citi_10k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31,
2009
Commission file number
1-9924
Citigroup Inc.
(Exact name of registrant as specified in its
charter)
Delaware |
52-1568099 |
(State or other jurisdiction
of |
(I.R.S. Employer |
incorporation or
organization) |
Identification No.) |
|
|
399 Park Avenue, New York,
NY |
10043 |
(Address of principal executive
offices) |
(Zip
code) |
Registrant’s telephone number, including area
code: (212) 559-1000
Securities registered pursuant to Section
12(b) of the Act: See Exhibit 99.02
Securities registered pursuant to Section
12(g) of the Act: none
Indicate by check mark if the Registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
X
Yes ¨ No
Indicate by check mark if the Registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the
Act. ¨ Yes X
No
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.
X
Yes ¨ No
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). X Yes
¨ No
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of Registrant’s
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form
10-K. ¨
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.
X Large
accelerated filer |
¨ Accelerated
filer |
¨ Non-accelerated
filer |
¨ Smaller reporting
company |
|
|
(Do not check if a
smaller reporting company) |
|
Indicate by check mark whether the Registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). ¨ Yes X No
The aggregate market value of Citigroup Inc. common stock held by
non-affiliates of Citigroup Inc. on June 30, 2009 was approximately $16.3
billion.
Number of shares of
common stock outstanding on January 31, 2010: 28,476,886,087
Documents Incorporated by Reference: Portions of the Registrant’s Proxy
Statement for the annual meeting of stockholders scheduled to be held on April
20, 2010, are incorporated by reference in this Form 10-K in response to Items
10, 11, 12, 13 and 14 of Part III.
1
10-K CROSS-REFERENCE INDEX
This Annual Report
on Form 10-K incorporates the requirements of the accounting profession and the
Securities and Exchange Commission, including a comprehensive explanation of
2009 results.
Form 10-K |
|
Item Number |
Page |
|
|
Part I |
|
|
|
1. |
|
Business |
4-38, 42, 105-114, 148,
259-262 |
|
|
|
|
1A. |
|
Risk Factors |
54-60 |
|
|
|
|
1B. |
|
Unresolved Staff
Comments |
Not Applicable |
|
|
|
|
2. |
|
Properties |
262 |
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|
|
|
3. |
|
Legal Proceedings |
263-266 |
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4. |
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Submission of Matters to a Vote
of |
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|
|
Security Holders |
Not Applicable |
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|
Part II |
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|
5. |
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Market for Registrant’s
Common |
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|
|
Equity, Related
Stockholder |
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|
Matters, and Issuer Purchases
of |
|
|
|
Equity Securities |
45-46, 154,
257, |
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|
|
267, 269-270 |
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|
|
6. |
|
Selected Financial
Data |
13 |
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|
|
7. |
|
Management’s Discussion
and |
|
|
|
Analysis of Financial
Condition |
|
|
|
and Results of
Operations |
4-53, 61-104 |
|
|
|
|
7A. |
|
Quantitative and
Qualitative |
|
|
|
Disclosures About Market
Risk |
61-102,149-150,
|
|
|
|
171-191,
195-238 |
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|
|
|
8. |
|
Financial Statements
and |
|
|
|
Supplementary Data |
120-258 |
|
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|
9. |
|
Changes in and
Disagreements |
|
|
|
with Accountants on
Accounting |
|
|
|
and Financial
Disclosure |
Not Applicable |
|
|
|
|
9A. |
|
Controls and
Procedures |
115-116 |
|
|
|
|
9B. |
|
Other Information |
Not
Applicable |
|
|
Part III |
|
|
|
10. |
|
Directors, Executive Officers
and |
|
|
|
Corporate
Governance |
268, 270, 272* |
|
|
|
|
11. |
|
Executive
Compensation |
** |
|
|
|
|
12. |
|
Security Ownership of
Certain |
|
|
|
Beneficial Owners
and |
|
|
|
Management and
Related |
|
|
|
Stockholder
Matters |
*** |
|
|
|
|
13. |
|
Certain Relationships and
Related |
|
|
|
Transactions, and Director
Independence
|
**** |
|
|
|
|
14. |
|
Principal Accounting Fees
and |
|
|
|
Services |
***** |
|
|
|
|
Part IV |
|
|
|
15. |
|
Exhibits and Financial
Statement |
|
|
|
Schedules |
273 |
* |
|
For additional information
regarding Citigroup’s Directors, see “Corporate Governance,” “Proposal 1:
Election of Directors” and “Section 16(a) Beneficial Ownership Reporting
Compliance” in the definitive Proxy Statement for Citigroup’s Annual
Meeting of Stockholders scheduled to be held on April 20, 2010, to be
filed with the SEC (the Proxy Statement), incorporated herein by
reference. |
** |
|
See “Executive Compensation—The
Personnel and Compensation Committee Report,” “Compensation Discussion and
Analysis” and “Compensation Tables” in the Proxy Statement, incorporated
herein by reference. |
*** |
|
See “About the Annual Meeting,”
“Stock Ownership” and “Proposal 3: Approval of Citigroup 2010 Stock
Incentive Plan” in the Proxy Statement, incorporated herein by
reference. |
**** |
|
See “Corporate Governance—Director
Independence,” “Certain Transactions and Relationships, Compensation
Committee Interlocks and Insider Participation,” “Indebtedness,” “Proposal
1: Election of Directors” and “Executive Compensation” in the Proxy
Statement, incorporated herein by reference. |
***** |
|
See “Proposal 2: Ratification of
Selection of Independent Registered Public Accounting Firm” in the Proxy
Statement, incorporated herein by
reference. |
2
CITIGROUP’S 2009 ANNUAL REPORT ON FORM
10-K
OVERVIEW |
4 |
CITIGROUP SEGMENTS AND
REGIONS |
5 |
MANAGEMENT’S DISCUSSION AND
ANALYSIS |
|
OF FINANCIAL
CONDITION AND RESULTS |
|
OF OPERATIONS |
7 |
EXECUTIVE SUMMARY |
7 |
2010 Business Outlook |
11 |
RESULTS OF
OPERATIONS |
13 |
FIVE-YEAR SUMMARY OF
SELECTED |
|
FINANCIAL DATA |
13 |
SEGMENT, BUSINESS AND
PRODUCT— |
|
INCOME (LOSS) AND
REVENUES |
14 |
Citigroup Income (Loss) |
14 |
Citigroup Revenues |
15 |
CITICORP |
16 |
Regional Consumer
Banking |
17 |
North America Regional Consumer
Banking |
18 |
EMEA Regional Consumer Banking |
20 |
Latin America Regional Consumer
Banking |
22 |
Asia Regional Consumer Banking |
24 |
Institutional Clients
Group |
26 |
Securities and Banking |
27 |
Transaction Services |
29 |
CITI HOLDINGS |
30 |
Brokerage
and Asset Management |
31 |
Local
Consumer Lending |
32 |
Special
Asset Pool |
35 |
CORPORATE/OTHER |
38 |
BALANCE SHEET
REVIEW |
39 |
Segment Balance Sheet at December 31,
2009 |
42 |
CAPITAL RESOURCES AND
LIQUIDITY |
43 |
Capital Resources |
43 |
Funding and Liquidity |
48 |
OFF-BALANCE-SHEET
ARRANGEMENTS |
52 |
CONTRACTUAL
OBLIGATIONS |
53 |
RISK FACTORS |
54 |
MANAGING GLOBAL
RISK |
61 |
Risk Management—Overview |
61 |
Risk Aggregation and Stress
Testing |
62 |
Risk Capital |
62 |
Credit Risk |
63 |
Loan and Credit Overview |
63 |
2010 Credit Outlook |
63 |
Loans Outstanding |
64 |
Details of Credit Loss
Experience |
65 |
Non-Accrual Assets |
66 |
Foregone Interest Revenue on
Loans |
68 |
Corporate Loans |
68 |
Consumer Loan Delinquency Amounts
and Ratios |
70 |
Consumer Loan Net Credit Losses
and Ratios |
71 |
Consumer Loan Modification
Programs |
72 |
U.S. Consumer Lending |
73 |
Corporate Loan Details |
82 |
U.S. Subprime-Related Direct
Exposure in Citi Holdings— |
|
Special Asset Pool |
85 |
Direct Exposure to Monolines |
87 |
Highly Leveraged Financial Transactions |
88 |
Market Risk |
89 |
Average Balances and Interest
Rates—Assets |
94 |
Average Balances and Interest
Rates—Liabilities and |
|
Equity, and Net Interest
Revenue |
95 |
Analysis of Changes in Interest
Revenue |
96 |
Analysis of Changes in Interest
Expense
and
Net Interest Revenue |
97 |
Operational Risk |
98 |
Country and FFIEC Cross-Border
Risk Management Process |
99 |
Country and Cross-Border
Risk |
99 |
DERIVATIVES |
100 |
PENSION AND POSTRETIREMENT
PLANS |
103 |
SIGNIFICANT ACCOUNTING POLICIES
AND |
|
SIGNIFICANT
ESTIMATES |
105 |
Valuations of Financial
Instruments |
105 |
Allowance for Credit
Losses |
107 |
Securitizations |
107 |
Goodwill |
110 |
Income Taxes |
112 |
Legal Reserves |
113 |
Accounting Changes and Future
Application of |
|
Accounting Standards |
113 |
FORWARD-LOOKING
INFORMATION |
114 |
CONTROLS AND
PROCEDURES |
115 |
MANAGEMENT’S REPORT ON
INTERNAL |
|
CONTROL OVER FINANCIAL
REPORTING |
116 |
REPORT OF INDEPENDENT
REGISTERED |
|
PUBLIC ACCOUNTING
FIRM—INTERNAL |
|
CONTROL OVER FINANCIAL
REPORTING |
117 |
REPORT OF INDEPENDENT
REGISTERED |
|
PUBLIC ACCOUNTING
FIRM— |
|
CONSOLIDATED FINANCIAL
STATEMENTS |
118 |
FINANCIAL STATEMENTS AND NOTES
TABLE |
|
OF CONTENTS |
119 |
CONSOLIDATED FINANCIAL
STATEMENTS |
120 |
NOTES TO CONSOLIDATED
FINANCIAL |
|
STATEMENTS |
126 |
FINANCIAL DATA SUPPLEMENT
(Unaudited) |
258 |
Ratios |
258 |
Average Deposit Liabilities in
Offices Outside the U.S. |
258 |
Maturity Profile of Time
Deposits ($100,000 or more) |
|
in U.S.
Offices |
258 |
Short-Term and Other
Borrowings |
258 |
SUPERVISION AND
REGULATION |
259 |
CUSTOMERS |
261 |
COMPETITION |
262 |
PROPERTIES |
262 |
LEGAL
PROCEEDINGS |
263 |
UNREGISTERED
SALES OF EQUITY;
PURCHASES OF EQUITY SECURITIES;
DIVIDENDS |
267 |
CORPORATE
INFORMATION |
270 |
CITIGROUP BOARD OF
DIRECTORS |
272 |
3
OVERVIEW
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 now 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 140
countries.
Citigroup currently operates, for management
reporting purposes, via two primary business segments: Citicorp, consisting of
our Regional Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of our 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 4 to the Consolidated Financial
Statements.
Throughout this report, “Citigroup” and “Citi”
refer to Citigroup Inc. and its consolidated subsidiaries.
4
As described above,
Citigroup is managed pursuant to the following segments:
*Note: See
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Results of Operations—Citi Holdings” for a discussion of certain
assets, totaling approximately $61 billion, that will be moved from Citi
Holdings to Citicorp during the first quarter of 2010.
The following are the four regions in
which Citigroup operates. The regional results are fully reflected in the
segment results above.
(1) Asia includes Japan, Latin America includes Mexico, and North America comprises the U.S., Canada and Puerto
Rico.
5
OVERVIEW (Continued)
On December 23, 2009,
Citigroup repaid $20 billion of trust preferred securities held by the U.S.
Treasury under the U.S. government’s Troubled Asset Relief Program (TARP)
and exited from the loss-sharing agreement, which covered a specified
pool of assets, with the U.S. Treasury, FDIC and the Federal Reserve Bank of New
York. In connection with the exiting from the loss-sharing agreement,
$1.8 billion of the approximately $7.1 billion of additional trust preferred
securities held by the U.S. Treasury and FDIC was cancelled. As a result of the
repayment of TARP and the exit from the loss-sharing agreement,
effective in 2010, Citi is no longer deemed to be a beneficiary of “exceptional
financial assistance” under TARP.
Following these
transactions, as of December 31, 2009 (i) the U.S. Treasury continued to hold
approximately 7.7 billion shares, or approximately 27%, of Citi’s common stock,
(ii) the U.S. Treasury and FDIC continue to hold an aggregate of approximately
$5.3 billion of Citi’s trust preferred securities, and (iii) the U.S. Treasury
continues to hold three warrants exercisable for an aggregate of approximately
465.1 million shares of Citi’s common stock. See “Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Executive
Summary—Repayment of TARP and Exit from Loss-Sharing Agreement; Common and
Preferred Stock Activities” for additional information.
At December 31, 2009,
Citi had approximately 265,300 full-time employees and 3,700 part-time
employees. At December 31, 2008, Citi had approximately 322,800 full-time and
4,100 part-time employees.
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 Securities and Exchange
Commission (SEC) are available free of charge through the Web site by clicking
on the “Investors” page and selecting “All SEC Filings.” The SEC Web site also
contains reports, proxy and information statements, and other information
regarding Citi, at www.sec.gov.
|
|
|
Please see “Risk Factors” below for a
discussion of certain risks and uncertainties that could materially impact
Citigroup’s financial condition and results of
operations. |
|
|
|
Certain
reclassifications have been made to the prior periods’ financial statements to
conform to the current period’s presentation.
6
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXECUTIVE SUMMARY
Introduction
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, including consumer banking, credit cards,
corporate and investment banking, securities brokerage and wealth management.
Citigroup has approximately 200 million customer accounts and does business in
more than 140 countries.
