10-Q 1 a2214911z10-q.htm 10-Q

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TABLE OF CONTENTS
FINANCIAL STATEMENTS AND NOTES TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

Commission file number 1-9924

Citigroup Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
  52-1568099
(I.R.S. Employer Identification No.)

399 Park Avenue, New York, NY
(Address of principal executive offices)

 

10022
(Zip code)

(212) 559-1000
(Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller reporting company)
  Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

        Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date:

Common stock outstanding as of March 31, 2013: 3,042,884,600

Available on the web at www.citigroup.com

   


CITIGROUP INC
FIRST QUARTER 2013—FORM 10-Q

OVERVIEW

    3  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   
5
 

Executive Summary

   
5
 

Summary of Selected Financial Data

   
9
 

SEGMENT AND BUSINESS—INCOME (LOSS) AND REVENUES

   
11
 

CITICORP

   
13
 

Global Consumer Banking

   
14
 

North America Regional Consumer Banking

   
15
 

EMEA Regional Consumer Banking

   
17
 

Latin America Regional Consumer Banking

   
19
 

Asia Regional Consumer Banking

   
21
 

Institutional Clients Group

   
23
 

Securities and Banking

   
24
 

Transaction Services

   
26
 

Corporate/Other

   
28
 

CITI HOLDINGS

   
29
 

Brokerage and Asset Management

   
30
 

Local Consumer Lending

   
31
 

Special Asset Pool

   
33
 

BALANCE SHEET REVIEW

   
34
 

CAPITAL RESOURCES AND LIQUIDITY

   
38
 

Capital Resources

   
38
 

Funding and Liquidity

   
44
 

OFF-BALANCE-SHEET ARRANGEMENTS

   
52
 

MANAGING GLOBAL RISK

   
53
 

CREDIT RISK

   
54
 

Loans Outstanding

   
54
 

Details of Credit Loss Experience

   
55
 

Non-Accrual Loans and Assets and Renegotiated Loans

   
57
 

North America Consumer Mortgage Lending

   
61
 

North America Cards

   
74
 

Consumer Loan Details

   
75
 

Corporate Loan Details

   
77
 

MARKET RISK

   
79
 

COUNTRYAND CROSS-BORDER RISK

   
87
 

Country Risk

   
87
 

Cross-Border Risk

   
94
 

FAIR VALUE ADJUSTMENTS FOR DERIVATIVES AND STRUCTURED DEBT

   
95
 

CREDIT DERIVATIVES

   
96
 

INCOME TAXES

   
98
 

DISCLOSURE CONTROLS AND PROCEDURES

   
99
 

DISCLOSURE PURSUANT TO SECTION 219 OF THE IRAN THREAT REDUCTION AND SYRIA HUMAN RIGHTS ACT

   
99
 

FORWARD-LOOKING STATEMENTS

   
100
 

FINANCIAL STATEMENTS AND NOTES TABLE OF CONTENTS

   
102
 

CONSOLIDATED FINANCIAL STATEMENTS

   
103
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   
109
 

LEGAL PROCEEDINGS

   
217
 

UNREGISTERED SALES OF EQUITY, PURCHASES OF EQUITY SECURITIES, DIVIDENDS

   
218
 

2



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 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 and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. Citi has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions.

        Citigroup currently operates, for management reporting purposes, via two primary business segments: Citicorp, consisting of Citi's Global Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of Brokerage and Asset Management, Local Consumer Lending and Special Asset Pool. For a further description of the business segments and the products and services they provide, see "Citigroup Segments" below, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 3 to the Consolidated Financial Statements.

        Throughout this report, "Citigroup," "Citi" and "the Company" refer to Citigroup Inc. and its consolidated subsidiaries.

        This Quarterly Report on Form 10-Q should be read in conjunction with Citigroup's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the U.S. Securities and Exchange Commission (SEC) on March 1, 2013 (2012 Annual Report on Form 10-K). Additional information about Citigroup is available on Citi's website at www.citigroup.com. Citigroup's recent annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, as well as other filings with the SEC, are available free of charge through Citi's website by clicking on the "Investors" page and selecting "All SEC Filings." The SEC's website also contains current reports, information statements, and other information regarding Citi at www.sec.gov.

        Within this Form 10-Q, please refer to the tables of contents on pages 2 and 102 for page references to Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statements, respectively.

        Certain reclassifications have been made to the prior periods' financial statements to conform to the current period's presentation. For information on certain recent such reclassifications, see Citi's Form 8-K furnished to the SEC on April 5, 2013.

3


As described above, Citigroup is managed pursuant to the following segments:

GRAPHIC

        The following are the four regions in which Citigroup operates. The regional results are fully reflected in the segment results above.

GRAPHIC

   


(1)
North America includes the U.S., Canada and Puerto Rico, Latin America includes Mexico, and Asia includes Japan.

4



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

First Quarter of 2013 Summary Results

        During the first quarter of 2013, Citi benefitted from growth in its core businesses in Citicorp, including seasonally strong results in its markets businesses within Securities and Banking and year-over-year growth in loans and deposits (for additional information, see "Balance Sheet Review" and "Capital Resources and Liquidity—Funding and Liquidity," respectively, below) as well as an improved credit environment. Despite this growth, Citi's results for the first quarter of 2013 also reflected a continued challenging operating environment, with spread compression(1) globally impacting its Global Consumer Banking and Transaction Services businesses, and continued elevated legal and related expenses as Citi continues to work through "legacy" legal issues.

Citigroup

        Citigroup reported first quarter of 2013 net income of $3.8 billion, or $1.23 per diluted share. Citi's reported net income increased by 30%, or $877 million, from the first quarter of 2012. Results for the first quarter of 2013 included a net negative credit valuation adjustment (CVA) on derivatives (counterparty and own-credit, excluding monolines), net of hedges, and debt valuation adjustment (DVA) on Citi's fair value option debt of $(319) million ($(198) million after-tax), compared to $(1,288) million ($(800) million after-tax) in the first quarter of 2012, as Citi's credit spreads improved during the quarter. First quarter of 2012 results also included a net gain of $477 million on minority investments ($308 million after-tax).(2)

        Excluding CVA/DVA in both periods and the gain on minority investments in the first quarter 2012,(3) Citi reported net income of $4.0 billion in the first quarter of 2013, or $1.29 per diluted share, an increase of 16% compared to $1.11 per diluted share in the prior-year period. The year-over-year increase in earnings per share (excluding CVA/DVA and minority investments) primarily reflected higher revenues and lower net credit losses, partially offset by higher legal and related expenses, a lower loan loss reserve release and a higher effective tax rate as compared to the prior-year period (for additional information, see "Income Taxes" below).

        Citi's revenues, net of interest expense, were $20.5 billion in the first quarter of 2013, up 6% versus the prior-year period. Excluding CVA/DVA and the gain on minority investments in the first quarter 2012, revenues were $20.8 billion, up 3% from the first quarter of 2012, as revenues in Citicorp and Citi Holdings grew by 2% and 15%, respectively, compared to the prior-year period. Net interest revenues of $11.9 billion were 1% lower than the prior-year period, largely driven by the ongoing impact of spread compression in Transaction Services in Citicorp, which Citi expects will likely continue to negatively impact net interest revenues in the near term. Non-interest revenues were $8.6 billion, up 15% from the prior-year period, driven by the lower CVA/DVA and growth in Securities and Banking revenues, partially offset by the absence of the gains on minority investments in the first quarter of 2012. Excluding CVA/DVA in both periods and the gain on minority investments in the first quarter of 2012, non-interest revenues of $8.9 billion were 8% higher than the prior-year period.

Operating Expenses

        Citigroup expenses increased 1% versus the prior-year period to $12.4 billion driven by higher legal and related expenses in Citi Holdings (see below) and higher repositioning charges. Citi incurred higher legal and related expenses of $710 million (compared to $545 million in the prior-year period, but down from approximately $1.3 billion in the fourth quarter of 2012) and higher repositioning charges of $148 million (compared to $66 million in the prior-year period, but down from approximately $1.0 billion in the fourth quarter of 2012 as a result of the restructuring efforts announced in December 2012). Excluding legal and related expenses, repositioning charges and the impact of foreign exchange translation into U.S. dollars for reporting purposes (as used throughout this report, FX translation(4)), which lowered reported expenses by approximately $0.2 billion in the first quarter of 2013 as compared to the prior-year period, Citi's operating expenses were $11.5 billion versus $11.6 billion in the prior-year period.

        Citicorp's expenses were $10.9 billion, down 2% from the prior-year period, largely reflecting lower legal and related expenses. Citicorp legal and related expenses were $66 million in the first quarter of 2013, compared to $378 million in the prior-year period and $735 million in the fourth quarter of 2012. Citi Holdings expenses increased 23% to $1.5 billion from the prior-year period, principally due to higher legacy legal and related expenses in the Special Asset Pool. Citi Holdings legal and related expenses were $644 million in the first quarter of 2013, compared to $167 million in the prior-year period and $551 million in the fourth quarter of 2012.

   


(1)
As used throughout this report, spread compression refers to the reduction in net interest revenue as a percentage of loans or deposits, as applicable, as driven by either lower yields on interest-earning assets or higher costs to fund such assets (or a combination thereof).

(2)
In the first quarter of 2012, Citi recorded a net pretax gain on minority investments of $477 million ($308 million after-tax), which included pretax gains of $1.1 billion and $542 million on the sales of Citi's remaining stake in Housing Development Finance Corporation Ltd. (HDFC) and its stake in Shanghai Pudong Development Bank (SPDB), respectively, offset by a pretax impairment charge relating to Akbank T.A.S. of $1.2 billion, all within Corporate/Other.

(3)
Citigroup's results of operations, excluding the impact of CVA/DVA and gains/(losses) on minority investments, are non-GAAP financial measures. Citi believes the presentation of its results of operations excluding the impact of CVA/DVA and gains/(losses) on minority investments provides a more meaningful depiction of the underlying fundamentals of its businesses impacted by these amounts.

(4)
For the impact of FX translation on first quarter of 2013 results of operations for each of EMEA Regional Consumer Banking (RCB), Latin America RCB, Asia RCB and Transaction Services, see the table accompanying the discussion of each respective business' results of operations below.

5


Credit Costs and Loan Loss Reserve Positions

        Citi's total provisions for credit losses and for benefits and claims of $2.5 billion declined 16% from the prior-year period. Net credit losses of $3.0 billion were down 25% from the first quarter of 2012. Consumer net credit losses declined 28% to $2.9 billion reflecting improvements in mortgages in Citi Holdings—Local Consumer Lending and North America Citi-branded cards and Citi retail services in Citicorp. Corporate net credit losses were $45 million in the first quarter of 2013, compared to a recovery of $83 million in first quarter of 2012.

        The net release of allowance for loan losses and unfunded lending commitments was $652 million in the first quarter of 2013, 44% lower than the prior-year period, with $662 million related to Consumer and the remainder in Corporate. Of the $652 million net reserve release, $301 million was attributable to Citicorp, compared to a $589 million release in the prior-year period. The decline in the Citicorp reserve release principally reflected lower releases in North America RCB. The $351 million net reserve release in Citi Holdings included a reserve release of $375 million related to North America mortgages, and was down from $576 million in the prior-year period, which included approximately $350 million of reserve releases related to previously deferred principal balances on modified mortgages recorded in Local Consumer Lending.

        Citigroup's total allowance for loan losses was $23.7 billion at quarter end, or 3.7% of total loans, compared to $29.0 billion, or 4.5%, at the end of the prior-year period. The decline in the total allowance for loan losses reflected asset sales, lower non-accrual loans, and overall continued improvement in the credit quality of Citi's loan portfolios.

        The Consumer allowance for loan losses was $20.9 billion, or 5.3% of total Consumer loans, at quarter end, compared to $26.0 billion, or 6.3% of total loans, at March 31, 2012. Total non-accrual assets decreased 9% to $11.1 billion as compared to March 31, 2012. Corporate non-accrual loans declined 16% to $2.5 billion, reflecting continued credit improvement. Consumer non-accrual loans declined 5%, to $8.1 billion, versus the prior-year period.

Capital

        Citigroup's Tier 1 Capital and Tier 1 Common ratios were 13.1% and 11.8% as of March 31, 2013, respectively, each reflecting the final U.S. market risk capital rules (Basel II.5) which became effective on January 1, 2013 (for additional information, see "Capital Resources and Liquidity—Capital Resources" below). Citi's estimated Tier 1 Common ratio under Basel III was 9.3% at the end of the first quarter of 2013, up from an estimated 8.7% at year-end 2012.(5)

Citicorp(6)

        Citicorp net income increased 17% from the prior-year period to $4.6 billion. CVA/DVA in Securities and Banking was $(310)  million ($(192) million after-tax), compared to $(1.4) billion ($(854) million after-tax) in the prior-year period. Excluding CVA/DVA and the gain on minority investments in the first quarter of 2012, Citicorp net income increased 7% from the prior-year period to $4.8 billion, as revenue growth, lower expenses and lower net credit losses were partially offset by lower loan loss reserve releases and a higher effective tax rate.

