10-K 1 c-12312017x10k.htm 10-K Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
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.)
388 Greenwich Street, New York, NY
(Address of principal executive offices)
 
10013
(Zip code)
(212) 559-1000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: See Exhibit 99.01

Securities registered pursuant to Section 12(g) of the Act: none

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
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 x    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 x  No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
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 x
 
Accelerated filer o
 
Non-accelerated filer o
 (Do not check if a smaller reporting company)
 
Smaller reporting company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes 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 x
The aggregate market value of Citigroup Inc. common stock held by non-affiliates of Citigroup Inc. on June 30, 2017 was approximately $123.0 billion.
Number of shares of Citigroup Inc. common stock outstanding on January 31, 2018: 2,570,065,748
Documents Incorporated by Reference: Portions of the registrant’s proxy statement for the annual meeting of stockholders scheduled to be held on April 24, 2018, are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III.
Available on the web at www.citigroup.com
 




FORM 10-K CROSS-REFERENCE INDEX

 
 
 
 
Item Number
Page
 
 
 
 
Part I
 
 
 
 
 
1.
 
Business
4–30, 121–125,
 
 
 
128, 153,
 
 
 
303–304
 
 
 
 
1A.
 
Risk Factors
56–64
 
 
 
 
1B.
 
Unresolved Staff Comments
Not Applicable
 
 
 
 
2.
 
Properties
303–304
 
 
 
 
3.
 
Legal Proceedings—See Note 27 to the Consolidated Financial Statements
283–290
 
 
 
 
4.
 
Mine Safety Disclosures
Not Applicable
 
 
 
 
Part II
 
 
 
 
 
5.
 
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
136–137, 157–159, 305–306
 
 
 
 
6.
 
Selected Financial Data
10–11
 
 
 
 
7.
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
6–32, 66–120
 
 
 
 
7A.
 
Quantitative and Qualitative Disclosures About Market Risk
66–120, 154–156, 178–215, 222–275
 
 
 
 
8.
 
Financial Statements and Supplementary Data
132–302
 
 
 
 
9.
 
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not Applicable
 
 
 
 
9A.
 
Controls and Procedures
126–127
 
 
 
 
9B.
 
Other Information
Not Applicable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Part III
 
 
 
 
 
10.
 
Directors, Executive Officers and Corporate Governance
307–309*
 
 
 
 
11.
 
Executive Compensation
**
 
 
 
 
12.
 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
***
 
 
 
 
13.
 
Certain Relationships and Related Transactions and Director Independence
****
 
 
 
 
14.
 
Principal Accountant Fees and Services
*****
 
 
 
 
 
 
 
 
Part IV
 
 
 
 
 
15.
 
Exhibits and Financial Statement Schedules
310–314

*
For additional information regarding Citigroup’s Directors, see “Corporate Governance,” “Proposal 1: Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the definitive Proxy Statement for Citigroup’s Annual Meeting of Stockholders scheduled to be held on April 24, 2018, to be filed with the SEC (the Proxy Statement), incorporated herein by reference.
**
See “Compensation Discussion and Analysis,” “The Personnel and Compensation Committee Report,” “2017 Summary Compensation Table and Compensation Information” and “CEO Pay Ratio”
in the Proxy Statement, incorporated herein by reference.
***
See “About the Annual Meeting,” “Stock Ownership” and “Equity Compensation Plan Information” in the Proxy Statement, incorporated herein by reference.
****
See “Corporate Governance—Director Independence,” “—Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation” and “—Indebtedness” in the Proxy Statement, incorporated herein by reference.
*****
See “Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm” in the Proxy Statement, incorporated herein by reference.


2


CITIGROUP’S 2017 ANNUAL REPORT ON FORM 10-K
OVERVIEW
MANAGEMENT'S DISCUSSION AND
  ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONS
Executive Summary
Impact of Tax Reform
Summary of Selected Financial Data
SEGMENT AND BUSINESS—INCOME (LOSS)
  AND REVENUES
SEGMENT BALANCE SHEET
Global Consumer Banking
North America GCB
Latin America GCB
Asia GCB
Institutional Clients Group
Corporate/Other
OFF-BALANCE SHEET
  ARRANGEMENTS
CONTRACTUAL OBLIGATIONS
CAPITAL RESOURCES
RISK FACTORS
Managing Global Risk Table of Contents
MANAGING GLOBAL RISK
SIGNIFICANT ACCOUNTING POLICIES AND
  SIGNIFICANT ESTIMATES
FUTURE APPLICATION OF ACCOUNTING
  STANDARDS
DISCLOSURE CONTROLS AND
  PROCEDURES
MANAGEMENT’S ANNUAL REPORT ON
  INTERNAL CONTROL OVER FINANCIAL
  REPORTING
FORWARD-LOOKING STATEMENTS
REPORT OF INDEPENDENT REGISTERED
  PUBLIC ACCOUNTING FIRM—INTERNAL
  CONTROL OVER FINANCIAL REPORTING
REPORT OF INDEPENDENT REGISTERED
  PUBLIC ACCOUNTING FIRM—
  CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS AND NOTES
  TABLE OF CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL
  STATEMENTS
FINANCIAL DATA SUPPLEMENT
SUPERVISION, REGULATION AND OTHER
CORPORATE INFORMATION
Citigroup Executive Officers
Citigroup Board of Directors


3


OVERVIEW

Citigroup’s history dates back to the founding of the City
Bank of New York in 1812.
Citigroup is a global diversified financial services holding company whose businesses provide consumers, corporations, governments and institutions with a broad, yet focused, range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services and wealth management. Citi has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions.
At December 31, 2017, Citi had approximately 209,000 full-time employees, compared to approximately 219,000 full-time employees at December 31, 2016.
Citigroup currently operates, for management reporting purposes, via two primary business segments: Global Consumer Banking and Institutional Clients Group, with the remaining operations in Corporate/Other. For a further description of the business segments and the products and services they provide, see “Citigroup Segments” below, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 to the Consolidated Financial Statements.
Throughout this report, “Citigroup,” “Citi” and “the Company” refer to Citigroup Inc. and its consolidated subsidiaries.
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 and proxy statements, as well as other filings with the U.S. Securities and Exchange Commission (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 on Form 8-K and other information regarding Citi at www.sec.gov.
Certain reclassifications, including a realignment of certain businesses, 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 Note 3 to the Consolidated Financial Statements.

Please see “Risk Factors” below for a discussion of the most significant risks and uncertainties that could impact Citigroup’s businesses, financial condition and results of operations.
 
















































4


As described above, Citigroup is managed pursuant to two business segments: Global Consumer Banking and Institutional Clients Group, with the remaining operations in Corporate/Other.
citisegmentsq4.jpg
The following are the four regions in which Citigroup operates. The regional results are fully reflected in the segment results above.
citiregionsq4.jpg

(1)
Latin America GCB consists of Citi’s consumer banking business in Mexico.
(2)
Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented.
(3)
North America includes the U.S., Canada and Puerto Rico, Latin America includes Mexico and Asia includes Japan.

5


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

EXECUTIVE SUMMARY

As described further throughout this Executive Summary, Citi reported balanced operating results for full-year 2017, reflecting continued momentum across businesses and geographies, notably many of those where Citi has been making investments.
During 2017, Citi had revenue and loan growth and positive operating leverage as well as operating margin expansion in the Institutional Clients Group (ICG) and every region in Global Consumer Banking (GCB). Citi also continued to demonstrate strong expense discipline, resulting in an operating efficiency ratio of 58% in 2017. Results in 2017 also included an updated estimate for a one-time, non-cash charge of $22.6 billion related to the impact of the Tax Cuts and Jobs Act (Tax Reform), which impacted the tax line within Corporate/Other, as well as the tax lines in North America GCB and ICG (for additional information on this updated estimate, see “Impact of Tax Reform” below).
In 2017, Citi increased the amount of capital returned to shareholders, while each of its key regulatory capital metrics remained strong (see “Capital” below). During the year, Citi returned approximately $17.1 billion in the form of common stock repurchases and dividends and repurchased approximately 214 million common shares as outstanding common shares declined 7% from the prior year.
Going into 2018, while economic sentiment has improved and the macroeconomic environment remains largely positive, there continue to be various economic, political and other risks and uncertainties that could impact Citi’s businesses and future results. For a more detailed discussion of the risks and uncertainties that could impact Citi’s businesses, results of operations and financial condition during 2018, see each respective business’s results of operations, “Risk Factors” and “Managing Global Risk” below. Despite these risks and uncertainties, Citi intends to continue to build on the progress made during 2017 with a focus on further optimizing its performance to benefit shareholders.

