10-Q 1 a2205087z10-q.htm 10-Q

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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 June 30, 2011

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)

 

10043
(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 filero
(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 June 30, 2011: 2,917,949,115

Available on the web at www.citigroup.com

1



CITIGROUP INC.
SECOND QUARTER 2011—FORM 10-Q

OVERVIEW

    3  

CITIGROUP SEGMENTS AND REGIONS

   
4
 

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

   
5
 

EXECUTIVE SUMMARY

   
5
 

RESULTS OF OPERATIONS

   
7
 

SUMMARY OF SELECTED FINANCIAL DATA

   
7
 

SEGMENT, BUSINESS AND PRODUCT—INCOME (LOSS) AND REVENUES

   
9
 

CITICORP

   
11
 
 

Regional Consumer Banking

   
12
 
     

North America Regional Consumer Banking

   
13
 
     

EMEA Regional Consumer Banking

   
15
 
     

Latin America Regional Consumer Banking

   
17
 
     

Asia Regional Consumer Banking

   
19
 
 

Institutional Clients Group

   
21
 
     

Securities and Banking

   
22
 
     

Transaction Services

   
24
 

CITI HOLDINGS

   
26
 
 

Brokerage and Asset Management

   
27
 
 

Local Consumer Lending

   
28
 
 

Special Asset Pool

   
29
 

CORPORATE/OTHER

   
31
 

SEGMENT BALANCE SHEET AT JUNE 30, 2011

   
32
 

CAPITAL RESOURCES AND LIQUIDITY

   
33
 
   

Capital Resources

   
33
 
   

Funding and Liquidity

   
38
 

OFF-BALANCE-SHEET ARRANGEMENTS

   
43
 

MANAGING GLOBAL RISK

   
44
 
   

Credit Risk

   
44
 
       

Loans Outstanding

   
44
 
       

Details of Credit Loss Experience

   
45
 
       

Impaired Loans, Non-Accrual Loans and Assets, and Renegotiated Loans

   
46
 
       

North America Consumer Mortgage Lending

   
50
 
       

North America Cards

   
57
 
       

Consumer Loan Details

   
60
 
       

Consumer Loan Modification Programs

   
62
 
       

Consumer Mortgage Representations and Warranties

   
66
 
       

Securities and Banking-Sponsored Private Label Residential Mortgage Securitizations—Representations and Warranties

   
70
 
       

Corporate Loan Details

   
71
 
       

Exposure to Commercial Real Estate

   
73
 
   

Market Risk

   
74
 
   

Country and Cross-Border Risk

   
84
 

DERIVATIVES

   
87
 

INCOME TAXES

   
90
 

DISCLOSURE CONTROLS AND PROCEDURES

   
91
 

FORWARD-LOOKING STATEMENTS

   
91
 

FINANCIAL STATEMENTS AND NOTES—TABLE OF CONTENTS

   
94
 

CONSOLIDATED FINANCIAL STATEMENTS

   
95
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   
101
 

LEGAL PROCEEDINGS

   
207
 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

   
207
 

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OVERVIEW

Introduction

        Citigroup operates, for management reporting purposes, via two primary business segments: Citicorp, consisting of Citi's Regional Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of Citi's Brokerage and Asset Management and Local Consumer Lending businesses, and a Special Asset Pool. There is also a third segment, Corporate/Other. For a further description of the business segments and the products and services they provide, see "Citigroup Segments" below, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 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, 2010 (2010 Annual Report on Form 10-K) and Citigroup's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011. Additional information about Citigroup is available on the company's Web site at www.citigroup.com. Citigroup's recent annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, as well as its other filings with the SEC are available free of charge through the company's Web site by clicking on the "Investors" page and selecting "All SEC Filings." The SEC's Web site also contains periodic and current reports, proxy and information statements, and other information regarding Citi at www.sec.gov.

        Certain reclassifications have been made to the prior periods' financial statements to conform to the current period's presentation. All per share amounts and Citigroup shares outstanding for the second quarter of 2011 and all prior periods reflect Citigroup's 1-for-10 reverse stock split, which was effective May 6, 2011.

        Within this Form 10-Q, please refer to the tables of contents on pages 2 and 94 for page references to Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statements, respectively.

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

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

SECOND QUARTER 2011 EXECUTIVE SUMMARY

Citigroup

        Citigroup reported second quarter of 2011 net income of $3.3 billion, or $1.09 per diluted share. Citigroup's income increased by 24%, or $644 million, from the second quarter of 2010, as a significant decline in credit costs more than offset the impact of lower revenues and an increase in operating expenses as compared to the prior-year period.

        Citigroup revenues, net of interest expense, were $20.6 billion, down $1.4 billion, or 7%, from the second quarter of 2010 as growth in international Regional Consumer Banking and Transaction Services was more than offset by lower revenues in Citi Holdings, Securities and Banking and North America Regional Consumer Banking. Net interest revenues of $12.1 billion were 13% lower than the prior-year period, largely due to continued declining loan balances and lower interest-earnings assets in Citi Holdings. Non-interest revenues were $8.5 billion, up 4% from the prior-year period, principally driven by realized gains on asset sales in the Special Asset Pool in Citi Holdings, including $511 million of pre-tax gains realized in the second quarter of 2011 on the sale of assets transferred out of held-to-maturity in the first quarter of 2011.

Operating Expenses

        Citigroup expenses increased $1.1 billion, or 9%, year-over-year to $12.9 billion. Excluding the impact of the UK bonus tax of approximately $400 million in the second quarter of 2010, expenses increased by nearly $1.5 billion, or 13%, year-over-year. Approximately one-third of this 13% increase resulted from the impact of foreign exchange in the translation of local currency results into U.S. dollars (as used throughout this Form 10-Q, FX translation) and another one-third was related to higher legal and related costs. The remaining one-third was driven by the net impact of investment spending, which was partially offset by ongoing productivity savings.

        For the first half of 2011, Citigroup expenses were $25.3 billion, up $2.3 billion from the prior-year period, excluding the impact of the UK bonus tax in the second quarter of 2010. Nearly 70% of this increase, or approximately $1.6 billion, resulted from the impact of FX translation and higher legal and related costs in the first half of 2011, as compared to the first half of 2010. The remaining increase of roughly $700 million was primarily driven by investment spending, partially offset by continued productivity savings. The impact of FX translation and legal and related costs will likely continue to affect Citigroup's operating expenses in the second half of 2011 and will remain difficult to predict. Citi currently believes, however, that operating expenses will remain elevated for the remainder of 2011.

        Citicorp expenses of $10.1 billion in the second quarter of 2011 grew 10% from the second quarter of 2010. Excluding the UK bonus tax in the second quarter of 2010, expenses were up 14% year-over-year. Over a quarter of this 14% increase resulted from the impact of FX translation, and the remainder was primarily driven by investment spending as Citi continues to execute its strategy to increase revenues and operating income in its business units.

        Citi Holdings expenses were down 9% year-over-year to $2.2 billion, principally due to the continued decline in assets and thus lowered operating expenses, offset by an increase in legal and related costs.

Credit Costs

        Citigroup total provisions for credit losses and for benefits and claims of $3.4 billion declined $3.3 billion, or 49%, from the prior-year period. Net credit losses of $5.1 billion were down $2.8 billion, or 35%, from the second quarter of 2010. Consumer net credit losses declined $2.7 billion, or 36%, to $4.8 billion, driven by continued improvement in credit in North America Citi-branded cards in Citicorp, and retail partner cards and residential real estate lending in Citi Holdings. Corporate net credit losses decreased $123 million year-over-year to $349 million, due in part to lower volume of loan sales.

        The net release of allowance for loan losses and unfunded lending commitments was $2.0 billion in the second quarter of 2011, compared to a net release of $1.5 billion in the second quarter of 2010. More than half of the net credit reserve release in the second quarter of 2011, or $1.1 billion, was attributable to Citi Holdings. The $914 million net credit release in Citicorp was up from $665 million in the prior-year period and was due primarily to higher net releases in Citi-branded cards, partially offset by lower releases in international Regional Consumer Banking and the Corporate portfolio. Citi continues to expect international Regional Consumer Banking and Corporate credit costs in Citicorp to increase, reflecting growing loan portfolios.

        Of the $2.0 billion net reserve release in the second quarter of 2011, $1.5 billion related to Consumer and was mainly driven by North America Citi-branded cards and retail partner cards. The $456 million net Corporate reserve release reflected continued improvement in Corporate credit trends, partially offset by the growth in the Corporate loan portfolio. The release reflected lower expected loan losses inherent in the remaining loan portfolios.

Capital and Loan Loss Reserve Positions

        Citigroup's Tier 1 Capital ratio was 13.6% at quarter-end, and its Tier 1 Common ratio was 11.6%.

        Citigroup's total allowance for loan losses was $34.4 billion at quarter-end, or 5.35%, of total loans, down from $46.2 billion, or 6.72%, in 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 the loan portfolio.

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        The Consumer allowance for loan losses was $31.0 billion, or 7.01%, of total Consumer loans, at quarter-end, compared to $39.6 billion, or 7.87%, at June 30, 2010.

        Citigroup's non-accrual loans of $13.2 billion declined 47% from the prior-year period. At the end of the second quarter of 2011, the allowance for loan losses was 260% of non-accrual loans.

Citicorp

        Citicorp net income of $3.7 billion in the second quarter of 2011 declined 2% from the prior-year period. Year-over-year, revenues declined less than 1%, and lower net credit losses and a higher net loan loss reserve release more than offset an increase in operating expenses. Citicorp's international operations accounted for over 68% of second quarter 2011 net income from continuing operations.