        Citicorp revenues, net of interest expense, were $19.6 billion in the first quarter of 2013, up 6% versus the prior-year period. Excluding CVA/DVA and the gain on minority investments in the first quarter of 2012, Citicorp revenues were $19.9 billion in the quarter, a 2% increase versus the prior-year period, as growth in Securities and Banking revenues was partially offset by a decline in Transaction Services revenues. Global Consumer Banking (GCB) revenues of $10.0 billion were flat versus the prior-year period, as were Corporate/Other revenues of $(7) million, excluding the gain on minority investments in the first quarter of 2012.

        North America RCB revenues of $5.1 billion declined 1% from the prior-year period, driven by a 3% decline in retail banking revenues with total cards revenues (Citi-branded cards and Citi retail services) flat versus the prior-year period. The decline in retail banking revenues was driven by spread compression, which more than offset growth in loans and deposits. North America RCB average retail loans of $43 billion grew 7% and average deposits of $164 billion grew 10%, both versus the prior-year period. Cards revenues remained flat, as improved net interest spreads were offset by lower average loans. Average card loans of $106 billion declined 4% versus the prior-year period, driven by increased payment rates resulting from ongoing consumer deleveraging, and card purchase sales of $54 billion were roughly flat. Citi retail services revenues were also negatively impacted by higher contractual partner payments due to the impact of improving credit trends. Quarter-over-quarter, revenues in North America RCB declined 4% due to lower mortgage gain on sale margins as well as seasonally lower cards revenues.

        International GCB revenues (consisting of Asia RCB, Latin America RCB and EMEA RCB) grew 1% versus the prior-year period as reported, and 3% on a constant dollar basis (excluding the impact of FX translation), driven by 6% revenue growth in Latin America RCB and 2% revenue growth in EMEA RCB. Asia RCB revenues declined by 1% versus the prior-year period, primarily reflecting ongoing spread compression in certain markets and the continued impact of regulatory actions in certain countries, most notably Korea. While international GCB revenues continued to reflect spread compression in certain markets, as well as the impact of regulatory changes, particularly in Asia, most underlying business metrics continued to improve. International GCB average retail loans increased 4% versus the prior-year period, investment sales grew 24%, average card loans grew 3%, and card purchase sales grew 7%,

   


(5)
Citi's estimated Basel III Tier 1 Common ratio and related metrics are non-GAAP financial measures. For additional information on Citi's estimated Basel III Tier 1 Common ratio, including the calculation of the ratio, see "Capital Resources and Liquidity—Capital Resources" below.

(6)
Citicorp includes Citi's three operating businesses—Global Consumer Banking, Securities and Banking and Transaction Services—as well as Corporate/Other. See "Citicorp" below for additional information on the results of operations for each of the businesses in Citicorp.

6


although average deposits declined 1%, all excluding the impact of FX translation.

        Securities and Banking revenues were $7.0 billion in the first quarter of 2013, up 31% from the prior-year period, including the benefit of lower CVA/DVA. Excluding CVA/DVA, Securities and Banking revenues of $7.3 billion increased 8% from the prior-year period, as a decline in equity and fixed income markets revenues was more than offset by growth in investment banking and Private Bank revenues, as well as lower mark-to-market losses on hedges related to accrual loans in lending.

        Fixed income markets revenues of $4.6 billion, excluding CVA/DVA,(7) decreased 3% from the prior-year period as rates and currencies revenues declined from a strong performance in the prior-year period, partially offset by growth in credit-related and securitized product revenues. Equity markets revenues of $826 million in the first quarter of 2013, excluding CVA/DVA, declined 10% from the prior-year period, driven in part by lower volatility that impacted derivatives performance.

        Investment banking revenues rose 22% from the prior-year period to $1.1 billion, driven by higher revenues in all major products. Private Bank revenues of $629 million, excluding CVA/DVA, increased 5% from the prior-year period, driven by growth in North America and Asia. Lending revenues increased to $309 million from $12 million in the prior-year period, reflecting $(24) million mark-to-market losses on hedges related to accrual loans as credit spreads tightened during the first quarter of 2013 (compared to a $(344) million loss in the prior-year period). Excluding the mark-to-market impact on hedges related to accrual loans, lending revenues declined 7% to $333 million versus the prior year, primarily related to loan sale activity.

        Transaction Services revenues declined 4% on a reported basis to $2.6 billion versus the prior-year period, and declined 2% excluding the impact of FX translation. Treasury and Trade Solutions revenues declined 5% on a reported basis and 3% excluding the impact of FX translation as the impact of spread compression globally was only partially offset by loan and deposit growth. Securities and Fund Services revenues declined 1% on a reported basis, but increased 2% excluding the impact of FX translation, as higher settlement volumes and fees offset lower net interest spreads.

        Citicorp end of period loans increased 5% from the prior-year period to $539 billion, with 1% growth in Consumer loans and 9% growth in Corporate loans. Consumer loan growth was driven by 12% growth in Latin America RCB and 8% growth in EMEA RCB, partially offset by a 2% decline in North America RCB and flat end of period loans in Asia RCB.

Citi Holdings(8)

        During the first quarter of 2013, Citi made progress on its goal of reducing the negative impact of Citi Holdings on its overall results of operations. Citi Holdings net loss was $794 million in the first quarter of 2013, compared to a net loss of $1.0 billion in the first quarter of 2012. Excluding CVA/DVA,(9) Citi Holdings net loss decreased to $788 million compared to a net loss of $1.1 billion in the prior-year period, as growth in revenues and lower credit costs were partially offset by higher expenses. Expenses increased 23% from the prior-year period reflecting higher legal and related costs, principally recorded in the Special Asset Pool. Excluding legal and related costs, expenses declined 18% versus the prior-year period.

        Citi Holdings revenues increased 2% to $901 million from $882 million in the prior-year period. Excluding CVA/DVA, Citi Holdings revenues increased 15% to $910 million versus the prior-year period, as higher revenues in the Special Asset Pool were partially offset by a decline in Local Consumer Lending driven by the continued decline in loan balances.

        Special Asset Pool revenues, excluding CVA/DVA, were $(129) million in the first quarter of 2013, compared to $(482) million in the prior-year period, predominantly reflecting lower asset marks and lower funding costs. Local Consumer Lending revenues of $1.1 billion declined 20% from the prior year primarily due to the 21% decline in average assets. Brokerage and Asset Management revenues were $(17) million, compared to $(48) million in the prior year, reflecting lower funding costs given the decline in assets. Net interest revenues increased 6% to $753 million versus the prior-year period, driven by improvements in Special Asset Pool and Brokerage and Asset Management revenues reflecting lower funding costs partially offset by a decline in Local Consumer Lending reflecting the lower loan balances. Non-interest revenues, excluding CVA/DVA, were $157 million versus $85 million in the prior year, reflecting lower asset marks within the Special Asset Pool offset by lower revenues in Local Consumer Lending reflecting the declining assets as well as higher repurchase reserve builds.

        Citi Holdings end of period assets declined 29% from the prior year to $149 billion at the end of the first quarter of 2013. At the end of the quarter, Citi Holdings assets comprised approximately 8% of total Citigroup GAAP assets, 14% of risk-weighted assets (as defined under current regulatory guidelines), and 22% of estimated risk-weighted assets under Basel III. Local Consumer Lending continued to represent the largest segment within Citi Holdings, with $122 billion of assets as of the end of first quarter of 2013, of which approximately 70% or $86 billion were related to mortgages in North America real estate lending.

   


(7)
For the summary of CVA/DVA by business within Securities and Banking for the first quarter of 2013 and comparable periods, see "Citicorp—Institutional Clients Group" below.

(8)
Citi Holdings includes Local Consumer Lending, Special Asset Pool and Brokerage and Asset Management. See "Citi Holdings" below for additional information on the results of operations for each of the businesses in Citi Holdings.

(9)
CVA/DVA in Citi Holdings, recorded in the Special Asset Pool, was $(9) million in the first quarter of 2013, compared to $88 million in the prior-year period.

7


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8



RESULTS OF OPERATIONS

SUMMARY OF SELECTED FINANCIAL DATA—Page 1

  
 
Citigroup Inc. and Consolidated Subsidiaries


 
 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except per-share amounts and ratios   2013   2012  

Net interest revenue

  $ 11,884   $ 11,947     (1 )%

Non-interest revenue

    8,607     7,459     15  
               

Total revenues, net of interest expense

  $ 20,491   $ 19,406     6 %

Operating expenses

    12,398     12,319     1  

Provisions for credit losses and for benefits and claims

    2,540     3,019     (16 )
               

Income from continuing operations before income taxes

  $ 5,553   $ 4,068     37 %

Income taxes

    1,588     1,006     58  
               

Income from continuing operations

  $ 3,965   $ 3,062     29 %

Income (loss) from discontinued operations, net of taxes(1)

    (67 )   (5 )   NM  
               

Net income before attribution of noncontrolling interests

  $ 3,898     3,057     28 %

Net income attributable to noncontrolling interests

    90     126     (29 )
               

Citigroup's net income

  $ 3,808   $ 2,931     30 %
               

Less:

                   

Preferred dividends—Basic

  $ 4   $ 4     %

Dividends and undistributed earnings allocated to employee restricted and deferred shares that contain nonforfeitable rights to dividends, applicable to Basic EPS

    72     54     33  
               

Income allocated to unrestricted common shareholders for Basic EPS

  $ 3,732   $ 2,873     30 %

Add: Interest expense, net of tax, on convertible securities and adjustment of undistributed earnings allocated to employee restricted and deferred shares that contain nonforfeitable rights to dividends, applicable to diluted EPS

        4     NM  
               

Income allocated to unrestricted common shareholders for diluted EPS

  $ 3,732   $ 2,877     30 %

Earnings per share

                   

Basic

                   

Income from continuing operations

    1.25     0.98     28  

Net income

    1.23     0.98     26  
               

Diluted

                   

Income from continuing operations

  $ 1.25   $ 0.96     30 %

Net income

    1.23     0.95     29  

Dividends declared per common share

    0.01     0.01      
               

Statement continues on the next page, including notes to the table.

9



SUMMARY OF SELECTED FINANCIAL DATA—Page 2

Citigroup Inc. and Consolidated Subsidiaries


 
 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except per-share amounts, ratios and direct staff   2013   2012  

At March 31:

                   

Total assets

  $ 1,881,734   $ 1,944,423     (3 )%

Total deposits

    933,762     906,012     3  

Long-term debt

    234,326     311,079     (25 )

Citigroup common stockholders' equity

    190,222     181,508     5  

Total Citigroup stockholders' equity

    193,359     181,820     6  

Direct staff (in thousands)

    257     263     (2 )
               

Ratios

                   

Return on average assets

    0.82 %   0.62 %      

Return on average common stockholders' equity(3)

    8.21     6.53        

Return on average total stockholders' equity(3)

    8.08     6.52        

Efficiency ratio

    61     63        
               

Tier 1 Common(4)(5)

    11.84 %   12.50 %      

Tier 1 Capital(5)

    13.09     14.26        

Total Capital(5)

    16.09     17.64        

Leverage(6)

    7.78     7.55        
               

Citigroup common stockholders' equity to assets

    10.11 %   9.33 %      

Total Citigroup stockholders' equity to assets

    10.28     9.35        

Dividend payout ratio(2)

    0.8     1.1        

Book value per common share

    62.51     61.90        

Ratio of earnings to fixed charges and preferred stock dividends

    2.26x     1.71x        
               

(1)
Discontinued operations for the first quarter of 2013 includes a carve-out of Citi's liquid strategies business within Citi Capital Advisors, the sale of which is to occur pursuant to two separate transactions, the first of which closed in February 2013. Discontinued operations for the first quarters of 2013 and 2012 also reflect the sale of the Egg Banking PLC credit card business. For additional information, see Note 2 to the Consolidated Financial Statements.

(2)
Dividends declared per common share as a percentage of net income per diluted share.

(3)
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 average total Citigroup stockholders' equity is calculated using net income divided by average Citigroup stockholders' equity.