2017 Summary Results

Citigroup
Citigroup reported a net loss of $6.8 billion, or $2.98 per share, compared to net income of $14.9 billion, or $4.72 per share, in the prior year. Excluding the impact of Tax Reform, Citigroup net income of $15.8 billion increased 6% compared to the prior year, reflecting higher revenues, partially offset by higher cost of credit, while earnings per share increased 13%, including the impact of a 7% reduction in average shares outstanding. (Citi’s results of operations excluding the impact of Tax Reform are non-GAAP financial measures. Citi believes the presentation of its results of operations excluding the impact of Tax Reform provides a meaningful depiction for investors of the underlying fundamentals of its businesses.) For additional information regarding the impact of Tax Reform, see “Impact of Tax Reform,” “Risk Factors,”
 
“Significant Accounting Policies and Significant Estimates—Income Taxes” below and Notes 1 and 9 to the Consolidated Financial Statements.
Citigroup revenues of $71.4 billion in 2017 increased 2%, driven by 6% aggregate growth in ICG and GCB, partially offset by a 40% decrease in Corporate/Other, primarily due to the continued wind-down of legacy assets.
Citigroup’s end-of-period loans increased 7% to $667 billion versus the prior-year period. Excluding the impact of foreign currency translation in U.S. dollars for reporting purposes (FX translation), Citigroup’s end-of-period loans grew 5%, as 9% growth in ICG and 4% growth in GCB was partially offset by the continued wind-down of legacy assets in Corporate/Other (Citi’s results of operations excluding the impact of FX translation are non-GAAP financial measures. Citi believes the presentation of its results of operations excluding the impact of FX translation provides a meaningful depiction for investors of the underlying fundamentals of its businesses). Citigroup’s end-of-period deposits increased 3% to $960 billion versus the prior year. Excluding the impact of FX translation, Citigroup’s deposits were up 1%, as a 2% increase in ICG deposits was partially offset by a decline in Corporate/ Other deposits, and GCB deposits were largely unchanged.

Expenses
Citigroup operating expenses were largely unchanged versus the prior year, as the impact of higher volume-related expenses and ongoing investments were offset by efficiency savings and the wind-down of legacy assets. Year-over-year, ICG operating expenses were up 3% and GCB operating expenses increased 2%, while Corporate/Other operating expenses declined 24%, all versus the prior year.

Cost of Credit
Citi’s total provisions for credit losses and for benefits and claims of $7.5 billion increased 7% from the prior year. The increase was mostly driven by a $515 million increase in net credit losses, primarily in North America GCB, partially offset by a lower provision for benefits and claims due to continued legacy asset divestitures within Corporate/Other. The net loan loss reserve build of $266 million compared to a net loan loss reserve build of $217 million in the prior year. The increase was mostly due to volume growth and seasoning, as well as the impact of loan loss reserve builds related to forward-looking net credit loss expectations, all in the North America cards portfolios, partially offset by a higher net reserve release in ICG.
Net credit losses of $7.1 billion increased 8% versus the prior year. Consumer net credit losses increased 11% to
$6.7 billion, mostly reflecting volume growth and seasoning in the North America cards portfolios and the impact of acquiring the Costco portfolio. The increase in consumer net credit losses was partially offset by the continued wind-down of legacy assets in Corporate/Other. Corporate net credit losses

6


decreased 26% to $379 million, largely driven by improvement in the energy sector.
For additional information on Citi’s consumer and corporate credit costs and allowance for loan losses, see each respective business’s results of operations and “Credit Risk” below.

Capital
Citigroup’s Common Equity Tier 1 Capital and Tier 1 Capital ratios, on a fully implemented basis, were 12.4% and 14.1% as of December 31, 2017 (based on the Basel III Standardized Approach for determining risk-weighted assets), respectively, compared to 12.6% and 14.2% as of December 31, 2016 (based on the Basel III Advanced Approaches for determining risk-weighted assets). The decline in regulatory capital reflected the return of capital to common shareholders and an approximately $6 billion reduction in Common Equity Tier 1 (CET1) Capital due to the impact of Tax Reform, partially offset by earnings growth. Citigroup’s Supplementary Leverage ratio as of December 31, 2017, on a fully implemented basis, was 6.7%, compared to 7.2% as of December 31, 2016. For additional information on Citi’s capital ratios and related components, including the impact of Tax Reform on its capital ratios, see “Capital Resources” below.

Global Consumer Banking
GCB net income decreased 21%. Excluding the impact of Tax Reform, GCB net income decreased 6%, as higher revenues were more than offset by higher expenses and higher cost of credit. Operating expenses were $17.8 billion, up 2%, as higher volume-related expenses and continued investments were partially offset by efficiency savings.
GCB revenues of $32.7 billion increased 4% versus the prior year, driven by growth across all regions. North America GCB revenues increased 3% to $20.3 billion, driven by higher revenues across all businesses. Citi-branded cards revenues of $8.6 billion were up 5% versus the prior year, mostly reflecting the addition of the Costco portfolio as well as modest growth in interest-earning balances, partially offset by the continued run-off of non-core portfolios as well as a higher cost to fund growth in transactor and promotional balances, given higher interest rates. Citi retail services revenues of $6.4 billion increased 1% versus the prior year, as continued loan growth was partially offset by the impact of the renewal and extension of certain partnerships, as well as the absence of gains on sales of two cards portfolios in 2016. Retail banking revenues increased 1% from the prior year to $5.3 billion. Excluding mortgage revenues, retail banking revenues of $4.5 billion were up 9% from the prior year, driven by continued growth in loans and assets under management, as well as a benefit from higher interest rates.
North America GCB average deposits of $184 billion increased 1% year-over-year, average retail loans of $56 billion grew 3% and assets under management of $60 billion grew 14%. Average Citi-branded card loans of $85 billion increased 15%, while Citi-branded card purchase sales of $320 billion increased 28% versus the prior year. Average Citi retail services loans of $46 billion increased 4% versus the prior
 
year, while retail services purchase sales of $81 billion were up 2%. For additional information on the results of operations of North America GCB for 2017, see “Global Consumer Banking—North America GCB” below.
International GCB revenues (consisting of Latin America GCB and Asia GCB (which includes the results of operations in certain EMEA countries)) increased 6% versus the prior year to $12.4 billion. Excluding the impact of FX translation, international GCB revenues increased 5% versus the prior year. Latin America GCB revenues increased 6% versus the prior year, driven by growth in loans and deposits, as well as improved deposit spreads. Asia GCB revenues increased 5% (4% excluding modest gains on the sales of merchant acquiring businesses in the second and fourth quarters of 2017) versus the prior year, primarily reflecting an increase in cards revenues and wealth management revenues, partially offset by lower retail lending revenues. For additional information on the results of operations of Latin America GCB and Asia GCB for 2017, including the impact of FX translation, see “Global Consumer Banking—Latin America GCB” and “Global Consumer Banking—Asia GCB” below.
Year-over-year, international GCB average deposits of $122 billion increased 5%, average retail loans of $87 billion were largely unchanged, assets under management of $101 billion increased 14%, average card loans of $24 billion increased 5% and card purchase sales of $98 billion increased 7%, all excluding the impact of FX translation.