In response to the
dramatic and profound changes in the market environment that became increasingly
apparent through 2008, in early 2009, Citigroup decided to increase the focus on
its core businesses and reorganized into three business segments for management
and reporting purposes: Citicorp (Regional Consumer Banking and
Institutional Clients Group); Citi Holdings (Brokerage and Asset Management, Local Consumer Lending, and Special Asset Pool); and Corporate/Other (Treasury, corporate
expenses). Citi believes the realignment allows it to enhance the capabilities
and performance of Citigroup’s core assets, through Citicorp, as well as to
tighten its focus on risk management and reduce and realize value from its
non-core assets, through Citi Holdings.
Citigroup reported a
net loss for 2009 of $1.6 billion, as compared to a $27.7 billion loss in 2008.
Diluted EPS was a loss of $0.80 per share in 2009, versus a loss of $5.63 per
share in 2008, and net revenue was $80.3 billion in 2009, versus $51.6 billion
in 2008. Net interest revenue declined by $4.8 billion to $48.9 billion in 2009,
generally as a result of lower average interest-earning assets, as the company
continued its focus on de-risking its balance sheet and decreasing its total
assets. Non-interest revenues improved by approximately $33.5 billion to $31.4
billion in 2009, primarily due to lower negative revenue marks in 2009. The
decrease in net loss from year to year was primarily attributable to lower
revenue marks in 2009 compared with 2008 (a pretax loss of $3.4 billion in 2009
versus a pretax loss of $38.5 billion in 2008), the $11.1 billion pretax Smith
Barney gain on sale recorded in the second quarter of 2009 and a $1.4 billion
pretax gain related to the exchange offers recognized in the third quarter of
2009. Partially offsetting these items were increasing credit loss provisions
during the year and a $10.1 billion pretax loss associated with the repayment of
TARP and the exit from the loss-sharing agreement with the U.S. government.
Additionally, 2008 included a $9.6 billion pretax goodwill impairment, a $0.9
billion pretax impairment related to Nikko Asset Management, and $3.3 billion
pretax of restructuring/repositioning charges. Continued strength of the core
Citi franchise was demonstrated by
strong revenues in
Securities and Banking (S&B) (up 23% from 2008 levels, excluding credit
value adjustments (CVA)) and continued stability in both the retail and
institutional deposit bases. At December 31, 2009, total deposits were $836
billion, up 8% from December 31, 2008.
Despite very
difficult market and economic conditions, Citicorp remained profitable with
$14.8 billion in income from continuing operations in 2009 versus $6.2 billion
in 2008, reflecting the strength of the underlying franchise, continued client
focus, cost management and strengthened risk management. Citi Holdings recorded
a loss of $8.2 billion in 2009 versus a $36.0 billion loss in 2008 as
substantial reductions in negative revenue marks, cost cuts and the Smith Barney
gain more than offset continued increases in credit costs within Local Consumer Lending. The gain related to the exchange offers and loss associated with TARP
repayment and exiting the loss-sharing agreement was recorded in Corporate/Other.
Citigroup’s 2009
financial results include the impact of 18 divestitures completed in 2009,
including Smith Barney, Nikko Cordial Securities and Nikko Asset Management, and
19 divestitures completed in 2008, including Citi’s German retail banking
operations, CitiCapital and Redecard. These divestitures were completed in
accordance with Citi’s strategy of exiting non-core businesses, while optimizing
value for shareholders.
Citi’s effective tax
rate on continuing operations in 2009 was 86%, versus 39% in 2008. The tax
provision reflected a benefit arising from a higher proportion of income earned
and indefinitely reinvested in countries with relatively lower tax rates, which
accounted for 26 percentage points of the differential between the
federal statutory tax rate and Citi’s effective tax rate in 2009, as well as a
higher proportion of income from tax-advantaged sources.
Repayment of TARP and Exit
from Loss-Sharing Agreement; Common and Preferred Stock Activities
Background
In October and December
2008, Citigroup raised $25 billion and $20 billion, respectively, through the
sale of preferred stock and warrants to purchase common stock to the U.S.
Treasury as part of TARP. In January 2009, Citi issued approximately $7.1
billion of preferred stock to the U.S. Treasury and FDIC, as well as a warrant
to purchase common stock to the U.S. Treasury, as consideration for the
loss-sharing agreement with the U.S. Treasury, FDIC and the Federal Reserve Bank
of New York covering a specified pool of Citigroup assets.
Pursuant to
Citigroup’s exchange offers consummated in July 2009, the $25 billion of TARP
preferred stock issued to the U.S. Treasury in October 2008 was exchanged for
approximately 7.7 billion shares of Citigroup common stock. At the same time,
the $20 billion of TARP preferred stock issued to the U.S. Treasury in December
2008 and the approximately $7.1 billion of
7
preferred stock issued
to the U.S. Treasury and FDIC as consideration for the loss-sharing agreement
were exchanged for trust preferred securities. Prior to the exchange of the
preferred stock held by the U.S. government pursuant to the exchange offers,
Citigroup paid the U.S. government approximately $2.2 billion in preferred
dividends on its investment in Citi, and has subsequently paid approximately
$800 million in interest on the trust preferred securities issued pursuant
to the exchange offers.
Repayment of TARP and Exit
from loss-sharing agreement
On December 23, 2009,
Citigroup repaid the $20 billion of TARP trust preferred securities held by the
U.S. Treasury and exited the loss-sharing agreement. In connection with the exit
of the loss-sharing agreement, $1.8 billion of the trust preferred securities
held by the U.S. Treasury out of the approximately $7.1 billion of trust
preferred securities issued in consideration for such agreement to the U.S.
Treasury and FDIC was cancelled.
In connection
with the repayment of TARP in December 2009, Citigroup raised an aggregate of
approximately $20.3 billion in common equity. On December 22, 2009
Citigroup issued $17.0 billion of common stock, or approximately 5.4 billion
shares, and $3.5 billion of tangible equity units (T-DECs) of which
approximately $2.8 billion was recorded as common equity and $0.7 billion was
recorded as long-term debt. On December 29, 2009, Citigroup raised an additional
approximate $0.6 billion of common stock, or approximately 185 million shares,
pursuant to exercise of the underwriters’ overallotment option. In addition, in
January 2010, Citigroup issued $1.7 billion of common stock equivalents to its
employees in lieu of cash compensation they would have otherwise received.
Subject to shareholder approval at Citi’s annual shareholder meeting scheduled
to be held on April 20, 2010, the common stock equivalents will be converted
into common stock.
Following the
repayment of TARP and exit from the loss-sharing agreement, as of
December 31, 2009, the U.S. Treasury continues to hold approximately 7.7 billion
shares, or approximately 27.0%, of Citi’s common stock, not including the
exercise of the warrants issued to the U.S. Treasury that remain outstanding, as
described below. The U.S. Treasury has indicated that it intends to sell its
holding in Citi common stock in 2010, subject to a 90-day lock-up period
expiring on March 16, 2010. In addition, the U.S. Treasury and FDIC continue to
hold an aggregate of approximately $5.3 billion of the trust preferred
securities originally issued by Citi as consideration for the loss-sharing
agreement.
As a result of Citi’s
repayment of the $20 billion of TARP trust preferred securities and the exit of
the loss-sharing agreement, effective in 2010, Citi is no longer deemed to be a
beneficiary of “exceptional financial assistance” under TARP.
Common stock warrants issued to the U.S.
Treasury
The three warrants
issued to the U.S. Treasury as part of TARP and the loss-sharing agreement
remain outstanding as of December 31, 2009 following Citi’s repayment of TARP
and exit from the loss-sharing agreement.
Each of the warrants
has a term of 10 years from the date of issuance. The warrant issued to the U.S.
Treasury in October 2008 has an exercise price of $17.85 per share and is
exercisable for approximately 210.1 million shares of common stock. The warrant
issued to the U.S. Treasury in December 2008 has an exercise price of $10.61 per
share and is exercisable for approximately 188.5 million shares of common stock.
The warrant issued to the U.S. Treasury as part of the loss-sharing agreement in
January 2009 also has an exercise price of $10.61 and is exercisable for
approximately 66.5 million shares of common stock.
8
The following table
summarizes Citigroup’s issuances, exchanges and repayments of preferred and
common stock and trust preferred securities during 2008 and 2009:
|
|
|
|
|
|
|
Common stock |
|
Citigroup |
|
|
|
|
|
|
|
|
and additional |
|
common stock |
|
In millions of dollars, shares in
millions |
|
Preferred stock |
|
paid-in capital |
|
outstanding |
|
|
|
Balance, December 31, 2007 |
|
$ |
— |
|
$ |
18,062 |
|
4,995 |
|
First
quarter 2008 |
|
Issuance of $12.5 billion of convertible preferred stock |
|
|
|
|
|
|
|
|
|
|
|
in a private
offering, $3.2 billion of convertible |
|
|
|
|
|
|
|
|
|
|
|
preferred stock
in a public offering, and $3.7 billion |
|
|
|
|
|
|
|
|
|
|
|
of non-convertible
preferred stock in public |
|
|
|
|
|
|
|
|
|
|
|
offerings |
|
|
19,384 |
|
|
— |
|
— |
|
|
|
Issuance of shares for Nikko Cordial acquisition |
|
|
— |
|
|
(3,485 |
) |
175 |
|
|
|
Other activity
(primarily employee benefit plans) |
|
|
— |
|
|
(3,391 |
) |
— |
|
Second
quarter 2008 |
|
Issuance of shares for Nikko
Cordial acquisition |
|
|
— |
|
|
(15 |
) |
— |
|
|
|
Issuance of $8.0 billion of
preferred stock in a public |
|
|
|
|
|
|
|
|
|
|
|
offering and $4.9
billion of common stock |
|
|
8,040 |
|
|
4,911 |
|
194 |
|
|
|
Other activity
(primarily employee benefit plans) |
|
|
— |
|
|
569 |
|
— |
|
Third quarter 2008 |
|
Other activity
(primarily employee benefit plans) |
|
|
— |
|
|
290 |
|
— |
|
Fourth
quarter 2008 |
|
Issuance of $45 billion of
preferred stock and warrants |
|
|
|
|
|
|
|
|
|
|
|
under
TARP |
|
|
43,203 |
|
|
1,797 |
|
— |
|
|
|
Preferred stock Series H discount
accretion |
|
|
37 |
|
|
— |
|
— |
|
|
|
Other
activity (primarily employee benefit plans) |
|
|
— |
|
|
484 |
|
86 |
|
|
|
Balance, December 31,
2008 |
|
$ |
70,664 |
|
$ |
19,222 |
|
5,450 |
|
First
quarter 2009 |
|
U.S. government loss-sharing
agreement; issuance of |
|
|
|
|
|
|
|
|
|
|
|
$7.1 billion of
preferred stock and warrants |
|
|
3,530 |
|
|
88 |
|
— |
|
|
|
Reset of convertible preferred
stock conversion price |
|
|
— |
|
|
1,285 |
|
— |
|
|
|
Preferred stock Series H discount
accretion |
|
|
52 |
|
|
— |
|
— |
|
|
|
Other
activity (primarily employee benefit plans) |
|
|
— |
|
|
(4,013 |
) |
63 |
|
|
|
Balance, end of
period |
|
$ |
74,246 |
|
$ |
16,582 |
|
5,513 |
|
Second
quarter 2009 |
|
Preferred stock Series H discount
accretion |
|
|
55 |
|
|
— |
|
— |
|
|
|
Other
activity (primarily employee benefit plans) |
|
|
— |
|
|
138 |
|
(5 |
) |
|
|
Balance, end of
period |
|
$ |
74,301 |
|
$ |
16,720 |
|
5,508 |
|
Third
quarter 2009 (1) |
|
Exchange offers: |
|
|
|
|
|
|
|
|
|
|
|
Private
investors |
|
|
(12,500 |
) |
|
21,839 |
|
3,846 |
|
|
|
Public
investors—convertible preferred stock |
|
|
(3,146 |
) |
|
5,136 |
|
823 |
|
|
|
Public
investors—non-convertible preferred stock |
|
|
(11,465 |
) |
|
9,149 |
|
3,351 |
|
|
|
Public
investors—trust preferred securities |
|
|
— |
|
|
4,532 |
|
1,660 |
|
|
|
U.S. government
matching of private exchange offer |
|
|
(11,924 |
) |
|
10,653 |
|
3,846 |
|
|
|
U.S. government
matching of public exchange offer |
|
|
(11,926 |
) |
|
10,654 |
|
3,846 |
|
|
|
U.S. government
TARP preferred stock converted to |
|
|
|
|
|
|
|
|
|
|
|
trust preferred
securities |
|
|
(19,514 |
) |
|
— |
|
— |
|
|
|
Preferred stock
held by U.S. Treasury and FDIC related |
|
|
|
|
|
|
|
|
|
|
|
to loss-sharing agreement (converted to trust preferred
securities) |
|
|
(3,530 |
) |
|
— |
|
— |
|
|
|
Preferred stock Series H discount
accretion |
|
|
16 |
|
|
— |
|
— |
|
|
|
Other
activity (primarily employee benefit plans) |
|
|
— |
|
|
349 |
|
(16 |
) |
|
|
Balance, end of
period |
|
$ |
312 |
|
$ |
79,032 |
|
22,864 |
|
Fourth
quarter 2009 |
|
Issuance of new common equity and
tangible equity units (T-DECs) pursuant |
|
|
|
|
|
|
|
|
|
|
|
to repayment of
TARP and exiting of loss-sharing agreement |
|
|
— |
|
|
20,298 |
|
5,582 |
|
|
|
Other
activity (primarily employee benefit plans) |
|
|
— |
|
|
(902 |
) |
37 |
|
|
|
Balance, December 31,
2009 |
|
$ |
312 |
|
$ |
98,428 |
|
28,483 |
|
(1) |
|
In addition to the U.S. government exchanges, pursuant to the
exchange offers, private holders of approximately $12.5 billion aggregate
liquidation value of Citi preferred stock exchanged such preferred stock
for approximately 3.8 billion shares of Citi common stock. In addition,
public holders of approximately $20.3 billion aggregate liquidation value
of Citi preferred stock and trust preferred securities exchanged such
securities for approximately 5.8 billion shares of Citi common
stock. |
9
Business Environment
The business environment
for financial services firms continued to be challenging in 2009, particularly
for firms with significant exposure to consumer credit. U.S. unemployment
reached 10.1%, GDP continued to contract through the second quarter, housing
markets remained weak, and personal and business bankruptcies increased. These
factors drove substantial increases in credit costs across consumer and
corporate portfolios. Credit spreads continued to widen earlier in the year,
driving further declines in the value of credit-sensitive financial instruments.
