10-Q 1 a2206106z10-q.htm 10-Q

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 September 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 filer o
(Do not check if a smaller
reporting company)
  Smaller reporting company o

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

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

Common stock outstanding as of September 30, 2011: 2,923,708,189

Available on the web at www.citigroup.com


CITIGROUP INC.

THIRD 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

   
8
 

SUMMARY OF SELECTED FINANCIAL DATA

   
8
 

SEGMENT AND BUSINESS— INCOME (LOSS) AND REVENUES

   
11
 

CITICORP

   
13
 
 

Regional Consumer Banking

   
14
 
     

North America Regional Consumer Banking

   
15
 
     

EMEA Regional Consumer Banking

   
17
 
     

Latin America Regional Consumer Banking

   
19
 
     

Asia Regional Consumer Banking

   
21
 
 

Institutional Clients Group

   
23
 
     

Securities and Banking

   
24
 
     

Transaction Services

   
26
 

CITI HOLDINGS

   
28
 
 

Brokerage and Asset Management

   
29
 
 

Local Consumer Lending

   
30
 
 

Special Asset Pool

   
31
 

CORPORATE/OTHER

   
33
 

SEGMENT BALANCE SHEET AT SEPTEMBER 30, 2011

   
34
 

CAPITAL RESOURCES AND LIQUIDITY

   
35
 
   

Capital Resources

   
35
 
   

Funding and Liquidity

   
40
 

OFF-BALANCE-SHEET ARRANGEMENTS

   
45
 

MANAGING GLOBAL RISK

   
46
 
   

Credit Risk

   
46
 
       

Loans Outstanding

   
46
 
       

Details of Credit Loss Experience

   
47
 
       

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

   
48
 
       

North America Consumer Mortgage Lending

   
52
 
       

North America Cards

   
57
 
       

Consumer Loan Details

   
59
 
       

Consumer Loan Modification Programs

   
61
 
       

Consumer Mortgage Representations and Warranties

   
64
 
       

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

   
68
 
       

Corporate Loan Details

   
69
 
       

Exposure to Commercial Real Estate

   
71
 
   

Market Risk

   
72
 
   

Country and Cross-Border Risk

   
82
 

DERIVATIVES

   
86
 

INCOME TAXES

   
89
 

DISCLOSURE CONTROLS AND PROCEDURES

   
90
 

FORWARD-LOOKING STATEMENTS

   
90
 

FINANCIAL STATEMENTS AND NOTESTABLE OF CONTENTS

   
92
 

CONSOLIDATED FINANCIAL STATEMENTS

   
93
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   
99
 

LEGAL PROCEEDINGS

   
212
 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

   
212
 

2



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 Reports on Form 10-Q for the quarters ended March 31, 2011 and June 30, 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 third 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 92 for page references to Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statements, respectively.

3


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

GRAPHIC


*
As announced on October 17, 2011, Citi will transfer the substantial majority of the retail partner cards business from Citi Holdings—Local Consumer Lending to Citicorp—North America RCB. While Citi previously announced this transfer would be completed during the fourth quarter of 2011, it now intends to complete this transfer during the first quarter of 2012.

        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 the U.S., Canada and Puerto Rico comprise North America.

4



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

THIRD QUARTER 2011 EXECUTIVE SUMMARY

Citigroup

        Citigroup reported third quarter of 2011 net income of $3.8 billion, or $1.23 per diluted share. Citigroup's income increased by 74%, or $1.6 billion, from the third quarter of 2010. Results for the third quarter of 2011 included a significant positive credit valuation adjustment (CVA) of $1.9 billion, compared to $115 million in the third quarter of 2010, driven by Citigroup's credit spreads widening during the quarter. Excluding CVA, Citigroup earned $2.6 billion in the third quarter of 2011, or $0.84 per diluted share, compared to $0.70 per diluted share in the prior-year period. The year-over-year increase in earnings per share, excluding CVA, primarily reflects a significant decline in credit costs, offset by the impact of lower revenues (excluding CVA) and an increase in operating expenses as compared to the prior-year period. Net income in the prior-year period was also affected by a loss on the announced sale of The Student Loan Corporation recorded in Discontinued Operations.

        Citigroup revenues, net of interest expense, were $20.8 billion, or roughly flat versus the prior-year period. Excluding CVA, revenues were down $1.7 billion, or 8%, from the third quarter of 2010 as continued 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 8% lower than the prior-year period, largely due to continued declining loan balances and lower interest-earning assets in Citi Holdings. Non-interest revenues were $8.7 billion, up 15% from the prior-year period, principally driven by significant positive CVA in the third quarter of 2011. Excluding CVA, non-interest revenues of $6.8 billion decreased by 10%, due primarily to lower revenues in Securities and Banking.

        Year-over-year, the U.S. dollar generally depreciated versus local currencies in which Citi generates revenues and incurs expenses. In the third quarter of 2011, 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) accounted for 2% of the growth in Citi's revenues and expenses, respectively, while contributing 1% to net income growth over the prior-year period.