Institutional Clients Group
ICG net income decreased 5%. Excluding the impact of Tax Reform, ICG net income increased 16%, driven by higher revenues and a small benefit to cost of credit (compared to a $486 million cost of credit in the prior year), partially offset by higher operating expenses. ICG operating expenses increased 3% to $19.6 billion, as higher compensation, investments and volume-related expenses were partially offset by efficiency savings.
ICG revenues were $35.7 billion in 2017, up 7% from the prior year, primarily driven by a 16% increase in Banking revenues. Markets and securities services were largely unchanged versus the prior year. The increase in Banking revenues included the impact of $133 million of losses on loan hedges within corporate lending, compared to losses of $594 million in the prior year.
Banking revenues of $18.7 billion (excluding the impact of losses on loan hedges within corporate lending) increased 12%, driven by solid growth across all products. Investment banking revenues of $5.2 billion increased 20% versus the prior year, reflecting wallet share gains across all products. Advisory revenues increased 11% to $1.1 billion, equity underwriting revenues increased 68% to $1.1 billion and debt underwriting revenues increased 13% to $3.0 billion, all versus the prior year.
Private bank revenues increased 14% from the prior year, driven by growth in clients, loans, investments and deposits, as well as improved spreads. Corporate lending revenues increased 59% to $1.8 billion. Excluding the impact of losses on loan hedges, corporate lending revenues increased 12% versus the prior year, primarily driven by lower hedging costs,

7


as well as the prior-year adjustment to the residual value of a lease financing. Treasury and trade solutions revenues of $8.5 billion increased 7% versus the prior year, reflecting volume growth and improved spreads, with balanced growth across net interest and fee income.
Markets and securities services revenues of $17.1 billion were largely unchanged from the prior year, as a decline in fixed income markets and equity markets revenues was offset by an increase in securities services revenues as well as a $580 million gain on the sale of a fixed income analytics business. Fixed income markets revenues of $12.1 billion decreased 6% from the prior year, reflecting low volatility, as well as the comparison to higher revenues from a more robust trading environment in the prior year following the vote in the U.K. in favor of its withdrawal from the European Union, as well as the U.S. election. Equity markets revenues of $2.7 billion decreased 2% from the prior year, driven by an episodic loss in derivatives of roughly $130 million related to a single client event. Excluding this item, equity markets revenues increased 2% from the prior year, driven by growth in client balances and higher investor client revenue. Securities services revenues of $2.3 billion increased 8%, driven by growth in client volumes and higher interest revenue. For additional information on the results of operations of ICG for 2017, see “Institutional Clients Group” below.

Corporate/Other
Corporate/Other net loss was $19.7 billion in 2017, compared to net income of $498 million in the prior year. Excluding the impact of Tax Reform, Corporate/Other net income declined 69% to $153 million, reflecting lower revenues, partially offset by lower operating expenses and lower cost of credit. Operating expenses of $3.8 billion declined 24% from the prior-year period, reflecting the wind-down of legacy assets and lower legal expenses.
Corporate/Other revenues were $3.1 billion, down 40% from the prior year, primarily reflecting the wind-down of legacy assets as well as the absence of gains related to debt buybacks in 2016.
Corporate/Other end-of-period assets of $77 billion decreased 25% from the prior year, reflecting the continued wind-down of legacy assets as well as the impact of Tax Reform, which reduced assets by approximately $20 billion. For additional information on the results of operations of Corporate/Other for 2017, see “Corporate/Other” below.




8


Impact of Tax Reform
Citi’s full-year 2017 results included the updated estimate for a one-time, non-cash charge of $22.6 billion, recorded within Corporate/Other, North America GCB and ICG related to the enactment of Tax Reform, which was signed into law on December 22, 2017. This updated estimate resulted in a downward adjustment to fourth-quarter and full-year 2017 financial results, as well as changes in the segments where the impact was recorded (previously, the entire charge was recorded in Corporate/Other), from those reported on January 16, 2018, by an aggregate of $594 million due to refinements of original estimates. The approximate $6 billion reduction in CET1 Capital due to the impact of Tax Reform was unchanged.
This charge was composed of a $12.4 billion remeasurement of Citi’s deferred tax assets (DTAs) due to the reduction to the U.S. corporate tax rate and the change to a quasi-territorial tax system (see “Significant Accounting Policies and Estimates—Income Taxes” below), a $7.9 billion valuation allowance against Citi’s foreign tax credit (FTC) carry-forwards and its U.S. residual DTAs related to its non-U.S. branches, and a $2.3 billion reduction in Citi’s FTC carry-forwards related to the deemed repatriation of undistributed earnings of non-U.S. subsidiaries.
The financial results in the table below disclose the as-reported GAAP results for 2017 and 2016, the impact of Tax Reform and the 2017 adjusted results excluding the impact of Tax Reform. The charge related to Tax Reform is reflected in Citi’s results throughout this Annual Report on Form 10-K, unless otherwise noted.
The final impact of Tax Reform may differ from the estimate due to, among other things, changes in assumptions
 
made by Citigroup and additional guidance that may be issued by the U.S. Department of the Treasury. For more information on possible changes to the estimated impact related to Tax Reform, see “Risk Factors—Strategic Risks” below and Notes 1 and 9 to the Consolidated Financial Statements.






















 


In millions of dollars, except per share amounts, and as otherwise noted
2017
as reported
Impact of
Tax Reform
 
2017
adjusted results(1)
2016
as reported
2017 Ex-Tax Reform increase/(decrease)
vs. 2016
 
$ Change
% Change
 
Net income (loss)
$
(6,798
)
$
(22,594
)
 
$
15,796

$
14,912

$
884

6
 %
 
Diluted earnings per share:
 
 
 
 
 
 


 
Income (loss) from continuing operations
(2.94
)
(8.31
)
 
5.37

4.74

0.63

13

 
Net income (loss)
(2.98
)
(8.31
)
 
5.33

4.72

0.61

13

 
Effective tax rate
129.1
 %
(9,930
)
bps
29.8
%
30.0
%
 
(20
)
bps
Global Consumer Banking—Net income
$
3,884

$
(750
)
 
$
4,634

$
4,947

$
(313
)
(6
)%
 
North America GCB—Net income
2,044

(750
)
 
2,794

3,240

(446
)
(14
)
 
Institutional Clients Group—Net income
9,009

(2,000
)
 
11,009

9,467

1,542

16

 
Corporate/Other—Net income (loss)
(19,691
)
(19,844
)
 
153

498

(345
)
(69
)
 
 
 
 
 
 
 
 
 
 
Performance and other metrics:
 
 
 
 
 
 
 
 
  Return on average assets
(0.36
)%
(120
)
bps
0.84
%
0.82
%
 
2

bps
  Return on average common stockholders’ equity
(3.9
)
(1,090
)
 
7.0

6.6

 
40

 
  Return on average total stockholders’ equity
(3.0
)
(1,000
)
 
7.0

6.5

 
50

 
  Return on average tangible common equity
(4.6
)
(1,270
)
 
8.1

7.6

 
50

 
  Dividend payout ratio
(32.2
)
(5,020
)
 
18.0

8.9

 
910

 
  Total payout ratio
(213.9
)
(33,140
)
 
117.5

77.1

 
404

 

(1) Excludes the impact of Tax Reform.
 


9


RESULTS OF OPERATIONS
SUMMARY OF SELECTED FINANCIAL DATA—PAGE 1
Citigroup Inc. and Consolidated Subsidiaries
In millions of dollars, except per-share amounts and ratios
2017
2016
2015
2014
2013
Net interest revenue
$
44,687

$
45,104

$
46,630

$
47,993

$
46,793

Non-interest revenue
26,762

24,771

29,724

29,226

29,931

Revenues, net of interest expense
$
71,449

$
69,875

$
76,354

$
77,219

$
76,724

Operating expenses
41,237

41,416

43,615

55,051

48,408

Provisions for credit losses and for benefits and claims
7,451

6,982

7,913

7,467

8,514

Income from continuing operations before income taxes
$
22,761

$
21,477

$
24,826

$
14,701

$
19,802

Income taxes(1)
29,388

6,444

7,440

7,197

6,186

Income (loss) from continuing operations
$
(6,627
)
$
15,033

$
17,386

$
7,504

$
13,616

Income (loss) from discontinued operations, net of taxes(2)
(111
)
(58
)
(54
)
(2
)
270

Net income (loss) before attribution of noncontrolling interests
$
(6,738
)
$
14,975

$
17,332

$
7,502

$
13,886

Net income attributable to noncontrolling interests
60

63

90

192

227

Citigroup’s net income (loss)(1)
$
(6,798
)
$
14,912

$
17,242

$
7,310

$
13,659

Less:
 
 
 
 
 
Preferred dividends—Basic
$
1,213

$
1,077

$
769

$
511

$
194

Dividends and undistributed earnings allocated to employee restricted and deferred shares that contain nonforfeitable rights to dividends, applicable to basic EPS
37

195

224

111

263

Income (loss) allocated to unrestricted common shareholders for basic EPS
$
(8,048
)
$
13,640

$
16,249

$
6,688

$
13,202

Add: Other adjustments to income



1

1

Income (loss) allocated to unrestricted common shareholders for diluted EPS
$
(8,048
)
$
13,640

$
16,249

$
6,689

$
13,203

Earnings per share
 
 
 
 
 
Basic
 
 
 
 
 
Income (loss) from continuing operations
$
(2.94
)
$
4.74

$
5.43

$
2.21

$
4.26

Net income (loss)
(2.98
)
4.72

5.41

2.21

4.35

Diluted
 
 
 
 
 
Income (loss) from continuing operations
$
(2.94
)
$
4.74

$
5.42

$
2.20

$
4.25

Net income (loss)
(2.98
)
4.72

5.40

2.20

4.34

Dividends declared per common share
0.96

0.42

0.16

0.04

0.04


Table continues on the next page, including footnotes.