        Citicorp revenues were $16.3 billion, down $141 million from the second quarter of 2010, driven by a positive credit valuation adjustment (CVA) of $147 million in the second quarter of 2011, compared to a positive CVA of $255 million in the prior-year period. Excluding CVA, Citicorp revenues were flat year-over-year, as growth in international Regional Consumer Banking and Transaction Services was offset by lower revenues in North America Regional Consumer Banking and Securities and Banking. Sequentially, Citicorp revenues, excluding CVA, were down 3% as growth in Regional Consumer Banking and Transaction Services was more than offset by lower revenues in Securities and Banking. Net interest revenues of $9.5 billion declined 1% from the prior-year period, and non-interest revenues were flat versus the prior year at $6.8 billion.

        Regional Consumer Banking revenues of $8.2 billion were 2% higher year-over-year, mostly due to continued growth in business volumes across international regions as well as the impact of FX translation. This growth was partly offset by lower credit card balances in North America, the impact of The Credit Card Accountability Responsibility and Disclosure Act (CARD Act), and continued spread compression in Asia and Latin America. Average retail banking loans increased 18% year-over-year to $129.0 billion, and average deposits increased 8% to $314.5 billion, both driven by Asia and Latin America. Citi-branded cards average loans increased 1% year-over-year to $110.1 billion, as growth in Asia and Latin America was offset by lower balances in North America. Cards purchase sales grew 12% from the prior-year period to $71.3 billion, and international investment sales increased 5% to $24.5 billion.

        Securities and Banking revenues of $5.5 billion declined 8% year-over-year, driven principally by lower revenues in fixed income markets. Sequentially, revenues declined 9%, driven by lower revenues in fixed income and equity markets, partially offset by a strong quarter in investment banking. Excluding CVA, revenues of $5.3 billion were down 7% from the prior-year period and down 15% sequentially. Fixed income markets revenues of $2.9 billion, excluding CVA, decreased 16% year-over-year, largely due to lower revenues in G10 rates and currencies, partially offset by growth in emerging markets, and 27% sequentially, driven by credit-related and securitized products. Equity markets revenues of $776 million, excluding CVA, were 25% higher year-over-year, mainly driven by derivatives, but down 30% sequentially, mainly due to lower market volumes and a challenging trading environment as compared to the first quarter of 2011, particularly in derivatives. Investment banking revenues were $1.1 billion, up 61% from the prior-year period and 27% sequentially, reflecting increased activity in both advisory and underwriting activities.

        Transaction Services revenues were $2.7 billion, up 6% from the prior-year period, driven by growth in Treasury and Trade Solutions as well as Securities and Fund Services. Revenues grew year-over-year in all international regions, as strong growth in business volumes was partially offset by continued spread compression. Average deposits and other customer liabilities grew 14% year-over-year to $365 billion, while assets under custody grew 19% to $13.5 trillion.

        Citicorp end of period loans increased 16% year-over-year to $440 billion, with 11% growth in Consumer loans and 22% growth in Corporate loans.

Citi Holdings

        Citi Holdings net loss of $218 million in the second quarter of 2011 was 82% less than the net loss of $1.2 billion in the second quarter of 2010, as lower operating expenses, a continued improvement in net credit losses and a higher net loan loss reserve release offset lower revenues.

        Citi Holdings revenues declined 18% to $4.0 billion from the prior-year period. Net interest revenues declined 33% year-over-year to $2.7 billion, largely driven by declining loan balances in Local Consumer Lending and lower interest-earning assets in the Special Asset Pool. Non-interest revenues increased 43% to $1.4 billion from the prior-year period, mostly reflecting the $511 million of pre-tax gains realized in the second quarter of 2011 on the sale of assets transferred out of held-to-maturity in the first quarter of 2011.

        Citi Holdings assets declined 34% from the second quarter of 2010 to $308 billion at the end of the second quarter of 2011. The decline reflected $108 billion in asset sales and business dispositions (including the sale of the previously-disclosed $12.7 billion of assets transferred out of held-to-maturity in the Special Asset Pool in the first quarter of 2011), $42 billion in net run-off and amortization, and $7 billion in net cost of credit and net asset marks. Local Consumer Lending continues to represent the largest segment within Citi Holdings, with $228 billion of assets at the end of the second quarter of 2011. Over half of Local Consumer Lending assets, or approximately $119 billion, were related to North America real estate lending. As of the end of the second quarter of 2011, there were approximately $10 billion of loan loss reserves allocated to North America real estate lending in Citi Holdings, representing over 27 months of coincident net credit loss coverage. At the end of the second quarter of 2011, Citi Holdings assets comprised approximately 16% of total Citigroup GAAP assets and 28% of risk-weighted assets.

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RESULTS OF OPERATIONS

SUMMARY OF SELECTED FINANCIAL DATA

Citigroup Inc. and Consolidated Subsidiaries

 
  Second Quarter    
  Six Months Ended    
 
In millions of dollars, except per-share amounts, ratios and direct staff    
   
 
  2011   2010   % Change   2011   2010   % Change  

Net interest revenue

  $ 12,148   $ 13,927     (13 )% $ 24,250   $ 28,368     (15 )%

Non-interest revenue

    8,474     8,144     4     16,098     19,124     (16 )
                           

Revenues, net of interest expense

  $ 20,622   $ 22,071     (7 )% $ 40,348   $ 47,492     (15 )%

Operating expenses

    12,936     11,866     9     25,262     23,384     8  

Provisions for credit losses and for benefits and claims

    3,387     6,665     (49 )   6,571     15,283     (57 )
                           

Income from continuing operations before income taxes

  $ 4,299   $ 3,540     21 % $ 8,515   $ 8,825     (4 )%

Income taxes

    967     812     19     2,152     1,848     16  
                           

Income from continuing operations

  $ 3,332   $ 2,728     22 % $ 6,363   $ 6,977     (9 )%

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

    71     (3 )   NM     111     208     (47 )
                           

Net income before attribution of noncontrolling interests

  $ 3,403   $ 2,725     25 % $ 6,474   $ 7,185     (10 )%

Net income attributable to noncontrolling interests

    62     28     NM     134     60     NM  
                           

Citigroup's net income

  $ 3,341   $ 2,697     24 % $ 6,340   $ 7,125     (11 )%
                           

Less: Preferred dividends–Basic

  $ 9   $     NM   $ 13   $     NM  

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

    62     26     NM     96     57     68 %
                           

Income allocated to unrestricted common shareholders for basic EPS

  $ 3,270   $ 2,671     22 % $ 6,231   $ 7,068     (12 )%

Add: Incremental dividends and undistributed earnings allocated to employee restricted and deferred shares that contain nonforfeitable rights to dividends, applicable to Diluted EPS

    6     1     NM     7     2     NM  
                           

Income allocated to unrestricted common shareholders for diluted EPS

  $ 3,276   $ 2,672     23 % $ 6,238   $ 7,070     (12 )%

Earnings per share(2)

                                     

Basic

                                     

Income from continuing operations

  $ 1.10   $ 0.93     18 % $ 2.11   $ 2.40     (12 )%

Net income

    1.12     0.93     20     2.14     2.47     (13 )
                           

Diluted

                                     

Income from continuing operations

  $ 1.07   $ 0.90     19 % $ 2.05   $ 2.32     (12 )%

Net income

    1.09     0.90     21     2.08     2.39     (13 )
                           

At June 30:

                                     

Total assets

  $ 1,956,626   $ 1,937,656     1 %                  

Total deposits

    866,310     813,951     6                    

Long-term debt

    352,458     413,297     (15 )                  

Mandatorily redeemable securities of subsidiary trusts (included in long-term debt)

    16,077     20,218     (20 )                  

Common stockholders' equity

    176,052     154,494     14                    

Total stockholders' equity

    176,364     154,806     14                    

Direct staff (in thousands)

    263     259     2                    
                           

Ratios:

                                     

Return on average common stockholders' equity(3)

    7.7 %   7.0 %         7.5 %   9.5 %      

Return on average total stockholders' equity(3)

    7.7     7.0           7.5     9.5        
                           

Tier 1 Common(4)

    11.62 %   9.71 %                        

Tier 1 Capital

    13.55     11.99                          

Total Capital

    17.18     15.59                          

Leverage(5)

    7.05     6.31                          
                           

Common stockholders' equity to assets

    9.00 %   7.97 %                        

Total stockholders' equity to assets

    9.01     7.99                          

Book value per common share(2)

  $ 60.34   $ 53.32                          

Tangible book value per share(2)(6)

    48.75     41.86                          

Ratio of earnings to fixed charges and preferred stock dividends

    1.65     1.54           1.67     1.68        
                           

(1)
Discontinued operations primarily reflects the sale of Nikko Cordial Securities, the sale of Citigroup's German retail banking operations, the sale of CitiCapital's equipment finance unit to General Electric, and the sale of the Egg Banking PLC credit card business. See Note 2 to the Consolidated Financial Statements.

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(2)
All per share amounts and Citigroup shares outstanding for all periods reflect Citigroup's 1-for-10 reverse stock split, which was effective May 6, 2011.

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

(4)
As defined by the banking regulators, the Tier 1 Common ratio represents Tier 1 Capital less qualifying perpetual preferred stock, qualifying noncontrolling interests in subsidiaries and qualifying mandatorily redeemable securities of subsidiary trusts divided by risk-weighted assets.

(5)
The Leverage ratio represents Tier 1 Capital divided by adjusted average total assets.

