COMMISSIONS AND FEES; ADMINISTRATION

AND OTHER FIDUCIARY FEES

The primary components of Commissions and fees revenue are investment banking fees, brokerage commissions, credit- and bank-card income and deposit-related fees.

Investment banking fees are substantially composed of underwriting and advisory revenues. Such fees are recognized at the point in time when Citigroup’s performance under the terms of a contractual arrangement is completed, which is typically at the closing of a transaction. Reimbursed expenses related to this transactions are recorded as revenue and are included within investment banking fees. In certain instances for advisory contracts, Citi will receive amounts in advance of the deal closing. In these instances, the amounts received will be recognized as a liability and not recognized in revenue until the transaction closes. The contract liability amount for the years presented was negligible. Out-of-pocket expenses associated with underwriting activity are deferred and recognized at the time the related revenue is recognized, while out-of-pocket expenses associated with advisory arrangements are expensed as incurred. In general, expenses incurred related to investment banking transactions, whether consummated or not, are recorded in Other operating expenses. The Company has determined that it acts as principal in the majority of these transactions and therefore presents expenses gross within Other operating expenses.

Brokerage commissions primarily include commissions and fees from the following: executing transactions for clients on exchanges and over-the-counter markets; sales of mutual funds, and other annuity products; and assisting clients in clearing transactions, providing brokerage services and other such activities. Brokerage commissions are recognized in Commissions and fees at the point in time the associated service is fulfilled, generally on trade-execution date. Gains or losses, if any, on these transactions are included in Principal transactions (see Note 6 to the Consolidated Financial Statements). Sales of certain investment products include a portion of variable consideration associated with the underlying product. In these instances, a portion of the revenue associated with the sale of the product is not recognized until the variable consideration becomes fixed. The Company recognized $148 million of revenue related to such variable consideration in the first quarter of 2018, compared with $96 million in the first quarter of 2017. These amounts primarily relate to performance obligations satisfied in prior periods.

Credit- and bank-card income is primarily composed of interchange fees, which are earned by card issuers based on purchase sales, and certain card fees, including annual fees. Costs related to customer reward programs and certain payments to partners (primarily based on program sales, profitability and customer acquisitions) are recorded as a reduction of Credit and bank card income. Interchange revenues are recognized as earned on a daily basis when Citi's performance obligation to transmit funds to the payment networks has been satisfied. Annual card fees, net of origination costs, are deferred and amortized on a straight-line basis over a 12-month period. Costs related to card reward programs are recognized when the rewards are earned by the cardholders. Payments to partners are recognized when incurred.

Deposit-related fees consist of service charges on deposit accounts and fees earned from performing cash management activities and other deposit account services. Such fees are recognized in the period in which the related service is provided.

Transactional service fees primarily consist of fees charged for processing services such as cash management, global payments, clearing, international funds transfer, and other trade services. Such fees are recognized as/when the associated service is satisfied, which normally occurs at the point in time the service is requested by the customer and provided by Citi.

Insurance distribution revenue consists of commissions earned from third-party insurance companies for marketing and selling insurance policies on behalf of such entities. Such commissions are recognized in Commissions and fees at the point in time the associated service is fulfilled, generally when the insurance policy is sold to the policyholder. Sales of certain insurance products include a portion of variable consideration associated with the underlying product. In these instances, a portion of the revenue associated with the sale of the policy is not recognized until the variable consideration becomes determinable. The Company recognized $103 million of revenue related to such variable consideration in the first quarter of 2018, compared with $120 million in the first quarter of 2017. These amounts primarily relate to performance obligations satisfied in prior periods.

Insurance premiums consist of premium income from insurance policies which Citi has underwritten and sold to policyholders.

The following tables present Commissions and fees revenue:



	Three Months Ended March 31,
	2018
In millions of dollars	ICG			GCB			Corporate/Other			Total
Investment banking	$	822		$	—		$	—		$	822
Brokerage commissions	566			248			—			814
Credit- and bank-card income
Interchange fees	260			1,875			5			2,140
Card-related loan fees	14			155			6			175
Card rewards and partner payments	(124		)	(1,874		)	(5		)	(2,003		)
Deposit-related fees⁽¹⁾	236			183			1			420
Transactional service fees	190			21			2			213
Corporate finance⁽²⁾	142			1			—			143
Insurance distribution revenue⁽³⁾	5			143			5			153
Insurance premiums⁽³⁾	—			33			(1		)	32
Loan servicing	38			22			12			72
Other	15			32			2			49
Total commissions and fees⁽⁴⁾	$	2,164		$	839		$	27		$	3,030