10


SUMMARY OF SELECTED FINANCIAL DATA—PAGE 2
 
Citigroup Inc. and Consolidated Subsidiaries
 
In millions of dollars, except per-share amounts, ratios and direct staff
2017
2016
2015
2014
2013
At December 31:
 
 
 
 
 
Total assets
$
1,842,465

$
1,792,077

$
1,731,210

$
1,842,181

$
1,880,035

Total deposits
959,822

929,406

907,887

899,332

968,273

Long-term debt
236,709

206,178

201,275

223,080

221,116

Citigroup common stockholders’ equity
181,487

205,867

205,139

199,717

197,254

Total Citigroup stockholders’ equity
200,740

225,120

221,857

210,185

203,992

Direct staff (in thousands)
209

219

231

241

251

Performance metrics
 
 
 
 
 
Return on average assets
(0.36
)%
0.82
%
0.95
%
0.39
%
0.73
%
Return on average common stockholders’ equity(3)
(3.9
)
6.6

8.1

3.4

7.0

Return on average total stockholders’ equity(3)
(3.0
)
6.5

7.9

3.5

6.9

Efficiency ratio (total operating expenses/total revenues)
58

59

57

71

63

Basel III ratios—full implementation
 
 
 
 
 
Common Equity Tier 1 Capital(4)
12.36
 %
12.57
%
12.07
%
10.57
%
10.57
%
Tier 1 Capital(4)
14.06

14.24

13.49

11.45

11.23

Total Capital(4)
16.30

16.24

15.30

12.80

12.64

Supplementary Leverage ratio(5)
6.68

7.22

7.08

5.94

5.42

Citigroup common stockholders’ equity to assets
9.85
 %
11.49
%
11.85
%
10.84
%
10.49
%
Total Citigroup stockholders’ equity to assets
10.90

12.56

12.82

11.41

10.85

Dividend payout ratio(6)
         NM
8.9

3.0

1.8

0.9

Total payout ratio(7)
         NM
77.1

36.0

19.9

7.1

Book value per common share
$
70.62

$
74.26

$
69.46

$
66.05

$
65.12

Tangible book value (TBV) per share(8)
60.16

64.57

60.61

56.71

55.19

Ratio of earnings to fixed charges and preferred stock dividends
2.26x
2.54x
2.89x

2.00x

2.18x

(1)
2017 includes the impact of Tax Reform. See “Impact of Tax Reform” above.
(2)
See Note 2 to the Consolidated Financial Statements for additional information on Citi’s discontinued operations.
(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)
Citi’s regulatory capital ratios reflect full implementation of the U.S. Basel III rules. As of December 31, 2017, Citi’s reportable Common Equity Tier 1 Capital and Tier 1 Capital ratios were the lower derived under the Basel III Standardized Approach, whereas the reportable Total Capital ratio was the lower derived under the Basel III Advanced Approaches framework. For all prior periods presented, Citi’s Common Equity Tier 1 Capital, Tier 1 Capital, and Total Capital ratios were the lower derived under the Basel III Advanced Approaches framework.
(5)
Citi’s Supplementary Leverage ratio reflects full implementation of the U.S. Basel III rules.
(6) Dividends declared per common share as a percentage of net income per diluted share.
(7)
Total common dividends declared plus common stock repurchases as a percentage of net income available to common shareholders. See “Consolidated Statement of Changes in Stockholders’ Equity,” Note 10 to the Consolidated Financial Statements and “Equity Security Repurchases” below for the component details.
(8) For information on TBV, see “Capital Resources—Tangible Common Equity, Tangible Book Value Per Share, Book Value Per Share and Returns on Equity” below.
NM Not meaningful



11


SEGMENT AND BUSINESS—INCOME (LOSS) AND REVENUES
CITIGROUP INCOME
In millions of dollars
2017(1)
2016
2015
% Change 
 2017 vs. 2016
% Change 
 2016 vs. 2015
Income (loss) from continuing operations
 
 
 
 
 
Global Consumer Banking
 
 
 
 
 
North America
$
2,043

$
3,238

$
4,188

(37
)%
(23
)%
Latin America
590

633

826

(7
)
(23
)
Asia(2)
1,260

1,083

1,200

16

(10
)
Total
$
3,893

$
4,954

$
6,214

(21
)%
(20
)%
Institutional Clients Group
 
 
 
 
 
North America
$
2,449

$
3,495

$
3,316

(30
)%
5
 %
EMEA
2,804

2,365

2,230

19

6

Latin America
1,513

1,454

1,351

4

8

Asia
2,300

2,211

2,213

4


Total
$
9,066

$
9,525

$
9,110

(5
)%
5
 %
Corporate/Other
$
(19,586
)
$
554

$
2,062

NM

(73
)%
Income (loss) from continuing operations
$
(6,627
)
$
15,033

$
17,386

NM

(14
)%
Discontinued operations
$
(111
)
$
(58
)
$
(54
)
(91
)%
(7
)%
Net income (loss) attributable to noncontrolling interests
60

63

90

(5
)
(30
)
Citigroup’s net income (loss)
$
(6,798
)
$
14,912

$
17,242

NM

(14
)%

(1)
2017 includes the impact of Tax Reform. See “Impact of Tax Reform” above.
(2) Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented.
NM Not meaningful

12


CITIGROUP REVENUES
In millions of dollars
2017
2016
2015
% Change 
 2017 vs. 2016
% Change 
 2016 vs. 2015
Global Consumer Banking
 
 
 
 
 
North America
$
20,262

$
19,759

$
19,515

3
 %
1
 %
Latin America
5,152

4,922

5,722

5

(14
)
Asia(1)
7,283

6,838

7,014

7

(3
)
Total
$
32,697

$
31,519

$
32,251

4
 %
(2
)%
Institutional Clients Group
 
 
 
 
 
North America
$
13,636

$
12,513

$
12,698

9
 %
(1
)%
EMEA
10,692

9,855

9,788

8

1

Latin America
4,216

3,977

3,944

6

1

Asia
7,123

6,882

6,902

4


Total
$
35,667

$
33,227

$
33,332

7
 %
 %
Corporate/Other
$
3,085

$
5,129

$
10,771

(40
)%
(52
)%
Total Citigroup net revenues
$
71,449

$
69,875

$
76,354

2
 %
(8
)%
(1)
Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented.