(6)
Tangible book value per share is a non-GAAP financial measure for SEC purposes. For additional information and a reconciliation of this measure to the most directly comparable GAAP measure, see "Capital Resources and Liquidity—Capital Resources—Tangible Common Equity and Tangible Book Value Per Share" below.

NM Not meaningful

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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 (LOSS)

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010(1)   % Change   2011   2010(1)   % Change  

Income (loss) from continuing operations

                                     

CITICORP

                                     

Regional Consumer Banking

                                     
 

North America

  $ 684   $ 52     NM   $ 1,235   $ 67     NM  
 

EMEA

    29     48     (40 )%   78     72     8 %
 

Latin America

    412     473     (13 )   896     840     7  
 

Asia

    484     566     (14 )   945     1,133     (17 )
                           
   

Total

  $ 1,609   $ 1,139     41 % $ 3,154   $ 2,112     49  
                           

Securities and Banking

                                     
 

North America

  $ 339   $ 816     (58 )% $ 797   $ 2,238     (64 )%
 

EMEA

    343     355     (3 )   1,108     1,376     (19 )
 

Latin America

    292     200     46     564     469     20  
 

Asia

    212     301     (30 )   422     770     (45 )
                           
   

Total

  $ 1,186   $ 1,672     (29 )% $ 2,891   $ 4,853     (40 )%
                           

Transaction Services

                                     
 

North America

  $ 137   $ 158     (13 )% $ 250   $ 319     (22 )%
 

EMEA

    289     320     (10 )   567     623     (9 )
 

Latin America

    157     154     2     327     306     7  
 

Asia

    290     296     (2 )   574     615     (7 )
                           
   

Total

  $ 873   $ 928     (6 )% $ 1,718   $ 1,863     (8 )%
                           
 

Institutional Clients Group

  $ 2,059   $ 2,600     (21 )% $ 4,609   $ 6,716     (31 )%
                           

Total Citicorp

  $ 3,668   $ 3,739     (2 )% $ 7,763   $ 8,828     (12 )%
                           

CITI HOLDINGS

                                     
 

Brokerage and Asset Management

  $ (100 ) $ (94 )   (6 )% $ (110 ) $ (18 )   NM  
 

Local Consumer Lending

    (746 )   (1,226 )   39     (1,345 )   (3,055 )   56 %
 

Special Asset Pool

    678     116     NM     740     994     (26 )
                           

Total Citi Holdings

  $ (168 ) $ (1,204 )   86 % $ (715 ) $ (2,079 )   66 %
                           

Corporate/Other

  $ (168 ) $ 193     NM   $ (685 ) $ 228     NM  
                           

Income from continuing operations

  $ 3,332   $ 2,728     22 % $ 6,363   $ 6,977     (9 )%
                           

Income loss (from) discontinued operations

  $ 71   $ (3 )       $ 111   $ 208        

Net income attributable to noncontrolling interests

    62     28           134     60        
                           

Citigroup's net income

  $ 3,341   $ 2,697     24 % $ 6,340   $ 7,125     (11 )%
                           

(1)
The prior period balances reflect reclassifications to conform the presentation in those periods to the current period's presentation. These reclassifications related to Citi's re-allocation of certain expenses between businesses and segments.

NM Not meaningful

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CITIGROUP REVENUES

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

CITICORP

                                     

Regional Consumer Banking

                                     
 

North America

  $ 3,366   $ 3,693     (9 )% $ 6,700   $ 7,494     (11 )%
 

EMEA

    391     376     4     789     781     1  
 

Latin America

    2,426     2,118     15     4,735     4,194     13  
 

Asia

    2,031     1,845     10     3,932     3,645     8  
                           
   

Total

  $ 8,214   $ 8,032     2 % $ 16,156   $ 16,114     %
                           

Securities and Banking

                                     
 

North America

  $ 2,125   $ 2,627     (19 )% $ 4,453   $ 6,180     (28 )%
 

EMEA

    1,640     1,762     (7 )   3,699     4,277     (14 )
 

Latin America

    675     558     21     1,257     1,165     8  
 

Asia

    1,031     1,008     2     2,074     2,336     (11 )
                           
   

Total

  $ 5,471   $ 5,955     (8 )% $ 11,483   $ 13,958     (18 )%
                           

Transaction Services

                                     
 

North America

  $ 609   $ 636     (4 )% $ 1,219   $ 1,275     (4 )%
 

EMEA

    898     848     6     1,734     1,681     3  
 

Latin America

    428     356     20     836     700     19  
 

Asia

    728     662     10     1,424     1,283     11  
                           
   

Total

  $ 2,663   $ 2,502     6 % $ 5,213   $ 4,939     6 %
                           
 

Institutional Clients Group

  $ 8,134   $ 8,457     (4 )% $ 16,696   $ 18,897     (12 )%
                           
   

Total Citicorp

  $ 16,348   $ 16,489     (1 )% $ 32,852   $ 35,011     (6 )%
                           

CITI HOLDINGS

                                     

Brokerage and Asset Management

  $ 47   $ 141     (67 )% $ 184   $ 481     (62 )%

Local Consumer Lending

    2,949     4,206     (30 )   6,102     8,876     (31 )

Special Asset Pool

    1,015     572     77     1,008     2,112     (52 )
                           

Total Citi Holdings

  $ 4,011   $ 4,919     (18 ) $ 7,294   $ 11,469     (36 )%
                           

Corporate/Other

  $ 263   $ 663     (60 )% $ 202   $ 1,012     (80 )%
                           

Total net revenues

  $ 20,622   $ 22,071     (7 )% $ 40,348   $ 47,492     (15 )%
                           

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CITICORP

        Citicorp is the Company'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. 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 large multinational clients and for meeting the needs of retail, private banking, commercial, public sector and institutional clients around the world. Citigroup's global footprint provides coverage of the world's emerging economies, which Citi believes represent a strong area of growth. At June 30, 2011, Citicorp had approximately $1.4 trillion of assets and $788 billion of deposits, representing approximately 71% of Citi's total assets and approximately 91% of its deposits.

        Citicorp consists of the following businesses: Regional Consumer Banking (which includes retail banking and Citi-branded cards in four regions—North America, EMEA, Latin America and Asia) and Institutional Clients Group (which includes Securities and Banking and Transaction Services).

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  
 

Net interest revenue

  $ 9,546   $ 9,680     (1 )% $ 19,007   $ 19,480     (2 )%
 

Non-interest revenue

    6,802     6,809         13,845     15,531     (11 )
                           

Total revenues, net of interest expense

  $ 16,348   $ 16,489     (1 )% $ 32,852   $ 35,011     (6 )%
                           

Provisions for credit losses and for benefits and claims

                                     
 

Net credit losses

  $ 2,153   $ 2,965     (27 )% $ 4,471   $ 6,107     (27 )%
 

Credit reserve build (release)

    (909 )   (639 )   (42 )   (2,167 )   (999 )   NM  
                           
 

Provision for loan losses

  $ 1,244   $ 2,326     (47 )% $ 2,304   $ 5,108     (55 )%
 

Provision for benefits and claims

    26     27     (4 )   70     71     (1 )
 

Provision for unfunded lending commitments

    (5 )   (26 )   81     (1 )   (33 )   97  
                           
   

Total provisions for credit losses and for benefits and claims

  $ 1,265   $ 2,327     (46 )% $ 2,373   $ 5,146     (54 )%
                           

Total operating expenses

  $ 10,062   $ 9,176     10 % $ 19,663   $ 17,771     11 %
                           

Income from continuing operations before taxes

  $ 5,021   $ 4,986     1 % $ 10,816   $ 12,094     (11 )%

Provisions for income taxes

    1,353     1,247     9     3,053     3,266     (7 )
                           

Income from continuing operations

  $ 3,668   $ 3,739     (2 )% $ 7,763   $ 8,828     (12 )%

Net income attributable to noncontrolling interests

    12     20     (40 )   23     41     (44 )
                           

Citicorp's net income

  $ 3,656   $ 3,719     (2 ) $ 7,740   $ 8,787     (12 )%
                           

Balance sheet data (in billions of dollars)

                                     

Total EOP assets

  $ 1,380   $ 1,211     14 %                  

EOP Loans:

                                     
 

Consumer

    244     219     11                    
 

Corporate

    197     161     22                    

Average assets

    1,381     1,250     10   $ 1,352   $ 1,242     9 %

Total EOP deposits

    788     719     10                    
                           

NM Not meaningful

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REGIONAL CONSUMER BANKING

        Regional Consumer Banking (RCB) consists of Citigroup's four RCB businesses that provide traditional banking services to retail customers. RCB also contains Citigroup's branded cards business and Citi's local commercial banking business. RCB is a globally diversified business with over 4,200 branches in 39 countries around the world. At June 30, 2011, RCB had $344 billion of assets and $316 billion of deposits.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Net interest revenue

  $ 5,815   $ 5,774     1 % $ 11,566   $ 11,691     (1 )%

Non-interest revenue

    2,399     2,258     6     4,590     4,423     4  
                           

Total revenues, net of interest expense

  $ 8,214   $ 8,032     2 % $ 16,156   $ 16,114     %
                           

Total operating expenses

  $ 4,774   $ 4,039     18 % $ 9,256   $ 8,037     15 %
                           
 

Net credit losses

  $ 2,002   $ 2,922     (31 )% $ 4,110   $ 5,962     (31 )%
 

Credit reserve build (release)