	Three Months Ended March 31,
	2017
In millions of dollars	ICG			GCB			Corporate/Other			Total
Investment banking	$	904		$	—		$	—		$	904
Brokerage commissions	482			193			1			676
Credit- and bank-card income
Interchange fees	222			1,703			40			1,965
Card-related loan fees	12			167			16			195
Card rewards and partner payments	(103		)	(1,685		)	(27		)	(1,815		)
Deposit-related fees⁽¹⁾	208			185			4			397
Transactional service fees	174			27			24			225
Corporate finance⁽²⁾	184			1			—			185
Insurance distribution revenue⁽³⁾	2			144			25			171
Insurance premiums⁽³⁾	—			33			(1		)	32
Loan servicing	35			26			31			92
Other	(20		)	25			23			28
Total commissions and fees⁽⁴⁾	$	2,100		$	819		$	136		$	3,055


(1)	Includes $32 million and $33 million of overdraft fees in the first quarter of 2018 and the first quarter of 2017, respectively. Overdraft fees are accounted for under ASC 310.


(2)	Consists primarily of fees earned from structuring and underwriting loan syndications or related financing activity. This activity is accounted for under ASC 310.


(3)	Previously reported as insurance premiums on the Consolidated Statement of Income.

(4)

Commissions and fees includes $(1,545) million and $(1,278) million not accounted for under ASC 606, Revenue from Contracts with Customers, for the first quarters of 2018 and 2017, respectively. Amounts reported in Commissions and fees accounted for under other guidance primarily include card-related loan fees, card reward programs and certain partner payments, corporate finance fees, insurance premiums, and loan servicing fees.

Administration and Other Fiduciary Fees

Administration and other fiduciary fees are primarily composed of custody fees and fiduciary fees.

The custody product is composed of numerous services related to the administration, safekeeping and reporting for both U.S. and non-U.S. denominated securities. The services offered to clients include: trade settlement, safekeeping, income collection, corporate action notification, record-keeping and reporting, tax reporting, and cash management. These services are provided for a wide range of securities, including but not limited to equities, municipal and corporate bonds, mortgage and asset-backed securities, money market instruments, U.S. Treasuries and agencies, derivative instruments, mutual funds, alternative investments and precious metals. Custody fees are recognized as/when the associated promised service is satisfied, which normally occurs at the point in time the service is requested by the customer and provided by Citi.

Fiduciary fees consist of trust services and investment management services. As an escrow agent, Citi receives, safe-keeps, services and manages clients’ escrowed assets such as cash, securities, property (including intellectual property), contracts, or other collateral. Citi performs its escrow agent duties by safekeeping the funds during the specified time period agreed upon by all parties and therefore earns its revenue evenly during the contract duration.

Investment management services consist of managing assets on behalf of Citi’s retail and institutional clients. Revenue from these services primarily consists of asset-based fees for advisory accounts, which are based on the market value of the client’s assets and recognized monthly, when the market value is fixed. In some instances, the Company contracts with third-party advisors and to third-party custodians. The Company has determined that it acts as principal in the majority of these transactions and therefore presents the amounts paid to third parties gross within Other operating expenses.

The following table presents Administration and other fiduciary fees:



	Three Months Ended March 31,
	2018
In millions of dollars	ICG		GCB		Corp/Other		Total
Custody fees	$	368	$	47	$	16	$	431
Fiduciary fees	167		147		7		321
Guarantee fees	137		14		2		153
Total administration and other fiduciary fees⁽¹⁾	$	672	$	208	$	25	$	905



	Three Months Ended March 31,
	2017
In millions of dollars	ICG		GCB		Corp/Other		Total
Custody fees	$	355	$	38	$	13	$	406
Fiduciary fees	141		133		11		285
Guarantee fees	128		13		2		143
Total administration and other fiduciary fees⁽¹⁾	$	624	$	184	$	26	$	834


(1)	Administration and other fiduciary fees includes $153 million and $143 million for the first quarters of 2018 and 2017, respectively, that are not accounted for under ASC 606, Revenue from Contracts with Customers. These amounts include guarantee fees.