Operating Expenses

        Citigroup expenses increased $940 million, or 8%, year-over-year to $12.5 billion. Roughly three-quarters of the increase was driven by FX translation, higher legal and related costs and the absence of one-time benefits recorded in the prior period. Excluding these items, operating expenses grew 2% year-over-year in the third quarter, driven by higher investment spending, which was partially offset by ongoing productivity savings and other expense reductions.

        For the first nine months of 2011, Citigroup expenses were $37.7 billion, up $2.8 billion, or 8%, from the prior-year period. Nearly two-thirds of this increase, or approximately $1.8 billion, resulted primarily from the impact of FX translation and higher legal and related costs in the first nine months of 2011 as compared to the same period in 2010. Excluding these items, operating expenses were up $1.0 billion, or 3%, versus the prior-year period. Investment spending was $2.8 billion higher in the first nine months of 2011, of which roughly half was funded with efficiency savings of $1.4 billion. All other expenses, including higher volume-related costs, were more than offset by a decline in Citi Holdings expenses. The impact of FX translation and legal and related costs will likely continue to affect Citigroup's operating expenses in the near term and will remain difficult to predict.

        Citicorp expenses of $9.8 billion in the third quarter of 2011 grew 9% from the third quarter of 2010. Roughly a quarter of this increase resulted from the impact of FX translation, and the remainder was primarily driven by investment spending, which was partially offset by ongoing productivity savings and other expense reductions.

        Citi Holdings expenses were down 6% year-over-year to $2.1 billion, principally due to the continued decline in assets and thus lowered operating expenses. As the pace of asset decline in Citi Holdings continues to slow, Citi's ability to continue to reduce its expenses in Citi Holdings will likely also decline.

Credit Costs

        Citigroup total provisions for credit losses and for benefits and claims of $3.4 billion declined $2.6 billion, or 43%, from the prior-year period. Net credit losses of $4.5 billion were down $3.1 billion, or 41%, from the third quarter of 2010. Consumer net credit losses declined $2.5 billion, or 37%, to $4.2 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 $650 million year-over-year to $272 million, as credit quality continued to improve in the Corporate portfolio.

        The net release of allowance for loan losses and unfunded lending commitments was $1.4 billion in the third quarter of 2011, compared to a net release of $2.0 billion in the third quarter of 2010. Of the $1.4 billion net reserve release, $1.2 billion related to Consumer and was mainly driven by North America Citi-branded cards and retail partner cards. The $186 million net Corporate reserve release reflected continued improvement in Corporate credit trends, partially offset by growth in the Corporate loan portfolio.

        More than half of the net credit reserve release in the third quarter of 2011, or $838 million, was attributable to Citi Holdings. The $585 million net credit release in Citicorp was up from $426 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

5


Banking and a net build in the Corporate portfolio, each driven by continued loan growth. Citi continues to expect international Regional Consumer Banking and Corporate credit costs in Citicorp to increase, reflecting growing loan portfolios.

Capital and Loan Loss Reserve Positions

        Citigroup's Tier 1 Capital ratio was 13.5% at quarter-end, and its Tier 1 Common ratio was 11.7%.

        Citigroup's total allowance for loan losses was $32.1 billion at quarter-end, or 5.1% of total loans, down from $43.7 billion, or 6.7% of total loans, at the end of the prior-year period. The decline in the total allowance for loan losses reflected asset sales, lower non-accrual loans, and overall continued improvement in the credit quality of the loan portfolios.

        The Consumer allowance for loan losses was $28.9 billion, or 6.82% of total Consumer loans at quarter-end, compared to $37.6 billion, or 8.19% of total loans, at September 30, 2010.

        Citigroup's non-accrual loans of $12.1 billion declined 46% from the prior-year period. At the end of the third quarter of 2011, the allowance for loan losses was 265% of non-accrual loans.

Citicorp

        Citicorp net income of $4.6 billion in the third quarter of 2011 increased by $1.1 billion, or 32%, from the prior-year period, driven by the significant positive CVA, lower net credit losses and a higher net loan loss reserve release, offset by lower revenues (excluding CVA) and an increase in operating expenses.

        Citicorp revenues were $17.7 billion, up $1.4 billion from the third quarter of 2010, driven by the CVA of $1.9 billion in the third quarter of 2011, compared to CVA of $99 million in the prior-year period. Excluding CVA, Citicorp revenues of $15.8 billion were down 2% year-over-year, as growth in international Regional Consumer Banking and Transaction Services was more than offset by lower revenues in North America Regional Consumer Banking and Securities and Banking. Net interest revenues of $9.7 billion increased 3% from the prior-year period, reflecting continuing growth in international business volumes, and non-interest revenues of $8.0 billion were up $1.2 billion, or 17%, driven by CVA.

        Regional Consumer Banking revenues of $8.3 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 in North America of the look-back provisions of The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) (see "Regional Consumer Banking—North America Regional Consumer Banking" below) and continued spread compression. Average retail banking loans increased 18% year-over-year to $128.6 billion, and average deposits increased 6% to $313.2 billion, both driven by Asia and Latin America. Citi-branded cards average loans increased 1% year-over-year to $110.2 billion, as growth in Asia and Latin America was offset by lower balances in North America. Cards purchase sales grew 9% from the prior-year period to $71.4 billion, and international investment sales increased 1% to $21.5 billion.