13


SEGMENT BALANCE SHEET(1) 
In millions of dollars
Global
Consumer
Banking
Institutional
Clients
Group
Corporate/Other
and
consolidating
eliminations(2)
Citigroup
parent
company-
issued
long-term
debt and
stockholders’
equity(3)
Total
Citigroup
consolidated
Assets
 
 
 
 
 
Cash and deposits with banks
$
11,446

$
65,916

$
103,154

$

$
180,516

Federal funds sold and securities borrowed or purchased under agreements to resell
242

231,806

430


232,478

Trading account assets
5,885

243,916

1,755


251,556

Investments
10,786

109,231

232,273


352,290

Loans, net of unearned income and
 
 
 
 

allowance for loan losses
301,729

330,826

22,124


654,679

Other assets
38,037

96,266

36,643


170,946

Liquidity assets(4)
60,755

258,342

(319,097
)


Total assets
$
428,880

$
1,336,303

$
77,282

$

$
1,842,465

Liabilities and equity
 
 
 
 

Total deposits
$
307,244

$
639,487

$
13,091

$

$
959,822

Federal funds purchased and securities loaned or sold under agreements to repurchase
4,705

151,563

9


156,277

Trading account liabilities
20

123,933

94


124,047

Short-term borrowings
576

20,075

23,801


44,452

Long-term debt(3)
2,143

35,297

47,106

152,163

236,709

Other liabilities
19,745

80,383

19,358


119,486

Net inter-segment funding (lending)(3)
94,447

285,565

(27,109
)
(352,903
)

Total liabilities
$
428,880

$
1,336,303

$
76,350

$
(200,740
)
$
1,640,793

Total equity(5)


932

200,740

201,672

Total liabilities and equity
$
428,880

$
1,336,303

$
77,282

$

$
1,842,465


(1)
The supplemental information presented in the table above reflects Citigroup’s consolidated GAAP balance sheet by reporting segment as of December 31, 2017. The respective segment information depicts the assets and liabilities managed by each segment as of such date.
(2)
Consolidating eliminations for total Citigroup and Citigroup parent company assets and liabilities are recorded within Corporate/Other. The impact of Tax Reform is included in North America GCB, ICG and Corporate/Other.
(3)
The total stockholders’ equity and the majority of long-term debt of Citigroup reside in the Citigroup parent company Consolidated Balance Sheet. Citigroup allocates stockholders’ equity and long-term debt to its businesses through inter-segment allocations as shown above.
(4)
Represents the attribution of Citigroup’s liquidity assets (primarily consisting of cash and available-for-sale securities) to the various businesses based on Liquidity Coverage Ratio (LCR) assumptions.
(5)
Corporate/Other equity represents noncontrolling interests.

14









































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15


GLOBAL CONSUMER BANKING
Global Consumer Banking (GCB) consists of consumer banking businesses in North America, Latin America (consisting of Citi’s consumer banking business in Mexico) and Asia. GCB provides traditional banking services to retail customers through retail banking, including commercial banking, and Citi-branded cards and Citi retail services (for additional information on these businesses, see “Citigroup Segments” above). GCB is focused on its priority markets in the U.S., Mexico and Asia with 2,451 branches in 19 countries and jurisdictions as of December 31, 2017. At December 31, 2017, GCB had approximately $429 billion in assets and $307 billion in deposits.
GCB’s overall strategy is to leverage Citi’s global footprint and be the pre-eminent bank for the emerging affluent and affluent consumers in large urban centers. In credit cards and in certain retail markets, Citi serves customers in a somewhat broader set of segments and geographies.

In millions of dollars except as otherwise noted
2017
2016
2015
% Change 
 2017 vs. 2016
% Change 
 2016 vs. 2015
Net interest revenue
$
27,187

$
26,025

$
25,752

4
 %
1
 %
Non-interest revenue
5,510

5,494

6,499


(15
)
Total revenues, net of interest expense
$
32,697

$
31,519

$
32,251

4
 %
(2
)%
Total operating expenses
$
17,843

$
17,483

$
17,199

2
 %
2
 %
Net credit losses
$
6,562

$
5,610

$
5,752

17
 %
(2
)%
Credit reserve build (release)
965

708

(395
)
36

NM

Provision (release) for unfunded lending commitments
(2
)
3

4

NM

(25
)
Provision for benefits and claims
116

106

108

9

(2
)
Provisions for credit losses and for benefits and claims
$
7,641

$
6,427

$
5,469

19
 %
18
 %
Income from continuing operations before taxes
$
7,213

$
7,609

$
9,583

(5
)%
(21
)%
Income taxes
3,320

2,655

3,369

25

(21
)
Income from continuing operations
$
3,893

$
4,954

$
6,214

(21
)%
(20
)%
Noncontrolling interests
$
9

$
7

$
10

29
 %
(30
)%
Net income
$
3,884

$
4,947

$
6,204

(21
)%
(20
)%
Balance Sheet data (in billions of dollars)
 
 
 
 
 
Total EOP assets
$
429

$
412

$
381

4
 %
8
 %
Average assets
418

396

378

6

5

Return on average assets
0.93
%
1.25
%
1.64
%
 
 
Efficiency ratio
55

55

53

 
 
Average deposits
$
306

$
298

$
295

3

1

Net credit losses as a percentage of average loans
2.21
%
2.01
%
2.12
%
 
 
Revenue by business
 
 
 
 
 
Retail banking
$
13,378

$
12,916

$
13,654

4
 %
(5
)%
Cards(1)
19,319

18,603

18,597

4


Total
$
32,697

$
31,519

$
32,251

4
 %
(2
)%
Income from continuing operations by business
 
 
 
 
 
Retail banking
$
1,673

$
1,566

$
1,875

7
 %
(16
)%
Cards(1)
2,220

3,388

4,339

(34
)
(22
)
Total
$
3,893

$
4,954

$
6,214

(21
)%
(20
)%
Table continues on the next page, including footnotes.


16


Foreign currency (FX) translation impact
 
 
 
 
 
Total revenue—as reported
$
32,697

$
31,519

$
32,251

4
 %
(2
)%
Impact of FX translation(2)

66

(924
)
 
 
Total revenues—ex-FX(3)
$
32,697

$
31,585

$
31,327

4
 %
1
 %
Total operating expenses—as reported
$
17,843

$
17,483

$
17,199

2
 %
2
 %
Impact of FX translation(2)

54

(401
)
 
 
Total operating expenses—ex-FX(3)
$
17,843

$
17,537

$
16,798

2
 %
4
 %
Total provisions for LLR & PBC—as reported
$
7,641

$
6,427

$
5,469

19
 %
18
 %
Impact of FX translation(2)

(1
)
(214
)
 
 
Total provisions for LLR & PBC—ex-FX(3)
$
7,641

$
6,426

$
5,255

19
 %
22
 %
Net income—as reported
$
3,884

$
4,947

$
6,204

(21
)%
(20
)%
Impact of FX translation(2)

7

(236
)
 
 
Net income—ex-FX(3)
$
3,884

$
4,954

$
5,968

(22
)%
(17
)%
(1)
Includes both Citi-branded cards and Citi retail services.
(2)
Reflects the impact of FX translation into U.S. dollars at the 2017 average exchange rates for all periods presented.
(3)
Presentation of this metric excluding FX translation is a non-GAAP financial measure.
NM Not meaningful


17


NORTH AMERICA GCB
North America GCB provides traditional retail banking, including commercial banking, Citi-branded cards products and Citi retail services card products to retail customers and small to mid-size businesses, as applicable, in the U.S. North America GCB’s U.S. cards product portfolio includes its proprietary portfolio (including the Citi Double Cash, Thank You and Value cards) and co-branded cards (including, among others, American Airlines and Costco) within Citi-branded cards as well as its co-brand and private label relationships (including, among others, Sears, The Home Depot, Best Buy and Macy’s) within Citi retail services.
As previously announced, the Hilton Honors co-brand credit card partnership with Citi was scheduled to terminate as of year-end 2017. On October 23, 2017, Citi signed an agreement to sell the Hilton credit card portfolio (approximately $1.1 billion in outstanding loan balances in Citi-branded cards as of December 31, 2017) to American Express. In connection with the sale agreement, the existing partnership was extended through the closing date. The sale was completed on January 30, 2018, resulting in a pretax gain of approximately $150 million, which approximates one year of revenues from the portfolio. The sale will impact North America GCB’s quarterly comparisons in 2018.
As of December 31, 2017, North America GCB’s 694 retail bank branches are concentrated in the six key metropolitan areas of New York, Chicago, Miami, Washington, D.C., Los Angeles and San Francisco. Also as of December 31, 2017, North America GCB had approximately 9.2 million retail banking customer accounts, $56.0 billion in retail banking loans and $182.5 billion in deposits. In addition, North America GCB had approximately 121 million Citi-branded and Citi retail services credit card accounts with $139.7 billion in outstanding card loan balances.
In millions of dollars, except as otherwise noted
2017
2016
2015
% Change 
 2017 vs. 2016
% Change 
 2016 vs. 2015
Net interest revenue
$
18,881