(4)
As currently defined by the U.S. banking regulators, the Tier 1 Common ratio represents Tier 1 Capital less non-common elements, including qualifying perpetual preferred stock, qualifying noncontrolling interests in subsidiaries and qualifying trust preferred securities divided by risk-weighted assets.

(5)
First quarter of 2013 Basel I capital ratios reflect the final (revised) U.S. market risk capital rules (Basel II.5) that were effective on January 1, 2013.

(6)
The leverage ratio represents Tier 1 Capital divided by quarterly adjusted average total assets.

10



SEGMENT AND BUSINESS—INCOME (LOSS) AND REVENUES

        The following tables show the income (loss) and revenues for Citigroup on a segment and business view:


CITIGROUP INCOME

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars   2013   2012  

Income (loss) from continuing operations

                   

CITICORP

                   

Global Consumer Banking

                   

North America

  $ 1,113   $ 1,297     (14 )%

EMEA

    7     (13 )   NM  

Latin America

    414     392     6  

Asia

    417     501     (17 )
               

Total

  $ 1,951   $ 2,177     (10 )%
               

Securities and Banking

                   

North America

  $ 1,152   $ 187     NM  

EMEA

    445     514     (13 )%

Latin America

    312     324     (4 )

Asia

    446     311     43  
               

Total

  $ 2,355   $ 1,336     76 %
               

Transaction Services

                   

North America

  $ 129   $ 126     2 %

EMEA

    223     300     (26 )

Latin America

    164     174     (6 )

Asia

    254     297     (14 )
               

Total

  $ 770   $ 897     (14 )%
               

Institutional Clients Group

  $ 3,125   $ 2,233     40 %
               

Corporate/Other

  $ (322 ) $ (331 )   3 %
               

Total Citicorp

  $ 4,754   $ 4,079     17 %
               

CITI HOLDINGS

                   

Brokerage and Asset Management

  $ (79 ) $ (137 )   42 %

Local Consumer Lending

    (293 )   (633 )   54  

Special Asset Pool

    (417 )   (247 )   (69 )
               

Total Citi Holdings

  $ (789 ) $ (1,017 )   22 %
               

Income from continuing operations

  $ 3,965   $ 3,062     29 %
               

Discontinued operations

  $ (67 ) $ (5 )   NM  

Net income attributable to noncontrolling interests

    90     126     (29 )%
               

Citigroup's net income

  $ 3,808   $ 2,931     30 %
               

NM Not meaningful

11



CITIGROUP REVENUES

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars   2013   2012  

CITICORP

                   

Global Consumer Banking

                   

North America

  $ 5,110   $ 5,166     (1 )%

EMEA

    368     369      

Latin America

    2,575     2,473     4  

Asia

    1,960     1,998     (2 )
               

Total

  $ 10,013   $ 10,006     %
               

Securities and Banking

                   

North America

  $ 2,970   $ 1,442     NM  

EMEA

    1,873     1,959     (4 )%

Latin America

    770     723     7  

Asia

    1,365     1,218     12  
               

Total

  $ 6,978   $ 5,342     31 %
               

Transaction Services

                   

North America

  $ 626   $ 639     (2 )%

EMEA

    861     873     (1 )

Latin America

    447     442     1  

Asia

    672     751     (11 )
               

Total

  $ 2,606   $ 2,705     (4 )%
               

Institutional Clients Group

  $ 9,584   $ 8,047     19 %
               

Corporate/Other

  $ (7 ) $ 471     NM  
               

Total Citicorp

  $ 19,590   $ 18,524     6 %
               

CITI HOLDINGS

                   

Brokerage and Asset Management

  $ (17 ) $ (48 )   65 %

Local Consumer Lending

    1,056     1,324     (20 )%

Special Asset Pool

    (138 )   (394 )   65 %
               

Total Citi Holdings

  $ 901   $ 882     2 %
               

Total Citigroup net revenues

  $ 20,491   $ 19,406     6 %
               

NM Not meaningful

12



CITICORP

        Citicorp is Citigroup's global bank for consumers and businesses and represents Citi's core franchises. Citicorp is focused on providing best-in-class products and services to customers and leveraging Citigroup's unparalleled global network, including many of the world's emerging economies. Citicorp is physically present in approximately 100 countries, many for over 100 years, and offers services in over 160 countries and jurisdictions. Citi believes this global network provides a strong foundation for servicing the broad financial services needs of its large multinational clients and for meeting the needs of retail, private banking, commercial, public sector and institutional clients around the world. At March 31, 2013, Citicorp had $1.7 trillion of assets and $868 billion of deposits, representing 92% of Citi's total assets and 93% of its deposits.

        Citicorp consists of the following operating businesses: Global Consumer Banking (which consists of Regional Consumer Banking in North America, EMEA, Latin America and Asia) and Institutional Clients Group (which includes Securities and Banking and Transaction Services). Citicorp also includes Corporate/Other.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars except as otherwise noted   2013   2012  

Net interest revenue

  $ 11,131   $ 11,238     (1 )%

Non-interest revenue

  $ 8,459     7,286     16  
               

Total revenues, net of interest expense

  $ 19,590   $ 18,524     6 %
               

Provisions for credit losses and for benefits and claims

                   

Net credit losses

  $ 2,031   $ 2,221     (9 )%

Credit reserve build (release)

    (319 )   (577 )   45  
               

Provision for loan losses

  $ 1,712   $ 1,644     4 %

Provision for benefits and claims

    63     58     9  

Provision for unfunded lending commitments

    18     (12 )   NM  
               

Total provisions for credit losses and for benefits and claims

  $ 1,793   $ 1,690     6 %
               

Total operating expenses

  $ 10,896   $ 11,102     (2 )%
               

Income from continuing operations before taxes

  $ 6,901   $ 5,732     20 %

Provisions for income taxes

    2,147     1,653     30  
               

Income from continuing operations

  $ 4,754   $ 4,079     17 %

Income (loss) from discontinued operations, net of taxes

    (67 )   (5 )   NM  

Noncontrolling interests

    85     124     (31 )
               

Net income

  $ 4,602   $ 3,950     17 %
               

Balance sheet data (in billions of dollars)

                   

Total end-of-period (EOP) assets

  $ 1,733   $ 1,735     %

Average assets

    1,734     1,689     3  

Return on average assets

    1.08 %   0.94 %      

Efficiency ratio (Operating expenses/Total revenues)

    56 %   60 %      

Total EOP loans

  $ 539   $ 514     5  

Total EOP deposits

    868     843     3  
               

NM Not meaningful

13



GLOBAL CONSUMER BANKING

        Global Consumer Banking (GCB) consists of Citigroup's four geographical Regional Consumer Banking (RCB) businesses that provide traditional banking services to retail customers through retail banking, commercial banking, Citi-branded cards and Citi retail services. GCB is a globally diversified business with 3,916 branches in 39 countries around the world. For the quarter ended March 31, 2013, GCB had $400 billion of average assets and $330 billion of average deposits. Citi's strategy is to focus on the top 150 cities globally that it believes have the highest growth potential in consumer banking. Consistent with this strategy, as announced in the fourth quarter of 2012 as part of its repositioning efforts, Citi intends to optimize its branch footprint and further concentrate its presence in major metropolitan areas. As of March 31, 2013, Citi had consumer banking operations in approximately 120, or 80%, of these cities.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars except as otherwise noted   2013   2012  

Net interest revenue

  $ 7,356   $ 7,366     %

Non-interest revenue

    2,657     2,640     1  
               

Total revenues, net of interest expense

  $ 10,013   $ 10,006     %
               

Total operating expenses

  $ 5,340   $ 5,220     2 %
               

Net credit losses

  $ 1,992   $ 2,278     (13 )%

Credit reserve build (release)

    (342 )   (734 )   53  

Provisions for unfunded lending commitments

    15     (1 )   NM  

Provision for benefits and claims

    63     58     9 %
               

Provisions for credit losses and for benefits and claims

  $ 1,728   $ 1,601     8 %
               

Income from continuing operations before taxes

  $ 2,945   $ 3,185     (8 )%

Income taxes

    994     1,008     (1 )
               

Income from continuing operations

  $ 1,951   $ 2,177     (10 )%

Noncontrolling interests

    5     1     NM  
               

Net income

  $ 1,946   $ 2,176     (11 )%
               

Balance Sheet data (in billions of dollars)

                   

Average assets

  $ 400   $ 386     4 %

Return on assets

    1.97 %   2.27 %      

Efficiency ratio

    53 %   52 %      

Total EOP assets

    403     390     3  

Average deposits

    330     319     4  

Net credit losses as a percentage of average loans

    2.78 %   3.19 %      
               

Revenue by business

                   

Retail banking

  $ 4,535   $ 4,549     %

Cards(1)

    5,478     5,457      
               

Total

  $ 10,013   $ 10,006     %
               

Income from continuing operations by business

                   

Retail banking

  $ 726   $ 828     (12 )%

Cards(1)

    1,225     1,349     (9 )
               

Total

  $ 1,951   $ 2,177     (10 )%
               

Foreign Currency (FX) Translation Impact

                   

Total revenue—as reported

  $ 10,013   $ 10,006     %

Impact of FX translation(2)

        (71 )      
               

Total revenues—ex-FX

  $ 10,013   $ 9,935     1 %
               

Total operating expenses—as reported

  $ 5,340   $ 5,220     2 %

Impact of FX translation(2)

        (63 )      
               

Total operating expenses—ex-FX

  $ 5,340   $ 5,157     4 %
               

Total provisions for LLR & PBC—as reported

  $ 1,728   $ 1,601     8 %

Impact of FX translation(2)

        (19 )      
               

Total provisions for LLR & PBC—ex-FX

  $ 1,728   $ 1,582     9 %
               

Net income—as reported

  $ 1,946   $ 2,176     (11 )%

Impact of FX translation(2)

        2        
               

Net income—ex-FX

  $ 1,946   $ 2,178     (11 )%
               

(1)
Includes both Citi-branded cards and Citi retail services.

(2)
Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the current exchange rate for all periods presented.


NM
Not meaningful

14



NORTH AMERICA REGIONAL CONSUMER BANKING

        North America Regional Consumer Banking (NA RCB) provides traditional banking and Citi-branded cards and Citi retail services to retail customers and small to mid-size businesses in the U.S. NA RCB's approximate 980 retail bank branches as of March 31, 2013 are largely concentrated in the greater metropolitan areas of New York, Los Angeles, San Francisco, Chicago, Miami, Washington, D.C., Boston, Philadelphia, Dallas, Houston, San Antonio and Austin. As announced in the fourth quarter of 2012, as part of its repositioning efforts, Citi expects to optimize its branch network in North America and further concentrate its presence in major metropolitan areas. At March 31, 2013, NA RCB had approximately 12.2 million customer accounts, $43.1 billion of retail banking loans and $166.8 billion of deposits. In addition, NA RCB had approximately 101.2 million Citi-branded and Citi retail services credit card accounts, with $104.6 billion in outstanding card loan balances.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except as otherwise noted   2013   2012  

Net interest revenue

  $ 4,152   $ 4,094     1 %

Non-interest revenue

    958     1,072     (11 )
               

Total revenues, net of interest expense

  $ 5,110   $ 5,166     (1 )%
               

Total operating expenses

  $ 2,429   $ 2,340     4 %
               

Net credit losses

  $ 1,255   $ 1,629     (23 )%

Credit reserve build (release)

    (370 )   (841 )   56  

Provisions for benefits and claims

    14     14      

Provision for unfunded lending commitments

             
               

Provisions for credit losses and for benefits and claims

  $ 899   $ 802     12 %
               

Income from continuing operations before taxes

  $ 1,782   $ 2,024     (12 )%

Income taxes

    669     727     (8 )
               

Income from continuing operations

  $ 1,113   $ 1,297     (14 )%

Noncontrolling interests

             
               

Net income

  $ 1,113   $ 1,297     (14 )%
               

Balance Sheet data (in billions of dollars)

                   

Average assets

  $ 176   $ 169     4 %

Return on average assets

    2.56 %   3.09 %      

Efficiency ratio

    48 %   45 %      

Average deposits

    163.8     149.4     10  

Net credit losses as a percentage of average loans

    3.40 %   4.32 %      
               

Revenue by business

                   

Retail banking

  $ 1,573   $ 1,629     (3 )%

Citi-branded cards

    2,026     2,046     (1 )

Citi retail services

    1,511     1,491     1  
               

Total

  $ 5,110   $ 5,166     (1 )%
               

Income from continuing operations by business

                   

Retail banking

  $ 229   $ 334     (31 )%

Citi-branded cards

    448     592     (24 )

Citi retail services

    436     371     18  
               

Total

  $ 1,113   $ 1,297     (14 )%
               

15



1Q13 vs. 1Q12

        Net income decreased 14%, mainly driven by a $471 million reduction in loan loss reserve releases and higher expenses, partially offset by a $374 million reduction in net credit losses.