Equity markets were also very weak during early 2009. At its low point in March
2009, the S&P 500 had declined 55% from December 31, 2007 levels.
While these trends
were negative for the economy and the financial services industry as a whole,
they were accompanied by very high levels of volatility and wide spreads within
fixed income markets during the first quarter of 2009, which provided
substantial trading opportunities. As a result, fixed income capital markets
businesses achieved high levels of revenue and profitability during the first
quarter, offsetting some of the substantial credit losses incurred in
consumer-oriented businesses, including mortgages and cards.
Beginning in late
2008, significant U.S. government actions were implemented to help stabilize the
U.S. economy and restore confidence in the capital markets. The U.S. government
had available over $700 billion to invest in financial institutions, including
$45 billion in Citi, through TARP. In early 2009, a $787 billion stimulus bill
was signed into law. A number of additional programs helped further stimulate
demand in 2009, including the U.S. government’s first-time home buyer credit
programs. The U.S. government also directly supported the capital markets
through various programs, including the Term Asset-Backed Securities Loan
Facility (TALF) and the Temporary Liquidity Guarantee Program (TLGP), and
through substantial direct purchases of mortgage-backed securities. These
actions, combined with continued accommodative monetary policy on the part of
the Federal Reserve Board, helped keep home mortgage rates near historic lows
and worked to facilitate the continued flow of credit to consumers.
Late in 2009, some
early positive economic signs were observed. U.S. GDP growth was positive in the
third and fourth quarters. The S&P 500 finished the year up 23% from
December 31, 2008, and up 67% from the trough level in March 2009, though still
down 24% from December 31, 2007. Credit spreads, while still elevated, tightened
significantly from peak levels in the early part of 2009. In the second half of
the year, Citi began to observe some very early signs of stabilization and, in
some areas, moderation in U.S. consumer credit trends as net credit losses
declined sequentially during the third and fourth quarters, though remaining
quite elevated. In addition,
improving economic and
market trends led to relatively stronger advisory and equity underwriting
volumes in the fourth quarter. On the other hand, lower levels of market
volatility and volumes resulted in diminished trading opportunities, which led
to significant sequential declines in S&B revenues in the second half of the
year. In certain key markets in Asia and
Latin America, improvement in the labor markets and overall
economic recovery was earlier, and somewhat stronger, than that observed in the
U.S. Citi observed improving credit trends in key markets including South Korea,
Mexico, Australia, Singapore and India, driven by improving economic conditions
as well as Citi’s loss mitigation efforts. Further, while EMEA continued to
be affected by a challenging economic environment, labor markets began to show
some improvement, particularly in Russia and Turkey, and there were some early
signs of financial stability returning to some of Citi’s key markets in the
region.
While some economic
and market improvements were observed in late 2009, Citi remains cautious,
particularly with respect to its North American businesses, as U.S. unemployment
remains high at 10.0% as of December 31, 2009, and housing markets remain
relatively weak. In addition, there remains significant uncertainty regarding
the pace of economic recovery and the impact of the U.S. government’s unwinding
of its extensive economic and market supports, which may accelerate in 2010. See
“2010 Business Outlook” below.
Citigroup's Actions in Response to Market
Challenges
During 2009, Citigroup
sought to respond to market challenges and the profound changes in the market
environment—changes in funding markets, operating models and client
needs—including:
Citi restructured into two primary operating segments—Citicorp and Citi
Holdings.
As described above,
Citicorp comprises Citi’s core franchise, while Citi Holdings consists of
non-core businesses and assets that Citi intends to exit as quickly
as practicable while seeking to optimize value
for shareholders.
Citigroup continued to reduce operating expenses and
headcount.
Citi’s ongoing operating
expenses in the fourth quarter of 2009 totaled $12.3 billion, down from $15.1
billion (excluding the goodwill impairment charge) in the fourth quarter of 2008
and $15.7 billion in the fourth quarter of 2007. The decline in expenses was
primarily driven by divestitures and re-engineering efforts. In addition, Citi
reduced headcount by over 100,000 to approximately 265,000 at December 31, 2009,
compared to 375,000 at peak levels in 2007.
10
Citigroup strengthened its balance sheet.
- Citi increased its common capital
ratios.
Citi
significantly increased its Tier 1 Common and Tangible Common Equity (TCE) ratios during 2009, primarily
as a result of its exchange offers completed in the third quarter of 2009. At December 31, 2009,
Citi’s Tier 1 Common ratio was
9.6% and its TCE ratio was 10.9%, compared to 2.3% and 3.1% at December 31, 2008,
respectively. In addition, Citi’s Tier 1 Capital ratio was 11.7% at December 31, 2009. Tier
1 Common and related ratios are
measures used and relied on by U.S. banking regulators; however, Tier 1 Common, TCE and related ratios
are non-GAAP financial measures
for SEC purposes. See “Capital Resources and Liquidity—Capital Resources” for
additional information on these
measures.
- Citi improved its liquidity
position.
Citigroup
lengthened the maturity structure of its liabilities, increased balances of cash and highly liquid
securities, continued to grow its deposit base, raised substantial equity capital and reduced illiquid
assets, primarily in Citi
Holdings. As a result, structural liquidity (defined as deposits, long-term debt and equity as a
percentage of total assets) grew to 73% as of December 31, 2009, compared to 66% at December 31,
2008 and 63% at December 31,
2007. Citigroup had $193 billion of cash and deposits with banks as of December 31, 2009.
Citi currently anticipates issuing less than $15 billion of Citigroup-level long-term debt in 2010
(down from $85 billion in 2009)
due to its current strong liquidity position and anticipated asset reductions within Citi
Holdings.
- Citi continued to de-risk and decrease the
amount of its total assets.
Citi’s total assets were approximately $1.86 trillion as of December
31, 2009, down from
approximately $1.94 trillion at December 31, 2008 and $2.19 trillion at December 31, 2007.
Consistent with Citi’s strategy, Citi Holdings now represents less than 30% of Citi’s total assets as of
December 31, 2009, compared to
41% at the start of 2008. While Citi made progress in de-risking and decreasing total assets,
particularly in Citi Holdings, these actions, together with an expansion of the Company’s loss
mitigation efforts and
declining yields in the trading book, resulted in a 9% reduction in net interest revenue in 2009 versus 2008
and a decrease in Citi’s net
interest margin (NIM) to 2.65% at December 31, 2009 compared to 3.26% at December 31,
2008.
Citigroup increased its allowance for loan losses.
During 2009, Citi added
a net build of $8.0 billion to its allowance for loan losses. The allowance for
loan losses was $36 billion at December 31, 2009, or 6.1% of loans, compared to
$29.6 billion, or 4.3% of loans, at year-end 2008. With the adoption of SFAS 166
and 167 in the first quarter of 2010, loan loss reserves would have been $49.4
billion, or 6.6% of loans, each as of December 31, 2009 and based on current
estimates. The consumer loan loss reserve was $28.4 billion at December 31,
2009, representing 14.1 months of concurrent charge-off coverage, versus 13.1
months at December 31, 2008.
Citi began to make selected investments in its core businesses.
Within Regional Consumer Banking, Citi began making selected investments in its core businesses in the
latter part of 2009. For example, in Asia, Citi invested
in new customer acquisition in the emerging affluent segment and in card usage
promotion. In Latin America, Citi invested in card account acquisition,
with a focus on higher-quality new accounts, consistent with portfolio
repositioning objectives. Citigroup also continued to invest in consumer banking
technology, for example, in banking products in markets such as Singapore, Hong
Kong and South Korea, where mobile phones and mobile banking have intersected in
ways not yet seen in the U.S. Within Transaction Services, Citi continued to invest in technology to support its global network,
including its investor services suite of products, prepaid and commercial cards
offerings and launch of a new front end online banking technology that provides
a diverse set of functionality beyond traditional transaction management and
reporting. These and similar
investments have increased, and will likely continue to increase, Citi’s
operating expenses.
2010 BUSINESS OUTLOOK
While showing signs of
improvement, the macroeconomic environment going into 2010 remains challenging,
with U.S. unemployment still elevated. The U.S. government has indicated its
intention to continue scaling back programs put in place to support the market
during 2008 and 2009. The impact of the U.S. government’s exit from many of
these programs is a source of uncertainty in 2010, as is the future course of
monetary policy. In addition, the potential impact of new laws and regulations
(e.g., The Credit Card Accountability Responsibility and Disclosure Act of 2009
(CARD Act)), potential new capital standards, and other legislative and
regulatory initiatives is a source of significant additional uncertainty
regarding the business and market environment.
11
Citigroup is
maintaining a cautious stance in light of this uncertain market environment and
continued macroeconomic headwinds. As it enters 2010, Citi is focused on
maintaining high levels of capital and liquidity, rigorous risk management
practices and cost discipline. In Citi Holdings, Citi will continue to focus on
reducing assets, which could result in lower revenues and operating expenses in
2010. In Citicorp, the focus will remain on serving the company’s core
institutional, corporate and retail client base in the U.S. and around the
world. Citi will continue to focus on credit loss mitigation and expense
control, and may continue to invest in areas such as Asia and
Latin America, where economic recovery and growth appear to
be taking hold. Operating expenses may grow modestly in Citicorp in 2010, as a
portion of the cost reductions achieved in Citi Holdings is re-invested in the
core franchise.
Credit costs will
likely remain a significant driver of Citigroup’s results in 2010, particularly
in North America, where credit trends will largely depend on
the broader macroeconomic environment, as well as the impact
of industry factors such
as CARD Act implementation and the outcome of the Home Affordable Modification
Program (HAMP) and other loss mitigation efforts. See “Results of
Operations—Citicorp—North America Regional
Consumer Banking,” “—Citi
Holdings—Local Consumer Lending”
and “Managing Global
Risk—Credit Risk” for additional information. Citi expects U.S. consumer net
credit losses to increase modestly in the first quarter of 2010 from fourth
quarter 2009 levels, due in part to expected seasonal patterns, after which
there may be some slight improvement. However, net credit losses in the second
half of 2010 will be dependent on the macroeconomic environment and success of
the company’s ongoing loss mitigation efforts. Changes to Citigroup’s consumer
loan loss reserve balances will continue to reflect the losses embedded in
Citi’s consumer loan portfolio due to underlying credit trends as well as the
impact of Citi’s forbearance programs. Citi currently expects NIM to remain
under pressure due to its enhanced liquidity position and ongoing de-risking of
the balance sheet.
12
RESULTS OF OPERATIONS
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL
DATA |
Citigroup Inc. and Consolidated
Subsidiaries |
In millions of dollars, except
per-share amounts, ratios and direct staff |
2009 |
(1) |
2008 |
|
2007 |
|
2006 |
|
2005 |
|
Net interest revenue |
$ |
48,914 |
|
$ |
53,749 |
|
$ |
45,389 |
|
$ |
37,928 |
|
$ |
37,494 |
|
Non-interest
revenue |
|
31,371 |
|
|
(2,150 |
) |
|
31,911 |
|
|
48,399 |
|
|
42,583 |
|
Revenues, net of interest
expense |
$ |
80,285 |
|
$ |
51,599 |
|
$ |
77,300 |
|
$ |
86,327 |
|
$ |
80,077 |
|
Operating expenses |
|
47,822 |
|
|
69,240 |
|
|
58,737 |
|
|
50,301 |
|
|
43,549 |
|
Provisions for
credit losses and for benefits and claims |
|
40,262 |
|
|
34,714 |
|
|
17,917 |
|
|
7,537 |
|
|
7,971 |
|
Income (loss) from continuing
operations before income taxes |
$ |
(7,799 |
) |
$ |
(52,355 |
) |
$ |
646 |
|
$ |
28,489 |
|
$ |
28,557 |
|
Income taxes
(benefits) |
|
(6,733 |
) |
|
(20,326 |
) |
|
(2,546 |
) |
|
7,749 |
|
|
8,787 |
|
Income (loss) from continuing
operations |
$ |
(1,066 |
) |
$ |
(32,029 |
) |
$ |
3,192 |
|
$ |
20,740 |
|
$ |
19,770 |
|
Income (loss) from discontinued
operations, net of taxes (2) |
|
(445 |
) |
|
4,002 |
|
|
708 |
|
|
1,087 |
|
|
5,417 |
|
Cumulative effect
of accounting change, net of taxes (3) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(49 |
) |
Net income (loss) before
attribution of noncontrolling interests |
$ |
(1,511 |
) |
$ |
(28,027 |
) |
$ |
3,900 |
|
$ |
21,827 |
|
$ |
25,138 |
|
Net income (loss)
attributable to noncontrolling interests |
|
95 |
|
|
(343 |
) |
|
283 |
|
|
289 |
|
|
549 |
|
Citigroup’s net income
(loss) |
$ |
(1,606 |
) |
$ |
(27,684 |
) |
$ |
3,617 |
|
$ |
21,538 |
|
$ |
24,589 |
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
$ |
(0.76 |
) |
$ |
(6.39 |
) |
$ |
0.53 |
|
$ |
4.07 |
|
$ |
3.69 |
|
Net income (loss) |
|
(0.80 |
) |
|
(5.63 |
) |
|
0.68 |
|
|
4.29 |
|
|
4.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
$ |
(0.76 |
) |
$ |
(6.39 |
) |
$ |
0.53 |
|
$ |
4.05 |
|
$ |
3.67 |
|
Net income (loss) |
|
(0.80 |
) |
|
(5.63 |
) |
|
0.67 |
|
|
4.27 |
|
|
4.71 |
|
Dividends declared per common
share |
$ |
0.01 |
|
$ |
1.12 |
|
$ |
2.16 |
|
$ |
1.96 |
|
$ |
1.76 |
|
At December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
1,856,646 |
|
$ |
1,938,470 |
|
$ |
2,187,480 |
|
$ |
1,884,167 |
|
$ |
1,493,886 |
|
Total deposits |
|
835,903 |
|
|
774,185 |
|
|
826,230 |
|
|
712,041 |
|
|
591,828 |
|
Long-term debt |
|
364,019 |
|
|
359,593 |
|
|
427,112 |
|
|
288,494 |
|
|
217,499 |
|
Mandatorily redeemable securities of subsidiary trusts |
|
19,345 |
|
|
24,060 |
|
|
23,756 |
|
|
9,775 |
|
|
6,459 |
|
Common stockholders’ equity |
|
152,388 |
|
|
70,966 |
|
|
113,447 |
|
|
118,632 |
|
|
111,261 |
|
Total stockholders’ equity |
|
152,700 |
|
|
141,630 |
|
|
113,447 |
|
|
119,632 |
|
|
112,386 |
|
Direct staff (in
thousands) |
|
265 |
|
|
323 |
|
|
375 |
|
|
327 |
|
|
296 |
|
Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common stockholders’ equity (4) |
|
(9.4 |
)% |
|
(28.8 |
)% |
|
2.9 |
% |
|
18.8 |
% |
|
22.4 |
% |
Return on total
stockholders’ equity (4) |
|
(1.1 |
) |
|
(20.9 |
) |
|
3.0 |
|
|
18.7 |
|
|
22.2 |
|
Tier 1 Capital |
|
11.67 |
% |
|
11.92 |
% |
|
7.12 |
% |
|
8.59 |
% |
|
8.79 |
% |
Total Capital |
|
15.25 |
|
|
15.70 |
|
|
10.70 |
|
|
11.65 |
|
|
12.02 |
|
Leverage (5) |
|
6.89 |
|
|
6.08 |
|
|
4.03 |
|
|
5.16 |
|
|
5.35 |
|
Common stockholders’ equity to assets |
|
8.21 |
% |
|
3.66 |
% |
|
5.19 |
% |
|
6.30 |
% |
|
7.45 |
% |
Total stockholders’ equity to assets |
|
8.22 |
|
|
7.31 |
|
|
5.19 |
|
|
6.35 |
|
|
7.52 |
|
Dividend payout ratio (6) |
|
NM |
|
|
NM |
|
|
322.4 |
|
|
45.9 |
|
|
37.4 |
|
Book value per common share |
$ |
5.35 |
|
$ |
13.02 |
|
$ |
22.71 |
|
$ |
24.15 |
|
$ |
22.34 |
|
Ratio of earnings
to fixed charges and preferred stock dividends |
|
NM |
|
|
NM |
|
|
1.01 |
x |
|
1.50 |
x |
|
1.79 |
x |
(1) |
|
On January 1, 2009, Citigroup adopted SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements (now ASC 810-10-45-15, Consolidation: Noncontrolling
Interest in a Subsidiary), and FSP EITF 03- 6-1, “Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities” (now ASC 260-10-45-59A, Earnings Per Share:
Participating Securities and the Two-Class Method). All prior
periods have been restated to conform to the current period’s
presentation. |
(2) |
|
Discontinued operations for 2005 to 2009 reflect the sale of Nikko
Cordial Securities to Sumitomo Mitsui Banking Corporation, the sale of
Citigroup’s German retail banking operations to Crédit Mutuel, and the
sale of CitiCapital’s equipment finance unit to General Electric. In
addition, discontinued operations for 2005 and 2006 include the operations
and associated gain on sale of substantially all of Citigroup’s asset
management business, the majority of which closed on December 1, 2005.