    (850 )   (408 )   NM     (1,712 )   (588 )   NM  
 

Provisions for unfunded lending commitments

    3     (4 )   NM     3     (4 )   NM  
 

Provision for benefits and claims

    26     27     (4 )   70     71     (1 )
                           

Provisions for credit losses and for benefits and claims

  $ 1,181   $ 2,537     (53 )% $ 2,471   $ 5,441     (55 )%
                           

Income from continuing operations before taxes

  $ 2,259   $ 1,456     55 % $ 4,429   $ 2,636     68 %

Income taxes

    650     317     NM     1,275     524     NM  
                           

Income from continuing operations

  $ 1,609   $ 1,139     41 % $ 3,154   $ 2,112     49 %

Net income (loss) attributable to noncontrolling interests

    3             1     (5 )   NM  
                           

Net income

  $ 1,606   $ 1,139     41 % $ 3,153   $ 2,117     49 %
                           

Average assets (in billions of dollars)

  $ 339   $ 306     11 % $ 333   $ 307     8 %

Return on assets

    1.90 %   1.49 %         1.91 %   1.39 %      

Total EOP assets (in billions of dollars)

  $ 344   $ 309     11                    

Average deposits (in billions of dollars)

    315     291     8     311     290     7  
                           

Net credit losses as a percentage of average loans

    3.36 %   5.38 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 4,120   $ 3,916     5 % $ 8,027   $ 7,730     4 %
 

Citi-branded cards

    4,094     4,116     (1 )   8,129     8,384     (3 )
                           
   

Total

  $ 8,214   $ 8,032     2 % $ 16,156   $ 16,114     %
                           

Income from continuing operations by business

                                     
 

Retail banking

  $ 641   $ 843     (24 )% $ 1,322   $ 1,642     (19 )%
 

Citi-branded cards

    968     296     NM     1,832     470     NM  
                           
   

Total

  $ 1,609   $ 1,139     41 % $ 3,154   $ 2,112     49 %
                           

NM
Not meaningful

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NORTH AMERICA REGIONAL CONSUMER BANKING

        North America Regional Consumer Banking (NA RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses in the U.S. NA RCB's approximate 1,000 retail bank branches and 12.9 million retail customer accounts are largely concentrated in the greater metropolitan areas of New York, Los Angeles, San Francisco, Chicago, Miami, Washington, D.C., Boston, Philadelphia and certain larger cities in Texas. At June 30, 2011, NA RCB had $34.5 billion of retail banking and residential real estate loans and $144.4 billion of average deposits. In addition, NA RCB had 21.2 million Citi-branded credit card accounts, with $73.7 billion in outstanding card loan balances.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Net interest revenue

  $ 2,589   $ 2,778     (7 )% $ 5,212   $ 5,732     (9 )%

Non-interest revenue

    777     915     (15 )   1,488     1,762     (16 )
                           

Total revenues, net of interest expense

  $ 3,366   $ 3,693     (9 )% $ 6,700   $ 7,494     (11 )%
                           

Total operating expenses

  $ 1,773   $ 1,513     17 % $ 3,462   $ 3,134     10 %
                           
 

Net credit losses

  $ 1,305   $ 2,126     (39 )% $ 2,745   $ 4,283     (36 )%
 

Credit reserve build (release)

    (757 )   (9 )   NM     (1,406 )   (5 )   NM  
 

Provisions for benefits and claims

    4     5     (20 )   10     13     (23 )
                           

Provisions for loan losses and for benefits and claims

  $ 552   $ 2,122     (74 )% $ 1,349   $ 4,291     (69 )%
                           

Income from continuing operations before taxes

  $ 1,041   $ 58     NM   $ 1,889   $ 69     NM  

Income taxes (benefits)

    357     6     NM     654     2     NM  
                           

Income from continuing operations

  $ 684   $ 52     NM   $ 1,235   $ 67     NM  

Net income attributable to noncontrolling interests

                         
                           

Net income

  $ 684   $ 52     NM   $ 1,235   $ 67     NM  
                           

Average assets (in billions of dollars)

  $ 120   $ 117     3 % $ 120   $ 119     1 %

Average deposits (in billions of dollars)

    144     146     (1 )   144     145     (1 )
                           

Net credit losses as a percentage of average loans

    4.94 %   7.98 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 1,249   $ 1,323     (6 )% $ 2,436   $ 2,603     (6 )%
 

Citi-branded cards

    2,117     2,370     (11 )   4,264     4,891     (13 )
                           
   

Total

  $ 3,366   $ 3,693     (9 )% $ 6,700   $ 7,494     (11 )%
                           

Income (loss) from continuing operations by business

                                     
 

Retail banking

  $ 100   $ 206     (51 )% $ 191   $ 371     (49 )%
 

Citi-branded cards

    584     (154 )   NM     1,044     (304 )   NM  
                           
   

Total

  $ 684   $ 52     NM   $ 1,235   $ 67     NM  
                           

NM
Not meaningful

2Q11 vs. 2Q10

        Revenues, net of interest expense decreased 9% to $3.4 billion, mainly due to lower volumes in branded cards and the net impact of the CARD Act on cards revenues, as well as lower mortgage-related revenues.

        Net interest revenue was down 7% to $2.6 billion, driven primarily by lower volumes in cards, with average loans down 5% from the prior-year period. In addition, cards net interest revenue was negatively impacted by the CARD Act.

        Non-interest revenue decreased 15% to $777 million from the prior-year period, mainly due to lower gains from mortgage loan sales and lower net mortgage servicing revenues.

        Operating expenses increased 17% to $1.8 billion from the prior-year period, primarily driven by higher investment spending, particularly in marketing and technology.

        Provisions for loan losses and for benefits and claims decreased 74% to $552 million, primarily due to lower net credit losses in Citi-branded cards and a net loan loss reserve release of $757 million in the current quarter, which also was a primary driver of the increase in net income year-over-year. Cards net credit losses were down $819 million, or 40%, from the prior-year period, and the net credit loss ratio decreased 397 basis points to 6.80%.

2Q11 YTD vs. 2Q10 YTD

        Revenues, net of interest expense decreased 11% to $6.7 billion, mainly due to lower volumes in branded cards and the net impact of the CARD Act on cards revenues, as well as lower mortgage-related revenues.

        Net interest revenue was down 9% to $5.2 billion, driven primarily by lower volumes in cards, with average loans down 6% from the first half of 2010. In addition, cards net interest revenue was negatively impacted by the CARD Act.

        Non-interest revenue decreased 16% to $1.5 billion from the prior-year period, mainly due to lower gains from mortgage loan sales and lower net mortgage servicing revenues.

        Operating expenses increased 10% to $3.5 billion from the prior-year period, primarily driven by higher investment spending, particularly in marketing and technology.

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        Provisions for loan losses and for benefits and claims decreased 69% to $1.3 billion, primarily due to a net loan loss reserve release of $1.4 billion in the current year-to-date period, which also drove the increase in net income year-over-year, and lower net credit losses in the Citi-branded cards portfolio. Cards net credit losses were down $1.6 billion, or 38%, from the prior year-to-date period, and the net credit loss ratio decreased 362 basis points to 7.11%.

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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. Remaining retail banking and cards activities in Western Europe are included in Citi Holdings. The countries in which EMEA RCB has the largest presence are Poland, Turkey, Russia and the United Arab Emirates. At June 30, 2011, EMEA RCB had 296 retail bank branches with 3.6 million customer accounts, $4.9 billion in retail banking loans and $9.9 billion in average deposits. In addition, the business had 2.5 million Citi-branded card accounts with $3.0 billion in outstanding card loan balances.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Net interest revenue

  $ 235   $ 230     2 % $ 463   $ 478     (3 )%

Non-interest revenue

    156     146     7     326     303     8  
                           

Total revenues, net of interest expense

  $ 391   $ 376     4 % $ 789   $ 781     1 %
                           

Total operating expenses

  $ 340   $ 270     26 % $ 648   $ 552     17 %
                           
 

Net credit losses

  $ 47   $ 85     (45 )% $ 96   $ 182     (47 )%
 

Credit reserve build (release)

    (55 )   (46 )   (20 )   (88 )   (56 )   (57 )
 

Provision for unfunded lending commitments

    3     (4 )   NM     3     (4 )   NM  
                           

Provisions for loan losses

  $ (5 ) $ 35     NM   $ 11   $ 122     (91 )%
                           

Income from continuing operations before taxes

  $ 56   $ 71     (21 )% $ 130   $ 107     21 %

Income taxes

    27     23     17     52     35     49  
                           

Income from continuing operations

  $ 29   $ 48     (40 )% $ 78   $ 72     8 %

Net income attributable to noncontrolling interests

    2             2          
                           

Net income

  $ 27   $ 48     (44 )% $ 76   $ 72     6 %
                           

Average assets (in billions of dollars)

  $ 11   $ 10     10 % $ 11   $ 10     10 %

Return on assets

    0.98 %   1.93 %         1.39 %   1.45 %      

Average deposits (in billions of dollars)

  $ 10   $ 9     11     10     9     11  
                           

Net credit losses as a percentage of average loans

    2.45 %   4.74 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 215   $ 205     5 % $ 434   $ 427     2 %
 

Citi-branded cards

    176     171     3     355     354      
                           
   

Total

  $ 391   $ 376     4 % $ 789   $ 781     1 %
                           

Income (loss) from continuing operations by business

                                     
 

Retail banking

  $ (16 ) $ 6     NM   $ (12 ) $ (3 )   NM  
 

Citi-branded cards

    45     42     7 %   90     75     20 %
                           
   

Total

  $ 29   $ 48     (40 )% $ 78   $ 72     8 %
                           

NM
Not meaningful

2Q11 vs. 2Q10

        Revenues, net of interest expense increased 4% to $391 million from the prior-year period due to improved underlying revenue and the impact of FX translation, offset by lower lending revenues on the continued liquidation of non-strategic customer portfolios and lower contributions from an equity investment in Turkey.

