GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

For additional information regarding Citi’s goodwill impairment testing process, see Notes 1 and 16 to the Consolidated Financial Statements in Citi’s 2016 Annual Report on Form 10-K.

Goodwill

The changes in Goodwill were as follows:



In millions of dollars
Balance, December 31, 2016	$	21,659
Foreign exchange translation and other	$	634
Impairment of goodwill	(28		)
Balance at March 31, 2017	$	22,265
Foreign exchange translation and other	$	156
Impairment of goodwill	—
Divestitures⁽¹⁾	(72		)
Balance at June 30, 2017	$	22,349


(1)	Goodwill allocated to the sale of the Fixed Income Analytics and Index businesses. See Note 2 to the Consolidated Financial Statements.

Citi performs its annual impairment test every third quarter and between annual tests (referred to as interim tests) if there are certain triggering events. Results of interim testing performed during the first half of 2017 are summarized below.

Effective January 1, 2017, the mortgage servicing business in North America GCB was reorganized and is now reported as part of Corporate/Other. Goodwill was allocated to the transferred business based on its relative fair value to the legacy North America GCB reporting unit. An interim test was performed under both the legacy and new reporting structures, which resulted in full impairment of the $28 million of allocated goodwill upon transfer to Citi Holdings—REL. The impairment was recorded as an operating expense in the first quarter of 2017.

Further, due to prior period indications that the fair value of the Citi Holdings—Consumer Latin America reporting unit only marginally exceeded its carrying value, updated interim tests were performed during the first and second quarters of 2017, with a minimal change in results. While there was no indication of impairment, the $16 million of goodwill present in Citi Holdings—Consumer Latin America may be particularly sensitive to further deterioration in economic conditions. The fair value as a percentage of allocated book value as of June 30, 2017 was 103%.

There were no other triggering events identified during the second quarter of 2017. The fair values of all other reporting units with goodwill balances exceeded their carrying values and did not indicate a risk of impairment based on the most recent valuations.

The following table shows reporting units with goodwill balances as of June 30, 2017 and the fair value as a percentage of allocated book value as of the latest impairment test⁽¹⁾:



In millions of dollars
Reporting unit	Goodwill		Fair value as a % of allocated book value
North America Global Consumer Banking	$	6,732	148	%
Asia Global Consumer Banking	4,900		157
Latin America Global Consumer Banking	1,178		180
ICG—Banking	2,998		194
ICG—Markets and Securities Services	6,525		115
Citi Holdings—Consumer Latin America⁽²⁾	16		103
Total as of June 30, 2017	$	22,349


(1)	As of July 1, 2016 for all reporting units, except for Citi Holdings—Consumer Latin America which is as of June 30, 2017.


(2)	All Citi Holdings reporting units are presented in the Corporate/Other segment beginning in the first quarter of 2017.

Intangible Assets

The components of intangible assets were as follows:



	June 30, 2017						December 31, 2016
In millions of dollars	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Purchased credit card relationships	$	5,376	$	3,757	$	1,619	$	8,215	$	6,549	$	1,666
Credit card contract related intangibles⁽¹⁾	5,043		2,258		2,785		5,149		2,177		2,972
Core deposit intangibles	671		651		20		801		771		30
Other customer relationships	464		265		199		474		272		202
Present value of future profits	35		31		4		31		27		4
Indefinite-lived intangible assets	235		—		235		210		—		210
Other	150		125		25		504		474		30
Intangible assets (excluding MSRs)	$	11,974	$	7,087	$	4,887	$	15,384	$	10,270	$	5,114
Mortgage servicing rights (MSRs)⁽²⁾	560		—		560		1,564		—		1,564
Total intangible assets	$	12,534	$	7,087	$	5,447	$	16,948	$	10,270	$	6,678

The changes in intangible assets were as follows:



	Net carrying amount at										Net carrying amount at
In millions of dollars	December 31, 2016		Acquisitions/ divestitures			Amortization			FX translation and other		June 30, 2017
Purchased credit card relationships	$	1,666	$	20		$	(68	)	$	1	$	1,619
Credit card contract related intangibles⁽¹⁾	2,972		9			(196		)	—		2,785
Core deposit intangibles	30		—			(12		)	2		20
Other customer relationships	202		—			(12		)	9		199
Present value of future profits	4		—			—			—		4
Indefinite-lived intangible assets	210		—			—			25		235
Other	30		(14		)	(5		)	14		25
Intangible assets (excluding MSRs)	$	5,114	$	15		$	(293	)	$	51	$	4,887
Mortgage servicing rights (MSRs)⁽²⁾	1,564										560
Total intangible assets	$	6,678									$	5,447


(1)	Primarily reflects contract-related intangibles associated with the American Airlines, Sears, The Home Depot, Costco and AT&T credit card program agreements, which represented 97% of the aggregate net carrying amount at June 30, 2017 and December 31, 2016.


(2)	For additional information on Citi’s MSRs, including the rollforward for the six months ended June 30, 2017, see Note 18 to the Consolidated Financial Statements.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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