Discontinued operations from 2005 and 2006 also include the operations and
associated gain on sale of Citigroup’s Travelers Life & Annuity,
substantially all of Citigroup’s international insurance business and
Citigroup’s Argentine pension business to MetLife Inc., which closed on
July 1, 2005. See Note 3 to the Consolidated Financial
Statements. |
(3) |
|
Accounting change of $(49) million in 2005 represents the adoption
of Financial Accounting Standards Board (FASB) Interpretation No. 47,
Accounting for
Conditional Asset Retirement Obligations, an interpretation of SFAS No.
143 (FIN 47) (now ASC 410-20, Asset Retirement and
Environmental Obligations: Asset Retirement
Obligations). |
(4) |
|
The return on average common stockholders’ equity is calculated
using net income less preferred stock dividends divided by average common
stockholders’ equity. The return on total stockholders’ equity is
calculated using net income divided by average stockholders’
equity. |
(5) |
|
Tier 1 Capital divided by each year’s fourth quarter adjusted
average total assets (hereinafter as adjusted average total
assets). |
(6) |
|
Dividends declared per common share as a percentage of net income
per diluted share. |
NM Not
meaningful |
13
SEGMENT, BUSINESS AND PRODUCT—INCOME (LOSS) AND REVENUES
The following tables
show the income (loss) and revenues for Citigroup on a segment, business and
product view:
CITIGROUP INCOME
(LOSS)
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Income (loss) from Continuing
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
CITICORP |
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional Consumer
Banking |
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America |
$ |
354 |
|
$ |
(1,578 |
) |
$ |
1,867 |
|
NM |
|
NM |
|
EMEA |
|
(209 |
) |
|
50 |
|
|
96 |
|
NM |
|
(48 |
)% |
Latin
America |
|
323 |
|
|
(3,348 |
) |
|
1,616 |
|
NM |
|
NM |
|
Asia |
|
1,423 |
|
|
1,736 |
|
|
2,010 |
|
(18 |
)% |
(14 |
) |
Total |
$ |
1,891 |
|
$ |
(3,140 |
) |
$ |
5,589 |
|
NM |
|
NM |
|
Securities and
Banking |
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America |
$ |
2,417 |
|
$ |
2,275 |
|
$ |
1,687 |
|
6 |
% |
35 |
% |
EMEA |
|
3,393 |
|
|
656 |
|
|
1,595 |
|
NM |
|
(59 |
) |
Latin
America |
|
1,512 |
|
|
1,048 |
|
|
1,436 |
|
44 |
|
(27 |
) |
Asia |
|
1,830 |
|
|
1,973 |
|
|
1,795 |
|
(7 |
) |
10 |
|
Total |
$ |
9,152 |
|
$ |
5,952 |
|
$ |
6,513 |
|
54 |
% |
(9 |
)% |
Transaction
Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America |
$ |
615 |
|
$ |
323 |
|
$ |
209 |
|
90 |
% |
55 |
% |
EMEA |
|
1,287 |
|
|
1,246 |
|
|
816 |
|
3 |
|
53 |
|
Latin
America |
|
604 |
|
|
588 |
|
|
463 |
|
3 |
|
27 |
|
Asia |
|
1,230 |
|
|
1,196 |
|
|
968 |
|
3 |
|
24 |
|
Total |
$ |
3,736 |
|
$ |
3,353 |
|
$ |
2,456 |
|
11 |
% |
37 |
% |
Institutional
Clients Group |
$ |
12,888 |
|
$ |
9,305 |
|
$ |
8,969 |
|
39 |
% |
4 |
% |
Total Citicorp |
$ |
14,779 |
|
$ |
6,165 |
|
$ |
14,558 |
|
NM |
|
(58 |
)% |
CITI HOLDINGS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage and Asset
Management |
$ |
7,107 |
|
$ |
(764 |
) |
$ |
1,707 |
|
NM |
|
NM |
|
Local Consumer
Lending |
|
(10,043 |
) |
|
(8,254 |
) |
|
1,712 |
|
(22 |
)% |
NM |
|
Special Asset
Pool |
|
(5,303 |
) |
|
(26,994 |
) |
|
(12,111 |
) |
80 |
|
NM |
|
Total Citi
Holdings |
$ |
(8,239 |
) |
$ |
(36,012 |
) |
$ |
(8,692 |
) |
77 |
% |
NM |
|
Corporate/Other |
$ |
(7,606 |
) |
$ |
(2,182 |
) |
$ |
(2,674 |
) |
NM |
|
18 |
% |
Income (loss) from continuing
operations |
$ |
(1,066 |
) |
$ |
(32,029 |
) |
$ |
3,192 |
|
97 |
% |
NM |
|
Discontinued
operations |
$ |
(445 |
) |
$ |
4,002 |
|
$ |
708 |
|
NM |
|
NM |
|
Net income (loss) attributable to
noncontrolling interests |
|
95 |
|
|
(343 |
) |
|
283 |
|
NM |
|
NM |
|
Citigroup’s net income
(loss) |
$ |
(1,606 |
) |
$ |
(27,684 |
) |
$ |
3,617 |
|
94 |
% |
NM |
|
NM Not
meaningful
14
CITIGROUP REVENUES
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
CITICORP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional Consumer
Banking |
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America |
$ |
7,246 |
|
$ |
7,764 |
|
$ |
9,773 |
|
(7 |
)% |
(21 |
)% |
EMEA |
|
1,555 |
|
|
1,865 |
|
|
1,587 |
|
(17 |
) |
18 |
|
Latin
America |
|
7,354 |
|
|
8,758 |
|
|
8,279 |
|
(16 |
) |
6 |
|
Asia |
|
6,616 |
|
|
7,287 |
|
|
7,004 |
|
(9 |
) |
4 |
|
Total |
$ |
22,771 |
|
$ |
25,674 |
|
$ |
26,643 |
|
(11 |
)% |
(4 |
)% |
Securities and
Banking |
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America |
$ |
9,400 |
|
$ |
10,987 |
|
$ |
8,998 |
|
(14 |
)% |
22 |
% |
EMEA |
|
10,035 |
|
|
6,006 |
|
|
7,756 |
|
67 |
|
(23 |
) |
Latin
America |
|
3,411 |
|
|
2,369 |
|
|
3,161 |
|
44 |
|
(25 |
) |
Asia |
|
4,800 |
|
|
5,573 |
|
|
5,441 |
|
(14 |
) |
2 |
|
Total |
$ |
27,646 |
|
$ |
24,935 |
|
$ |
25,356 |
|
11 |
% |
(2 |
)% |
Transaction
Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America |
$ |
2,526 |
|
$ |
2,161 |
|
$ |
1,646 |
|
17 |
% |
31 |
% |
EMEA |
|
3,389 |
|
|
3,677 |
|
|
2,999 |
|
(8 |
) |
23 |
|
Latin
America |
|
1,373 |
|
|
1,439 |
|
|
1,199 |
|
(5 |
) |
20 |
|
Asia |
|
2,501 |
|
|
2,669 |
|
|
2,254 |
|
(6 |
) |
18 |
|
Total |
$ |
9,789 |
|
$ |
9,946 |
|
$ |
8,098 |
|
(2 |
)% |
23 |
% |
Institutional
Clients Group |
$ |
37,435 |
|
$ |
34,881 |
|
$ |
33,454 |
|
7 |
% |
4 |
% |
Total
Citicorp |
$ |
60,206 |
|
$ |
60,555 |
|
$ |
60,097 |
|
(1 |
)% |
1 |
% |
CITI HOLDINGS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage and Asset
Management |
$ |
15,135 |
|
$ |
8,423 |
|
$ |
10,659 |
|
80 |
% |
(21 |
)% |
Local Consumer
Lending |
|
19,182 |
|
|
24,453 |
|
|
26,750 |
|
(22 |
) |
(9 |
) |
Special Asset
Pool |
|
(3,682 |
) |
|
(39,574 |
) |
|
(17,896 |
) |
91 |
|
NM |
|
Total Citi
Holdings |
$ |
30,635 |
|
$ |
(6,698 |
) |
$ |
19,513 |
|
NM |
|
NM |
|
Corporate/Other |
$ |
(10,556 |
) |
$ |
(2,258 |
) |
$ |
(2,310 |
) |
NM |
|
2 |
% |
Total net revenues |
$ |
80,285 |
|
$ |
51,599 |
|
$ |
77,300 |
|
56 |
% |
(33 |
)% |
NM Not
meaningful
15
CITICORP
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 nearly 100 countries, many for
over 100 years, and offers services in over 140 countries. 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 and commercial customers around the world. Citigroup’s
global footprint provides coverage of the world’s emerging economies, which the
company believes represents a strong area of growth. As discussed in the
“Executive Summary,” Citicorp remained profitable in 2008 and 2009, despite very
difficult market conditions. At December 31, 2009, Citicorp had approximately
$1.1 trillion of assets and $731 billion of deposits, representing approximately
60% of Citi’s total assets and approximately 90% of its deposits.
Citicorp consists of the following
businesses: Regional Consumer
Banking (which includes retail banking and Citi-branded cards in four
regions—North America, EMEA, Latin
America and Asia) and Institutional Clients
Group (which includes Securities and
Banking and Transaction
Services).
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Net interest
revenue |
$ |
33,263 |
|
$ |
33,970 |
|
$ |
25,600 |
|
(2 |
)% |
33 |
% |
Non-interest
revenue |
|
26,943 |
|
|
26,585 |
|
|
34,497 |
|
1 |
|
(23 |
) |
Total revenues, net of interest
expense |
$ |
60,206 |
|
$ |
60,555 |
|
$ |
60,097 |
|
(1 |
)% |
1 |
% |
Provisions for credit losses and
for benefits and claims |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net credit
losses |
$ |
6,079 |
|
$ |
4,941 |
|
$ |
2,700 |
|
23 |
% |
83 |
% |
Credit reserve
build |
|
2,562 |
|
|
3,219 |
|
|
1,069 |
|
(20 |
) |
NM |
|
Provision for
loan losses |
$ |
8,641 |
|
$ |
8,160 |
|
$ |
3,769 |
|
6 |
% |
NM |
|
Provision for
benefits and claims |
|
48 |
|
|
6 |
|
|
16 |
|
NM |
|
(63 |
)% |
Provision for
unfunded lending commitments |
|
138 |
|
|
(191 |
) |
|
79 |
|
NM |
|
NM |
|
Total
provisions for credit losses and for benefits and claims |
$ |
8,827 |
|
$ |
7,975 |
|
$ |
3,864 |
|
11 |
% |
NM |
|
Total operating
expenses |
$ |
31,725 |
|
$ |
43,533 |
|
$ |
36,437 |
|
(27 |
)% |
19 |
% |
Income from continuing operations
before taxes |
$ |
19,654 |
|
$ |
9,047 |
|
$ |
19,796 |
|
NM |
|
(54 |
)% |
Provisions for
income taxes |
|
4,875 |
|
|
2,882 |
|
|
5,238 |
|
69 |
% |
(45 |
) |
Income from continuing
operations |
$ |
14,779 |
|
$ |
6,165 |
|
$ |
14,558 |
|
NM |
|
(58 |
)% |
Net income
attributable to noncontrolling interests |
|
68 |
|
|
29 |
|
|
63 |
|
NM |
|
(54 |
) |
Citicorp’s net
income |
$ |
14,711 |
|
$ |
6,136 |
|
$ |
14,495 |
|
NM |
|
(58 |
)% |
Balance sheet data
(in billions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EOP assets |
$ |
1,079 |
|
$ |
1,002 |
|
$ |
1,222 |
|
8 |
% |
(18 |
)% |
Average assets |
$ |
1,035 |
|
$ |
1,256 |
|
$ |
1,353 |
|
(18 |
)% |
(7 |
)% |
Total EOP deposits |
$ |
731 |
|
$ |
673 |
|
$ |
733 |
|
9 |
% |
(8 |
)% |
NM Not
meaningful
16
REGIONAL CONSUMER BANKING
Regional Consumer
Banking (RCB) consists of
Citigroup’s four regional consumer banks that provide traditional banking
services to retail customers. RCB
also contains
Citigroup’s branded cards business and small commercial banking business.