        Securities and Banking revenues of $6.7 billion increased 20% year-over-year and 23% sequentially, driven by the positive CVA (for details on S&B CVA amounts, see "Institutional Clients GroupSecurities and Banking" below). Excluding CVA, revenues were $4.8 billion, down 12% from the prior-year period and 9% sequentially, driven by lower fixed income markets, equity markets and investment banking revenues, partially offset by higher lending revenues. Fixed income markets revenues of $2.3 billion, excluding CVA, decreased 33% year-over-year and 22% sequentially, as growth in rates and currencies was more than offset by lower revenues in credit-related and securitized products. Equity markets revenues of $289 million, excluding CVA, were down 73% year-over-year and 63% sequentially, mainly driven by weak trading revenues in derivatives, as well as losses in equity proprietary trading (which Citi also refers to as equity principal strategies). Investment banking revenues of $736 million were down 21% year-over-year and 32% sequentially, driven by lower activity levels across all products. Lending revenues were $1.0 billion, up from negative $11 million in the prior-year period and positive $356 million in the second quarter of 2011, due to hedging gains.

        Transaction Services revenues were $2.7 billion, up 7% 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 7% year-over-year to $365 billion. Assets under custody grew 1% year-over-year to $12.5 trillion, but were down 7% from the prior quarter due to a negative impact of FX translation and lower market values.

        Citicorp end of period loans increased 13% year-over-year to $443.6 billion, with 6% growth in Consumer loans and 21% growth in Corporate loans.

Citi Holdings

        Citi Holdings net loss of $802 million in the third quarter of 2011 improved by $344 million, or 30%, from a net loss of $1.1 billion in the third quarter of 2010, as continued improvement in net credit losses and lower operating expenses offset lower revenues and a lower net loan loss reserve release.

        Citi Holdings revenues declined 27% to $2.8 billion from the prior-year period, primarily due to lower assets. Net interest revenues declined 30% year-over-year to $2.5 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 6% to $353 million from the prior-year period.

        Citi Holdings assets declined 31% from the third quarter of 2010 to $289 billion at the end of the third quarter of 2011. The decline reflected $86 billion in asset sales and business dispositions, $40 billion in net run-off and amortization, and $6 billion in net cost of credit and net asset marks. On October 17, 2011, Citi announced it will transfer the substantial majority of the retail partner cards business from Local Consumer Lending to Citicorp—North America Regional Consumer Banking, which Citi intends to complete during the first quarter of 2012. This transfer will further decrease the assets within Citi Holdings as well as materially impact the earnings profile of Citi Holdings.

6


        At September 30, 2011, Local Consumer Lending continued to represent the largest segment within Citi Holdings, with $218 billion of assets. Over half of Local Consumer Lending assets, or approximately $117 billion, were related to North America real estate lending. As of the end of the third quarter of 2011, there were approximately $10 billion of loan loss reserves allocated to North America real estate lending in Citi Holdings, representing over 30 months of coincident net credit loss coverage.

        At the end of the third quarter of 2011, Citi Holdings assets comprised approximately 15% of total Citigroup GAAP assets and 27% of risk-weighted assets.

7



RESULTS OF OPERATIONS

SUMMARY OF SELECTED FINANCIAL DATA

 
   
   
  Citigroup Inc. and Consolidated Subsidiaries
 
 
  Third Quarter    
  Nine Months Ended    
 
 
  %
Change
  %
Change
 
In millions of dollars,
except per-share amounts, ratios and direct staff
  2011   2010   2011   2010  

Net interest revenue

  $ 12,114   $ 13,128     (8 )% $ 36,364   $ 41,496     (12 )%

Non-interest revenue

    8,717     7,610     15     24,815     26,734     (7 )
                           

Revenues, net of interest expense

  $ 20,831   $ 20,738       $ 61,179   $ 68,230     (10 )%

Operating expenses

    12,460     11,520     8     37,722     34,904     8  

Provisions for credit losses and for benefits and claims

    3,351     5,919     (43 )   9,922     21,202     (53 )
                           

Income from continuing operations before income taxes

  $ 5,020   $ 3,299     52 % $ 13,535   $ 12,124     12 %

Income taxes

    1,278     698     83     3,430     2,546     35  
                           

Income from continuing operations

  $ 3,742   $ 2,601     44 % $ 10,105   $ 9,578     6 %

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

    1     (374 )   NM     112     (166 )   NM  
                           

Net income before attribution of noncontrolling interests

  $ 3,743   $ 2,227     68 % $ 10,217   $ 9,412     9 %

Net income (loss) attributable to noncontrolling interests

    (28 )   59     NM     106     119     (11 )
                           