        Revenues decreased 1%, as higher volumes in retail banking were offset by significant continued spread compression. Cards spreads have started to recover but were offset by lower volumes.

        Retail banking revenues declined 3% despite a 26% increase in mortgage originations, 7% growth in average retail loans and 10% growth in average deposits. In addition, deposit mix improved as average checking balances increased 17%. However, these trends were offset by spread compression in both mortgage gain-on-sale margins, particularly in the retail channel, and in the deposit portfolio. Citi expects higher mortgage volumes to continue through the third quarter of 2013, but expects spread compression to continue to negatively impact revenues during the remainder of 2013.

        Cards revenues were flat, as improved net interest spreads, benefitting from both higher yields and lower funding costs, were offset by lower average loan balances. In Citi-branded cards, average loans declined 5% and net interest revenue declined 1%, reflecting continued increased payment rates resulting from consumer deleveraging, and purchase sales were flat. In Citi retail services, net interest revenues increased 5% due to improved spreads, partially offset by a 2% decline in average loans as well as declining non-interest revenues, driven by improving credit and the resulting impact on contractual partner payments. Citi expects cards revenues could continue to be negatively impacted by higher payment rates for consumers, reflecting ongoing economic uncertainty and deleveraging as well as Citi's shift to higher credit quality borrowers.

        Expenses increased 4%, primarily due to higher repositioning charges and higher volume-related mortgage origination costs, partially offset by efficiency savings.

        Provisions increased 12%, as lower net credit losses in the cards portfolio and in retail banking were offset by continued lower loan loss reserve releases ($370 million compared to $841 million in the prior-year period). Assuming no downturn in the U.S. economic environment, Citi believes credit trends have largely stabilized in the cards portfolios.

16



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. The countries in which EMEA RCB has the largest presence are Poland, Turkey, Russia and the United Arab Emirates. As part of Citi's previously announced repositioning efforts, since the fourth quarter of 2012, Citi closed its consumer branch network in Pakistan and announced it had agreed to sell its consumer operations in Romania and Turkey. At March 31, 2013, EMEA RCB had 222 retail bank branches with 3.9 million customer accounts, $5.2 billion in retail banking loans and $13.1 billion in deposits. In addition, the business had 2.8 million Citi-branded card accounts with $2.8 billion in outstanding card loan balances.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except as otherwise noted   2013   2012  

Net interest revenue

  $ 246   $ 253     (3 )%

Non-interest revenue

    122     116     5 %
               

Total revenues, net of interest expense

  $ 368   $ 369     %
               

Total operating expenses

  $ 344   $ 359     (4 )%
               

Net credit losses

  $ 29   $ 29     %

Credit reserve build (release)

    (11 )   (5 )   NM  

Provision for unfunded lending commitments

    1     (1 )   NM  
               

Provisions for credit losses

  $ 19   $ 23     (17 )%
               

Income from continuing operations before taxes

  $ 5   $ (13 )   NM  

Income taxes (benefits)

    (2 )       %
               

Income (loss) from continuing operations

  $ 7   $ (13 )   NM  

Noncontrolling interests

    3     1     NM  
               

Net income (loss)

  $ 4   $ (14 )   NM  
               

Balance Sheet data (in billions of dollars)

                   

Average assets

  $ 10   $ 9     11 %

Return on average assets

    0.16 %   (0.63 )%      

Efficiency ratio

    93 %   97 %      

Average deposits

    13.0     12.5     4  

Net credit losses as a percentage of average loans

    1.47 %   1.62 %      
               

Revenue by business

                   

Retail banking

  $ 215   $ 216     %

Citi-branded cards

    153     153      
               

Total

  $ 368   $ 369     %
               

Income (loss) from continuing operations by business

                   

Retail banking

  $ (8 ) $ (26 )   69 %

Citi-branded cards

    15     13     15 %
               

Total

  $ 7   $ (13 )   NM  
               

Foreign Currency (FX) Translation Impact

                   

Total revenue—as reported

  $ 368   $ 369     %

Impact of FX translation(1)

        (8 )      
               

Total revenues—ex-FX

  $ 368   $ 361     2 %
               

Total operating expenses—as reported

  $ 344   $ 359     (4 )%

Impact of FX translation(1)

        (8 )      
               

Total operating expenses—ex-FX

  $ 344   $ 351     (2 )%
               

Provisions for credit losses—as reported

  $ 19   $ 23     (17 )%

Impact of FX translation(1)

               
               

Provisions for credit losses—ex-FX

  $ 19   $ 23     (17 )%
               

Net income (loss)—as reported

  $ 4   $ (14 )   NM  

Impact of FX translation(1)

        1        
               

Net income (loss)—ex-FX

  $ 4   $ (13 )   NM  
               

(1)
Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the current exchange rate for all periods presented.

NM Not meaningful

17


        The discussion of the results of operations for EMEA RCB below excludes the impact of FX translation for all periods presented. Presentation of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of EMEA RCB's results excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of certain of these metrics to the reported results, see the table above.


1Q13 vs. 1Q12

        Net income of $4 million compared to a net loss of $14 million in the prior-year period and was mainly due to lower operating expenses and higher loan loss reserve releases.

        Revenues increased 2%, with growth across the major products due to higher volumes, partially offset by losses resulting from the sale of Citi's consumer operations in Romania. Net interest revenue was flat, as spread compression was offset by growth in average deposits of 5%, average retail loans of 14% and average cards loans of 1%. Interest rate caps on credit cards, particularly in Poland, the continued liquidation of a higher yielding non-strategic retail banking portfolio and the continued low interest rate environment were the main contributors to the lower spreads. Citi expects spread compression to continue to negatively impact revenues in this business during the remainder of 2013. Non-interest revenue increased 7%, mainly reflecting higher investment fees and card fees due to increased sales volume, partially offset by a loss on the sale of certain businesses. Cards purchase sales increased 8% and investment sales increased 13%.

        Expenses declined 2%, primarily due to efficiency savings and lower repositioning charges, partially offset by continued investment spending on new internal operating platforms.

        Provisions decreased $4 million due to higher loan loss reserve releases. Net credit losses were flat and reflected stabilizing credit quality and the move toward lower-risk customers. Assuming the underlying core portfolio continues to grow during the remainder of 2013, Citi believes credit costs in EMEA RCB could begin to rise.

18



LATIN AMERICA REGIONAL CONSUMER BANKING

        Latin America Regional Consumer Banking (Latin America 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. Latin America RCB includes branch networks throughout Latin America as well as Banco Nacional de Mexico, or Banamex, Mexico's second-largest bank, with over 1,700 branches. As part of Citi's previously announced repositioning efforts, since the fourth quarter of 2012, Citi sold its Paraguay consumer business and closed 14 retail branches in Brazil. At March 31, 2013, Latin America RCB had 2,139 retail branches, with approximately 31.6 million customer accounts, $30.3 billion in retail banking loans and $49.1 billion in deposits. In addition, the business had approximately 12.9 million Citi-branded card accounts with $14.9 billion in outstanding loan balances.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except as otherwise noted   2013   2012  

Net interest revenue

  $ 1,731   $ 1,691     2 %

Non-interest revenue

    844     782     8  
               

Total revenues, net of interest expense

  $ 2,575   $ 2,473     4 %
               

Total operating expenses

  $ 1,439   $ 1,371     5 %
               

Net credit losses

  $ 502   $ 430     17 %

Credit reserve build

    36     113     (68 )

Provision for benefits and claims

    49     44     11 %
               

Provisions for loan losses and for benefits and claims (LLR & PBC)

  $ 587   $ 587      
               

Income from continuing operations before taxes

  $ 549   $ 515     7 %

Income taxes

    135     123     10  
               

Income from continuing operations

  $ 414   $ 392     6 %

Noncontrolling interests

    2          
               

Net income

  $ 412   $ 392     5 %
               

Balance Sheet data (in billions of dollars)

                   

Average assets

  $ 86   $ 82     5 %

Return on average assets

    1.94 %   1.92 %      

Efficiency ratio

    56 %   55 %      

Average deposits

    46.4     46.0     1  

Net credit losses as a percentage of average loans

    4.62 %   4.31 %      
               

Revenue by business

                   

Retail banking

  $ 1,547   $ 1,474     5 %

Citi-branded cards

    1,028     999     3  
               

Total

  $ 2,575   $ 2,473     4 %
               

Income from continuing operations by business

                   

Retail banking

  $ 248   $ 216     15 %

Citi-branded cards

    166     176     (6 )
               

Total

  $ 414   $ 392     6 %
               

Foreign Currency (FX) Translation Impact

                   

Total revenue—as reported

  $ 2,575   $ 2,473     4 %

Impact of FX translation(1)

        (38 )      
               

Total revenues—ex-FX

  $ 2,575   $ 2,435     6 %
               

Total operating expenses—as reported

  $ 1,439   $ 1,371     5 %

Impact of FX translation(1)

        (31 )      
               

Total operating expenses—ex-FX

  $ 1,439   $ 1,340     7 %
               

Provisions for LLR & PBC—as reported

  $ 587   $ 587     %

Impact of FX translation(1)

        (21 )      
               

Provisions for LLR & PBC—ex-FX

  $ 587   $ 566     4 %
               

Net income—as reported

  $ 412   $ 392     5 %

Impact of FX translation(1)

        (1 )      
               

Net income—ex-FX

  $ 412   $ 391     5 %
               

(1)
Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the current exchange rate for all periods presented.

19


The discussion of the results of operations for Latin America RCB below excludes the impact of FX translation for all periods presented. Presentation of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of Latin America RCB's results excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of certain of these metrics to the reported results, see the table above.


1Q13 vs. 1Q12

        Net income increased 5% as higher revenues were partially offset by higher operating expenses and credit costs.

        Revenues increased 6%, primarily due to growth in the region generally, and particularly in Mexico, mostly related to Mexico personal loans and credit cards, partially offset by spread compression. Average retail loans grew 15% and average card loans grew 7%, while average deposits grew 1%. Net interest revenue increased 4% due to increased volumes, partially offset by continued spread compression. Citi expects spread compression to continue to negatively impact revenues in this business during the remainder of 2013. Non-interest revenue increased 10%, primarily due to increased business volumes in the private pension fund and insurance businesses. Both card purchase sales and investment sales grew 9%. Despite the growth year-over-year, Citi expects volume growth could begin to slow, particularly in Mexico, due to slowing economic growth in the region. In addition, the Mexican government is considering various legislative reforms which could, among other things, require expanded lending requirements for banks, lower interest rates and reform the tax code. This legislation has not yet been proposed, and thus the impact on Citi's businesses in Mexico and/or on Banamex is not certain. For information on the potential impact from foreign exchange controls, see "Managing Global Risk—Cross-Border Risk" below.

        Expenses increased 7% on increased volume-related costs, mandatory salary increases in certain countries and higher transactional and marketing costs.

        Provisions increased 4%, primarily due to higher net credit losses, partially offset by lower loan loss reserve builds. Net credit losses increased, primarily in the Mexico card portfolios, reflecting both portfolio seasoning and volume growth. Citi believes that net credit losses in Latin America could trend higher in the second quarter of 2013, as these loan portfolios continue to mature, after which they are expected to trend slightly lower.