RCB
is a globally
diversified business with nearly 4,000 branches in 39 countries around the
world. During 2009, 68% 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. At year-end 2009, RCB had $213 billion
of assets and $290 billion of deposits.
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Net interest revenue |
$ |
15,524 |
|
$ |
16,230 |
|
$ |
13,896 |
|
(4 |
)% |
17 |
% |
Non-interest
revenue |
|
7,247 |
|
|
9,444 |
|
|
12,747 |
|
(23 |
) |
(26 |
) |
Total revenues, net of interest
expense |
$ |
22,771 |
|
$ |
25,674 |
|
$ |
26,643 |
|
(11 |
)% |
(4 |
)% |
Total operating
expenses |
$ |
14,157 |
|
$ |
22,578 |
|
$ |
15,625 |
|
(37 |
)% |
44 |
% |
Net credit
losses |
$ |
5,356 |
|
$ |
4,024 |
|
$ |
2,390 |
|
33 |
% |
68 |
% |
Credit reserve
build |
|
1,705 |
|
|
2,070 |
|
|
902 |
|
(18 |
) |
NM |
|
Provision for
benefits and claims |
|
48 |
|
|
6 |
|
|
15 |
|
NM |
|
(60 |
) |
Provisions for
loan losses and for benefits and claims |
$ |
7,109 |
|
$ |
6,100 |
|
$ |
3,307 |
|
17 |
% |
84 |
% |
Income (loss) from continuing operations before taxes |
$ |
1,505 |
|
$ |
(3,004 |
) |
$ |
7,711 |
|
NM |
|
NM |
|
Income taxes
(benefits) |
|
(386 |
) |
|
136 |
|
|
2,122 |
|
NM |
|
(94 |
)% |
Income (loss) from continuing
operations |
$ |
1,891 |
|
$ |
(3,140 |
) |
$ |
5,589 |
|
NM |
|
NM |
|
Net income
attributable to noncontrolling interests |
|
— |
|
|
11 |
|
|
18 |
|
(100 |
)% |
(39 |
)% |
Net income (loss) |
$ |
1,891 |
|
$ |
(3,151 |
) |
$ |
5,571 |
|
NM |
|
NM |
|
Average assets (in billions of
dollars) |
$ |
196 |
|
$ |
219 |
|
$ |
199 |
|
(11 |
)% |
10 |
% |
Return on assets |
|
0.96 |
% |
|
(1.44 |
)% |
|
2.80 |
% |
|
|
|
|
Average deposits
(in billions of dollars) |
$ |
271 |
|
$ |
267 |
|
$ |
256 |
|
1 |
% |
4 |
% |
Net credit losses as a percentage
of average loans |
|
4.47 |
% |
|
3.15 |
% |
|
2.08 |
% |
|
|
|
|
Revenue by
business |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
banking |
$ |
12,799 |
|
$ |
13,700 |
|
$ |
12,871 |
|
(7 |
)% |
6 |
% |
Citi-branded
cards |
|
9,972 |
|
|
11,974 |
|
|
13,772 |
|
(17 |
) |
(13 |
) |
Total |
$ |
22,771 |
|
$ |
25,674 |
|
$ |
26,643 |
|
(11 |
)% |
(4 |
)% |
Income (loss) from continuing
operations by business |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
banking |
$ |
2,006 |
|
$ |
(3,965 |
) |
$ |
2,400 |
|
NM |
|
NM |
|
Citi-branded
cards |
|
(115 |
) |
|
825 |
|
|
3,189 |
|
NM |
|
(74 |
)% |
Total |
$ |
1,891 |
|
$ |
(3,140 |
) |
$ |
5,589 |
|
NM |
|
NM |
|
NM Not
meaningful
17
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 12 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 the
larger cities in Texas. At December 31, 2009, NA
RCB
had
approximately $7.2 billion of retail banking loans and $143.7 billion of
deposits. In addition, NA
RCB had approximately 23.1 million Citi-branded credit card accounts, with
$82.7 billion in outstanding loan balances on a managed
basis.
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Net interest revenue |
$ |
4,559 |
|
$ |
3,662 |
|
$ |
3,019 |
|
24 |
% |
21 |
% |
Non-interest
revenue |
|
2,687 |
|
|
4,102 |
|
|
6,754 |
|
(34 |
) |
(39 |
) |
Total revenues, net of interest
expense |
$ |
7,246 |
|
$ |
7,764 |
|
$ |
9,773 |
|
(7 |
)% |
(21 |
)% |
Total operating
expenses |
$ |
5,359 |
|
$ |
8,388 |
|
$ |
6,401 |
|
(36 |
)% |
31 |
% |
Net credit
losses |
$ |
1,151 |
|
$ |
615 |
|
$ |
450 |
|
87 |
% |
37 |
% |
Credit reserve
build/(release) |
|
446 |
|
|
463 |
|
|
96 |
|
(4 |
) |
NM |
|
Provisions for
benefits and claims |
|
48 |
|
|
5 |
|
|
(3 |
) |
NM |
|
NM |
|
Provision for
loan losses and for benefits and claims |
$ |
1,645 |
|
$ |
1,083 |
|
$ |
543 |
|
52 |
% |
99 |
% |
Income (loss) from continuing operations before taxes |
|
242 |
|
$ |
(1,707 |
) |
$ |
2,829 |
|
NM |
|
NM |
|
Income taxes
(benefits) |
|
(112 |
) |
|
(129 |
) |
|
962 |
|
13 |
% |
NM |
|
Income (loss) from continuing
operations |
$ |
354 |
|
$ |
(1,578 |
) |
$ |
1,867 |
|
NM |
|
NM |
|
Net income (loss)
attributable to noncontrolling interests |
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
|
Net income (loss) |
$ |
354 |
|
$ |
(1,578 |
) |
$ |
1,867 |
|
NM |
|
NM |
|
Average assets (in billions of
dollars) |
$ |
34 |
|
$ |
36 |
|
$ |
39 |
|
(6 |
)% |
(8 |
)% |
Average
deposits (in billions of
dollars) |
$ |
137 |
|
$ |
123 |
|
$ |
120 |
|
11 |
% |
3 |
% |
Net credit losses as a percentage
of average loans |
|
5.84 |
% |
|
3.60 |
% |
|
2.68 |
% |
|
|
|
|
Revenue by
business |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
banking |
$ |
3,907 |
|
$ |
3,770 |
|
$ |
3,301 |
|
4 |
% |
14 |
% |
Citi-branded
cards |
|
3,339 |
|
|
3,994 |
|
|
6,472 |
|
(16 |
) |
(38 |
) |
Total |
$ |
7,246 |
|
$ |
7,764 |
|
$ |
9,773 |
|
(7 |
)% |
(21 |
)% |
Income (loss) from continuing
operations by business |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
banking |
$ |
429 |
|
$ |
(1,788 |
) |
$ |
111 |
|
NM |
|
NM |
|
Citi-branded
cards |
|
(75 |
) |
|
210 |
|
|
1,756 |
|
NM |
|
(88 |
)% |
Total |
$ |
354 |
|
$ |
(1,578 |
) |
$ |
1,867 |
|
NM |
|
NM |
|
NM Not
meaningful
2009 vs. 2008
Revenues, net of interest
expense declined 7%,
primarily reflecting higher credit losses in the securitization trusts, which
were offset by higher credit-card-securitization revenue, higher net interest
margin in cards and higher volumes in retail banking.
Net interest
revenue was up 24%, driven
by the impact of pricing actions and lower funding costs in Citi-branded cards,
and by higher deposit volumes in retail banking, with average deposits up 11%
from the prior year.
Non-interest
revenue declined 34%,
driven by higher credit losses flowing through the securitization trusts
partially offset by securitization revenue, and by the absence of a $349 million
gain on the sale of Visa shares and a $170 million gain from a cards portfolio
sale in the prior year.
Operating
expenses declined 36% from
the prior year. Excluding a 2008 goodwill impairment charge of $2.3 billion,
expenses were down 12% reflecting the benefits from re-engineering efforts,
lower marketing costs, and the absence of $217 million in repositioning charges
in the prior year offset by the absence of a prior-year $159 million Visa
litigation reserve release.
Provisions for loan
losses and for benefits and claims increased $562 million, or 52%, primarily due
to rising net credit losses in both cards and retail banking. Continued
weakening of leading credit indicators and trends in the macroeconomic
environment, including rising unemployment and higher bankruptcy filings,
primarily drove higher credit costs. The cards managed net credit loss ratio
increased 386 basis points to 9.58%, while the retail banking net credit loss
ratio increased 75 basis points to 4.29% (see the “Managed Presentations”
section below).
18
2008 vs. 2007
Revenues, net of
interest expense decreased 21%, driven by
lower securitization revenue and higher credit losses in the securitization
trusts, which were partially offset by higher net interest margin in cards and
higher revenues in retail banking. Lower securitization revenue was mainly
driven by a write-down of $1.1 billion in the residual interest in securitized
balances. The residual interest was primarily affected by deterioration in the
projected credit loss assumption used to value the asset.
Net
interest revenue was up 21%, mainly driven by lower funding costs.
Non-interest
revenue
decreased 39%, primarily due to lower securitization revenue, higher credit
losses in the securitization trusts, and the absence of a $297 million gain on
the sale of MasterCard shares in 2007. This decline was partially offset by a
$349 million gain on the sale of Visa shares and a $170 million gain from a
cards portfolio sale in 2008.
Operating
expenses increased 31%, primarily driven by a
$2.3 billion goodwill impairment charge in 2008. Excluding the charge, expenses
were down 5% mainly reflecting the absence of a $292 million Visa
litigation-related charge in 2007 and a $159 million Visa litigation reserve
release in 2008, partially offset by $217 million repositioning charges in
2008.
Provisions
for loan losses and for benefits and claims increased $540 million driven
by higher net credit losses, up $165 million, and a higher loan loss reserve
build, up $367 million, in both cards and retail banking. Higher credit costs
reflected a weakening of leading credit indicators, including the continued
acceleration in the rate at which delinquent cards customers advanced to
write-off, as well as trends in the macroeconomic environment, including the
housing market downturn and rising unemployment. The cards managed net credit
loss ratio increased 191 basis points to 5.72%, while the retail banking net
credit loss ratio increased 14 basis points to 3.54%.
Managed Presentations
Managed-basis (Managed) presentations detail certain
non-GAAP financial measures. Managed presentations (applicable only to North
American branded and retail partner credit card operations in NA RCB and Citi Holdings—Local Consumer
Lending,
respectively, as there are no deconsolidated credit card securitizations in any
other region) include results from both the on-balance-sheet loans and
off-balance-sheet loans, and exclude the impact of credit card securitizations
activity. Managed presentations assume that securitized loans have not been sold
and present the results of the securitized loans in the same manner as
Citigroup’s owned loans. Citigroup believes that Managed presentations are
useful to investors because they are widely used by analysts and investors
within the credit card industry. Managed presentations are commonly used by
other companies within the financial services industry. See also the “2010
Outlook” for NA RCB below.
|
2009 |
|
2008 |
|
2007 |
|
Managed credit losses as |
|
|
|
|
|
|
a percentage of
average |
|
|
|
|
|
|
managed
loans |
9.14 |
% |
5.62 |
% |
3.81 |
% |
Impact from credit card |
|
|
|
|
|
|
securitizations |
3.30 |
% |
2.02 |
% |
1.13 |
% |
Net credit losses as a |
|
|
|
|
|
|
percentage of
average loans |
5.84 |
% |
3.60 |
% |
2.68 |
% |
2010 Outlook
In 2010, NA RCB is expected to continue to
operate in a challenging economic and credit environment. Revenues will be
affected by the continued U.S. economic downturn that has impacted customer
demand and credit performance, as well as by legislative and regulatory changes.
Both retail banking and cards will continue to focus on tight expense control,
productivity improvements, and effective credit management. With high levels of
unemployment and bankruptcy filings in 2010, net credit losses, delinquencies
and defaults are expected to remain at elevated levels during the
year.
NA
RCB results will also continue to be impacted by Citi’s continued
implementation of the CARD Act as well as the company’s loss mitigation and
forbearance programs, particularly in Citi’s card and U.S. mortgage businesses.
The majority of the provisions of the CARD Act will have taken effect by
February 2010. The CARD Act implementation began to impact card revenues in the
fourth quarter of 2009 as lower net interest rate revenue due to such
implementation was partially mitigated by pricing actions. Management
within NA RCB continues to review and
revise the company’s credit card business model to implement the required
changes of the CARD Act, and this will likely continue throughout 2010. While
management of NA RCB believes that it can mitigate
a portion of the impact of the CARD Act, Citi currently estimates that the net
impact of the CARD Act on NA RCB
revenues
for 2010 could be a reduction of approximately $400 to $600 million. See also
“Results of Operations—Citi Holdings—Local
Consumer Lending” and “Managing Global Risk—Credit Risk”
below.
In
addition, on January 1, 2010, Citi adopted SFAS No. 166, Accounting for Transfers of
Financial Assets, an Amendment of FASB Statement No. 140 (SFAS 166) and SFAS No.