        Net interest revenue was $235 million, or 2% higher than the prior-year period, due to improved underlying revenue and 11% growth in average deposit balances, offset by the continued decline in the non-strategic portfolios and spread compression in the cards portfolio.

        Non-interest revenue increased by 7% to $156 million, reflecting higher investment sales and cards fees, offset by lower contributions from an equity investment in Turkey. Investment sales grew 43% year-over-year and assets under management grew 32%.

        Operating expenses increased 26% to $340 million, reflecting continued account acquisition-focused investment spending, expansion of the sales force, higher transactional expenses and the impact of FX translation.

        Provisions for loan losses and for benefits and claims was a benefit of $5 million in the second quarter of 2011, compared to a loss of $35 million in the second quarter of 2010. Net credit losses decreased 45% to $47 million, while the loan loss reserve release, including the provision for unfunded lending commitments, increased 4% to $52 million, reflecting the ongoing improvement in credit quality during the period.

2Q11 YTD vs. 2Q10 YTD

        Revenues, net of interest expense of $789 million increased 1% from the prior year-to-date period due to improved underlying revenue and the impact of FX translation, offset by lower lending revenues on the continued liquidation of non-strategic portfolios, unrest in the Middle East markets in the first quarter of 2011 and lower contributions from an equity investment in Turkey.

        Net interest revenue was $463 million, or 3% lower than the prior year-to-date period due to the continued decline in the non-strategic portfolio, Middle East unrest and spread compression in the cards portfolio.

        Non-interest revenue increased by 8% to $326 million, reflecting higher investment sales and cards fees offset by lower contributions from an equity investment in Turkey.

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Investment sales grew 43% from the prior year-to-date period, and assets under management grew 32%.

        Operating expenses increased 17% to $648 million, reflecting account acquisition-focused investment spending, expansion of the sales force, higher transactional expenses and the impact of FX translation.

        Provisions for loan losses and for benefits and claims was lower by $111 million, or 91%, as compared to the prior year-to-date period. Net credit losses decreased 47% to $96 million, while the loan loss reserve release, including the provision for unfunded lending commitments, increased 42% to $85 million, reflecting the ongoing improvement in credit quality during the period.

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LATIN AMERICA REGIONAL CONSUMER BANKING

        Latin America Regional Consumer Banking (LATAM RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, with the largest presence in Mexico and Brazil. LATAM RCB includes branch networks throughout Latin America as well as Banco Nacional de Mexico, or Banamex, Mexico's second largest bank, with over 1,700 branches. At June 30, 2011, LATAM RCB had 2,210 retail branches, with 26.9 million customer accounts, $25.5 billion in retail banking loan balances and $48.3 billion in average deposits. In addition, the business had 13.0 million Citi-branded card accounts with $14.2 billion in outstanding loan balances.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Net interest revenue

  $ 1,639   $ 1,471     11 % $ 3,213   $ 2,929     10 %

Non-interest revenue

    787     647     22     1,522     1,265     20  
                           

Total revenues, net of interest expense

  $ 2,426   $ 2,118     15 % $ 4,735   $ 4,194     13 %
                           

Total operating expenses

  $ 1,493   $ 1,294     15 % $ 2,858   $ 2,469     16 %
                           
 

Net credit losses

  $ 425   $ 457     (7 )% $ 832   $ 966     (14 )%
 

Credit reserve build (release)

    (23 )   (241 )   90     (169 )   (377 )   55  
 

Provision for benefits and claims

    22     22         60     58     3  
                           

Provisions for loan losses and for benefits and claims

  $ 424   $ 238     78 % $ 723   $ 647     12 %
                           

Income from continuing operations before taxes

  $ 509   $ 586     (13 )% $ 1,154   $ 1,078     7 %

Income taxes

    97     113     (14 )   258     238     8  
                           

Income from continuing operations

  $ 412   $ 473     (13 )% $ 896   $ 840     7 %

Net income (loss) attributable to noncontrolling interests

    1             (1 )   (5 )   80  
                           

Net income

  $ 411   $ 473     (13 )% $ 897   $ 845     6 %
                           

Average assets (in billions of dollars)

  $ 85   $ 74     15 % $ 82   $ 73     12 %

Return on assets

    1.94 %   2.56 %         2.21 %   2.33 %      

Average deposits (in billions of dollars)

  $ 48   $ 40     21     17     40     18  
                           

Net credit losses as a percentage of average loans

    4.39 %   5.84 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 1,416   $ 1,236     15 % $ 2,764   $ 2,432     14 %
 

Citi-branded cards

    1,010     882     15     1,971     1,762     12  
                           
   

Total

  $ 2,426   $ 2,118     15 % $ 4,735   $ 4,194     13 %
                           

Income from continuing operations by business

                                     
 

Retail banking

  $ 252   $ 257     (2 )% $ 557   $ 491     13 %
 

Citi-branded cards

    160     216     (26 )   339     349     (3 )
                           
   

Total

  $ 412   $ 473     (13 )% $ 896   $ 840     7 %
                           

2Q11 vs. 2Q10

        Revenues, net of interest expense, increased 15% to $2.4 billion, mainly due to higher loans and deposits as well as the impact of FX translation, partially offset by spread compression in retail banking.

        Net interest revenue increased 11% to $1.6 billion due to loan growth in retail banking and cards as well as deposit growth and the impact of FX translation, partially offset by spread compression in retail banking.

        Non-interest revenue increased 22% to $787 million, primarily due to higher fees in cards resulting from an increase in purchase sales, higher fees and commissions in insurance and retirement services and the impact of FX translation.

        Operating expenses increased 15% to $1.5 billion due to the impact of FX translation, higher business volumes and higher marketing investments.

        Provisions for loan losses and for benefits and claims increased 78% to $424 million, mainly due to the absence of a prior-year period loan loss reserve release of $241 million, compared to a $23 million release in the current quarter, partially offset by a 7% decline in net credit losses, reflecting continued improved credit conditions, particularly in Mexico cards. The cards net credit loss ratio declined across the region year-over-year, from 12.1% to 8.8%, reflecting continued portfolio improvement. The retail banking net credit loss ratio remained fairly consistent year-over-year, reflecting more stable credit conditions.

2Q11 YTD vs. 2Q10 YTD

        Revenues, net of interest expense, increased 13% to $4.7 billion, mainly due to higher lending and deposit volumes in retail banking, higher lending volumes and higher purchase sales in cards and the impact of FX translation.

        Net interest revenue increased 10% to $3.2 billion, driven by higher lending and higher deposit volumes in retail banking, higher loan volume in cards and the impact of FX translation.

        Non-interest revenue increased 20% to $1.5 billion, mainly due to higher fees in the cards business driven by an increase in purchase sales and higher fees and commissions in insurance and retirement services, as well as the impact of FX translation.

        Operating expenses increased 16% to $2.9 billion, driven by the impact of FX translation, incremental business volumes driven by incremental accounts, loans and new branches and higher marketing and investment initiatives.

        Provisions for loan losses and for benefits and claims increased 12% to $723 million, mainly due to lower loan loss reserve releases of $169 million partly offset by a decline in net credit losses of $134 million. The decline in net credit

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losses was driven primarily by cards due to continued improving credit conditions, notably in Mexico. The increase in net credit losses in retail banking primarily reflected portfolio growth.

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ASIA REGIONAL CONSUMER BANKING

        Asia Regional Consumer Banking (Asia RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, with the largest Citi presence in South Korea, Japan, Taiwan, Singapore, Australia, Hong Kong, India and Indonesia. At June 30, 2011, Asia RCB had 699 retail branches, 16.3 million retail banking accounts, $111.9 billion in average customer deposits and $66.7 billion in retail banking loans. In addition, the business had 15.6 million Citi-branded card accounts with $21.0 billion in outstanding loan balances.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Net interest revenue

  $ 1,352   $ 1,295     4 % $ 2,678   $ 2,552     5 %

Non-interest revenue

    679     550     23     1,254     1,093     15  
                           

Total revenues, net of interest expense

  $ 2,031   $ 1,845     10 % $ 3,932   $ 3,645     8 %
                           

Total operating expenses

  $ 1,168   $ 962     21 % $ 2,288   $ 1,882     22 %
                           
 

Net credit losses

  $ 225   $ 254     (11 )% $ 437   $ 531     (18 )%
 

Credit reserve build (release)

    (15 )   (112 )   87     (49 )   (150 )   67  
                           

Provisions for loan losses and for benefits and claims

  $ 210   $ 142     48 % $ 388   $ 381     2 %
                           

Income from continuing operations before taxes

  $ 653   $ 741     (12 )% $ 1,256   $ 1,382     (9 )%

Income taxes

    169     175     (3 )   311     249     25  
                           

Income from continuing operations

  $ 484   $ 566     (14 )% $ 945   $ 1,133     (17 )%

Net income attributable to noncontrolling interests

                         
                           

Net income

  $ 484   $ 566     (14 )% $ 945   $ 1,133     (17 )%
                           

Average assets (in billions of dollars)

  $ 123   $ 105     17 % $ 121     105     15 %

Return on assets

    1.58 %   2.16 %         1.57 %   2.18 %      

Average deposits (in billions of dollars)

  $ 112   $ 97     15     110     96     15  
                           

Net credit losses as a percentage of average loans

    1.04 %   1.41 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 1,240   $ 1,152     8 % $ 2,393   $ 2,268     6 %
 

Citi-branded cards

    791     693     14     1,539     1,377     12  
                           
   

Total

  $ 2,031   $ 1,845     10 % $ 3,932   $ 3,645     8 %
                           

Income from continuing operations by business

                                     
 

Retail banking

  $ 305   $ 374     (18 )% $ 586   $ 783     (25 )%
 

Citi-branded cards

    179     192     (7 )   359     350     3  
                           
   

Total

  $ 484   $ 566     (14 )% $ 945   $ 1,133     (17 )%
                           

2Q11 vs. 2Q10

        Revenues, net of interest expense increased 10% to $2.0 billion, driven by higher cards purchase sales, investment sales, loan and deposit volumes and the impact of FX translation. This was partially offset by spread compression, particularly in retail banking.