$
18,131

$
17,409

4
 %
4
 %
Non-interest revenue
1,381

1,628

2,106

(15
)
(23
)
Total revenues, net of interest expense
$
20,262

$
19,759

$
19,515

3
 %
1
 %
Total operating expenses
$
10,160

$
10,058

$
9,369

1
 %
7
 %
Net credit losses
$
4,796

$
3,919

$
3,751

22
 %
4
 %
Credit reserve build (release)
869

653

(339
)
33

NM

Provision for unfunded lending commitments
4

6

8

(33
)
(25
)
Provision for benefits and claims
33

34

39

(3
)
(13
)
Provisions for credit losses and for benefits and claims
$
5,702

$
4,612

$
3,459

24
 %
33
 %
Income from continuing operations before taxes
$
4,400

$
5,089

$
6,687

(14
)%
(24
)%
Income taxes
2,357

1,851

2,499

27

(26
)
Income from continuing operations
$
2,043

$
3,238

$
4,188

(37
)%
(23
)%
Noncontrolling interests
(1
)
(2
)
3

50

NM

Net income
$
2,044

$
3,240

$
4,185

(37
)%
(23
)%
Balance Sheet data (in billions of dollars)
 
 

 

 
 
Average assets
$
248

$
228

$
208

9
 %
10
 %
Return on average assets
0.82
%
1.42
%
2.01
%
 
 
Efficiency ratio
50

51

48

 
 
Average deposits
$
184.4

$
183.2

$
180.7

1

1

Net credit losses as a percentage of average loans
2.58
%
2.29
%
2.39
%
 
 
Revenue by business
 
 

 

 
 
Retail banking
$
5,257

$
5,222

$
5,312

1
 %
(2
)%
Citi-branded cards
8,578

8,150

7,781

5

5

Citi retail services
6,427

6,387

6,422

1

(1
)
Total
$
20,262

$
19,759

$
19,515

3
 %
1
 %
Income from continuing operations by business
 
 

 

 
 
Retail banking
$
455

$
533

$
616

(15
)%
(13
)%
Citi-branded cards
1,019

1,441

2,057

(29
)
(30
)
Citi retail services
569

1,264

1,515

(55
)
(17
)
Total
$
2,043

$
3,238

$
4,188

(37
)%
(23
)%

NM Not meaningful


18


2017 vs. 2016
Net income decreased 37% and was impacted by an estimated $750 million non-cash charge recorded in the tax line due to the impact of Tax Reform (for additional information, see “Impact of Tax Reform” above). Excluding the impact of Tax Reform, net income decreased 14% due to higher cost of credit and slightly higher expenses, partially offset by higher revenues.
Revenues increased 3%, driven by higher revenues across all businesses.
Retail banking revenues increased 1%. Excluding the decline in mortgage revenues (down of 32%), retail banking revenues were up 9%, driven by growth in checking deposits, continued growth in loans (average loans up 3%) and assets under management (up 14%) and increased commercial banking activity, as well as a benefit from higher interest rates. The decline in mortgage revenues was driven by lower origination activity and higher cost of funds, reflecting the higher interest rate environment, as well as the impact of the previously announced sale of a portion of Citi’s mortgage servicing rights.
Cards revenues increased 3%. In Citi-branded cards, revenues increased 5%, primarily reflecting the acquisition of the Costco portfolio (completed June 17, 2016), as well as modest growth in interest-earning balances, partially offset by the continued run-off of non-core portfolios and the higher cost to fund growth in transactor and promotional balances, given the higher interest rates. Average loans grew 15% and purchase sales grew 28%. North America GCB expects that additional terms in certain partnership contracts that go into effect in 2018 will negatively impact Citi-branded cards revenues going forward.
Citi retail services revenues increased 1%, as continued loan growth was partially offset by the impact of the previously disclosed renewal and extension of certain partnerships within the portfolio, as well as the absence of gains on sales of two cards portfolios in 2016. Average loans grew 4% and purchase sales grew 2%.
Expenses increased 1%, driven by the addition of the Costco portfolio, higher volume-related expenses and investments, partially offset by efficiency savings. Also included in expenses is an $80 million provision for remediation costs related to a Credit Card Accountability Responsibility and Disclosure Act (CARD Act) matter (for additional information, see “Corporate/Other” below and Note 27 to the Consolidated Financial Statements).
Provisions increased 24% from the prior year, driven by higher net credit losses and a higher net loan loss reserve build.
Net credit losses increased 22% to $4.8 billion, largely driven by higher net credit losses in Citi-branded cards (up 28% to $2.4 billion) and Citi retail services (up 19% to $2.2 billion). The increase in net credit losses primarily reflected volume growth and seasoning in both cards portfolios, as well as the impact of acquiring the Costco portfolio in Citi-branded cards.
The net loan loss reserve build in 2017 was $873 million (compared to a build of $659 million in the prior year), driven by volume growth and seasoning in both cards portfolios, as
 
well as the increase in net flow rates in later delinquency buckets leading to higher inherent credit loss expectations, primarily in Citi retail services.
For additional information on North America GCB’s retail banking portfolios, including commercial banking, and its Citi-branded cards and Citi retail services portfolios, see “Credit Risk—Consumer Credit” below.

2016 vs. 2015
Net income decreased by 23% due to significantly higher cost of credit and higher expenses, partially offset by higher revenues.
Revenues increased 1%, reflecting higher revenues in Citi-branded cards, partially offset by lower revenues in retail banking and Citi retail services. Retail banking revenues decreased 2%. Excluding the previously disclosed $110 million gain on sale of branches in Texas in the first quarter of 2015, retail banking revenues were largely unchanged, as lower mortgage revenues were offset by continued volume growth, including growth in average loans (9%) and average checking deposits (9%).
Cards revenues increased 2%. In Citi-branded cards, revenues increased 5%, primarily reflecting the acquisition of the Costco portfolio as well as volume growth, partially offset by higher investment-related acquisition and rewards costs and the impact of higher promotional balances. Citi retail services revenues decreased 1%, as the impact of the renewal and extension of several partnerships within the portfolio as well as the absence of revenues from portfolio exits were partially offset by modest growth in average loans.
Expenses increased 7%, primarily due to the Costco acquisition, continued investment spending, volume growth, higher repositioning charges and regulatory and compliance costs, partially offset by ongoing efficiency savings and lower legal and related costs.
Provisions increased 33%, driven by a net loan loss reserve build, compared to a loan loss reserve release in the prior year, and higher net credit losses. The net loan loss reserve build mostly reflected reserve builds in the cards portfolios and was primarily driven by the impact of the acquisition of the Costco portfolio, as well as volume growth and seasoning of the portfolios and the absence of nearly $400 million of reserve releases in 2015 as credit normalized. The reserve build was also due to the estimated impact of proposed regulatory guidelines on third-party debt collections.
The increase in net credit losses was driven by increases in cards and retail banking. In retail banking, net credit losses grew 37%, primarily due to an increase related to Citi’s energy and energy-related exposures within the commercial banking portfolio, which was largely offset by releases of previously established loan loss reserves. In Citi-branded cards, net credit losses increased 1%, driven by volume growth, including the impact of Costco beginning in the fourth quarter of 2016, seasoning and the impact of the regulatory changes on collections. In Citi retail services, net credit losses increased 6%, primarily due to portfolio growth and seasoning and the impact of the regulatory changes on collections.