167 Amendments to FASB
Interpretation No. 46(R) (SFAS 167). These new
accounting standards will be applied prospectively and will require
consolidation of certain credit card securitization trusts and
the elimination of sale accounting for transfers of credit card receivables
to those trusts. Under previous accounting standards, transfers of credit card
receivables to the securitization trusts were accounted for as sales.
Consequently, beginning in 2010, the financial results of NA RCB will vary from previously
reported financial results prepared under the amended accounting standards. See
Note 1 to the Consolidated Financial Statements for a discussion of “Future
Application of Accounting Standards” for further
detail.
19
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.
Western Europe retail banking is included in Citi Holdings. EMEA RCB has
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
December 31, 2009, EMEA RCB had
approximately 341 retail bank branches with approximately 4.2 million customer
accounts, $5.2 billion in retail banking loans and $10.1 billion in deposits. In
addition, the business had approximately 2.7 million Citi-branded card accounts
with $3.0 billion in outstanding loan balances.
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Net interest revenue |
|
$ |
979 |
|
$ |
1,269 |
|
$ |
967 |
|
(23 |
)% |
31 |
% |
Non-interest
revenue |
|
|
576 |
|
|
596 |
|
|
620 |
|
(3 |
) |
(4 |
) |
Total revenues, net of interest
expense |
|
$ |
1,555 |
|
$ |
1,865
|
|
$ |
1,587
|
|
(17 |
)% |
18 |
% |
Total operating
expenses |
|
$ |
1,094 |
|
$ |
1,500 |
|
$ |
1,265 |
|
(27 |
)% |
19 |
% |
Net credit losses |
|
$ |
487 |
|
$ |
237 |
|
$ |
113 |
|
NM |
|
NM |
|
Credit reserve
build/(release) |
|
|
307 |
|
|
75 |
|
|
96 |
|
NM |
|
(22 |
)% |
Provisions
for loan losses |
|
$ |
794 |
|
$ |
312
|
|
$ |
209
|
|
NM |
|
49 |
% |
Income (loss) from continuing operations before taxes |
|
$ |
(333 |
) |
$ |
53 |
|
$ |
113 |
|
NM |
|
(53 |
)% |
Income taxes
(benefits) |
|
|
(124 |
) |
|
3 |
|
|
17 |
|
NM |
|
(82
|
) |
Income (loss) from continuing
operations |
|
$ |
(209 |
) |
$ |
50 |
|
$ |
96 |
|
NM |
|
(48 |
)% |
Net income
attributable to noncontrolling interests |
|
|
— |
|
|
12 |
|
|
18 |
|
(100 |
)% |
(33
|
) |
Net income (loss) |
|
$ |
(209 |
) |
$ |
38 |
|
$ |
78 |
|
NM |
|
(51 |
)% |
Average assets (in billions of
dollars) |
|
$ |
11 |
|
$ |
13 |
|
$ |
10 |
|
(15 |
)% |
30 |
% |
Return on assets |
|
|
(1.90 |
)% |
|
0.29 |
% |
|
0.78 |
% |
|
|
|
|
Average
deposits (in billions of
dollars) |
|
$ |
9 |
|
$ |
11 |
|
$ |
9 |
|
(18 |
)% |
22 |
% |
Net credit losses as a percentage
of average loans |
|
|
5.81 |
% |
|
2.48 |
% |
|
1.56 |
% |
|
|
|
|
Revenue by
business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail banking |
|
$ |
889 |
|
$ |
1,160 |
|
$ |
1,039 |
|
(23 |
)% |
12 |
% |
Citi-branded cards |
|
|
666 |
|
|
705
|
|
|
548
|
|
(6 |
) |
29 |
|
Total |
|
$ |
1,555 |
|
$ |
1,865 |
|
$ |
1,587 |
|
(17 |
)% |
18 |
% |
Income (loss) from continuing
operations by business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail banking |
|
$ |
(179 |
) |
$ |
(57 |
) |
$ |
(8 |
) |
NM |
|
NM |
|
Citi-branded cards |
|
|
(30 |
) |
|
107
|
|
|
104
|
|
NM |
|
3 |
% |
Total |
|
$ |
(209 |
) |
$ |
50 |
|
$ |
96 |
|
NM |
|
(48 |
)% |
NM Not
meaningful
2009 vs.
2008
Revenues, net of interest
expense declined
17%. More than half of the revenue decline is attributable to the impact of FX
translation. Other drivers included lower wealth-management and lending revenues
due to lower volumes and spread compression from credit tightening initiatives.
Investment sales declined by 26% due to market conditions at the start of the
year with assets under management increasing by 9% by year
end.
Net interest revenue was 23% lower than the prior year due to external competitive pressure
on rates and higher funding costs, with average loans for retail banking down
18% and average deposits down 18%.
Non-interest revenue decreased by 3%, primarily due to the impact of FX translation.
Excluding FX there was marginal
growth.
Operating expenses
declined 27%, reflecting expense control actions, lower marketing expenses and
the impact of FX translation. Cost savings were achieved by branch closures,
headcount reductions and process re-engineering
efforts.
Provisions for loan losses increased $482 million to $794 million. Net credit
losses increased from $237 million to $487 million, while the loan loss
reserve build increased from $75 million to $307 million. Higher credit costs
reflected continued credit deterioration across the region.
20
2008 vs.
2007
Revenues, net of interest expense increased 18% due to growth in the
size of the portfolio across Central and Eastern Europe and the Middle East.
Investment sales declined by 39% with assets under management declining by 42%
as a result of market conditions in the second half of
2008.
Net interest revenue was 31% higher than the prior year due to growth in the size of the
portfolio across Central and Eastern Europe and the Middle East and growth in
revolving balances. Average loans for retail banking were up 26%, cards were up
49% and average deposits were up
22%.
Non-interest revenue decreased by 4% due to reduced investment revenue as a result of market
conditions.
Operating expenses
increased 19%, reflecting growth in the portfolio and repositioning
charges.
Provisions for loan losses increased 49% to $312 million. Net
credit losses increased from $113 million to $237 million, while the
Loan loss reserve build decreased by 22%
to $75 million. Credit costs increased as a result of market conditions driving
deterioration in the portfolio.
2010
Outlook
During
2010, EMEA RCB businesses are expected to operate in an
environment of continued challenging economic and credit conditions. While key
business drivers, including deposits, investment sales and card purchase sales,
began to show some signs of improvement during the latter part of 2009,
continued positive developments, if any, will depend on the success of
EMEA RCB’s strategy of concentrated focus on larger
urban markets. Credit quality is currently anticipated to improve modestly with
remedial programs and tighter origination standards reducing both delinquencies
and credit losses, with some continued pockets of weakness in Poland and
Hungary. Loan and card volume growth will continue to be controlled, driven by
tighter origination standards.
21
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 Banamex, Mexico’s second largest bank with over 1,700 branches. At
December 31, 2009, LATAM RCB had
approximately 2,216 retail branches, with 16.6 million customer accounts,
$18.2 billion in retail banking loan balances and $41.4 billion in deposits. In
addition, the business had approximately 12.2 million Citi-branded card
accounts with $12.2 billion in outstanding loan balances.
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Net interest revenue |
|
$ |
5,303 |
|
$ |
6,391 |
|
$ |
5,567 |
|
(17 |
)% |
15 |
% |
Non-interest
revenue |
|
|
2,051 |
|
|
2,367 |
|
|
2,712 |
|
(13 |
) |
(13 |
) |
Total revenues, net of interest
expense |
|
$ |
7,354 |
|
$ |
8,758
|
|
$ |
8,279
|
|
(16 |
)% |
6 |
% |
Total operating
expenses |
|
$ |
4,232 |
|
$ |
8,857 |
|
$ |
4,503 |
|
(52 |
)% |
97 |
% |
Net credit losses |
|
$ |
2,435 |
|
$ |
2,205 |
|
$ |
1,189 |
|
10 |
% |
85 |
% |
Credit reserve
build/(release) |
|
|
458 |
|
|
1,116 |
|
|
504 |
|
(59 |
) |
NM |
|
Provision for benefits and
claims |
|
|
— |
|
|
1 |
|
|
18 |
|
(100 |
) |
(94 |
) |
Provisions for
loan losses and for benefits and claims |
|
$ |
2,893 |
|
$ |
3,322 |
|
$ |
1,711 |
|
(13 |
)% |
94 |
% |
Income (loss) from continuing
operations before taxes |
|
$ |
229 |
|
$ |
(3,421 |
) |
$ |
2,065 |
|
NM |
|
NM |
|
Income taxes
(benefits) |
|
|
(94 |
) |
|
(73 |
) |
|
449 |
|
(29 |
)% |
NM |
|
Income (loss) from continuing
operations |
|
$ |
323 |
|
$ |
(3,348 |
) |
$ |
1,616 |
|
NM |
|
NM |
|
Net income
attributable to noncontrolling interests |
|
|
— |
|
|
— |
|
|
1 |
|
— |
|
(100 |
)% |
Net income (loss) |
|
$ |
323 |
|
$ |
(3,348 |
) |
$ |
1,615
|
|
NM |
|
NM |
|
Average assets (in billions of
dollars) |
|
|
61 |
|
$ |
76 |
|
$ |
63 |
|
(20 |
)% |
21 |
% |
Return on assets |
|
|
0.53 |
% |
|
(4.41 |
)% |
|
2.56 |
% |
|
|
|
|
Average deposits
(in billions of
dollars) |
|
$ |
36 |
|
$ |
40 |
|
$ |
38 |
|
(10 |
)% |
5 |
% |
Net credit losses as a percentage
of average loans |
|
|
8.60 |
% |
|
7.11 |
% |
|
4.57 |
% |
|
|
|
|
Revenue by
business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail banking |
|
$ |
3,872 |
|
$ |
4,097 |
|
$ |
3,979 |
|
(5 |
)% |
3 |
% |
Citi-branded cards |
|
|
3,482 |
|
|
4,661 |
|
|
4,300 |
|
(25 |
) |
8 |
|
Total |
|
$ |
7,354 |
|
$ |
8,758
|
|
$ |
8,279
|
|
(16 |
)% |
6 |
% |
Income (loss) from continuing
operations by business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail banking |
|
$ |
547 |
|
$ |
(3,500 |
) |
$ |
812 |
|
NM |
|
NM |
|
Citi-branded cards |
|
|
(224 |
) |
|
152 |
|
|
804 |
|
NM |
|
(81 |
)% |
Total |
|
$ |
323 |
|
$ |
(3,348 |
) |
$ |
1,616
|
|
NM |
|
NM |
|
NM Not
meaningful
2009 vs.
2008
Revenues, net of interest
expense declined 16%, driven by
the impact of FX translation as well as lower activity in the branded cards
business.
Net interest revenue decreased 17%, mainly driven by FX translation impact as well as lower
volumes and spread compression in the branded cards business that offset the
growth in loans, deposits and investment products in the retail
business.
Non interest revenue decreased 13%, driven also by FX impact and lower branded cards fee
income from lower customer activity.
Operating expenses
decreased 52%, primarily driven by the absence of a goodwill impairment charge
of $4.3 billion in 2008, the benefit associated with the FX impact and saves
from restructuring actions implemented primarily at the end of 2008. The $125
million related to 2008 restructuring charges was offset by an expense benefit
of $257 million related to a legal vehicle restructuring in 2008. Expenses
increased slightly in the fourth quarter of 2009 primarily due to selected
marketing and investment
spending.
Provisions for loan losses and for benefits and claims decreased 13% primarily reflecting lower loan
loss reserve builds as a result of lower volumes, improved portfolio quality and
lower net credit losses in the branded cards portfolio primarily in Mexico due
to repositioning in the portfolio.
22
2008 vs.
2007
Revenues,
net of interest expense
increased 6% compared to the prior year, associated with higher volumes and
partially offset by the extraordinary gains recorded in 2007: a $235 million
gain on the sale of Visa shares and a $78 million gain on the sale of MasterCard
shares.
Net interest revenue increased 15% driven by higher volumes in both the branded cards and
retail businesses.
Non-interest revenue declined, driven by the 2007 Visa and MasterCard extraordinary
gains.
Operating expenses
growth of 97% was mainly driven by goodwill impairment of $4.3 billion in 2008,
and to a lesser extent, restructuring charges of $125 million. Partially
offsetting these increases was a $257 million expense benefit related to a legal
vehicle restructuring.
Provisions for loan losses and for benefits and claims
increased 94%, primarily
driven by higher loan loss reserve builds in 2008 reflecting portfolio growth
and market conditions.
2010
Outlook
Improving economic conditions across the region, including the level of
exchange rates, the credit environment and unemployment rates, are currently
expected to have a positive impact on LATAM RCB
performance in 2010. However, LATAM RCB results
will depend on overall macroeconomic conditions in the region as well as the
impact of loss mitigation efforts and the repositioning of the
portfolio.
During the fourth quarter of 2009,
LATAM RCB began to increase investments in card account
acquisition, with a focus on higher-quality accounts. This step may begin to
contribute to account and card revenue growth in 2010. While the business
anticipates continued selective marketing and investment spending during the
year, management of LATAM RCB currently
expects that overall operating expenses will continue to reflect re-engineering
efforts.
In addition, Mexico’s Ministry of Finance has publicly stated that the
U.S. government ownership stake in Citigroup does not violate Mexican law
barring indirect foreign government ownership of Mexican affiliate banks. The
Mexican Senate has asked the Mexican Supreme Court to determine the
constitutionality of the Ministry’s interpretation. The Mexican Supreme Court is
considering and will issue a resolution on the matter. Neither Citi, Banamex nor
the U.S. government is a party to this proceeding.
