
1,040 | 446 | NM | 2,905 | 3,152 | (8 | ) | |||||||||||||
Lending |
(18 | ) | (794 | ) | 98 | 747 | (2,261 | ) | NM | |||||||||||
Private Bank |
497 | 522 | (5 | ) | 1,503 | 1,507 | | |||||||||||||
Other Securities and Banking |
(357 | ) | (471 | ) | 24 | (859 | ) | (1,530 | ) | 44 | ||||||||||
Total Securities and Banking revenues |
$ | 5,593 | $ | 4,891 | 14 | % | $ | 19,551 | $ | 23,792 | (18 | )% | ||||||||
3Q10 vs. 3Q09
Revenues, net of interest expense, were $5.6 billion, compared to $4.9 billion in the prior-year quarter, resulting from an increase in CVA, lending and advisory revenues, partially offset by a decrease in fixed income markets, debt and equity underwriting, equity markets and Private Bank revenues. CVA was $99 million in the third quarter of 2010, reflecting derivative CVA gains as corporate spreads tightened during the quarter. CVA of negative $1.8 billion in the third quarter of 2009 was driven by narrowing of Citigroup spreads during the period. Lending revenues increased from negative $0.8 billion to negative $18 million, due to lower losses on credit default swap hedges. Fixed income markets revenues (excluding CVA, net of hedges, of $0.1 billion and negative $0.8 billion in the current quarter and prior-year quarter, respectively) declined $1.5 billion to $3.4 billion, with a majority of the decline coming from weaker results in Credit Products, Securitized Products and G10 Rates trading, which reflected a challenging market environment. This was partially offset by strong performance in emerging markets. Equity markets revenues (excluding CVA, net of hedges, of
22
negative $22 million and negative $0.9 billion in the current quarter and prior-year quarter, respectively), decreased $0.3 billion to $1.1 billion, driven by lower client activity levels. Investment banking revenues decreased $0.2 billion to $0.9 billion, reflecting lower levels of market activity in debt and equity underwriting, partially offset by an increase in advisory revenues resulting from increased M&A transaction volume and improvement in completed M&A market share.
Operating expenses increased 2%, or $63 million, to $3.6 billion, reflecting select investments in the businesses.
Provisions for loan losses and for benefits and claims decreased by $0.2 billion to $0.3 billion, primarily attributable to the impact of a $7 million credit reserve release in the current quarter, compared to a $171 million build in the prior-year quarter, as improvements continued in the corporate loan portfolio.
3Q10 YTD vs. 3Q09 YTD
Revenues, net of interest expense for the current period were $19.6 billion, compared to $23.8 billion for the prior-year period, which was a particularly strong nine months driven by robust fixed income markets and higher client activity levels in investment banking. The decrease was partially offset by an increase in lending revenues, due to gains on credit default swap hedges. Revenue declines were also partially offset by an increase in CVA.
Operating expenses increased 14%, or $1.3 billion, to $10.9 billion, mainly driven by higher compensation costs, the U.K. bonus tax in the second quarter of 2010 and a net change in the litigation reserve releases.
Provisions for loan losses and for benefits and claims decreased by $1.7 billion to $37 million primarily attributable to the impact of a $394 million credit reserve release in the current period, compared to a $1.2 billion build in the prior-year period, as the market environment showed signs of stabilization.
23
Transaction Services is composed of Treasury and Trade Solutions (TTS) and Securities and Fund Services (SFS). TTS provides comprehensive cash management and trade finance for corporations, financial institutions and public sector entities worldwide. SFS provides custody and funds services to investors such as insurance companies, mutual funds and hedge funds, clearing services to intermediaries such as broker-dealers, and depository and agency/trust services to multinational corporations and governments globally. Revenue is generated from net interest revenue on deposits in TTS and SFS, as well as from trade loans and from fees for transaction processing and fees on assets under custody in SFS.