20



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 Korea, Australia, Singapore, Hong Kong, Taiwan, Japan, India, Malaysia and Indonesia. As part of Citi's previously announced repositioning efforts, since the fourth quarter of 2012, Citi closed 15 retail branches in Korea and 5 retail branches in Hong Kong. At March 31, 2013, Asia RCB had 574 retail branches, 16.9 million customer accounts, $69.4 billion in retail banking loans and $106.8 billion in deposits. In addition, the business had approximately 16.1 million Citi-branded card accounts with $19.4 billion in outstanding loan balances.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except as otherwise noted   2013   2012  

Net interest revenue

  $ 1,227   $ 1,328     (8 )%

Non-interest revenue

    733     670     9  
               

Total revenues, net of interest expense

  $ 1,960   $ 1,998     (2 )%
               

Total operating expenses

  $ 1,128   $ 1,150     (2 )%
               

Net credit losses

  $ 206   $ 190     8 %

Credit reserve build (release)

    3     (1 )   NM  

Provision for unfunded lending commitments

    14          
               

Provisions for credit losses

  $ 223   $ 189     18  
               

Income from continuing operations before taxes

  $ 609   $ 659     (8 )%

Income taxes

    192     158     22  
               

Income from continuing operations

  $ 417   $ 501     (17 )%

Noncontrolling interests

             
               

Net income

  $ 417   $ 501     (17 )%
               

Balance Sheet data (in billions of dollars)

                   

Average assets

  $ 128   $ 126     2 %

Return on average assets

    1.32 %   1.60 %      

Efficiency ratio

    58 %   58 %      

Average deposits

    107.0     110.9     (4 )

Net credit losses as a percentage of average loans

    0.94 %   0.86 %      
               

Revenue by business

                   

Retail banking

  $ 1,200   $ 1,230     (2 )%

Citi-branded cards

    760     768     (1 )
               

Total

  $ 1,960   $ 1,998     (2 )%
               

Income from continuing operations by business

                   

Retail banking

  $ 257   $ 304     (15 )%

Citi-branded cards

    160     197     (19 )
               

Total

  $ 417   $ 501     (17 )%
               

Foreign Currency (FX) Translation Impact

                   

Total revenue—as reported

  $ 1,960   $ 1,998     (2 )%

Impact of FX translation(1)

        (25 )      
               

Total revenues—ex-FX

  $ 1,960   $ 1,973     (1 )%
               

Total operating expenses—as reported

  $ 1,128   $ 1,150     (2 )%

Impact of FX translation(1)

        (24 )      
               

Total operating expenses—ex-FX

  $ 1,128   $ 1,126      
               

Provisions for credit losses—as reported

  $ 223   $ 189     18 %

Impact of FX translation(1)

        2        
               

Provisions for credit losses—ex-FX

  $ 223   $ 191     17 %
               

Net income—as reported

  $ 417   $ 501     (17 )%

Impact of FX translation(1)

        2        
               

Net income—ex-FX

  $ 417   $ 503     (17 )%
               

(1)
Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the current exchange rate for all periods presented.

NM Not meaningful

21


The discussion of the results of operations for Asia RCB below excludes the impact of FX translation for all periods presented. Presentation of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of Asia RCB's results excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of certain of these metrics to the reported results, see the table above.


1Q13 vs. 1Q12

        Net income decreased 17%, primarily due to a higher effective tax rate (see "Income Taxes" below) as well as higher credit costs and lower revenues.

        Revenues declined 1%, due to lower net interest revenue, partially offset by higher non-interest revenue. Net interest revenue declined 7%, primarily driven by the ongoing spread compression and lack of volume growth. Average retail deposits declined 2%, partly reflecting an outflow to investment products. Spread compression continued to reflect the low interest environment and ongoing regulatory changes in the region, particularly in Korea as well as in Indonesia, Taiwan and Australia. Spread compression and regulatory changes in the region are expected to continue to have an adverse impact on cards revenue. Non-interest revenue increased 12%, reflecting a 45% increase in investment sales, due to favorable market conditions, and an increase in Citi-branded cards purchase sales. Most underlying business metrics continued to improve in Asia RCB, with a 5% increase in cards purchase sales (7% increase excluding Korea) and flat average retail loans (10% increase excluding Korea).

        Expenses were flat, as efficiency savings were offset by higher volume-related growth and increased investment spending, including investments in China cards.

        Provisions increased 17%, reflecting higher net credit losses, primarily due to increases in Korea consumer and Australia cards. Despite this increase year-over-year, overall credit quality in the region continued to show strength, and Citi believes that net credit losses in Asia RCB should generally remain stable, with increases in line with portfolio growth.

22



INSTITUTIONAL CLIENTS GROUP

        Institutional Clients Group (ICG) includes Securities and Banking and Transaction Services. ICG provides corporate, institutional, public sector and high-net-worth clients around the world with a full range of products and services, including cash management, foreign exchange, trade finance and services, securities services, sales and trading of loans and securities, institutional brokerage, underwriting, lending and advisory services. ICG's international presence is supported by trading floors in approximately 75 countries and jurisdictions and a proprietary network within Transaction Services in over 95 countries and jurisdictions. At March 31, 2013, ICG had approximately $1.1 trillion of assets and $524 billion of deposits.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except as otherwise noted   2013   2012  

Commissions and fees

  $ 1,179   $ 1,141     3 %

Administration and other fiduciary fees

    694     696      

Investment banking

    1,085     811     34  

Principal transactions

    2,415     1,916     26  

Other

    359     (405 )   NM  
               

Total non-interest revenue

  $ 5,732   $ 4,159     38 %

Net interest revenue (including dividends)

    3,852     3,888     (1 )
               

Total revenues, net of interest expense

  $ 9,584   $ 8,047     19 %
               

Total operating expenses

  $ 4,988   $ 5,087     (2 )%
               

Net credit losses

  $ 39   $ (58 )   NM  

Provision (release) for unfunded lending commitments

    3     (11 )   NM  

Credit reserve build

    23     158     (85 )%
               

Provisions for credit losses

  $ 65   $ 89     (27 )%
               

Income from continuing operations before taxes

  $ 4,531   $ 2,871     58 %

Income taxes

    1,406     638     NM  
               

Income from continuing operations

  $ 3,125   $ 2,233     40 %

Noncontrolling interests

    50     60     (17 )
               

Net income

  $ 3,075   $ 2,173     42 %
               

Average assets (in billions of dollars)

  $ 1,070   $ 1,018     5 %

Return on average assets

    1.17 %   0.86 %      

Efficiency ratio

    52 %   63 %      
               

Revenues by region

                   

North America

  $ 3,596   $ 2,081     73 %

EMEA

    2,734     2,832     (3 )

Latin America

    1,217     1,165     4  

Asia

    2,037     1,969     3  
               

Total revenues

  $ 9,584   $ 8,047     19 %
               

Income from continuing operations by region

                   

North America

  $ 1,281   $ 313     NM  

EMEA

    668     814     (18 )%

Latin America

    476     498     (4 )

Asia

    700     608     15  
               

Total income from continuing operations

  $ 3,125   $ 2,233     40 %
               

Average loans by region (in billions of dollars)

                   

North America

  $ 91   $ 76     20 %

EMEA

    53     51     4  

Latin America

    38     34     12  

Asia

    60     60      
               

Total average loans

  $ 242   $ 221     10 %
               

NM Not meaningful

23



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 public sector entities, and high-net-worth individuals. S&B transacts with clients in both cash instruments and derivatives, including fixed income, foreign currency, equity, and commodity products. S&B includes investment banking and advisory services, lending, debt and equity sales and trading, institutional brokerage, derivative services and private banking.

        S&B revenue is generated primarily from fees and spreads associated with these activities. S&B earns fee income for assisting clients in clearing transactions, providing brokerage and investment banking services and other such activities. Revenue generated from these activities is recorded in Commissions and fees. In addition, as a market maker, S&B facilitates transactions, including holding product inventory to meet client demand, and earns the differential between the price at which it buys and sells the products. These price differentials and the unrealized gains and losses on the inventory are recorded in Principal transactions. S&B interest income earned on inventory and loans held is recorded as a component of Net interest revenue.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except as otherwise noted   2013   2012  

Net interest revenue

  $ 2,437   $ 2,339     4 %

Non-interest revenue

    4,541     3,003     51  
               

Total revenues, net of interest expense

  $ 6,978   $ 5,342     31 %
               

Total operating expenses

  $ 3,564   $ 3,701     (4 )
               

Net credit losses

  $ 35   $ (60 )   NM  

Provision (release) for unfunded lending commitments

    3     (17 )   NM  

Credit reserve build

    34     135     (75 )
               

Provisions for credit losses

  $ 72   $ 58     24 %
               

Income before taxes and noncontrolling interests

  $ 3,342   $ 1,583     NM  

Income taxes

    987     247     NM  
               

Income from continuing operations

  $ 2,355   $ 1,336     76 %

Noncontrolling interests

    44     56     (21 )
               

Net income

  $ 2,311   $ 1,280     81 %
               

Average assets (in billions of dollars)

  $ 926   $ 884     5 %

Return on average assets

    1.01 %   0.58 %      

Efficiency ratio

    51 %   69 %      
               

Revenues by region

                   

North America

  $ 2,970   $ 1,442     NM  

EMEA

    1,873     1,959     (4 )%

Latin America

    770     723     7  

Asia

    1,365     1,218     12  
               

Total revenues

  $ 6,978   $ 5,342     31 %
               

Income from continuing operations by region

                   

North America

  $ 1,152   $ 187     NM  

EMEA

    445     514     (13 )%

Latin America

    312     324     (4 )

Asia

    446     311     43  
               

Total income from continuing operations

  $ 2,355   $ 1,336     76 %
               

Securities and Banking revenue details (excluding CVA/DVA)

                   

Total investment banking

  $ 1,063   $ 872     22 %

Fixed income markets

    4,623     4,781     (3 )

Equity markets

    826     916     (10 )

Lending

    309     12     NM  

Private bank

    629     598     5  

Other Securities and Banking

    (162 )   (461 )   65  
               

Total Securities and Banking revenues (ex-CVA/DVA)

  $ 7,288   $ 6,718     8 %
               

CVA/DVA

  $ (310 ) $ (1,376 )   77 %
               

Total revenues, net of interest expense

  $ 6,978   $ 5,342     31 %
               

NM Not meaningful

24



1Q13 vs. 1Q12

        Net income increased 81%. Excluding $(310) million of CVA/DVA (see table below), net income increased 17%, primarily driven by an increase in revenues and a decline in expenses, partially offset by a higher effective tax rate (see "Income Taxes" below).

        Revenues increased 31%. Excluding CVA/DVA:

    Revenues increased 8%, reflecting higher revenues in investment banking, partially offset by lower revenues in fixed income markets and equity markets. Overall, Citi's wallet share continued to improve during the quarter in most products, while maintaining what it believes to be a disciplined risk appetite for the market environment.

    Fixed income markets revenues decreased 3%, reflecting lower performance in rates and currencies, partially offset by higher revenues in credit-related and securitized products. Rates and currencies were lower compared to a strong prior-year period that benefitted significantly from long-term refinancing operations (LTRO) activity in EMEA as well as lower volatility, partially offset by growth in credit-related and securitized products, particularly in North America, which experienced investor demand for yield. Equity markets revenues decreased 10% due to lower volatility that impacted derivatives performance. Cash equity client activity was relatively unchanged despite decreased industry volumes.

    Investment banking revenues increased 22%, reflecting growth in all major products and wallet share gains in equity underwriting and advisory. Advisory revenues increased 84%, reflecting improved wallet share resulting from announced volumes during the second half of 2012.

    Equity underwriting revenues increased 45%, primarily driven by improved wallet share and an increase in follow-on activity. Debt underwriting revenues rose 5%, driven by improvements in loan underwriting.

    Lending revenues increased by $297 million, driven by lower mark-to-market losses on hedges related to accrual loans (see table below) as credit spreads tightened less in the first quarter of 2013 versus the prior-year period. Excluding lending hedges related to accrual loans, lending revenues decreased 7%, primarily related to loan sale activity.

    Private Bank revenues increased 5%, driven mainly by growth in North America and Asia. Managed investments, deposits and lending all reflected improved performance.

        Expenses decreased 4%, primarily due to efficiency savings from ongoing re-engineering programs and lower legal and related expenses.

        Provisions increased 24% to $72 million, primarily reflecting higher net credit losses due to the absence of a net credit recovery in the prior-year period, partially offset by smaller reserve builds resulting from less portfolio growth.

 
  Three Months Ended  
In millions of dollars   March 31,
2013
  March 31,
2012
 

S&B CVA/DVA

             

Fixed Income Markets

  $ (293 ) $ (1,087 )

Equity Markets

    (16 )   (283 )

Private Bank

    (1 )   (6 )
           

Total S&B CVA/DVA

  $ (310 ) $ (1,376 )
           

S&B Hedges on Accrual Loans gain (loss)(1)

  $ (24 ) $ (344 )
           

(1)
Hedges on S&B accrual loans reflect the mark-to-market on credit derivatives used to economically hedge the corporate loan accrual portfolio. The fixed premium cost of these hedges is included (netted against) the core lending revenues to reflect the cost of the credit protection.