23
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, Australia, Singapore,
India, Taiwan, Malaysia, Japan and Hong Kong. At December 31, 2009, Asia RCB had approximately 633 retail
branches, $94.5 billion in customer deposits, 15.8 million customer accounts and
$50.1 billion in retail banking loans. In addition, the business
had approximately 15.1 million Citi-branded card accounts with $17.7
billion in outstanding loan balances at December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Net interest revenue |
|
$ |
4,683 |
|
$ |
4,908 |
|
$ |
4,343 |
|
(5 |
)% |
13 |
% |
Non-interest
revenue |
|
|
1,933 |
|
|
2,379 |
|
|
2,661 |
|
(19 |
) |
(11 |
) |
Total revenues, net of interest
expense |
|
$ |
6,616 |
|
$ |
7,287 |
|
$ |
7,004 |
|
(9 |
)% |
4 |
% |
Total operating
expenses |
|
$ |
3,472 |
|
$ |
3,833 |
|
$ |
3,456 |
|
(9 |
)% |
11 |
% |
Net credit losses |
|
$ |
1,283 |
|
$ |
967 |
|
$ |
638 |
|
33 |
% |
52 |
% |
Credit reserve build |
|
|
494 |
|
|
416 |
|
|
206 |
|
19 |
|
NM |
|
Provisions
for loan losses and for benefits and claims |
|
$ |
1,777 |
|
$ |
1,383 |
|
$ |
844 |
|
28 |
% |
64 |
% |
Income from continuing operations before taxes |
|
$ |
1,367 |
|
$ |
2,071 |
|
$ |
2,704 |
|
(34 |
)% |
(23 |
)% |
Income taxes
(benefits) |
|
|
(56 |
) |
|
335 |
|
|
694 |
|
NM |
|
(52 |
) |
Income from continuing
operations |
|
$ |
1,423 |
|
$ |
1,736 |
|
$ |
2,010 |
|
(18 |
)% |
(14 |
)% |
Net (loss)
attributable to noncontrolling interests |
|
|
— |
|
|
(1 |
) |
|
(1 |
) |
100 |
|
— |
|
Net income |
|
$ |
1,423 |
|
$ |
1,737 |
|
$ |
2,011 |
|
(18 |
)% |
(14 |
)% |
Average assets (in billions of
dollars) |
|
$ |
90 |
|
$ |
94 |
|
$ |
88 |
|
(4 |
)% |
7 |
% |
Return on assets |
|
|
1.58 |
% |
|
1.85 |
% |
|
2.29 |
% |
|
|
|
|
Average
deposits (in billions of
dollars) |
|
$ |
89 |
|
$ |
93 |
|
$ |
89 |
|
(4 |
)% |
4 |
% |
Net credit losses as a percentage
of average loans |
|
|
2.02 |
% |
|
1.38 |
% |
|
0.98 |
% |
|
|
|
|
Revenue by
business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail banking |
|
$ |
4,131 |
|
$ |
4,673 |
|
$ |
4,552 |
|
(12 |
)% |
3 |
% |
Citi-branded cards |
|
|
2,485 |
|
|
2,614 |
|
|
2,452 |
|
(5 |
) |
7 |
% |
Total |
|
$ |
6,616 |
|
$ |
7,287 |
|
$ |
7,004 |
|
(9 |
)% |
4 |
% |
Income from continuing operations
by business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail banking |
|
$ |
1,209 |
|
$ |
1,380 |
|
$ |
1,485 |
|
(12 |
)% |
(7 |
) |
Citi-branded cards |
|
|
214 |
|
|
356 |
|
|
525 |
|
(40 |
) |
(32 |
) |
Total |
|
$ |
1,423 |
|
$ |
1,736 |
|
$ |
2,010 |
|
(18 |
)% |
(14 |
)% |
NM Not
meaningful
2009 vs.
2008
Revenues,
net of interest expense declined
9%, driven by the absence of the gain on Visa shares in the prior year, lower
investment product revenues and cards purchase sales, lower spreads, and the
impact of FX translation.
Net interest revenue was 5% lower than the prior year. Average loans and deposits were down
10% and 4%, respectively, in each case partly due to the impact of FX
translation.
Non-interest revenue declined 19%, primarily due to the decline in investment revenues, lower
cards purchase sales, the absence of the gain on Visa shares and the impact of
FX translation.
Operating expenses
declined 9%, reflecting the benefits of re-engineering efforts and the impact of
FX translation. Expenses increased slightly in the fourth quarter of 2009
primarily due to selected marketing and investment
spending.
Provisions for loan losses and for benefits and claims increased 28%, mainly due to the impact of a
higher credit reserve build and an increase in net credit
losses partially offset by the impact of FX translation. In the first
half of the year, rising credit losses were particularly apparent in the
portfolios in India and South Korea. However, delinquencies improved in recent
periods and net credit losses flattened as the region showed early signs of
economic recovery and increased levels of customer activity.
24
2008 vs.
2007
Revenues, net of interest
expense increased 4%, driven by
higher cards purchase sales and higher loan and deposit volumes, partially
offset by lower gains on Visa shares than the prior year and a 47% decline in
investment sales.
Net interest revenue was 13% higher than the prior year reflecting higher card balances,
higher average loans and deposits, and better spreads.
Non-interest revenue declined 11%, primarily due to the lower gains on Visa shares than the
prior year and the decline in investment sales, partially offset by higher cards
purchase sales.
Operating expenses
increased 11%, reflecting higher business volume and restructuring expenses in
2008.
Provisions for loan losses and for benefits and claims increased 64%, mainly due to higher net
credit losses and higher credit reserve builds, reflective of the overall
economic environment in the region.
2010
Outlook
The 2010
performance of Asia RCB will continue to
be driven by improving macroeconomic conditions in the region, supported by
continued investment spending in the business and product capability. Asia RCB anticipates continued investment in
expanded retail distribution, an enhanced wealth management offering and
increased expenditure on card promotion and account acquisition, which could
result in an increase in year-on-year expenses. While Asia RCB currently expects credit trends,
including declining net credit losses and improving delinquencies, to continue
in 2010, credit trends in the region will also be affected by the pace of
recovery in the U.S. and European Union.
25
INSTITUTIONAL CLIENTS GROUP
Institutional Clients Group
(ICG)
includes Securities and Banking
and Transaction Services. ICG provides corporate,
institutional and 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 90 countries. At December 31, 2009, ICG
had approximately $866 billion of assets and $442 billion of
deposits.
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Commissions and fees |
|
$ |
2,075 |
|
$ |
2,876 |
|
$ |
3,156 |
|
(28 |
)% |
(9 |
)% |
Administration and other fiduciary fees |
|
|
4,964 |
|
|
5,413 |
|
|
5,014 |
|
(8 |
) |
8 |
|
Investment banking |
|
|
4,685 |
|
|
3,329 |
|
|
5,399 |
|
41 |
|
(38 |
) |
Principal transactions |
|
|
6,001 |
|
|
6,544 |
|
|
7,012 |
|
(8 |
) |
(7 |
) |
Other |
|
|
1,971 |
|
|
(1,021
|
) |
|
1,169
|
|
NM |
|
NM |
|
Total non-interest
revenue |
|
$ |
19,696 |
|
$ |
17,141 |
|
$ |
21,750 |
|
15 |
% |
(21 |
)% |
Net interest revenue (including
dividends) |
|
|
17,739 |
|
|
17,740
|
|
|
11,704
|
|
— |
|
52 |
|
Total revenues, net of interest
expense |
|
$ |
37,435 |
|
$ |
34,881 |
|
$ |
33,454 |
|
7 |
% |
4 |
% |
Total operating expenses |
|
|
17,568 |
|
|
20,955 |
|
|
20,812 |
|
(16 |
) |
1 |
|
Net credit losses |
|
|
723 |
|
|
917 |
|
|
310 |
|
(21 |
) |
NM |
|
Provision for unfunded lending
commitments |
|
|
138 |
|
|
(191 |
) |
|
79 |
|
NM |
|
NM |
|
Credit reserve
build |
|
|
857 |
|
|
1,149 |
|
|
167 |
|
(25 |
) |
NM |
|
Provision for benefits and
claims |
|
|
— |
|
|
— |
|
|
1 |
|
— |
|
(100
|
) |
Provisions for
loan losses and benefits and claims |
|
$ |
1,718 |
|
$ |
1,875 |
|
$ |
557 |
|
(8 |
)% |
NM |
|
Income from continuing operations
before taxes |
|
$ |
18,149 |
|
$ |
12,051 |
|
$ |
12,085 |
|
51 |
% |
— |
|
Income
taxes |
|
|
5,261 |
|
|
2,746 |
|
|
3,116 |
|
92 |
|
(12 |
)% |
Income from continuing
operations |
|
$ |
12,888 |
|
$ |
9,305 |
|
$ |
8,969 |
|
39 |
% |
4 |
% |
Net income
attributable to noncontrolling interests |
|
|
68 |
|
|
18 |
|
|
45 |
|
NM |
|
(60 |
) |
Net
income |
|
$ |
12,820 |
|
$ |
9,287
|
|
$ |
8,924
|
|
38 |
% |
4 |
% |
Average assets (in billions of
dollars) |
|
$ |
839 |
|
$ |
1,037 |
|
$ |
1,154 |
|
(19 |
)% |
(10 |
)% |
Return on
assets |
|
|
1.53 |
% |
|
0.90
|
% |
|
0.77
|
% |
|
|
|
|
Revenues by region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
11,926 |
|
$ |
13,148 |
|
$ |
10,644 |
|
(9 |
)% |
24 |
% |
EMEA |
|
|
13,424 |
|
|
9,683 |
|
|
10,755 |
|
39 |
|
(10 |
) |
Latin America |
|
|
4,784 |
|
|
3,808 |
|
|
4,360 |
|
26 |
|
(13 |
) |
Asia |
|
|
7,301 |
|
|
8,242 |
|
|
7,695 |
|
(11 |
) |
7 |
|
Total |
|
$ |
37,435 |
|
$ |
34,881
|
|
$ |
33,454
|
|
7 |
% |
4 |
% |
Income from continuing operations
by region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
3,032 |
|
$ |
2,598 |
|
$ |
1,896 |
|
17 |
% |
37 |
% |
EMEA |
|
|
4,680 |
|
|
1,902 |
|
|
2,411 |
|
NM |
|
(21 |
) |
Latin America |
|
|
2,116 |
|
|
1,636 |
|
|
1,899 |
|
29 |
|
(14 |
) |
Asia |
|
|
3,060 |
|
|
3,169 |
|
|
2,763 |
|
(3 |
) |
15 |
|
Total |
|
$ |
12,888 |
|
$ |
9,305
|
|
$ |
8,969
|
|
39 |
% |
4 |
% |
Average loans by region
(in billions
of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
45 |
|
$ |
50 |
|
$ |
51 |
|
(10 |
)% |
(2 |
)% |
EMEA |
|
|
44 |
|
|
54 |
|
|
56 |
|
(19 |
) |
(4 |
) |
Latin America |
|
|
21 |
|
|
24 |
|
|
26 |
|
(13 |
) |
(8 |
) |
Asia |
|
|
28 |
|
|
37 |
|
|
38 |
|
(24 |
) |
(3 |
) |
Total |
|
$ |
138 |
|
$ |
165
|
|
$ |
171 |
|
(16 |
)% |
(4 |
)% |
NM Not
meaningful
26
SECURITIES AND BANKING
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.
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Net interest revenue |
|
$ |
12,088 |
|
$ |
12,255 |
|
$ |
7,450 |
|
(1 |
)% |
64 |
% |
Non-interest
revenue |
|
|
15,558 |
|
|
12,680 |
|
|
17,906 |
|
23 |
|
(29 |
) |
Revenues, net of interest
expense |
|
$ |
27,646 |
|
$ |
24,935 |
|
$ |
25,356 |
|
11 |
% |
(2 |
)% |
Total operating expenses |
|
|
13,053 |
|
|
15,799 |
|
|
16,178 |
|
(17 |
) |
(2 |
) |
Net credit losses |
|
|
720 |
|
|
899 |
|
|
306 |
|
(20 |
) |
NM |
|
Provisions for unfunded
lending commitments |
|
|
138 |
|
|
(185 |
) |
|
79 |
|
NM |
|
NM |
|
Credit reserve build |
|
|
853 |
|
|
1,126 |
|
|
201 |
|
(24 |
) |
NM |
|
Provisions for benefits and
claims |
|
|
— |
|
|
— |
|
|
1 |
|
— |
|
(100 |
) |
Provisions
for loan losses and benefits and claims |
|
$ |
1,711 |
|
$ |
1,840
|
|
$ |
587
|
|
(7 |
)% |
NM |
|
Income before taxes and
noncontrolling interests |
|
$ |
12,882 |
|
$ |
7,296 |
|
$ |
8,591 |
|
77 |
% |
(15 |
)% |
Income taxes |
|
|
3,730 |
|
|
1,344 |
|
|
2,078 |
|
NM |
|
(35 |
) |
Income from continuing operations |
|
|
9,152 |
|
|
5,952 |
|
|
6,513 |
|
54 |
|
(9 |
) |
Net income
(loss) attributable to noncontrolling interests |
|
|
55 |
|
|
(13
|
) |
|
25 |
|
NM |
|
NM |
|
Net income |
|
$ |
9,097 |
|
$ |
5,965 |
|
$ |
6,488 |
|
53 |
% |
(8 |
)% |
Average assets (in billions of
dollars) |
|
$ |
779 |
|
$ |
966 |
|
$ |
1,085 |
|
(19 |
)% |
(11 |
)% |
Return on
assets |
|
|
1.17 |
% |
|
0.62 |
% |
|
0.60 |
% |
|
|
|
|
Revenues by region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
9,400 |
|
$ |
10,987 |
|
$ |
8,998 |
|
(14 |
)% |
22 |
% |
EMEA |
|
|
10,035 |
|
|
6,006 |
|
|
7,756 |
|
67 |
|
(23 |
) |
Latin America |
|
|
3,411 |
|
|
2,369 |
|
|
3,161 |
|
44 |
|
(25 |
) |
Asia |
|
|
4,800 |
|
|
5,573
|
|
|
5,441
|
|
(14 |
) |
2 |
|
Total revenues |
|
$ |
27,646 |
|
$ |
24,935 |
|
$ |
25,356 |
|
11 |
% |
(2 |
)% |
Net income from continuing
operations by region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
2,417 |
|
$ |
2,275 |
|
$ |
1,687 |
|
6 |
% |
35 |
% |
EMEA |
|
|
3,393 |
|
|
656 |
|
|
1,595 |
|
NM |
|
(59 |
) |
Latin America |
|
|
1,512 |
|
|
1,048 |
|
|
1,436 |
|
44 |
|
(27 |
) |
Asia |
|
|
1,830 |
|
|
1,973
|
|
|
1,795
|
|
(7 |
) |
10 |
|
Total net income from continuing
operations |
|
$ |
9,152 |
|
$ |
5,952 |
|
$ |
6,513 |
|
54 |
% |
(9 |
)% |
Securities and Banking revenue
details |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment
banking |
|
$ |
4,763 |
|
$ |
3,245 |
|
$ |
5,570 |
|
47 |
% |
(42 |
)% |
Lending |
|
|
(2,153 |
) |
|
4,220 |
|
|
1,814 |
|
NM |
|
NM |
|
Equity markets |
|
|
3,182 |
|
|
2,878 |
|
|
5,202 |
|
11 |
|
(45 |
) |
Fixed income markets |
|
|
21,540 |
|
|
14,395 |
|
|
11,507 |
|
50 |
|
25 |
|
Private bank |
|
|
2,054 |
|
|
2,309 |
|
|
2,473 |
|
(11 |
) |
(7 |
) |
Other Securities and
Banking |
|
|
(1,740 |
) |
|
(2,112
|
) |
|
(1,210
|
) |
18 |
|
(75
|
) |
Total Securities and Banking
revenues |
|
$ |
27,646 |
|
$ |
24,935 |
|
$ |
25,356 |
|
11 |
% |
(2 |
)% |
NM Not
meaningful
27
2009 vs.