Citigroup's net income

  $ 3,771   $ 2,168     74 % $ 10,111   $ 9,293     9 %
                           

Less: Preferred dividends—Basic

  $ 4   $     NM   $ 17   $     NM  

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

    70     20     NM     164     78     NM  
                           

Income allocated to unrestricted common shareholders for basic EPS

  $ 3,697   $ 2,148     72 % $ 9,930   $ 9,215     8 %

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

    6     1     NM     12     2     NM  
                           

Income allocated to unrestricted common shareholders for diluted EPS

  $ 3,703   $ 2,149     72 % $ 9,942   $ 9,217     8 %

Earnings per share(2)

                                     

Basic

                                     

Income from continuing operations

  $ 1.27   $ 0.85     49   $ 3.38   $ 3.25     4 %

Net income

    1.27     0.74     72     3.41     3.21     6  
                           

Diluted

                                     

Income from continuing operations

  $ 1.23   $ 0.83     48 % $ 3.28   $ 3.15     4 %

Net income

    1.23     0.72     71     3.32     3.11     7  
                           

At September 30:

                                     

Total assets

  $ 1,935,992   $ 1,983,280     (2 )%                  

Total deposits

    851,281     850,095                        

Long-term debt

    333,824     387,330     (14 )                  

Junior subordinated debentures owned by trust issuers of mandatorily redeemable securities (included in long-term debt)

    16,089     20,449     (21 )                  

Citigroup common stockholders' equity

    177,060     162,601     9                    

Total Citigroup stockholders' equity

    177,372     162,913     9                    

Direct staff (in thousands)

    267     258     3                    
                           

Ratios:

                                     

Return on average common stockholders' equity(3)

    8.4 %   5.4 %         7.8 %   8.1 %      

Return on average total stockholders' equity(3)

    8.4     5.4           7.8     8.1        
                           

Tier 1 Common(4)

    11.71 %   10.33 %                        

Tier 1 Capital

    13.45     12.50                          

Total Capital

    16.89     16.14                          

Leverage(5)

    7.01     6.57                          
                           

Citigroup common stockholders' equity to assets

    9.15 %   8.20 %                        

Total Citigroup stockholders' equity to assets

    9.16     8.21                          

Book value per common share(2)

  $ 60.56   $ 55.97                          

Tangible book value per share(2)(6)

    49.50     44.42                          

Ratio of earnings to fixed charges and preferred stock dividends

    1.81     1.52           1.71     1.63        
                           

8



(1)
Discontinued operations primarily reflects the sale of the Egg Banking PLC credit card business and the sale of The Student Loan Corporation business. Additionally, there continues to be minimal residual costs associated with the sale of Nikko Cordial Securities, the sale of Citigroup's German retail banking operations and the sale of CitiCapital's equipment finance unit to General Electric. See Note 2 to the Consolidated Financial Statements.

(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 junior subordinated debentures owned by trust issuers of mandatorily redeemable securities (included in long-term debt) 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 considered a non-GAAP financial measure for SEC reporting 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

9


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10



SEGMENT AND BUSINESS—INCOME (LOSS) AND REVENUES

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


CITIGROUP INCOME (LOSS)

 
  Third Quarter    
  Nine Months Ended    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010(1)   2011   2010(1)  

Income (loss) from continuing operations

                                     

CITICORP

                                     

Regional Consumer Banking

                                     
 

North America

  $ 692   $ 177     NM   $ 1,928   $ 247     NM  
 

EMEA

    9     17     (47 )%   85     89     (4 )%
 

Latin America

    344     532     (35 )   1,224     1,363     (10 )
 

Asia

    567     496     14     1,512     1,624     (7 )
                           
   

Total

  $ 1,612   $ 1,222     32 % $ 4,749   $ 3,323     43 %
                           

Securities and Banking

                                     
 

North America

  $ 666   $ 430     55 % $ 1,461   $ 2,669     (45 )%
 

EMEA

    737     499     48     1,846     1,874     (1 )
 

Latin America

    208     277     (25 )   779     747     4  
 

Asia

    526     179     NM     948     952      
                           
   

Total

  $ 2,137   $ 1,385     54 % $ 5,034   $ 6,242     (19 )%
                           

Transaction Services

                                     
 

North America

  $ 121   $ 127     (5 )% $ 372   $ 444     (16 )%
 

EMEA

    289     306     (6 )   856     929     (8 )
 

Latin America

    169     174     (3 )   504     487     3  
 

Asia

    318     319         894     936     (4 )
                           
   

Total

  $ 897   $ 926     (3 )% $ 2,626   $ 2,796     (6 )%
                           
 

Institutional Clients Group (ICG)

  $ 3,034   $ 2,311     31 % $ 7,660   $ 9,038     (15 )%
                           

Total Citicorp

  $ 4,646   $ 3,533     32 % $ 12,409   $ 12,361      
                           

CITI HOLDINGS

                                     

Brokerage and Asset Management

  $ (83 ) $ (153 )   46 % $ (193 ) $ (171 )   (13 )%

Local Consumer Lending

    (585 )   (830 )   30     (1,930 )   (3,885 )   50  

Special Asset Pool

    (127 )   (83 )   (53 )   613     911     (33 )
                           

Total Citi Holdings

  $ (795 ) $ (1,066 )   25 % $ (1,510 ) $ (3,145 )   52 %
                           

Corporate/Other

  $ (109 ) $ 134     NM   $ (794 ) $ 362     NM  
                           

Income from continuing operations

  $ 3,742   $ 2,601     44 % $ 10,105   $ 9,578     6 %
                           

Income (loss) from discontinued operations

  $ 1   $ (374 )       $ 112   $ (166 )      

Net income attributable to noncontrolling interests

    (28 )   59           106     119        
                           

Citigroup's net income

  $ 3,771   $ 2,168     74 % $ 10,111   $ 9,293     9 %
                           

(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 and the transfer of certain commercial market loans from RCB to ICG.