        Net interest revenue increased 4% to $1.4 billion, mainly due to higher lending and deposit volumes and the impact of FX translation, partially offset by spread compression.

        Non-interest revenue increased 23% to $679 million, primarily due to higher investment revenues, higher cards purchase sales and the impact of FX translation.

        Operating expenses increased 21% to $1.2 billion, due to continued investment spending, the impact of FX translation and an increase in business volumes, partially offset by ongoing productivity savings.

        Provisions for loan losses and for benefits and claims increased 48% to $210 million, mainly due to a lower net credit reserve release in the current quarter and the impact of FX translation, partially offset by lower net credit losses. The increase in provision for loan losses and for benefits and claims also reflected increased volumes, partially offset by continued credit quality improvement, particularly in India.

2Q11 YTD vs. 2Q10 YTD

        Revenues, net of interest expense increased 8% to $3.9 billion, driven by higher cards purchase sales, investment sales, loan and deposit volumes and the impact of FX translation, partially offset by lower spreads and a $80 million charge for the anticipated repurchase of certain securities in the current year-to-date period.

        Net interest revenue increased 5% to $2.7 billion, mainly due to higher lending and deposit volumes and the impact of FX translation, partially offset by spread compression.

        Non-interest revenue increased 15% to $1.3 billion, primarily due to higher investment revenues, higher cards purchase sales and the impact of FX translation, partially offset by the charge for the anticipated repurchase of certain securities.

        Operating expenses increased 22% to $2.3 billion, due to continued investment spending, incremental legal and related expenses and the impact of FX translation. Higher operating expenses also reflected an increase in business volumes, partially offset by ongoing productivity savings.

        Provisions for loan losses and for benefits and claims increased 2% to $388 million, mainly due to a lower net credit reserve release in the current quarter and the impact of FX translation, partially offset by lower net credit losses. The

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increase in provision for loan losses and for benefits and claims also reflected increased volumes, partially offset by continued credit quality improvement, particularly in India.

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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, 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 June 30, 2011, ICG had $1,036 billion of assets and $472 billion of deposits.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Commissions and fees

  $ 1,132   $ 1,086     4 % $ 2,264   $ 2,194     3 %

Administration and other fiduciary fees

    730     615     19     1,474     1,336     10  

Investment banking

    1,001     592     69     1,794     1,545     16  

Principal transactions

    1,288     1,777     (28 )   3,548     5,084     (30 )

Other

    252     481     (48 )   175     949     (82 )
                           
 

Total non-interest revenue

  $ 4,403   $ 4,551     (3 )% $ 9,255   $ 11,108     (17 )%
 

Net interest revenue (including dividends)

    3,731     3,906     (4 )   7,441     7,789     (4 )
                           

Total revenues, net of interest expense

  $ 8,134   $ 8,457     (4 )% $ 16,696   $ 18,897     (12 )%

Total operating expenses

    5,288     5,137     3     10,407     9,734     7  
 

Net credit losses

    151     43     NM     361     145     NM  
 

Provision (release) for unfunded lending commitments

    (8 )   (22 )   64     (4 )   (29 )   86  
 

Credit reserve build (release)

    (59 )   (231 )   74     (455 )   (411 )   (11 )
                           

Provisions for loan losses and benefits and claims

  $ 84   $ (210 )   NM   $ (98 ) $ (295 )   67 %
                           

Income from continuing operations before taxes

  $ 2,762   $ 3,530     (22 )% $ 6,387   $ 9,458     (32 )%

Income taxes

    703     930     (24 )   1,778     2,742     (35 )
                           

Income from continuing operations

  $ 2,059   $ 2,600     (21 )% $ 4,609   $ 6,716     (31 )%

Net income attributable to noncontrolling interests

    9     20     (55 )   22     46     (52 )
                           

Net income

  $ 2,050   $ 2,580     (21 )% $ 4,587   $ 6,670     (31 )%
                           

Average assets (in billions of dollars)

  $ 1,042   $ 944     10 % $ 1,019   $ 935     9 %

Return on assets

    0.79 %   1.10 %         0.91 %   1.44 %      
                           

Revenues by region

                                     
 

North America

  $ 2,734   $ 3,263     (16 )% $ 5,672   $ 7,455     (24 )%
 

EMEA

    2,538     2,610     (3 )   5,433     5,958     (9 )
 

Latin America

    1,103     914     21     2,093     1,865     12  
 

Asia

    1,759     1,670     5     3,498     3,619     (3 )
                           

Total

  $ 8,134   $ 8,457     (4 )% $ 16,696   $ 18,897     (12 )%
                           

Income from continuing operations by region

                                     
 

North America

  $ 476   $ 974     (51 )% $ 1,047   $ 2,557     (59 )%
 

EMEA

    632     675     (6 )   1,675     1,999     (16 )
 

Latin America

    449     354     27     891     775     15  
 

Asia

    502     597     (16 )   996     1,385     (28 )
                           

Total

  $ 2,059   $ 2,600     (21 )% $ 4,609   $ 6,716     (31 )%
                           

Average loans by region (in billions of dollars)

                                     
 

North America

  $ 68   $ 68     % $ 67   $ 68     (1 )%
 

EMEA

    48     37     30     45     37     22  
 

Latin America

    27     21     29     26     22     18  
 

Asia

    48     34     41     46     32     44  
                           

Total

  $ 191   $ 160     19 % $ 184   $ 159     16 %
                           

NM
Not meaningful

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SECURITIES AND BANKING

        Securities and Banking (S&B) offers a wide array of investment and commercial banking services and products for corporations, governments, institutional and retail investors, and 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 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 by holding product inventory to meet client demand, and earns the differential between the price at which it buys and sells the products. The price differential between the buys and sells, and the unrealized gains and losses on the inventory, are recorded in Principal transactions. S&B interest income earned on inventory held is recorded as a component of Net interest revenue.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Net interest revenue

  $ 2,261   $ 2,508     (10 )% $ 4,541   $ 5,003     (9 )%

Non-interest revenue

    3,210     3,447     (7 )   6,942     8,955     (22 )
                           

Revenues, net of interest expense

  $ 5,471   $ 5,955     (8 )% $ 11,483   $ 13,958     (18 )%

Total operating expenses

    3,899     3,958     (1 )   7,701     7,395     4  
 

Net credit losses

    152     42     NM     356     143     NM  
 

Provisions for unfunded lending commitments

    (8 )   (22 )   64     (4 )   (29 )   86  
 

Credit reserve build (release)

    (85 )   (196 )   57     (482 )   (358 )   (35 )
                           

Provisions for loan losses and benefits and claims

  $ 59   $ (176 )   NM   $ (130 ) $ (244 )   47 %
                           

Income before taxes and noncontrolling interests

  $ 1,513   $ 2,173     (30 )% $ 3,912   $ 6,807     (43 )%

Income taxes

    327     501     (35 )   1,021     1,954     (48 )

Income from continuing operations

    1,186     1,672     (29 )   2,891     4,853     (40 )

Net income attributable to noncontrolling interests

    4     15     (73 )   13     36     (64 )
                           

Net income

  $ 1,182   $ 1,657     (29 )% $ 2,878   $ 4,817     (40 )%
                           

Average assets (in billions of dollars)

  $ 913   $ 845     8 % $ 894   $ 836     7 %

Return on assets

    0.52 %   0.79 %         0.65 %   1.16 %      
                           

Revenues by region

                                     
 

North America

  $ 2,125   $ 2,627     (19 )% $ 4,453   $ 6,180     (28 )%
 

EMEA

    1,640     1,762     (7 )   3,699     4,277     (14 )
 

Latin America

    675     558     21     1,257     1,165     8  
 

Asia

    1,031     1,008     2     2,074     2,336     (11 )
                           

Total revenues

  $ 5,471   $ 5,955     (8 )% $ 11,483   $ 13,958     (18 )%
                           

Net income from continuing operations by region

                                     
 

North America

  $ 339   $ 816     (58 )% $ 797   $ 2,238     (64 )%
 

EMEA

    343     355     (3 )   1,108     1,376     (19 )
 

Latin America

    292     200     46     564     469     20  
 

Asia

    212     301     (30 )   422     770     (45 )
                           

Total net income from continuing operations

  $ 1,186   $ 1,672     (29 )% $ 2,891   $ 4,853     (40 )%
                           

Securities and Banking revenue details

                                     
 

Total investment banking

  $ 1,085   $ 674     61 % $ 1,936   $ 1,731     12 %
 

Lending

    346     522     (34 )   590     765     (23 )
 

Equity markets

    812     652     25     1,882     1,865     1  
 

Fixed income markets

    3,033     3,713     (18 )   6,828     9,093     (25 )
 

Private bank

    555     512     8     1,070     1,006     6  
 

Other

    (360 )   (118 )   NM     (823 )   (502 )   (64 )
                           

Total Securities and Banking revenues

  $ 5,471   $ 5,955     (8 )% $ 11,483   $ 13,958     (18 )%
                           

NM    Not meaningful

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2Q11 vs. 2Q10

        Revenues, net of interest expense, of $5.5 billion decreased 8% as compared to the prior-year period, primarily driven by lower results in fixed income markets, partly offset by an increase in investment banking and equity markets revenues. Fixed income markets revenues decreased 16% to $2.9 billion (excluding CVA, net of hedges, of positive $0.1 billion and positive $0.2 billion in the current quarter and prior-year quarter, respectively), reflecting weaker results in G10 rates and currencies, partly offset by emerging markets and credit products. Investment banking revenues grew 61% to $1.1 billion, as activity levels across advisory and debt and equity underwriting increased from the second quarter of 2010. Equity markets revenues increased 25% to $776 million (excluding CVA, net of hedges, of positive $36 million and positive $32 million in the current quarter and prior-year quarter, respectively), reflecting stronger results in derivatives and prime finance that offset weaker results in cash equities.