2008
Revenues, net of interest expense
increased 11% or $2.7 billion, as markets began to recover in the early part of
2009, bringing back higher levels of volume activity and higher levels of
liquidity, which began to decline again in the third quarter of 2009. The growth
in revenue in the early part of the year was mainly due to a $7.1 billion
increase in fixed income markets, reflecting strong trading opportunities across
all asset classes in the first half of 2009, and a $1.5 billion increase in
investment banking revenue primarily from increases in debt and equity
underwriting activities reflecting higher transaction volumes from depressed
2008 levels. These increases were offset by a $6.4 billion decrease in lending
revenue primarily from losses on credit default swap hedges. Excluding the 2009
and 2008 CVA impact, as indicated in the table below, revenues increased 23% or
$5.5 billion.
Operating expenses
decreased 17%, or $2.7 billion. Excluding the 2008 repositioning and
restructuring charges and the 2009 litigation reserve release, operating
expenses declined 11% or $1.6 billion, mainly as a result of headcount
reductions and benefits from expense
management.
Provisions for loan losses and for benefits and claims
decreased 7% or $129 million, to $1.7 billion, mainly due to lower credit
reserve builds and net credit losses, due to an improved credit environment,
particularly in the latter part of the year.
2008 vs.
2007
Revenues, net of interest expense
decreased 2% or $0.4 billion reflecting the overall difficult market conditions.
Excluding the 2008 and 2007 CVA impact, revenues decreased 3% or $0.6 billion.
The reduction in revenue was primarily due to a decrease in investment banking
revenue of $2.3 billion to $3.2 billion, mainly in debt and equity underwriting,
reflecting lower volumes, and a decrease in equity markets revenue of $2.3
billion to $2.9 billion due to extremely high volatility and reduced levels of
activity. These reductions were offset by an increase in fixed income markets of
$2.9 billion to $14.4 billion due to strong performance in interest rates and
currencies, and an increase in lending revenue of $2.4 billion to $4.2 billion
mainly from gains on credit default swap
hedges.
Operating expenses
decreased by 2% or $0.4 billion. Excluding the 2008 and 2007 repositioning and
restructuring charges and the 2007 litigation reserve reversal, operating
expenses decreased by 7% or $1.1 billion driven by headcount reduction and lower
performance-based incentives.
Provisions for credit losses and for benefits and
claims increased $1.3 billion to $1.8 billion mainly from higher credit
reserve builds and net credit losses offset by a lower provision for unfunded
lending commitments due to deterioration in the credit
environment.
Certain
Revenues Impacting Securities and Banking
Items
that impacted S&B revenues during
2009 and 2008 are set forth in the table below.
|
|
Pretax revenue |
|
In millions of
dollars |
|
2009 |
|
|
2008 |
|
Private equity and equity
investments |
|
$ |
201 |
|
|
$ |
(377 |
) |
Alt-A mortgages (1) (2) |
|
|
321 |
|
|
|
(737 |
) |
Commercial real estate (CRE)
positions (1) (3) |
|
|
68 |
|
|
|
270 |
|
CVA on Citi debt liabilities under fair value option |
|
|
(3,974 |
) |
|
|
4,325 |
|
CVA on
derivatives positions, excluding monoline insurers |
|
|
2,204 |
|
|
|
(3,292 |
) |
Total significant
revenue items |
|
$ |
(1,180 |
) |
|
$ |
189 |
|
(1) |
|
Net of hedges. |
(2) |
|
For these purposes, Alt-A mortgage securities are non-agency
residential mortgage-backed securities (RMBS) where (i) the underlying
collateral has weighted average FICO scores between 680 and 720 or (ii)
for instances where FICO scores are greater than 720, RMBS have 30% or
less of the underlying collateral composed of full documentation loans.
See “Managing Global Risk—Credit Risk—U.S. Consumer Mortgage
Lending.” |
(3) |
|
S&B’s commercial real estate exposure is
split into three categories of assets: held at fair value;
held-to-maturity/held-for-investment; and equity. See “Managing Global
Risk—Credit Risk—Exposure to Commercial Real Estate” section for a further
discussion. |
In the table above, 2009 includes a $330 million pretax adjustment to the
CVA balance, which reduced pretax revenues for the year, reflecting a correction
of an error related to prior periods. See “Significant Accounting
Policies and Significant Estimates” below and Notes 1
and 34 to the Consolidated Financial Statements for a further discussion of this
adjustment.
2010
Outlook
The 2010 outlook for S&B will depend on the
level of client activity and on macroeconomic conditions, market valuations and
volatility, interest rates and other market factors. Management of S&B
currently expects to maintain client activity throughout 2010 and to operate in
market conditions that offer moderate volatility and increased
liquidity.
Operating expenses will benefit from continued re-engineering and expense
management initiatives, but will be offset by investments in talent and
infrastructure to support growth.
28
TRANSACTION SERVICES
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 and
mutual 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 trade loans and from fees for transaction processing
and fees on assets under custody in SFS.
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Net interest revenue |
|
$ |
5,651 |
|
$ |
5,485 |
|
$ |
4,254 |
|
3 |
% |
29 |
% |
Non-interest
revenue |
|
|
4,138 |
|
|
4,461 |
|
|
3,844 |
|
(7 |
) |
16 |
|
Total revenues, net of interest
expense |
|
$ |
9,789 |
|
$ |
9,946 |
|
$ |
8,098 |
|
(2 |
)% |
23 |
% |
Total operating expenses |
|
|
4,515 |
|
|
5,156 |
|
|
4,634 |
|
(12 |
) |
11 |
|
Provisions
for credit losses and for benefits and claims |
|
|
7 |
|
|
35 |
|
|
(30
|
) |
(80 |
) |
NM |
|
Income before taxes and
noncontrolling interests |
|
$ |
5,267 |
|
$ |
4,755 |
|
$ |
3,494 |
|
11 |
% |
36 |
% |
Income taxes |
|
|
1,531 |
|
|
1,402 |
|
|
1,038 |
|
9 |
|
35 |
|
Income from continuing operations |
|
|
3,736 |
|
|
3,353 |
|
|
2,456 |
|
11 |
|
37 |
|
Net income
attributable to noncontrolling interests |
|
|
13 |
|
|
31 |
|
|
20 |
|
(58 |
) |
55 |
|
Net income |
|
$ |
3,723 |
|
$ |
3,322 |
|
$ |
2,436 |
|
12 |
% |
36 |
% |
Average assets (in billions of
dollars) |
|
$ |
60 |
|
$ |
71 |
|
$ |
69 |
|
(15 |
)% |
3 |
% |
Return on
assets |
|
|
6.21 |
% |
|
4.68 |
% |
|
3.53 |
% |
|
|
|
|
Revenues by region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
2,526 |
|
$ |
2,161 |
|
$ |
1,646 |
|
17 |
% |
31 |
% |
EMEA |
|
|
3,389 |
|
|
3,677 |
|
|
2,999 |
|
(8 |
) |
23 |
|
Latin America |
|
|
1,373 |
|
|
1,439 |
|
|
1,199 |
|
(5 |
) |
20 |
|
Asia |
|
|
2,501 |
|
|
2,669
|
|
|
2,254
|
|
(6 |
) |
18 |
|
Total revenues |
|
$ |
9,789 |
|
$ |
9,946 |
|
$ |
8,098 |
|
(2 |
)% |
23 |
% |
Income from continuing operations
by region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
615 |
|
$ |
323 |
|
$ |
209 |
|
90 |
% |
55 |
% |
EMEA |
|
|
1,287 |
|
|
1,246 |
|
|
816 |
|
3 |
|
53 |
|
Latin America |
|
|
604 |
|
|
588 |
|
|
463 |
|
3 |
|
27 |
|
Asia |
|
|
1,230 |
|
|
1,196
|
|
|
968
|
|
3 |
|
24 |
|
Total net income from continuing
operations |
|
$ |
3,736 |
|
$ |
3,353 |
|
$ |
2,456 |
|
11 |
% |
37 |
% |
Key indicators (in billions of
dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average deposits and other customer liability balances |
|
$ |
303 |
|
$ |
280 |
|
$ |
246 |
|
8 |
% |
14 |
% |
EOP assets
under custody (in trillions of
dollars) |
|
|
12.1 |
|
|
11.0
|
|
|
13.1
|
|
10 |
|
(16
|
) |
NM Not
meaningful
2009 vs.
2008
Revenues,
net of interest expense
declined 2% compared to 2008 as strong growth in balances was more than offset
by lower spreads driven by low interest rates globally.
Average deposits and other customer liability balances
grew 8%, driven by strong growth in all regions.
Treasury and Trade Solutions revenues grew 7% as a result of strong growth in balances and higher
trade revenues.
Securities and Funds Services revenues declined 18%, attributable to reductions in asset valuations and
volumes.
Operating expenses
declined 12%, mainly as a result of headcount reductions and successful
execution of reengineering initiatives.
Cost of credit
declined 80%, which was primarily attributable to overall portfolio
management.
Net income
increased 12%, leading to a record net income, with growth across all regions
reflecting benefits of continued re-engineering and expense management
efforts.
2008 vs.
2007
Revenues, net of interest expense
grew 23% driven by new business and implementations, growth in customer
liability balances, increased transaction volumes and the impact of
acquisitions.
Average deposits and other customer liability balances
grew 14% driven by success of new business growth and
implementations.
Treasury and Trade Solutions revenues grew 26% as a result of strong liability and fee growth as well
as increased client penetration.
Securities and Funds Services revenues grew 17% as a result of increased assets under custody, volumes
and liability balances.
2010
Outlook
Transaction Services
business performance will continue to be impacted in 2010 by levels of interest
rates, economic activity, volatility in global capital markets, foreign exchange
and market valuations globally. Levels of client activity and client cash and
security flows are key factors dependent on macroeconomic conditions. Transaction Services intends to continue to
invest in technology to support its global network, as well as investments to
build out its investor services suite of products aimed at large,
under-penetrated markets for middle and back office outsourcing among a range of
investors. These and similar investments could lead to increasing operating
expenses.
29
CITI HOLDINGS
Citi Holdings contains businesses and portfolios of assets that Citigroup
has determined are not central to its core Citicorp business. 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 yet in an economically rational
manner through business divestitures, portfolio run-off and asset sales. Citi
has made substantial progress divesting and exiting businesses from Citi
Holdings, having completed 15 divestitures in 2009, including Smith Barney,
Nikko Cordial Securities, Nikko Asset Management Financial Institution Credit
Card business (FI) and Diners Club North America. Citi Holdings’
assets have been reduced by nearly 40%, or $351 billion, from the peak level of
$898 billion in the first quarter of 2008 to $547 billion at year-end 2009. Citi
Holdings’ assets represented less than 30% of Citi’s assets as of December 31,
2009. 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.
With Citi’s exit from the loss-sharing agreement with the U.S. government
in December 2009, the Company conducted a broad review of the Citi Holdings
asset base to determine which assets are strategically important to Citicorp. As
a result of this analysis, approximately $61 billion of assets will be moved
from Citi Holdings into Citicorp in the first quarter of 2010. The assets
consist primarily of approximately $34 billion of U.S. mortgages that will be
transferred to NA RCB, approximately $19 billion of commercial and corporate loans and
securities related to core Citicorp clients, of which approximately $17 billion
will be moved to S&B
and the remainder to NA RCB, and approximately $5.0 billion of assets related to Citi’s Mexico
asset management business that will be moved to LATAM RCB.
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
% Change |
|
In millions of
dollars |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
2009 vs. 2008 |
|
2008 vs.
2007 |
|
Net interest revenue |
|
$ |
17,314 |
|
$ |
22,459 |
|
$ |
21,797 |
|
(23 |
)% |
3 |
% |
Non-interest
revenue |
|
|
13,321 |
|
|
(29,157 |
) |
|
(2,284 |
) |
NM |
|
NM |
|
Total revenues, net of interest
expense |
|
$ |
30,635 |
|
$ |
(6,698 |
) |
$ |
19,513 |
|
NM |
|
NM |
|
Provisions for credit losses and
for benefits and claims |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net credit losses |
|
$ |
24,660 |
|
$ |
14,070 |
|
$ |
7,230 |
|
75 |
% |
95 |
% |
Credit reserve
build |
|
|
5,457 |
|
|
11,444 |
|
|
5,836 |
|
(52 |
) |
96 |
|
Provision for loan losses |
|
$ |
30,117 |
|
$ |
25,514 |
|
$ |
13,066 |
|
18 |
% |
95 |
% |
Provision for benefits and claims |
|
|
1,210 |
|
|
1,396 |
|
|
919 |
|
(13 |
) |
52 |
|
Provision for
unfunded lending commitments |
|
|
109 |
|
|
(172 |
) |
|
71 |
|
NM |
|
|