|
Third Quarter | |
Nine Months | |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
% Change |
% Change |
||||||||||||||||||
In millions of dollars | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Net interest revenue |
$ | 1,433 | $ | 1,393 | 3 | % | $ | 4,219 | $ | 4,254 | (1 | )% | ||||||||
Non-interest revenue |
1,102 | 1,064 | 4 | 3,255 | 3,060 | 6 | ||||||||||||||
Total revenues, net of interest expense |
$ | 2,535 | $ | 2,457 | 3 | % | $ | 7,474 | $ | 7,314 | 2 | % | ||||||||
Total operating expenses |
1,230 | 1,141 | 8 | 3,551 | 3,303 | 8 | ||||||||||||||
Provisions for loan losses and for benefits and claims |
(15 | ) | (7 | ) | NM | (66 | ) | (1 | ) | NM | ||||||||||
Income before taxes and noncontrolling interests |
$ | 1,320 | $ | 1,323 | | $ | 3,989 | $ | 4,012 | (1 | )% | |||||||||
Income taxes |
395 | 384 | 3 | 1,189 | 1,195 | (1 | ) | |||||||||||||
Income from continuing operations |
925 | 939 | (1 | ) | 2,800 | 2,817 | (1 | ) | ||||||||||||
Net income attributable to noncontrolling interests |
5 | 5 | | 15 | 4 | NM | ||||||||||||||
Net income |
$ | 920 | $ | 934 | (1 | )% | $ | 2,785 | $ | 2,813 | (1 | )% | ||||||||
Average assets (in billions of dollars) |
72 | 60 | 20 | % | 68 | 59 | 15 | % | ||||||||||||
Return on assets |
5.07 | % | 6.18 | % | 5.48 | % | 6.37 | % | ||||||||||||
Revenues by region |
||||||||||||||||||||
North America |
$ | 620 | $ | 643 | (4 | )% | $ | 1,895 | $ | 1,888 | | |||||||||
EMEA |
835 | 845 | (1 | ) | 2,516 | 2,549 | (1 | )% | ||||||||||||
Latin America |
384 | 337 | 14 | 1,084 | 1,020 | 6 | ||||||||||||||
Asia |
696 | 632 | 10 | 1,979 | 1,857 | 7 | ||||||||||||||
Total revenues |
$ | 2,535 | $ | 2,457 | 3 | % | $ | 7,474 | $ | 7,314 | 2 | % | ||||||||
Revenue details |
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Treasury and Trade Solutions |
$ | 1,846 | $ | 1,794 | 3 | % | $ | 5,432 | $ | 5,337 | 2 | % | ||||||||
Securities and Fund Services |
689 | 663 | 4 | 2,042 | 1,977 | 3 | ||||||||||||||
Total revenues |
$ | 2,535 | $ | 2,457 | 3 | % | $ | 7,474 | $ | 7,314 | 2 | % | ||||||||
Income from continuing operations by region |
||||||||||||||||||||
North America |
$ | 131 | $ | 152 | (14 | )% | $ | 456 | $ | 471 | (3 | )% | ||||||||
EMEA |
305 | 308 | (1 | ) | 929 | 984 | (6 | ) | ||||||||||||
Latin America |
171 | 148 | 16 | 481 | 458 | 5 | ||||||||||||||
Asia |
318 | 331 | (4 | ) | 934 | 904 | 3 | |||||||||||||
Total income from continuing operations |
$ | 925 | $ | 939 | (1 | )% | $ | 2,800 | $ | 2,817 | (1 | )% | ||||||||
Key indicators |
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Average deposits and other customer liability balances (in billions of dollars) |
$ | 340 | $ | 314 | 8 | % | ||||||||||||||
EOP assets under custody (in trillions of dollars) |
12.4 | 12.1 | 2 | |||||||||||||||||
3Q10 vs. 3Q09
Revenues, net of interest expense, grew 3% with increases in both the TTS and SFS businesses. TTS revenue increased 3%, driven primarily by growth in Trade and Cards businesses as well as higher balances which more than offset spread compression. SFS revenues increased 4%, driven by higher fees as well as increased client activity.
Operating expenses increased 8%, related to increased technology and other investment spend required to support future business growth.
Provisions for loan losses and for benefits and claims declined by $8 million, primarily attributable to a credit reserve release of $16 million in the current quarter, reflecting the improved quality of the portfolio.
3Q10 YTD vs. 3Q09 YTD
Revenues, net of interest expense, grew 2% as improvement in fees in both the TTS and SFS businesses more than offset spread compression. TTS revenue increased 2%, driven primarily by growth in Trade and Cards businesses. SFS revenues increased 3%, driven by higher fees as a result of growth in assets under custody and client activity.
Operating expenses increased 8%, related to continued investment spend required to support future business growth, as well as higher transaction related costs.
Provisions for loan losses and for benefits and claims declined by $65 million, primarily attributable to a credit reserve release of $69 million, reflecting the improved quality of the portfolio.
24
Citi Holdings contains businesses and portfolios of assets that Citigroup has determined are not central to its core Citicorp businesses. These noncore businesses tend to be more asset intensive and reliant on wholesale funding and also may be product-driven rather than client-driven. Citi intends to exit these businesses as quickly as practicable in an economically rational manner through business divestitures, portfolio run-offs and asset sales.
Citi has made substantial progress divesting and exiting businesses from Citi Holdings, having completed more than 30 divestiture transactions since the beginning of 2009 through September 30, 2010, including Smith Barney, Nikko Cordial Securities, Nikko Asset Management, Primerica Financial Services, various credit card businesses and Diners Club North America. During the third quarter of 2010, Citi announced sale of The Student Loan Corporation, which is currently expected to close in the fourth quarter of 2010. (The Student Loan Corporation is reported as Discontinued Operations within the Corporate/Other segment for the third quarter of 2010 only.) Citi Holdings' GAAP assets have been reduced by approximately 24%, or $135 billion, from the third quarter of 2009, and 49% from the peak in the first quarter of 2008. Citi Holdings' GAAP assets of $421 billion represent approximately 21% of Citi's assets as of September 30, 2010. Citi Holdings' risk-weighted assets of approximately $370 billion represent approximately 37% of Citi's risk-weighted assets as of September 30, 2010. Asset reductions from Citi Holdings have the combined benefits of further fortifying Citigroup's capital base, lowering risk, simplifying the organization and allowing Citi to allocate capital to fund long-term strategic businesses.
Citi Holdings consists of the following businesses: Brokerage and Asset Management, Local Consumer Lending, and Special Asset Pool.
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