19


LATIN AMERICA GCB
Latin America GCB provides traditional retail banking, including commercial banking, and its Citi-branded card products to retail customers and small to mid-size businesses in Mexico through Citibanamex, one of Mexico’s largest banks.
At December 31, 2017, Latin America GCB had 1,479 retail branches in Mexico, with approximately 27.7 million retail banking customer accounts, $19.9 billion in retail banking loans and $27.1 billion in deposits. In addition, the business had approximately 5.6 million Citi-branded card accounts with $5.4 billion in outstanding loan balances.
On November 27, 2017, Citi entered into an agreement to sell its Mexico asset management business reported within Latin America GCB. For additional information on this sale, see Note 2 to the Consolidated Financial Statements.
In millions of dollars, except as otherwise noted
2017
2016
2015
% Change 
 2017 vs. 2016
% Change 
 2016 vs. 2015
Net interest revenue
$
3,638

$
3,431

$
3,849

6
 %
(11
)%
Non-interest revenue
1,514

1,491

1,873

2

(20
)
Total revenues, net of interest expense
$
5,152

$
4,922

$
5,722

5
 %
(14
)%
Total operating expenses
$
2,920

$
2,838

$
3,251

3
 %
(13
)%
Net credit losses
$
1,117

$
1,040

$
1,280

7
 %
(19
)%
Credit reserve build (release)
125

83

33

51

NM

Provision (release) for unfunded lending commitments
(1
)
1

(2
)
NM

NM

Provision for benefits and claims
83

72

69

15

4

Provisions for credit losses and for benefits and claims (LLR & PBC)
$
1,324

$
1,196

$
1,380

11
 %
(13
)%
Income from continuing operations before taxes
$
908

$
888

$
1,091

2
 %
(19
)%
Income taxes
318

255

265

25

(4
)
Income from continuing operations
$
590

$
633

$
826

(7
)%
(23
)%
Noncontrolling interests
5

5

3


67

Net income
$
585

$
628

$
823

(7
)%
(24
)%
Balance Sheet data (in billions of dollars)
 
 

 

 
 
Average assets
$
45

$
49

$
53

(8
)%
(8
)%
Return on average assets
1.30
%
1.28
%
1.55
%
 
 
Efficiency ratio
57

58

57

 
 
Average deposits
$
27.4

$
25.7

$
26.7

7

(4
)
Net credit losses as a percentage of average loans
4.42
%
4.32
%
4.87
%
 
 
Revenue by business
 
 
 
 
 
Retail banking
$
3,690

$
3,447

$
3,933

7
 %
(12
)%
Citi-branded cards
1,462

1,475

1,789

(1
)
(18
)
Total
$
5,152

$
4,922

$
5,722

5
 %
(14
)%
Income from continuing operations by business
 
 

 

 
 
Retail banking
$
410

$
355

$
520

15
 %
(32
)%
Citi-branded cards
180

278

306

(35
)
(9
)
Total
$
590

$
633

$
826

(7
)%
(23
)%
FX translation impact
 
 

 

 
 
Total revenues—as reported
$
5,152

$
4,922

$
5,722

5
 %
(14
)%
Impact of FX translation(1)

(45
)
(906
)
 
 
Total revenues—ex-FX(2)
$
5,152

$
4,877

$
4,816

6
 %
1
 %
Total operating expenses—as reported
$
2,920

$
2,838

$
3,251

3
 %
(13
)%
Impact of FX translation(1)

(21
)
(376
)
 
 
Total operating expenses—ex-FX(2)
$
2,920

$
2,817

$
2,875

4
 %
(2
)%
Provisions for LLR & PBC—as reported
$
1,324

$
1,196

$
1,380

11
 %
(13
)%
Impact of FX translation(1)

(10
)
(211
)
 
 
Provisions for LLR & PBC—ex-FX(2)
$
1,324

$
1,186

$
1,169

12
 %
1
 %
Net income—as reported
$
585

$
628

$
823

(7
)%
(24
)%
Impact of FX translation(1)

(10
)
(244
)
 
 
Net income—ex-FX(2)
$
585

$
618

$
579

(5
)%
7
 %
(1)
Reflects the impact of FX translation into U.S. dollars at the 2017 average exchange rates for all periods presented.
(2)
Presentation of this metric excluding FX translation is a non-GAAP financial measure.

20


NM Not meaningful

The discussion of the results of operations for Latin America GCB below excludes the impact of FX translation for all periods presented. Presentations of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. For a reconciliation of certain of these metrics to the reported results, see the table above.

2017 vs. 2016
Net income decreased 5%, primarily driven by higher credit costs and expenses, partially offset by higher revenues.
Revenues increased 6%, driven by higher revenues in
retail banking.
Retail banking revenues increased 8%, reflecting continued growth in volumes, including an increase in average deposits (8%), average loans (6%), reflecting growth across most portfolios, an increase in assets under management (6%), as well as improved deposit spreads, driven by higher interest rates. Cards revenues were largely unchanged, as continued improvement in full-rate revolving loans in the second half of 2017 was offset by a higher cost to fund non-revolving loans. Purchase sales grew 8% and average card loans grew 5%.
Expenses increased 4%, as ongoing investment spending and business growth were partially offset by efficiency savings. Citi continues to execute on its investment plans for Citibanamex (totaling more than $1 billion through 2020), including initiatives to modernize the branch network, enhance digital capabilities and upgrade core operating platforms.
Provisions increased 12%, primarily driven by higher net credit losses (8%) and a $42 million increase in the net loan loss reserve build, largely reflecting volume growth and seasoning. The increase in the loan loss reserve build was also driven by a Mexico earthquake-related loan loss reserve build in the third quarter of 2017 (approximately $25 million).
For additional information on Latin America GCB’s retail banking portfolios, including commercial banking, and its Citi-branded cards portfolio, see “Credit Risk—Consumer Credit” below.
For additional information on potential macroeconomic
and geopolitical challenges and other risks facing Latin
America GCB, see “Risk Factors—Strategic Risks” below.



 

2016 vs. 2015
Net income increased 7%, driven by higher revenues and lower expenses, partially offset by higher credit costs.
Revenues increased 1%, driven by overall volume growth, largely offset by the absence of a $160 million gain on sale related to the sale of the merchant acquiring business in Mexico in 2015. Excluding this gain, revenues increased 5%, primarily due to higher revenues in retail banking, partially offset by lower revenues in cards. Retail banking revenues increased 3%. Excluding the gain on sale related to the merchant acquiring business, revenues increased 9%, driven by volume growth. Cards revenues decreased 4%, driven by the impact of higher payment rates, partially offset by increased purchase sales.
Expenses decreased 2%, as lower legal and related expenses, the impact of business divestitures and ongoing efficiency savings were partially offset by higher repositioning charges and ongoing investment spending.
Provisions increased 1%, driven by a higher net loan loss reserve build, partially offset by lower net credit losses. The net loan loss reserve build increased $56 million, largely due to volume growth. Net credit losses decreased 5%, largely reflecting continued lower net credit losses in the cards portfolio, partially offset by higher net credit losses in the personal loan portfolio.
  








21


ASIA GCB
Asia GCB provides traditional retail banking, including commercial banking, and its Citi-branded card products to retail customers and small to mid-size businesses, as applicable. As of December 31, 2017, Citi’s most significant revenues in the region were from Singapore, Hong Kong, Korea, Australia, India, Taiwan, Indonesia, Philippines, Thailand and Malaysia. Included within Asia GCB, traditional retail banking and Citi-branded card products are also provided to retail customers in certain EMEA countries, primarily in Poland, Russia and the United Arab Emirates.
At December 31, 2017, on a combined basis, the businesses had 278 retail branches, approximately 16.0 million retail banking customer accounts, $70.0 billion in retail banking loans and $97.7 billion in deposits. In addition, the businesses had approximately 16.4 million Citi-branded card accounts with $19.8 billion in outstanding loan balances.