        Operating expenses decreased 1% to $3.9 billion from the prior-year period. Excluding the impact of the U.K. bonus tax in the prior-year period, operating expenses grew 9%, mainly due to continued investment spending, higher business volumes, and the impact of FX translation, partially offset by productivity saves.

        Provisions for loan losses and for benefits and claims increased by $235 million to $59 million, primarily attributable to lower loan loss reserve releases due to growth in the Corporate portfolio. Net credit losses also grew by $110 million to $152 million.

2Q11 YTD vs. 2Q10 YTD

        Revenues, net of interest expense, were $11.5 billion, a decrease of 18% as compared to the prior-year period, primarily driven by lower fixed income markets revenues and negative CVA. Fixed income markets revenues decreased 19% to $6.9 billion (excluding CVA, net of hedges, of negative $0.1 billion and positive $0.5 billion, in the current period and prior-year period, respectively), reflecting lower results in rates and currencies, securitized products, and credit products. CVA decreased $0.6 billion to negative $0.1 billion in the current period, mainly due to the absence of gains from the widening of Citigroup spreads in the prior-year period. The decrease in S&B revenues year-over-year is due to lower fixed-income revenues and negative CVA and was partially offset by an increase in investment banking revenues, driven by higher levels of client activity.

        Operating expenses increased 4% to $7.7 billion. Excluding the impact of the U.K. bonus tax and a litigation reserve release in the first half of 2010, operating expenses grew 7%, primarily due to continued investment spending, increased business volumes, and the impact of FX translation, partially offset by productivity saves.

        Provision for credit losses and for benefits and claims increased by $114 million to a negative $130 million, primarily due to net credit losses related to specific write-offs in the current period and the absence of one-time recoveries that were realized in the prior-year period. The net loan loss reserve release, including provisions for unfunded lending commitments, grew by $99 million to $486 million.

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TRANSACTION SERVICES

        Transaction Services is composed of Treasury and Trade Solutions (TTS) and Securities and Fund Services (SFS). TTS provides comprehensive cash management and trade finance and services for corporations, financial institutions and public sector entities worldwide. SFS 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 in TTS and SFS, as well as from trade loans and fees for transaction processing and fees on assets under custody and administration in SFS.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Net interest revenue

  $ 1,470   $ 1,398     5 % $ 2,900   $ 2,786     4 %

Non-interest revenue

    1,193     1,104     8     2,313     2,153     7  
                           

Total revenues, net of interest expense

  $ 2,663   $ 2,502     6 % $ 5,213   $ 4,939     6 %

Total operating expenses

    1,389     1,179     18     2,706     2,339     16  

Provisions (releases) for credit losses and for benefits and claims

    25     (34 )   NM     32     (51 )   NM  
                           

Income before taxes and noncontrolling interests

  $ 1,249   $ 1,357     (8 )% $ 2,475   $ 2,651     (7 )%

Income taxes

    376     429     (12 )   757     788     (4 )

Income from continuing operations

    873     928     (6 )   1,718     1,863     (8 )

Net income attributable to noncontrolling interests

    5     5         9     10     (10 )
                           

Net income

  $ 868   $ 923     (6 )% $ 1,709   $ 1,853     (8 )%
                           

Average assets (in billions of dollars)

  $ 129   $ 99     30 % $ 125   $ 99     26 %

Return on assets

    2.70 %   3.74 %         2.76 %   3.77 %      
                           

Revenues by region

                                     
 

North America

  $ 609   $ 636     (4 )% $ 1,219   $ 1,275     (4 )%
 

EMEA

    898     848     6     1,734     1,681     3  
 

Latin America

    428     356     20     836     700     19  
 

Asia

    728     662     10     1,424     1,283     11  
                           

Total revenues

  $ 2,663   $ 2,502     6 % $ 5,213   $ 4,939     6 %
                           

Income from continuing operations by region

                                     
 

North America

  $ 137   $ 158     (13 )% $ 250   $ 319     (22 )%
 

EMEA

    289     320     (10 )   567     623     (9 )
 

Latin America

    157     154     2     327     306     7  
 

Asia

    290     296     (2 )   574     615     (7 )
                           

Total net income from continuing operations

  $ 873   $ 928     (6 )% $ 1,718   $ 1,863     (8 )%
                           

Key indicators (in billions of dollars)

                                     

Average deposits and other customer liability balances

  $ 365   $ 320     14 % $ 360   $ 320     13 %

EOP assets under custody(1) (in trillions of dollars)

    13.5     11.3     19                    
                           

(1)
Includes assets under custody, assets under trust and assets under administration.

NM    Not meaningful

2Q11 vs. 2Q10

        Revenues, net of interest expense grew 6% to $2.7 billion, as improvement in fees and increased customer liability balances in both the TTS and SFS businesses more than offset spread compression. Asset growth was driven by trade loans, with average trade assets up 70% from the prior-year period. Average deposits grew 14% year-over-year to $365 billion with a favorable shift to core operating balances. Assets under custody were up 19% to $13.5 billion as a result of market and client activity.

        Treasury and Trade Solutions revenue increased 6% to $1.9 billion, driven primarily by growth in the trade and commercial cards businesses, partially offset by spread compression.

        Securities and Fund Services revenues increased 6% to $741 million, driven by growth in custody and securities lending on new client mandates as well as market activity.

        Operating expenses increased 18% to $1.4 billion, related primarily to higher business volumes and increased investment spending required to support future business growth, as well as the impact of FX translation.

        Provisions for credit losses and for benefits and claims increased by $59 million to a positive $25 million, primarily attributable to a reserve release in the prior-year period compared to a build of $26 million in the current period, reflecting growth in trade finance.

2Q11 YTD vs. 2Q10 YTD

        Revenues, net of interest expense grew 6% to $5.2 billion, as improvement in fees and increased customer liability balances in both the TTS and SFS businesses more than offset spread compression.

        Treasury and Trade Solutions revenue increased 5% to $3.8 billion, driven primarily by growth in the trade and commercial cards businesses, partially offset by spread compression.

        Securities and Fund Services revenues increased 8% to $1.5 billion, driven by higher volumes and client activity.

        Operating expenses increased 16% to $2.7 billion, related to higher business volumes and increased investment spending required to support future business growth, as well as the impact of FX translation.

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        Provisions for credit losses and for benefits and claims increased by $83 million to a positive $32 million, primarily attributable to a reserve release in the prior-year period.

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CITI HOLDINGS

        Citi Holdings contains businesses and portfolios of assets that Citigroup has determined are not central to its core Citicorp businesses. Citi Holdings consists of the following: Brokerage and Asset Management, Local Consumer Lending and Special Asset Pool.Consistent with its strategy, Citi intends to continue to exit these businesses as quickly as practicable in an economically rational manner. To date, the decrease in Citi Holdings assets has been primarily driven by asset sales and business dispositions, as well as portfolio run-off and pay-downs. Asset levels have also been impacted, and will continue to be impacted, by charge-offs and revenue marks, when appropriate.

        During the second quarter of 2011, the assets in Citi Holdings declined by approximately $29 billion, composed of nearly $21 billion of asset sales and business dispositions, over $7 billion of net run-off and pay-downs and approximately $1 billion of net cost of credit and net asset marks. As previously disclosed, Citi's ability to continue to decrease the assets in Citi Holdings through the methods discussed above, including sales and dispositions, may not occur at the same pace or level as in the past.