NM
Not meaningful

11



CITIGROUP REVENUES

 
  Third Quarter    
  Nine Months Ended    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

CITICORP

                                     

Regional Consumer Banking

                                     
 

North America

  $ 3,418   $ 3,741     (9 )% $ 10,120   $ 11,235     (10 )%
 

EMEA

    363     347     5     1,147     1,124     2  
 

Latin America

    2,420     2,223     9     7,129     6,398     11  
 

Asia

    2,067     1,834     13     5,989     5,470     9  
                           
   

Total

  $ 8,268   $ 8,145     2 % $ 24,385   $ 24,227     1 %
                           

Securities and Banking

                                     
 

North America

  $ 2,445   $ 2,203     11 % $ 6,898   $ 8,384     (18 )%
 

EMEA

    2,299     1,735     33     6,002     6,015      
 

Latin America

    519     643     (19 )   1,786     1,815     (2 )
 

Asia

    1,460     1,020     43     3,538     3,360     5  
                           
   

Total

  $ 6,723   $ 5,601     20 % $ 18,224   $ 19,574     (7 )%
                           

Transaction Services

                                     
 

North America

  $ 620   $ 621       $ 1,838   $ 1,896     (3 )%
 

EMEA

    893     835     7 %   2,628     2,516     4  
 

Latin America

    442     389     14     1,294     1,101     18  
 

Asia

    759     698     9     2,188     1,986     10  
                           
   

Total

  $ 2,714   $ 2,543     7 % $ 7,948   $ 7,499     6 %
                           
 

Institutional Clients Group

  $ 9,437   $ 8,144     16 % $ 26,172   $ 27,073     (3 )%
                           
   

Total Citicorp

  $ 17,705   $ 16,289     9 % $ 50,557   $ 51,300     (1 )%
                           

CITI HOLDINGS

                                     

Brokerage and Asset Management

  $ 55   $ (8 )   NM   $ 239   $ 473     (49 )%

Local Consumer Lending

    2,998     3,547     (15 )%   9,100     12,423     (27 )

Special Asset Pool

    (227 )   314     NM     781     2,426     (68 )
                           

Total Citi Holdings

  $ 2,826   $ 3,853     (27 )% $ 10,120   $ 15,322     (34 )%
                           

Corporate/Other

  $ 300   $ 596     (50 )% $ 502   $ 1,608     (69 )%
                           

Total net revenues

  $ 20,831   $ 20,738       $ 61,179   $ 68,230     (10 )%
                           

12



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 September 30, 2011, Citicorp had approximately $1.4 trillion of assets and $776 billion of deposits, representing approximately 70% of Citi's total assets and approximately 91% of its deposits.

        At September 30, 2011, Citicorp consisted 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).

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  
 

Net interest revenue

  $ 9,663   $ 9,415     3 % $ 28,670   $ 28,895     (1 )%
 

Non-interest revenue

    8,042     6,874     17     21,887     22,405     (2 )
                           

Total revenues, net of interest expense

  $ 17,705   $ 16,289     9 % $ 50,557   $ 51,300     (1 )%
                           

Provisions for credit losses and for benefits and claims

                                     
 

Net credit losses

  $ 1,933   $ 3,020     (36 )% $ 6,404   $ 9,127     (30 )%
 

Credit reserve build (release)

    (630 )   (427 )   (48 )   (2,797 )   (1,426 )   (96 )
                           
 

Provision for loan losses

  $ 1,303   $ 2,593     (50 )% $ 3,607   $ 7,701     (53 )%
 

Provision for benefits and claims

    45     38     18     115     109     6  
 

Provision for unfunded lending commitments

    45     1     NM     44     (32 )   NM  
                           
   

Total provisions for credit losses and for benefits and claims

  $ 1,393   $ 2,632     (47 )% $ 3,766   $ 7,778     (52 )%
                           

Total operating expenses

  $ 9,778   $ 8,931     9 % $ 29,441   $ 26,702     10 %
                           

Income from continuing operations before taxes

  $ 6,534   $ 4,726     38 % $ 17,350   $ 16,820     3 %

Provisions for income taxes

    1,888     1,193     58     4,941     4,459     11  
                           

Income from continuing operations

  $ 4,646   $ 3,533     32 % $ 12,409   $ 12,361      

Net income attributable to noncontrolling interests

    6     30     (80 )   29     71     (59 )%
                           

Citicorp's net income

  $ 4,640   $ 3,503     32 % $ 12,380   $ 12,290     1 %
                           

Balance sheet data (in billions of dollars)