In millions of dollars, except as otherwise noted(1)
2017
2016
2015
% Change 
 2017 vs. 2016
% Change 
 2016 vs. 2015
Net interest revenue
$
4,668

$
4,463

$
4,494

5
 %
(1
)%
Non-interest revenue
2,615

2,375

2,520

10

(6
)
Total revenues, net of interest expense
$
7,283

$
6,838

$
7,014

7
 %
(3
)%
Total operating expenses
$
4,763

$
4,587

$
4,579

4
 %
 %
Net credit losses
$
649

$
651

$
721

 %
(10
)%
Credit reserve build (release)
(29
)
(28
)
(89
)
(4
)
69

Provision (release) for unfunded lending commitments
(5
)
(4
)
(2
)
(25
)
(100
)
Provisions for credit losses
$
615

$
619

$
630

(1
)%
(2
)%
Income from continuing operations before taxes
$
1,905

$
1,632

$
1,805

17
 %
(10
)%
Income taxes
645

549

605

17

(9
)
Income from continuing operations
$
1,260

$
1,083

$
1,200

16
 %
(10
)%
Noncontrolling interests
5

4

4

25


Net income
$
1,255

$
1,079

$
1,196

16
 %
(10
)%
Balance Sheet data (in billions of dollars)
 
 

 

 
 
Average assets
$
125

$
119

$
117

5
 %
2
 %
Return on average assets
1.00
%
0.91
%
1.02
%
 
 
Efficiency ratio
65

67

65

 
 
Average deposits
$
94.6

$
89.5

$
87.7

6

2

Net credit losses as a percentage of average loans
0.76
%
0.77
%
0.81
%
 
 
Revenue by business
 
 
 
 
 
Retail banking
$
4,431

$
4,247

$
4,409

4
 %
(4
)%
Citi-branded cards
2,852

2,591

2,605

10

(1
)
Total
$
7,283

$
6,838

$
7,014

7
 %
(3
)%
Income from continuing operations by business
 
 
 
 
 
Retail banking
$
808

$
678

$
739

19
 %
(8
)%
Citi-branded cards
452

405

461

12

(12
)
Total
$
1,260

$
1,083

$
1,200

16
 %
(10
)%

22


FX translation impact
 
 
 
 
 
Total revenues—as reported
$
7,283

$
6,838

$
7,014

7
 %
(3
)%
Impact of FX translation(2)

111

(18
)
 
 
Total revenues—ex-FX(3)
$
7,283

$
6,949

$
6,996

5
 %
(1
)%
Total operating expenses—as reported
$
4,763

$
4,587

$
4,579

4
 %
 %
Impact of FX translation(2)

75

(25
)
 
 
Total operating expenses—ex-FX(3)
$
4,763

$
4,662

$
4,554

2
 %
2
 %
Provisions for credit losses—as reported
$
615

$
619

$
630

(1
)%
(2
)%
Impact of FX translation(2)

9

(3
)
 
 
Provisions for credit losses—ex-FX(3)
$
615

$
628

$
627

(2
)%
 %
Net income—as reported
$
1,255

$
1,079

$
1,196

16
 %
(10
)%
Impact of FX translation(2)

17

8

 
 
Net income—ex-FX(3)
$
1,255

$
1,096

$
1,204

15
 %
(9
)%

(1)
Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented.
(2)
Reflects the impact of FX translation into U.S. dollars at the 2017 average exchange rates for all periods presented.
(3)
Presentation of this metric excluding FX translation is a non-GAAP financial measure.


The discussion of the results of operations for Asia GCB below excludes the impact of FX translation for all periods presented. Presentations of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. For a reconciliation of certain of these metrics to the reported results, see the table above.

2017 vs. 2016
Net income increased 15%, reflecting higher revenues and lower cost of credit, partially offset by higher expenses.
Revenues increased 5%, driven by improvement in cards and wealth management revenues, partially offset by continued lower retail lending revenues.
Retail banking revenues increased 3%, primarily due to the continued improvement in wealth management revenues, partially offset by the repositioning of the retail loan portfolio. Wealth management revenues increased due to improvement in investor sentiment, stronger equity markets and increases in assets under management (18%) and investment sales (38%). Average deposits increased 5%. The increase in revenues was partially offset by the lower retail lending revenues (down 4%), reflecting continued lower average loans (1%) due to the continued optimization of this portfolio away from lower yielding mortgage loans to focus on growing higher-return personal loans.
Cards revenues increased 8%, reflecting 5% growth in average loans and 7% growth in purchase sales, both of which benefited from the previously disclosed portfolio acquisition in Australia in 2017, as well as modest gains in 2017 related to sales of merchant acquiring businesses in certain countries.
Expenses increased 2%, resulting from volume growth and ongoing investment spending, partially offset by efficiency savings.
Provisions decreased 2%, primarily driven by a decrease in net credit losses.
For additional information on Asia GCB’s retail banking portfolios, including commercial banking, and its Citi-branded cards portfolio, see “Credit Risk—Consumer Credit” below.

 
2016 vs. 2015
Net income decreased 9%, reflecting lower revenues and higher expenses.
Revenues decreased 1%, reflecting lower retail banking revenues, partially offset by higher cards revenues. Retail banking revenues decreased 2%, mainly due to a 5% decrease in wealth management revenues due to lower client activity, modestly lower investment assets under management and a decline in average loans. The decline in revenues was partially offset by growth in deposit volumes and higher insurance revenues. Cards revenues increased 1%, driven by continued improvement in yields, modestly abating regulatory headwinds and modest volume growth due to continued stabilizing payment rates.
Expenses increased 2%, primarily due to higher repositioning costs, higher regulatory and compliance costs and increased investment spending, partially offset by efficiency savings.
Provisions were largely unchanged as lower net loan loss reserve releases were offset by lower net credit losses, primarily in the commercial portfolio.



23


INSTITUTIONAL CLIENTS GROUP
Institutional Clients Group (ICG) includes Banking and Markets and securities services (for additional information on these businesses, see “Citigroup Segments” above). ICG provides corporate, institutional, public sector and high-net-worth clients around the world with a full range of wholesale banking products and services, including fixed income and equity sales and trading, foreign exchange, prime brokerage, derivative services, equity and fixed income research, corporate lending, investment banking and advisory services, private banking, cash management, trade finance and securities services. ICG transacts with clients in both cash instruments and derivatives, including fixed income, foreign currency, equity and commodity products.
ICG revenue is generated primarily from fees and spreads associated with these activities. ICG 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 and Investment banking. Revenue is also generated from transaction processing and assets under custody and administration. Revenue generated from these activities is primarily recorded in Administration and other fiduciary fees. In addition, as a market maker, ICG 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 (for additional information on Principal transactions revenue, see Note 6 to the Consolidated Financial Statements). Other primarily includes mark-to-market gains and losses on certain credit derivatives, gains and losses on available-for-sale (AFS) securities and other non-recurring gains and losses. Interest income earned on assets held, less interest paid to customers on deposits and long- and short-term debt, is recorded as Net interest revenue.
The amount and types of Markets revenues are impacted by a variety of interrelated factors, including market liquidity; changes in market variables such as interest rates, foreign exchange rates, equity prices, commodity prices and credit spreads, as well as their implied volatilities; investor confidence; and other macroeconomic conditions. Assuming all other market conditions do not change, increases in client activity levels or bid/offer spreads generally result in increases in revenues. However, changes in market conditions can significantly impact client activity levels, bid/offer spreads and the fair value of product inventory. For example, a decrease in market liquidity may increase bid/offer spreads, decrease client activity levels and widen credit spreads on product inventory positions.
ICG’s management of the Markets businesses involves daily monitoring and evaluating of the above factors at the trading desk as well as the country level. ICG does not separately track the impact on total Markets revenues of the volume of transactions, bid/offer spreads, fair value changes of product inventory positions and economic hedges because, as noted above, these components are interrelated and are not deemed useful or necessary individually to manage the Markets businesses at an aggregate level.
In the Markets businesses, client revenues are those revenues directly attributable to client transactions at the time of inception, including commissions, interest or fees earned. Client revenues do not include the results of client facilitation activities (for example, holding product inventory in anticipation of client demand) or the results of certain economic hedging activities.
ICG’s international presence is supported by trading floors in approximately 80 countries and a proprietary network in 98 countries and jurisdictions. At December 31, 2017, ICG had approximately $1.3 trillion of assets and $640 billion of deposits, while two of its businesses—securities services and issuer services—managed approximately $17.4 trillion of assets under custody compared to $15.2 trillion at the end of the prior-year period.
In millions of dollars, except as otherwise noted
2017
2016
2015
% Change 
 2017 vs. 2016
% Change 
 2016 vs. 2015
Commissions and fees
$
4,314

$
4,045

$
4,088

7
 %
(1
)%
Administration and other fiduciary fees
2,523

2,262

2,248

12

1

Investment banking
4,404

3,655

4,110

20

(11
)
Principal transactions
7,740

7,335

5,824

6

26

Other(1)
1,149

(164
)
1,394

NM

NM

Total non-interest revenue
$
20,130

$
17,133

$
17,664

17
 %
(3
)%
Net interest revenue (including dividends)
15,537

16,094

15,668

(3
)
3

Total revenues, net of interest expense
$
35,667

$
33,227

$
33,332

7
 %
 %
Total operating expenses
$
19,608

$
18,956

$
19,087

3
 %
(1
)%
Net credit losses
$
365

$