25



TRANSACTION SERVICES

        Transaction Services is composed of Treasury and Trade Solutions and Securities and Fund Services. Treasury and Trade Solutions provides comprehensive cash management and trade finance services for corporations, financial institutions and public sector entities worldwide. Securities and Fund Services provides securities services to investors, such as global asset managers, custody and 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 and trade loans as well as fees for transaction processing and fees on assets under custody and administration.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except as otherwise noted   2013   2012  

Net interest revenue

  $ 1,415   $ 1,549     (9 )%

Non-interest revenue

    1,191     1,156     3  
               

Total revenues, net of interest expense

  $ 2,606   $ 2,705     (4 )%

Total operating expenses

    1,424     1,386     3  

Provisions (releases) for credit losses

    (7 )   31     NM  
               

Income before taxes and noncontrolling interests

  $ 1,189   $ 1,288     (8 )%

Income taxes

    419     391     7  

Income from continuing operations

    770     897     (14 )

Noncontrolling interests

    6     4     50  
               

Net income

  $ 764   $ 893     (14 )%
               

Average assets (in billions of dollars)

  $ 144   $ 134     7 %

Return on average assets

    2.15 %   2.68 %      

Efficiency ratio

    55 %   51 %      
               

Revenues by region

                   

North America

  $ 626   $ 639     (2 )%

EMEA

    861     873     (1 )

Latin America

    447     442     1  

Asia

    672     751     (11 )
               

Total revenues

  $ 2,606   $ 2,705     (4 )%
               

Income from continuing operations by region

                   

North America

  $ 129   $ 126     2 %

EMEA

    223     300     (26 )

Latin America

    164     174     (6 )

Asia

    254     297     (14 )
               

Total income from continuing operations

  $ 770   $ 897     (14 )%
               

Foreign Currency (FX) Translation Impact

                   

Total revenue—as reported

  $ 2,606   $ 2,705     (4 )%

Impact of FX translation(1)

        (41 )      
               

Total revenues—ex-FX

  $ 2,606   $ 2,664     (2 )%
               

Total operating expenses—as reported

  $ 1,424   $ 1,386     3 %

Impact of FX translation(1)

        (15 )      
               

Total operating expenses—ex-FX

  $ 1,424   $ 1,371     4 %
               

Net income—as reported

  $ 764   $ 893     (14 )%

Impact of FX translation(1)

        (23 )      
               

Net income—ex-FX

  $ 764   $ 870     (12 )%
               

Key indicators (in billions of dollars)

                   

Average deposits and other customer liability balances—as reported

  $ 415   $ 377     10 %

Impact of FX translation(1)

        (1 )      
               

Average deposits and other customer liability balances—ex-FX

  $ 415   $ 376     10 %
               

EOP assets under custody(2) (in trillions of dollars)

  $ 13.5   $ 12.5     8 %
               

(1)
Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the current exchange rate for all periods presented.

(2)
Includes assets under custody, assets under trust and assets under administration.

NM Not meaningful

26


The discussion of the results of operations for Transaction Services below excludes the impact of FX translation for all periods presented. Presentation of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of Transaction Services' results excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of certain of these metrics to the reported results, see the table above.


1Q13 vs. 1Q12

        Net income decreased 14%, primarily reflecting lower revenues and higher expenses and a higher effective tax rate on international operations (see "Income Taxes" below).

        Revenues decreased 2% as higher deposit balances, trade loans and higher market volumes were more than offset by continued spread compression. Treasury and Trade Solutions revenues declined 3%, driven by spread compression globally, partially offset by continued growth in balances as average deposits increased 10% and average trade loans increased over 20%. Securities and Fund Services revenues increased 2%, as settlement volumes increased 5% and assets under custody increased 8%, partially offset by spread compression on deposits. Despite the underlying volume growth, Citi expects spread compression will continue to negatively impact Transaction Services revenues in the near term.

        Expenses increased 4%, primarily driven by volume-related growth, partially offset by efficiency savings.

        Average deposits and other customer liabilities increased 10%, driven by continued focused deposit building activities as well as continued market demand for U.S. dollar deposits (for additional information on Citi's deposits, see "Capital Resources and Liquidity—Funding and Liquidity" below).

27



CORPORATE/OTHER

        Corporate/Other includes unallocated global staff functions (including finance, risk, human resources, legal and compliance), other corporate expenses and unallocated global operations and technology expenses, Corporate Treasury and discontinued operations. At March 31, 2013, this segment had approximately $280 billion of assets, or 15%, of Citigroup's total assets, consisting primarily of Citi's liquidity portfolio (approximately $83 billion of cash and cash equivalents and $143 billion of liquid available-for-sale securities, each as of March 31, 2013). For additional information, see "Balance Sheet Review" and "Capital Resources and Liquidity—Funding and Liquidity" below.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars   2013   2012  

Net interest revenue

  $ (77 ) $ (16 )   NM  

Non-interest revenue

    70     487     (86 )%
               

Total revenues, net of interest expense

  $ (7 ) $ 471     NM  
               

Total operating expenses

  $ 568   $ 795     (29 )%

Provisions for loan losses and for benefits and claims

             
               

Loss from continuing operations before taxes

  $ (575 ) $ (324 )   (77 )%

Income taxes (benefits)

    (253 )   7     NM  
               

Loss from continuing operations

  $ (322 ) $ (331 )   3 %

Loss from discontinued operations, net of taxes

    (67 )   (5 )   NM  
               

Net loss before attribution of noncontrolling interests

  $ (389 ) $ (336 )   (16 )%

Noncontrolling interests

    30     63     (52 )
               

Net loss

  $ (419 ) $ (399 )   (5 )%
               

NM Not meaningful


1Q13 vs. 1Q12

        The net loss increased by $19 million due to a decrease in revenues, partially offset by lower expenses.

        Revenues decreased $478 million, driven by the absence of the impact of minority investments in the prior-year period,(10) the impact of hedging activities and lower revenue from both sales of available-for-sale securities (AFS) and investment yields on Citi's treasury portfolio.

        Expenses decreased 29%, largely driven by lower legal and related costs, partially offset by higher repositioning charges.

   


(10)
In the first quarter of 2012, Citi recorded a net pretax gain on minority investments of $477 million ($308 million after-tax), which included pretax gains of $1.1 billion and $542 million on the sales of Citi's remaining stake in Housing Development Finance Corporation Ltd. (HDFC) and its stake in Shanghai Pudong Development Bank (SPDB), respectively, offset by a pretax impairment charge relating to Akbank T.A.S. of $1.2 billion.

28



CITI HOLDINGS

        Citi Holdings contains businesses and portfolios of assets that Citigroup has determined are not central to its core Citicorp businesses and consists of Brokerage and Asset Management, Local Consumer Lending and Special Asset Pool.

        As of March 31, 2013, Citi Holdings assets were approximately $149 billion, a decrease of approximately 29% year-over-year and 4% from December 31, 2012. The decline in assets of $7 billion from December 31, 2012 was composed of approximately $2 billion of asset sales and business dispositions, $4 billion of run-off and pay-downs and $1 billion of charge-offs and fair value marks. As of March 31, 2013, Citi Holdings represented approximately 8% of Citi's GAAP assets, 14% of Citi's risk-weighted assets (as defined under current regulatory guidelines), and 22% of its estimated risk-weighted assets under Basel III.

 
  First Quarter    
 
In millions of dollars, except as otherwise noted   2013   2012   %
Change
 

Net interest revenue

  $ 753   $ 709     6 %

Non-interest revenue

    148     173     (14 )
               

Total revenues, net of interest expense

  $ 901   $ 882     2 %
               

Provisions for credit losses and for benefits and claims

                   

Net credit losses

  $ 930   $ 1,734     (46 )%

Credit reserve build (release)

    (347 )   (550 )   37  
               

Provision for loan losses

  $ 583   $ 1,184     (51 )%

Provision for benefits and claims

    168     171     (2 )

Provision (release) for unfunded lending commitments

    (4 )   (26 )   85  
               

Total provisions for credit losses and for benefits and claims

  $ 747   $ 1,329     (44 )%
               

Total operating expenses

  $ 1,502   $ 1,217     23 %
               

Loss from continuing operations before taxes

  $ (1,348 ) $ (1,664 )   19 %

Benefits for income taxes

    (559 )   (647 )   14  
               

(Loss) from continuing operations

  $ (789 ) $ (1,017 )   22 %

Noncontrolling interests

    5     2     NM  
               

Citi Holdings net loss

  $ (794 ) $ (1,019 )   22 %
               

Balance sheet data (in billions of dollars)

                   

Average assets

  $ 153   $ 223     (31 )%

Total EOP assets

  $ 149   $ 209     (29 )

Total EOP loans

    108     134     (19 )

Total EOP deposits

    66     63     5  
               

NM Not meaningful

29



BROKERAGE AND ASSET MANAGEMENT

        Brokerage and Asset Management (BAM) primarily consists of Citi's remaining investment in, and assets related to, the Morgan Stanley Smith Barney joint venture (MSSB). At March 31, 2013, BAM had approximately $9 billion of assets, or approximately 6% of Citi Holdings assets, of which approximately $8 billion related to MSSB. At March 31, 2013, the MSSB assets were composed of an approximate $4.7 billion equity investment and $3 billion of other MSSB financing (consisting of approximately $2 billion of preferred stock and $1 billion of loans). For information on the agreement entered into with Morgan Stanley regarding MSSB on September 11, 2012, see Citigroup's Current Report on Form 8-K filed with the SEC on September 11, 2012 and Note 12 to the Consolidated Financial Statements. See also "Capital Resources and Liquidity—Funding and Liquidity—Deposits" for a discussion of the deposits associated with MSSB. The remaining assets in BAM consist of other retail alternative investments.

 
  First Quarter    
 
In millions of dollars, except as otherwise noted   2013   2012   %
Change
 

Net interest revenue

  $ (84 ) $ (131 )   36 %

Non-interest revenue

    67     83     (19 )
               

Total revenues, net of interest expense

  $ (17 ) $ (48 )   65 %
               

Total operating expenses

  $ 105   $ 157     (33 )%
               

Net credit losses

  $   $     %

Credit reserve build (release)

        (1 )   100  

Provisions for loan losses

  $   $ (1 )   100 %
               

Loss from continuing operations before taxes

  $ (122 ) $ (204 )   40 %

Income tax benefits

    (43 )   (67 )   36  
               

Loss from continuing operations

  $ (79 ) $ (137 )   42 %

Noncontrolling interests

    5     1     NM  
               

Net loss

  $ (84 ) $ (138 )   39 %
               

EOP assets (in billions of dollars)

  $ 9   $ 26     (65 )%

EOP deposits (in billions of dollars)

    57     55     4  
               

NM Not meaningful


1Q13 vs. 1Q12

        The net loss in BAM decreased 39% to $84 million, primarily due to an increase in revenues and lower expenses.

        Revenues increased $31 million to $(17) million, driven by lower funding costs due to a 65% decline in assets year-over-year. The revenue increase was also due to an increase in the equity contribution from MSSB during the current quarter, partially offset by lower transition services revenues associated with MSSB.

        Expenses decreased 33%, driven by lower costs related to transition services provided to MSSB and lower legal and related costs.

30



LOCAL CONSUMER LENDING

        Local Consumer Lending (LCL) includes a substantial portion of Citigroup's North America mortgage business (see "North America Consumer Mortgage Lending" below), CitiFinancial North America (consisting of the OneMain and CitiFinancial Servicing businesses), remaining student loans and credit card portfolios, and other local consumer finance businesses globally (including Western European cards and retail banking and Japan Consumer Finance). At March 31, 2013, LCL consisted of approximately $122 billion of assets (with approximately $114 billion in North America), or approximately 82% of Citi Holdings assets, and thus represents the largest segment within Citi Holdings. The North America assets primarily consist of residential mortgages (residential first mortgages and home equity loans), which stood at $86 billion as of March 31, 2013.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except as otherwise noted   2013   2012  

Net interest revenue

  $ 840   $ 929     (10 )%

Non-interest revenue

    216     395     (45 )
               

Total revenues, net of interest expense

  $ 1,056   $ 1,324     (20 )%
               

Total operating expenses

  $ 825   $ 997     (17 )%
               

Net credit losses

  $ 920   $ 1,752     (47 )%

Credit reserve build (release)

    (325 )   (520 )   38  

Provision for benefits and claims

    168     171     (2 )
               

Provisions for credit losses and for benefits and claims

  $ 763   $ 1,403     (46 )%
               

Loss from continuing operations before taxes

  $ (532 )   (1,076 )   51 %

Benefits for income taxes

    (239 )   (443 )   46  
               

Loss from continuing operations

  $ (293 ) $ (633 )   54 %

Noncontrolling interests

        1     (100 )
               

Net loss

  $ (293 ) $ (634 )   54 %
               

Balance sheet data (in billions of dollars)

                   

Average assets

  $ 124   $ 157     (21 )%

EOP assets

  $ 122   $ 147     (17 )%

Net credit losses as a percentage of average loans

    3.37 %   5.31 %      
               


1Q13 vs. 1Q12

        The net loss decreased by 54%, driven mainly by the improved credit environment primarily in North America mortgages.