                                     

Total EOP assets

  $ 1,364   $ 1,283     6 %                  

EOP Loans:

                                     
 

Consumer

    237     223     6                    
 

Corporate

    207     171     21                    

Average assets

    1,381     1,252     10   $ 1,362   $ 1,245     9 %

Total EOP deposits

    776     757     3                    
                           

NM
Not meaningful

13



REGIONAL CONSUMER BANKING

        Regional Consumer Banking (RCB) consists of Citigroup's four geographical 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 nearly 4,200 branches in 39 countries around the world. At September 30, 2011, RCB had $335 billion of assets and $310 billion of deposits.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

Net interest revenue

  $ 5,817   $ 5,675     3 % $ 17,350   $ 17,338      

Non-interest revenue

    2,451     2,470     (1 )   7,035     6,889     2 %
                           

Total revenues, net of interest expense

  $ 8,268   $ 8,145     2 % $ 24,385   $ 24,227      
                           

Total operating expenses

  $ 4,753   $ 4,085     16 % $ 14,000   $ 12,111     16 %
                           
 

Net credit losses

  $ 1,846   $ 2,730     (32 )% $ 5,957   $ 8,691     (31 )%
 

Credit reserve build (release)

    (662 )   (400 )   (66 )   (2,379 )   (990 )   NM  
 

Provisions for unfunded lending commitments

                3     (3 )   NM  
 

Provision for benefits and claims

    45     38     18     115     109     6 %
                           

Provisions for credit losses and for benefits and claims

  $ 1,229   $ 2,368     (48 )% $ 3,696   $ 7,807     (53 )%
                           

Income from continuing operations before taxes

  $ 2,286   $ 1,692     35 % $ 6,689   $ 4,309     55 %

Income taxes

    674     470     43     1,940     986     97  
                           

Income from continuing operations

  $ 1,612   $ 1,222     32 % $ 4,749   $ 3,323     43 %

Net income (loss) attributable to noncontrolling interests

    1     (4 )   NM     2     (9 )   NM  
                           

Net income

  $ 1,611   $ 1,226     31 % $ 4,747   $ 3,332     42 %
                           

Average assets (in billions of dollars)

  $ 338   $ 309     9 % $ 333   $ 307     8 %

Return on assets

    1.89 %   1.57 %         1.91 %   1.45 %      

Total EOP assets (in billions of dollars)

    335     318     6 %                  

Average deposits (in billions of dollars)

    313     296     6     312     292     7 %
                           

Net credit losses as a percentage of average loans

    3.07 %   4.95 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 4,133   $ 3,989     4 % $ 12,121   $ 11,688     4 %
 

Citi-branded cards

    4,135     4,156     (1 )   12,264     12,539     (2 )
                           
   

Total

  $ 8,268   $ 8,145     2 % $ 24,385   $ 24,227      
                           

Income from continuing operations by business

                                     
 

Retail banking

  $ 634   $ 755     (16 )% $ 1,939   $ 2,388     (19 )%
 

Citi-branded cards

    978     467     NM     2,810     935     NM  
                           
   

Total

  $ 1,612   $ 1,222     32 % $ 4,749   $ 3,323     43 %
                           

NM
Not meaningful

14



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 September 30, 2011, NA RCB had $36.5 billion of retail banking loans and $147.4 billion of deposits. In addition, NA RCB had 21.6 million Citi-branded credit card accounts, with $73.8 billion in outstanding card loan balances.

        As previously announced, Citi will transfer the substantial majority of the retail partner cards business from Citi Holdings—Local Consumer Lending to NA RCB, which Citi intends to complete during the first quarter of 2012.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

Net interest revenue

  $ 2,580   $ 2,734     (6 )% $ 7,794   $ 8,466     (8 )%

Non-interest revenue

    838     1,007     (17 )   2,326     2,769     (16 )
                           

Total revenues, net of interest expense

  $ 3,418   $ 3,741     (9 )% $ 10,120   $ 11,235     (10 )%
                           

Total operating expenses

  $ 1,811   $ 1,458     24 % $ 5,274   $ 4,591     15 %
                           
 

Net credit losses

  $ 1,155   $ 1,970     (41 )% $ 3,901   $ 6,253     (38 )%
 

Credit reserve build (release)

    (653 )   40     NM     (2,059 )   36     NM  
 

Provisions for benefits and claims

    7     6     17     17     19     (11 )
                           

Provisions for loan losses and for benefits and claims

  $ 509   $ 2,016     (75 )% $ 1,859   $ 6,308     (71 )%
                           

Income from continuing operations before taxes

  $ 1,098   $ 267     NM   $ 2,987   $ 336     NM  

Income taxes (benefits)

    406     90     NM     1,059     89     NM  
                           

Income from continuing operations

  $ 692   $ 177     NM   $ 1,928   $ 247     NM  

Net income attributable to noncontrolling interests

                         
                           

Net income

  $ 692   $ 177     NM   $ 1,928   $ 247     NM  
                           

Average assets (in billions of dollars)