        Citi Holdings' GAAP assets of approximately $308 billion at June 30, 2011 have been reduced by approximately $157 billion from June 30, 2010 and $519 billion from the peak in the first quarter of 2008. Citi Holdings represented approximately 16% of Citi's assets as of June 30, 2011, while Citi Holdings' risk-weighted assets of approximately $281 billion at June 30, 2011 represented approximately 28% of Citi's risk-weighted assets as of such date.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Net interest revenue

  $ 2,652   $ 3,971     (33 )% $ 5,282   $ 8,346     (37 )%

Non-interest revenue

    1,359     948     43     2,012     3,123     (36 )
                           

Total revenues, net of interest expense

  $ 4,011   $ 4,919     (18 )% $ 7,294   $ 11,469     (36 )%
                           

Provisions for credit losses and for benefits and claims

                                     

Net credit losses

  $ 2,995   $ 4,998     (40 )% $ 6,945   $ 10,239     (32 )%

Credit reserve build (release)

    (1,057 )   (800 )   (32 )   (3,169 )   (460 )   NM  
                           

Provision for loan losses

  $ 1,938   $ 4,198     (54 )% $ 3,776   $ 9,779     (61 )%

Provision for benefits and claims

    193     185     4     409     428     (4 )

Provision (release) for unfunded lending commitments

    (8 )   (45 )   82     13     (71 )   NM  
                           

Total provisions for credit losses and for benefits and claims

  $ 2,123   $ 4,338     (51 )% $ 4,198   $ 10,136     (59 )%
                           

Total operating expenses

  $ 2,204   $ 2,435     (9 )% $ 4,223     5,008     (16 )%
                           

Loss from continuing operations before taxes

  $ (316 ) $ (1,854 )   83 % $ (1,127 ) $ (3,675 )   69 %

Benefits for income taxes

    (148 )   (650 )   77     (412 )   (1,596 )   74  
                           

Loss from continuing operations

  $ (168 ) $ (1,204 )   86 % $ (715 ) $ (2,079 )   66 %

Net income attributable to noncontrolling interests

    50     8     NM     111     19     NM  
                           

Citi Holdings net loss

  $ (218 ) $ (1,212 )   82 % $ (826 ) $ (2,098 )   61 %
                           

Balance sheet data (in billions of dollars)

                                     

Total EOP assets

  $ 308   $ 465     (34 )%                  
                           

Total EOP deposits

  $ 73   $ 82     (11 )%                  
                           

NM    Not meaningful

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BROKERAGE AND ASSET MANAGEMENT

        Brokerage and Asset Management (BAM), which constituted approximately 9% of Citi Holdings by assets as of June 30, 2011, consists of Citi's global retail brokerage and asset management businesses. At June 30, 2011, BAM had approximately $27 billion of assets, primarily consisting of Citi's investment in, and assets related to, the Morgan Stanley Smith Barney joint venture (MSSB JV). As more fully described in Forms 8-K filed with the SEC on January 14, 2009 and June 3, 2009, Morgan Stanley has options to purchase Citi's remaining stake in the MSSB JV over three years starting in 2012.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Net interest revenue (expense)

  $ (44 ) $ (71 )   38 % $ (90 ) $ (136 )   34 %

Non-interest revenue

    91     212     (57 )   274     617     (56 )
                           

Total revenues, net of interest expense

  $ 47   $ 141     (67 )% $ 184   $ 481     (62 )%
                           

Total operating expenses

  $ 230   $ 267     (14 )% $ 404   $ 540     (25 )%
                           
 

Net credit losses

  $   $ 1     (100 )% $ 1   $ 12     (92 )%
 

Credit reserve build (release)

    (2 )   (3 )   33     (3 )   (10 )   70  
 

Provision (release)for unfunded lending commitments

    1     (6 )   NM     1     (6 )   NM  
 

Provision for benefits and claims

    9     9         17     18     (6 )
                           

Provisions for credit losses and for benefits and claims

  $ 8   $ 1     NM   $ 16   $ 14     14 %
                           

Income (loss) from continuing operations before taxes

  $ (191 ) $ (127 )   (50 )% $ (236 ) $ (73 )   NM  

(Benefits) for taxes

    (91 )   (33 )   NM     (126 )   (55 )   NM  
                           

Income (loss) from continuing operations

  $ (100 ) $ (94 )   (6 )% $ (110 ) $ (18 )   NM  

Net income attributable to noncontrolling interests

    1     7     (86 )   3     2     50 %
                           

Net income (loss)

  $ (101 ) $ (101 )   % $ (113 ) $ (20 )   NM  
                           

EOP assets (in billions of dollars)

  $ 27   $ 30     (10 )%                  

EOP deposits (in billions of dollars)

    55     57     (4 )                  
                           

NM    Not meaningful

2Q11 vs. 2Q10

        Revenues, net of interest expense decreased 67% to $47 million versus the prior-year period, mainly driven by lower revenues from the MSSB JV, given the continued challenging market environment and the impact of the increased FDIC assessment in the current quarter.

        Operating expenses decreased 14% to $230 million from the prior-year period, mainly driven by the sale of the Citi private equity business which was partially offset by higher legal expenses.

        Provisions for credit losses and for benefits and claims increased to $8 million, compared to $1 million in the prior-year period, mainly due to lower credit losses.

        Assets decreased 10% versus the prior-year period to $27 billion, mostly driven by the sale of the Citi private equity business and the run-off of tailored loan portfolios.

2Q11 YTD vs. 2Q10 YTD

        Revenues, net of interest expense, decreased 62% to $184 million, primarily driven by the sale of the Habitat and Colfondos businesses (including a $78 million pretax gain on sale related to the transactions) in the first quarter of 2010 and lower revenues from the MSSB JV.

        Operating expenses decreased 25% to $404 million from the prior-year period, primarily driven by the sale of the Colfondos and the Citi private equity businesses, which were partially offset by higher legal expenses.

        Provisions for credit losses and for benefits and claims increased 14% to $16 million, due to lower reserve releases.

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LOCAL CONSUMER LENDING

        Local Consumer Lending (LCL), which constituted approximately 74% of Citi Holdings assets as of June 30, 2011, includes a portion of Citigroup's North American mortgage business, retail partner cards, CitiFinancial North America (consisting of the OneMain and CitiFinancial Servicing businesses), student and auto loans, Citi's remaining interest in Primerica and other local Consumer finance businesses globally (including Western European cards and retail banking and Japan Consumer Finance). At June 30, 2011, LCL had approximately $228 billion of assets (approximately $205 billion in North America). The North American assets consist of residential mortgages (residential first mortgages and home equity loans), retail partner card loans, personal loans, commercial real estate, and other consumer loans and assets. Approximately $116 billion of assets in LCL consisted of North America mortgages in Citi's CitiMortgage and CitiFinancial operations.

 
  Second Quarter    
  Six Months    
 
In millions of dollars   2011   2010   % Change   2011   2010   % Change  

Net interest revenue

  $ 2,831   $ 3,688     (23 )% $ 5,448   $ 7,708     (29 )%

Non-interest revenue

    118     518     (77 )   654     1,168     (44 )
                           

Total revenues, net of interest expense

  $ 2,949   $ 4,206     (30 )% $ 6,102   $ 8,876     (31 )%
                           

Total operating expenses

  $ 1,879   $ 2,039     (8 )% $ 3,642   $ 4,204     (13 )%
                           
 

Net credit losses

  $ 2,776   $ 4,535     (39 )% $ 6,055   $ 9,473     (36 )%
 

Credit reserve build (release)

    (664 )   (421 )   (58 )   (1,774 )   (35 )   NM  
 

Provision for benefits and claims

    184     176     5     392     410     (4 )
                           

Provisions for credit losses and for benefits and claims

  $ 2,296   $ 4,290     (46 )% $ 4,673   $ 9,848     (53 )%
                           

Loss from continuing operations before taxes

  $ (1,226 ) $ (2,123 )   42 % $ (2,213 ) $ (5,176 )   57 %

Benefits for income taxes

    (480 )   (897 )   46     (868 )   (2,121 )   59  
                           

Loss from continuing operations

  $ (746 ) $ (1,226 )   39 % $ (1,345 ) $ (3,055 )   56 %

Net income attributable to noncontrolling interests

        7     (100 )       7     (100 )
                           

Net loss

  $ (746 ) $ (1,233 )   39 % $ (1,345 ) $ (3,062 )   56 %
                           

Average assets (in billions of dollars)

  $ 233   $ 333     (30 )% $ 240   $ 344     (30 )%
                           

Net credit losses as a percentage of average loans

    5.43 %   6.03 %                        
                           

NM    Not meaningful

2Q11 vs. 2Q10

        Revenues, net of interest expense, declined 30% to $2.9 billion from the prior-year period, driven by continued declining loan balances. Net interest revenue decreased 23% to $2.8 billion, driven by lower balances due to portfolio run-off, asset sales and divestitures. Non-interest revenue declined 77% to $118 million, primarily due to lower net servicing revenues in real estate lending and a markdown of Citi's equity investment in Primerica.

        Operating expenses declined 8% to $1.9 billion, due to the continued impact of divestitures, lower volumes and re-engineering benefits, offset by higher legal and related regulatory expenses in the current quarter.

        Provisions for credit losses and for benefits and claims decreased 46% to $2.3 billion from the prior quarter, reflecting a decline in net credit losses of $1.8 billion and an increase in loan loss reserve release of $243 million. The year-over-year decline in net credit losses was primarily driven by U.S. retail partner cards and real estate lending.

        Average assets declined 30% to $233 million versus the prior-year period, primarily driven by the continued impact of asset sales and portfolio run-off.

2Q11 YTD vs. 2Q10 YTD

        Revenues, net of interest expense, decreased 31% to $6.1 billion from the prior-year period, driven by continued declining loan balances. Net interest revenue decreased 29% to $5.4 billion, driven by the impact of lower balances due to portfolio run-off and asset sales. Non-interest revenue declined 44% to $654 million, due to the continued impact of divestitures and lower net servicing revenues in real estate lending.

        Operating expenses decreased 13% to $3.6 billion, primarily due to the continued impact of divestitures, lower volumes and re-engineering actions, offset by higher legal and related regulatory expenses in the current period.

        Provisions for credit losses and for benefits and claims decreased 53% to $4.7 billion, reflecting a net $1.8 billion reserve release in the first half of 2011 compared to a smaller release in the first half of 2010, driven by higher releases in U.S. retail partner cards and CitiFinancial North America