        Revenues decreased 20%, with a decline in both net interest and non-interest revenues. The decline in net interest revenue was driven by lower loan balances due to continued asset sales, divestitures and run-off, partly offset by lower funding costs. The decline in non-interest revenue was driven by lower asset levels and a higher residential mortgage repurchase reserve build. The repurchase reserve build in the current quarter was $225 million, compared to $185 million in the prior-year period (see "Managing Global Risk—Credit Risk—Citigroup Residential Mortgages—Representations and Warranties" below).

        Expenses decreased 17%, driven by lower volumes and divestitures as well as lower legal and related costs, which declined 27% due to lower independent foreclosure review charges as a result of the previously announced foreclosure review settlement (see "Managing Global Risk—Credit Risk—Independent Foreclosure Review Settlement" in Citigroup's 2012 Annual Report on Form 10-K).

        Provisions decreased 46%, driven primarily by the improved credit environment in North America mortgages, lower volumes and divestitures. Net credit losses decreased by 47%, driven by improved credit performance as well as the impact of $370 million of incremental charge-offs in the prior-year period related to previously deferred principal balances on modified mortgages associated with anticipated forgiveness of principal in connection with the national mortgage settlement. Net credit losses in the current quarter included $76 million related to the national mortgage settlement. Citi expects that net credit losses in LCL will continue to be impacted by Citi's fulfillment of the terms of the national mortgage settlement through the second quarter of 2013 (see "Managing Global Risk—Credit Risk—National Mortgage Settlement" below). Thereafter, net credit losses in LCL will likely continue to be impacted as Citi completes its mortgage assistance obligations under the independent foreclosure review settlement, which is currently estimated to result in $30 to $40 million of quarterly net credit losses during the remainder of 2013 (see "Managing Global Risk—Credit Risk—Independent Foreclosure Review Settlement" in Citigroup's 2012 Annual Report on Form 10-K).

        Excluding the incremental charge-offs arising from the previously deferred balances on modified mortgages in the prior-year period, net credit losses in LCL would have declined 33%, with net credit losses in North America mortgages decreasing by 33%, other portfolios in North America by 25% and international by 50%. These declines were driven by lower overall asset levels, the sale of current and delinquent loans as well as underlying credit improvements. Loan loss reserve releases were 38% lower, primarily due to the release in the prior-year period related to the previously deferred principal balances on modified mortgages. Excluding this prior year release, loan loss reserve releases were 91% higher, driven by a loan loss reserve release of approximately $375 million related to the North America mortgage portfolio.

        Average assets declined 21%, driven by asset sales and portfolio run-off, including declines of $16 billion in North America mortgage loans and $7 billion in international assets.

31



Payment Protection Insurance

        As previously disclosed, over the past several years Citi, along with other financial institutions in the UK, has been subject to an increased number of claims relating to the sale of payment protection insurance products (PPI). For additional information, see "Citi Holdings—Local Consumer Lending—Payment Protection Insurance" in Citi's 2012 Annual Report on Form 10-K.

        During the first quarter of 2013, Citi continued its pilot program to contact proactively any customers who may have been mis-sold PPI after January 2005 and invite them to have their individual sale reviewed (Customer Contact Exercise). Citi expects to initiate the full Customer Contact Exercise during the second quarter of 2013. In addition, Citi continues the re-evaluation of PPI customer complaints that were reviewed and rejected prior to December 2010 to determine if, based on the current regulations for the assessment of PPI complaints, customers would have been entitled to redress.

        During the first quarter of 2013, Citi did not increase its PPI reserves and paid PPI claims totaling $46 million, all of which were charged against its reserves. At March 31, 2013, Citi's PPI reserve was $307 million.

32



SPECIAL ASSET POOL

        The Special Asset Pool (SAP) consists of a portfolio of securities, loans and other assets that Citigroup intends to continue to reduce over time through asset sales and portfolio run-off. SAP had approximately $18 billion of assets as of March 31, 2013, which constituted approximately 12% of Citi Holdings assets.

 
  First Quarter    
 
 
  %
Change
 
In millions of dollars, except as otherwise noted   2013   2012  

Net interest revenue

  $ (3 ) $ (89 )   97 %

Non-interest revenue

    (135 )   (305 )   56  
               

Total revenues, net of interest expense

  $ (138 ) $ (394 )   65 %
               

Total operating expenses

  $ 572   $ 63     NM  
               

Net credit losses

  $ 10   $ (18 )   NM  

Credit reserve builds (releases)

    (22 )   (29 )   24 %

Provision (releases) for unfunded lending commitments

    (4 )   (26 )   85  
               

Provisions for credit losses

  $ (16 ) $ (73 )   78 %
               

Loss from continuing operations before taxes

  $ (694 ) $ (384 )   (81 )%

Income taxes (benefits)

    (277 )   (137 )   NM  
               

Net loss from continuing operations

  $ (417 ) $ (247 )   (69 )%

Noncontrolling interests

             
               

Net loss

  $ (417 ) $ (247 )   (69 )%
               

EOP assets (in billions of dollars)

  $ 18   $ 36     (50 )%
               

NM Not meaningful

1Q13 vs. 1Q12

        The net loss increased 69%, mainly driven by higher legal and related costs and higher credit costs, partially offset by an improvement in revenues.

        Revenues were $(138) million. CVA/DVA was $(9) million, compared to $88 million in the prior-year period. Excluding the impact of CVA/DVA, revenues in SAP were $(129) million, compared to $(482) million in the prior-year period. The improvement in revenues was driven by an improvement in non-interest revenue, primarily due to lower asset marks, as well as net interest revenues, due to lower funding costs.

        Expenses increased $509 million, primarily driven by higher legacy legal and related costs.

        Provisions were a benefit of $16 million, which represented a 78% decline from the prior-year period due to a $28 million increase in net credit losses and a decrease in the provision for unfunded lending commitments (a release of $4 million compared to a release of $26 million in the prior-year period).

        Assets declined 50% to $18 billion, primarily driven by sales, amortization and prepayments. Asset sales of $1.4 billion in the current quarter generated a pretax loss of $64 million, compared to asset sales of $2.2 billion and a pretax loss of $66 million in the prior-year period.

33



BALANCE SHEET REVIEW

        The following sets forth a general discussion of the changes in certain of the more significant line items of Citi's Consolidated Balance Sheet. For additional information on Citigroup's liquidity resources, including its deposits, short-term and long-term debt and secured financing transactions, see "Capital Resources and Liquidity—Funding and Liquidity" below.

In billions of dollars   March 31,
2013
  December 31,
2012
  March 31,
2012
  1Q13 vs.
4Q12
Increase
(decrease)
  %
Change
  1Q13 vs.
1Q12
Increase
(decrease)
  %
Change
 

Assets

                                           

Cash and deposits with banks

  $ 174   $ 139   $ 210   $ 35     25 % $ (36 )   (17 )%

Federal funds sold and securities borrowed or purchased under agreements to resell

    270     261     289     9     3     (19 )   (7 )

Trading account assets

    308     321     307     (13 )   (4 )   1      

Investments

    305     312     297     (7 )   (2 )   8     3  

Loans, net of unearned income and allowance for loan losses

    623     630     619     (7 )   (1 )   4     1  

Other assets

    202     202     222             (20 )   (9 )
                               

Total assets

  $ 1,882   $ 1,865   $ 1,944   $ 17     1 % $ (62 )   (3 )%
                               

Liabilities

                                           

Deposits

  $ 934   $ 931   $ 906   $ 3     % $ 28     3 %

Federal funds purchased and securities loaned or sold under agreements to repurchase

    222     211     226     11     5     (4 )   (2 )

Trading account liabilities

    120     116     136     4     3     (16 )   (12 )

Short-term borrowings

    48     52     56     (4 )   (8 )   (8 )   (14 )

Long-term debt

    234     239     311     (5 )   (2 )   (77 )   (25 )

Other liabilities

    129     125     125     4     3     4     3  
                               

Total liabilities

  $ 1,687   $ 1,674   $ 1,760   $ 13     1 % $ (73 )   (4 )%

Total equity

    195     191     184     4     2     11     6  
                               

Total liabilities and equity

  $ 1,882   $ 1,865   $ 1,944   $ 17     1 % $ (62 )   (3 )%
                               


ASSETS

Cash and Deposits with Banks

        Cash and deposits with banks is composed of both Cash and due from banks and Deposits with banks. Cash and due from banks includes (i) cash on hand at Citi's domestic and overseas offices, and (ii) non-interest-bearing balances due from banks, including non-interest-bearing demand deposit accounts with correspondent banks, central banks (such as the Federal Reserve Bank), and other banks or depository institutions for normal operating purposes. Deposits with banks includes interest-bearing balances, demand deposits and time deposits held in or due from banks (including correspondent banks, central banks and other banks or depository institutions) maintained for, among other things, normal operating and regulatory reserve requirement purposes.

        During the first quarter of 2013, cash and deposits with banks increased $35 billion, or 25%, driven by a $41 billion, or 40%, increase in deposits with banks offset by a $5 billion, or 15%, decrease in cash and due from banks. The growth in cash balances was driven by the overall reduction in loans, both as a result of the continued reduction of Citi Holdings assets as well as through customer repayment of credit card loan balances (which repayments are typically higher in the first quarter of the year following year-end holiday season spending patterns), net income generated during the first quarter of 2013 and growth in the U.S. deposit base (for additional information on Citi's deposits, see "Capital Resources and Liquidity—Funding and Liquidity" below).


Federal Funds Sold and Securities Borrowed or Purchased Under Agreements to Resell (Reverse Repos)

        Federal funds sold consist of unsecured advances to third parties of excess balances in reserve accounts held at the Federal Reserve Bank. During the first quarter of 2013, Citi's federal funds sold were not significant.

        Reverse repos and securities borrowing transactions increased by $9 billion, or 3%, in the first quarter of 2013. The increase in the quarter was driven by increases in Securities and Banking, including client and market-driven changes in Prime Finance, as well as activity in Fixed Income finance.

        For further information regarding these balance sheet categories, see Notes 1 and 10 to the Consolidated Financial Statements.


Trading Account Assets

        Trading account assets includes debt and marketable equity securities, derivatives in a net receivable position, residual interests in securitizations and physical commodities inventory. In addition, certain assets that Citigroup has elected to carry at fair value, such as certain loans and purchase guarantees, are also included in trading account assets.

        Trading account assets decreased $13 billion, or 4%, quarter-over-quarter, primarily due to decreases in foreign government securities ($4 billion, or 4%), equity securities ($3 billion, or 4%) and corporate debt securities ($2 billion, or 5%), partially offset by a $1 billion, or 1%, increase in derivative assets. Average trading account assets were $265 billion in the first quarter of 2013, compared to $256 billion in the fourth quarter of 2012. The changes in the end-of-period and average

34


trading account asset levels reflected normal trading fluctuations in line with market movements during the quarter.

        For further information on Citi's trading account assets, see Notes 1 and 11 to the Consolidated Financial Statements.


Investments

        Investments consist of debt and equity securities that are available-for-sale, debt securities that are held-to-maturity, non-marketable equity securities that are carried at fair value and non-marketable equity securities carried at cost. Debt securities include bonds, notes and redeemable preferred stock, as well as certain mortgage-backed and asset-backed securities and other structured notes. Marketable and non-marketable equity securities carried at fair value include common and nonredeemable preferred stock. Nonmarketable equity securities carried at cost primarily include equity shares issued by the Federal Reserve Bank and the Federal Home Loan Banks that Citigroup is required to hold.

        During the first quarter of 2013, investments decreased $7 billion, or 2%, substantially all of which was due to a decrease in available-for-sale securities managed outside of North America resulting from a reduction in overseas deposits during the quarter.

        For further information regarding investments, see Notes 1 and 12 to the Consolidated Financial Statements.


Loans

        Loans represent the largest asset category of Citi's balance sheet. Citi's total loans (as discussed throughout this section, presented net of unearned income) were $646 billion at March 31, 2013, compared to $655 billion at December 31, 2012. Excluding the impact of FX translation, loans decreased 1% quarter-over-quarter. At the end of the first quarter 2013, Consumer and Corporate loans represented 61% and 39%, respectively, of Citi's total loans.