  $ 125   $ 118     6 % $ 121   $ 119     2 %

Average deposits (in billions of dollars)

    145     145         144     145      
                           

Net credit losses as a percentage of average loans

    4.24 %   7.39 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 1,282   $ 1,373     (7 )% $ 3,720   $ 3,976     (6 )%
 

Citi-branded cards

    2,136     2,368     (10 )   6,400     7,259     (12 )
                           
   

Total

  $ 3,418   $ 3,741     (9 )% $ 10,120   $ 11,235     (10 )%
                           

Income (loss) from continuing operations by business

                                     
 

Retail banking

  $ 126   $ 205     (39 )% $ 318   $ 579     (45 )%
 

Citi-branded cards

    566     (28 )   NM     1,610     (332 )   NM  
                           
   

Total

  $ 692   $ 177     NM   $ 1,928   $ 247     NM  
                           

NM
Not meaningful

3Q11 vs. 3Q10

        Net income increased $515 million as compared to the prior year, driven by improvements in credit costs, in part offset by lower revenues and higher expenses.

        Revenues decreased 9% mainly due to lower loan balances and margin pressure in the cards business as well as lower mortgage-related revenues (primarily lower refinancing activity as compared to the prior-year period). Net interest revenue was down 6% driven primarily by a 4% reduction in average loans. In addition, cards net interest revenue was negatively impacted by the look-back provision of the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) which reduced the net interest margin. (The "look-back" provision of the CARD Act generally requires a review to be done once every six months for card accounts where the annual percentage rate (APR) has been increased since January 1, 2009 to assess whether changes in credit risk, market conditions or other factors merit a future decline in the APR.) Cards net interest revenue as a percentage of average loans decreased to 9.38% from 10.06% in the prior year. Non-interest revenue decreased 17% due to lower gains from mortgage loan sales. This was primarily driven by loan originations which were 9% lower than the prior year. Cards purchase sales were up 2% as compared to the prior year.

        Expenses increased 24%, primarily driven by higher investment spending, particularly in cards marketing and technology, and the absence of a $78 million benefit from the renegotiation of a third-party contract in the prior period. Assuming credit continues to improve, investment spending will likely remain at elevated levels, but is expected to be partly offset by continued savings initiatives.

        Provisions decreased $1.5 billion, or 75%, primarily due to a net loan loss reserve release of $653 million in the current quarter and lower net credit losses in the Citi-branded cards portfolio. Cards net credit losses were down $790 million, or 42%, from the prior-year quarter, and the net credit loss ratio decreased 387 basis points to 5.94%. The decline in credit costs was driven by improving credit conditions as well as stricter underwriting criteria, which has lowered the cards risk

15


profile. Citi believes the improvements in, and Citi's resulting benefit from, declining credit costs in NA RCB will likely slow during the remainder of 2011 and into 2012 as credit trends begin to approach more normalized levels.

3Q11 YTD vs. 3Q10 YTD

        Year-to-date, NA RCB has experienced similar trends to those described above. Net income increased $1,681 million as compared to the prior year driven by improvements in credit costs partially offset by lower revenues and higher expenses.

        Revenues decreased 10% mainly due to lower loan balances and the margin pressure in the cards business as well as lower mortgage-related revenues, as described above. Net interest revenue was down 8% driven primarily by lower volumes in cards, with average loans lower by 5%. In addition, cards net interest margin was negatively impacted, primarily by the look-back provision of the CARD Act. Non-interest revenue decreased 16% from the prior year, mainly due to lower gains from mortgage loan sales and lower net mortgage servicing revenues.

        Expenses increased 15%, primarily driven by the higher investment spending described above. This was offset partly by ongoing savings initiatives.

        Provisions decreased $4.4 billion, or 71%, primarily due to a loan loss reserve release of $2.1 billion in the current year-to-date period and lower net credit losses in the Citi-branded cards portfolio. Cards net credit losses were down $2.3 billion, or 39%, from the prior year-to-date, and the net credit loss ratio decreased 370 basis points to 6.72%. The decline in credit costs was driven by the improving credit conditions and stricter underwriting criteria described above.

16



EMEA REGIONAL CONSUMER BANKING

        EMEA Regional Consumer Banking (EMEA RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, primarily in Central and Eastern Europe, the Middle East and Africa. 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 September 30, 2011, EMEA RCB had 294 retail bank branches with 3.7 million customer accounts, $4.3 billion in retail banking loans and $9.4 billion in deposits. In addition, the business had 2.6 million Citi-branded card accounts with $2.7 billion in outstanding card loan balances.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

Net interest revenue

  $ 221   $ 220       $ 680   $ 694     (2 )%

Non-interest revenue

    142     127     12 %   467     430     9  
                           

Total revenues, net of interest expense

  $ 363   $ 347     5 % $ 1,147   $ 1,124     2 %
                           

Total operating expenses

  $ 328   $ 305     8 % $ 975   $ 855     14 %
                           
 

Net credit losses

  $ 49   $ 63     (22 )% $ 145   $ 244     (41 )%
 

Credit reserve build (release)