        In Citicorp, loans remained flat at $539 billion at quarter end, compared to $540 billion at the end of 2012, as underlying growth was offset by the seasonal repayment of credit card balances, as discussed above. Citicorp Corporate loans increased 2% while Citicorp Consumer loans were down 2% sequentially. The modest Corporate loan growth was driven by Transaction Services (up 2% sequentially), particularly from increased trade finance loan book in Asia, as well as growth in Securities and Banking Corporate lending (up 2% sequentially), including increases in the Private Bank and EMEA. The Consumer loan decline was driven by Global Consumer Banking, as declines in North America were partially offset by slight growth in Latin America. North America Consumer loans decreased by $6 billion, or 4%, driven by the seasonal credit card loan repayments and continued consumer de-leveraging.

        Citi Holdings loans declined 7% in the quarter, due to the continued run-off and asset sales in the portfolios.

        Year-over-year, Citicorp loans were up 5%, including 1% growth in Global Consumer Banking (excluding the impact of FX translation) and 10% growth in Institutional Clients Group (excluding the impact of FX translation). The year-over-year growth in the Consumer businesses was driven by increased lending in Latin America, while the increase in Corporate lending was experienced across segments and regions.

        During the first quarter of 2013, average loans of $646 billion yielded an average rate of 7.3%, compared to $650 billion and 7.3%, respectively, in the fourth quarter of 2012.

        For further information on Citi's loan portfolios, see generally "Managing Global Risk—Credit Risk" below and Notes 1 and 13 to the Consolidated Financial Statements.


Other Assets

        Other assets consists of brokerage receivables, goodwill, intangibles and mortgage servicing rights in addition to other assets (including, among other items, loans held-for-sale, deferred tax assets, equity-method investments, interest and fees receivable, premises and equipment, certain end-user derivatives in a net receivable position, repossessed assets and other receivables).

        During the first quarter of 2013, other assets remained flat at $202 billion as a $3 billion increase in brokerage receivables was offset by a $3 billion decrease in other assets, each of which was driven by Citi's normal business operations.

        For further information regarding goodwill and intangible assets, see Note 15 to the Consolidated Financial Statements.


LIABILITIES

Deposits

        Deposits represent customer funds that are payable on demand or upon maturity. For a discussion of Citi's deposits, see "Capital Resources and Liquidity—Funding and Liquidity" below.


Federal Funds Purchased and Securities Loaned or Sold Under Agreements to Repurchase (Repos)

        Federal funds purchased consist of unsecured advances of excess balances in reserve accounts held at the Federal Reserve Banks from third parties. During the first quarter of 2013, Citi's federal funds purchased were not significant.

        Repos and securities lending transactions increased by $11 billion, or 5%, in the first quarter of 2013, primarily to fund the client and market-driven increase in reverse repos and securities borrowing transactions, as discussed above. For further information on Citi's secured financing transactions, including repos and securities lending transactions, see "Capital Resources and Liquidity—Funding and Liquidity" below. See also Notes 1 and 10 to the Consolidated Financial Statements for additional information on these balance sheet categories.


Trading Account Liabilities

        Trading account liabilities includes securities sold, not yet purchased (short positions), and derivatives in a net payable position, as well as certain liabilities that Citigroup has elected to carry at fair value.

        During the first quarter of 2013, trading account liabilities increased by $4 billion, or 3%, substantially all of which was due to an increase in short equity positions, which was aligned with the corresponding increase in securities borrowing transactions. Average trading account liabilities were $72 billion, compared to $68 billion in the fourth quarter of 2012, primarily due to higher average Institutional Clients Group volumes in the beginning of the quarter.

35


        For further information on Citi's trading account liabilities, see Notes 1 and 11 to the Consolidated Financial Statements.


Debt

        Debt is composed of both short-term and long-term borrowings. Short-term borrowings include commercial paper and borrowings from unaffiliated banks and other market participants. Long-term borrowings include senior notes, subordinated notes, trust preferred securities and securitizations. For further information on Citi's long-term and short-term debt borrowings, see "Capital Resources and Liquidity—Funding and Liquidity" below and Notes 1 and 16 to the Consolidated Financial Statements.


Other Liabilities

        Other liabilities consists of brokerage payables and other liabilities (including, among other items, accrued expenses and other payables, deferred tax liabilities, certain end-user derivatives in a net payable position, and reserves for legal claims, taxes, restructuring, unfunded lending commitments, and other matters).

        During the first quarter of 2013, other liabilities increased $4 billion, or 3%, primarily due to an increase in brokerage payables, driven by normal business fluctuations.

36



SEGMENT BALANCE SHEET AT MARCH 31, 2013(1)

In millions of dollars   Global
Consumer
Banking
  Institutional
Clients
Group
  Corporate/Other,
Discontinued
Operations
and
Consolidating
Eliminations(2)
  Subtotal
Citicorp
  Citi Holdings   Citigroup
Parent
Company-
Issued
Long-Term
Debt and
Stockholders'
Equity(3)
  Total
Citigroup
Consolidated
 

Assets

                                           

Cash and deposits with banks

  $ 19,252   $ 69,901   $ 83,511   $ 172,664   $ 1,713   $   $ 174,377  

Federal funds sold and securities borrowed or purchased under agreements to resell

    5,346     264,001         269,347     1,079         270,426  

Trading account assets

    14,159     287,922     184     302,265     6,056         308,321  

Investments

    31,679     104,661     151,636     287,976     16,883         304,859  

Loans, net of unearned income and

                                           

allowance for loan losses

    278,011     246,472         524,483     98,154         622,637  

Other assets

    54,111     77,179     44,953     176,243     24,871         201,114  
                               

Total assets

  $ 402,558   $ 1,050,136   $ 280,284   $ 1,732,978   $ 148,756   $   $ 1,881,734  
                               

Liabilities and equity

                                           

Total deposits

  $ 335,826   $ 523,459   $ 8,815   $ 868,100   $ 65,662   $   $ 933,762  

Federal funds purchased and securities loaned or sold under agreements to repurchase

    6,729     215,323         222,052     1         222,053  

Trading account liabilities

    151     118,633     230     119,014     1,212         120,226  

Short-term borrowings

    162     44,466     3,247     47,875     318         48,193  

Long-term debt

    2,381     41,398     9,611     53,390     7,187     173,749     234,326  

Other liabilities

    20,956     78,597     18,405     117,958     9,877         127,835  

Net inter-segment funding (lending)

    36,353     28,260     237,996     302,609     64,499     (367,108 )    
                               

Total liabilities

  $ 402,558   $ 1,050,136   $ 278,304   $ 1,730,998   $ 148,756   $ (193,359 ) $ 1,686,395  

Total equity

            1,980     1,980         193,359     195,339  
                               

Total liabilities and equity

  $ 402,558   $ 1,050,136   $ 280,284   $ 1,732,978   $ 148,756   $   $ 1,881,734  
                               

(1)
The supplemental information presented in the table above reflects Citigroup's consolidated GAAP balance sheet by reporting segment as of March 31, 2013. The respective segment information depicts the assets and liabilities managed by each segment as of such date. While this presentation is not defined by GAAP, Citi believes that these non-GAAP financial measures enhance investors' understanding of the balance sheet components managed by the underlying business segments, as well as the beneficial inter-relationship of the asset and liability dynamics of the balance sheet components among Citi's business segments.

(2)
Consolidating eliminations for total Citigroup and Citigroup parent company assets and liabilities are recorded within the Corporate/Other segment.

(3)
The total stockholders' equity and substantially all long-term debt of Citigroup resides in the Citigroup parent company Consolidated Balance Sheet. Citigroup allocates stockholders' equity and long-term debt to its businesses through inter-segment allocations as described above.

37



CAPITAL RESOURCES AND LIQUIDITY

CAPITAL RESOURCES

Overview

        Capital is used principally to support assets in Citi's businesses and to absorb credit, market and operational losses. Citi primarily generates capital through earnings from its operating businesses. Citi may augment its capital through issuances of common stock, perpetual preferred stock and equity issued through awards under employee benefit plans, among other issuances. During the first quarter of 2013, Citi issued $575 million of noncumulative perpetual preferred stock, resulting in approximately $3.1 billion outstanding as of March 31, 2013 (see "Funding and Liquidity—Long-Term Debt" below).

        Citi has also previously augmented its regulatory capital through the issuance of subordinated debt underlying trust preferred securities, although the treatment of such instruments as regulatory capital will be phased out under the U.S. Basel III rules in accordance with the timeframe specified by The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) (see "Capital Resources and Liquidity—Capital Resources—Regulatory Capital Standards "in Citi's 2012 Annual Report on Form 10-K). Accordingly, Citi continues to redeem certain of its trust preferred securities (see "Funding and Liquidity—Long-Term Debt" below) in contemplation of such future phase out.

        Further, changes in regulatory and accounting standards as well as the impact of future events on Citi's business results, such as corporate and asset dispositions, may also affect Citi's capital levels.

        For additional information on Citi's capital resources, including an overview of Citigroup's capital management framework and regulatory capital standards, see "Capital Resources and Liquidity—Capital Resources" and "Risk Factors—Regulatory Risks" in Citigroup's 2012 Annual Report on Form 10-K.


Capital Ratios Under Current Regulatory Guidelines

        Citigroup is subject to the risk-based capital guidelines issued by the Federal Reserve Board which, as currently in effect, constitute the Basel I credit risk capital rules and, beginning January 1, 2013, also the final (revised) market risk capital rules (Basel II.5).

        Historically, capital adequacy has been measured, in part, based on two risk-based capital ratios, the Tier 1 Capital and Total Capital (Tier 1 Capital + Tier 2 Capital) ratios. Tier 1 Capital consists of the sum of "core capital elements," such as qualifying common stockholders' equity, as adjusted, qualifying perpetual preferred stock, qualifying noncontrolling interests, and qualifying trust preferred securities, principally reduced by goodwill, other disallowed intangible assets, and disallowed deferred tax assets. Total Capital also includes "supplementary" Tier 2 Capital elements, such as qualifying subordinated debt and a limited portion of the allowance for credit losses. Both measures of capital adequacy are stated as a percentage of risk-weighted assets.

        In 2009, the U.S. banking regulators developed a new supervisory measure of capital termed "Tier 1 Common," which is defined as Tier 1 Capital less non-common elements, including qualifying perpetual preferred stock, qualifying noncontrolling interests, and qualifying trust preferred securities.

        Citigroup's risk-weighted assets are principally derived from application of the risk-based capital guidelines related to the measurement of credit risk. Pursuant to these guidelines, on balance sheet assets and the credit equivalent amount of certain off-balance-sheet exposures (such as financial guarantees, unfunded lending commitments, letters of credit and derivatives) are assigned to one of several prescribed risk-weight categories based upon the perceived credit risk associated with the obligor or, if relevant, the guarantor, the nature of the collateral, or external credit ratings. Risk-weighted assets also incorporate a measure for market risk on covered trading account positions and all foreign exchange and commodity positions whether or not carried in the trading account. Excluded from risk-weighted assets are any assets, such as goodwill and deferred tax assets, to the extent required to be deducted from regulatory capital.

        Citigroup is also subject to a Leverage ratio requirement, a non-risk-based measure of capital adequacy, which is defined as Tier 1 Capital as a percentage of quarterly adjusted average total assets.

        To be "well capitalized" under current federal bank regulatory agency definitions, a bank holding company must have a Tier 1 Capital ratio of at least 6%, a Total Capital ratio of at least 10%, and not be subject to a Federal Reserve Board directive to maintain higher capital levels. In addition, the Federal Reserve Board expects bank holding companies to maintain a minimum Leverage ratio of 3% or 4%, depending on factors specified in its regulations. The following table sets forth Citigroup's regulatory capital ratios as of March 31, 2013 and December 31, 2012:

 
  Mar. 31,
2013(1)
  Dec. 31,
2012(2)
 

Tier 1 Common

    11.84 %   12.67 %

Tier 1 Capital

    13.09     14.06  

Total Capital (Tier 1 Capital + Tier 2 Capital)

    16.09     17.26  

Leverage

    7.78     7.48  
           

(1)
Tier 1 Common, Tier 1 Capital, and Total Capital ratios are calculated based on Basel I credit risk capital rules and final (revised) market risk capital rules (Basel II.5) effective on January 1, 2013.

(2)
Tier 1 Common, Tier 1 Capital, and Total Capital ratios are calculated based on Basel I credit risk and market risk capital rules.

        As indicated in the table above, Citigroup was "well capitalized" under the current federal bank regulatory agency definitions as of March 31, 2013 and December 31, 2012.

38



Components of Capital Under Current Regulatory Guidelines

In millions of dollars   March 31,
2013
  December 31,
2012
 

Tier 1 Common Capital

             

Citigroup common stockholders' equity

  $ 190,222   $ 186,487  

Regulatory Capital Adjustments and Deductions:

             

Less: Net unrealized gains on securities available-for-sale, net of tax(1)(2)