    (32 )   (48 )   33     (121 )   (105 )   (15 )
 

Provision for unfunded lending commitments

                3     (4 )   NM  
                           

Provisions for loan losses

  $ 17   $ 15     13 % $ 27   $ 135     (80 )%
                           

Income from continuing operations before taxes

  $ 18   $ 27     (33 )% $ 145   $ 134     8 %

Income taxes

    9     10     (10 )   60     45     33  
                           

Income from continuing operations

  $ 9   $ 17     (47 )% $ 85   $ 89     (4 )%

Net income attributable to noncontrolling interests

    1     (1 )   NM     3     (1 )   NM  
                           

Net income

  $ 8   $ 18     (56 )% $ 82   $ 90     (9 )%
                           

Average assets (in billions of dollars)

  $ 10   $ 10       $ 10   $ 10      

Return on assets

    0.32 %   0.71 %         1.10 %   1.20 %      

Average deposits (in billions of dollars)

  $ 10   $ 9     11 %   10     9     11 %
                           

Net credit losses as a percentage of average loans

    2.70 %   3.57 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 199   $ 184     8 % $ 628   $ 607     3 %
 

Citi-branded cards

    164     163     1     519     517      
                           
   

Total

  $ 363   $ 347     5 % $ 1,147   $ 1,124     2 %
                           

Income (loss) from continuing operations by business

                                     
 

Retail banking

  $ (21 ) $ (24 )   13 % $ (35 ) $ (27 )   (30 )%
 

Citi-branded cards

    30     41     (27 )   120     116     3  
                           
   

Total

  $ 9   $ 17     (47 )% $ 85   $ 89     (4 )%
                           

NM
Not meaningful

3Q11 vs. 3Q10

        Net income declined 56%, as higher revenues were more than offset by higher operating expenses and an increase in credit costs as compared to the prior-year-period. On a year-over-year basis, the U.S. dollar generally depreciated versus local currencies. The impact of FX translation accounted for 3% of the growth in revenues, while contributing 2% to expenses and approximately $1 million to net income.

        Revenues were up 5%, driven by the impact of FX translation, as well as the overall improved underlying performance and a higher contribution from Akbank, Citi's equity investment in Turkey. Net interest revenue was flat, as better spreads on lower cost deposits and retail loan growth of 5% were mostly offset by spread compression. Interest rate caps on credit cards, particularly in Turkey and Poland, and the continued liquidation of a higher yielding non-strategic retail banking portfolio were the main contributors to the lower spreads. Non-interest revenue increased 12%, reflecting higher investment sales, credit cards fees and the higher contribution from Akbank. The underlying drivers in EMEA RCB showed growth as investment sales grew 67% and cards purchase sales grew 13% year-on-year.

        Expenses increased 8%, mostly reflecting account acquisition-focused investment spending, an expansion of the sales force and higher transactional expenses, partly offset by continued savings initiatives.

        Provisions were 13% higher due to lower loan loss reserve releases. Net credit losses continued to improve, declining 22% due to the ongoing improvement in credit quality and the move towards lower risk products, although the pace of improvement has slowed and will likely continue to slow. Citi expects that as the portfolio continues to grow and season, provisions could continue to increase.

3Q11 YTD vs. 3Q10 YTD

        Net income declined 9%, primarily due to the increased investment spending, partially offset by the improvement in credit trends. The impact of FX translation accounted for 3% of the growth in revenues, while contributing 2% to expenses and $9 million to net income.

        Revenues improved 2% driven by the impact of FX translation and improved underlying trends, mostly offset by the continued liquidation of non-strategic customer portfolios and a lower contribution from Akbank. Net interest revenue was 2% lower due to the continued decline in the higher yielding non-strategic retail banking portfolio and spread

17


compression in the cards portfolio. The spread headwind created by lowering the risk of the portfolio is currently expected to continue in the near term. Non-interest revenue increased 9%, reflecting higher investment sales and cards fees partly offset by the lower contribution from Akbank. Underlying drivers continued to show growth as investment sales grew 40% from the prior year-to-date period and average assets under management grew 17%.

        Expenses increased 14%, primarily due to the factors described above.

        Provisions were 80% lower than the prior year-to-date period. Net credit losses decreased 41%, reflecting continued credit quality improvement and the move to lower risk products, and loan loss reserve releases were $15 million higher in the current year-to-date period, Citi expects that as the portfolio continues to grow and season, provisions could increase in the future.

18


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 September 30, 2011, LATAM RCB overall had 2,215 retail branches, with 27.2 million customer accounts, $22.0 billion in retail banking loans and $43.7 billion in deposits. In addition, the business had 13.3 million Citi-branded card accounts with $12.9 billion in outstanding loan balances.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

Net interest revenue

  $ 1,656   $ 1,492     11 % $ 4,843   $ 4,402     10 %

Non-interest revenue

    764     731     5     2,286     1,996     15  
                           

Total revenues, net of interest expense

  $ 2,420   $ 2,223     9 % $ 7,129   $ 6,398     11 %
                           

Total operating expenses

  $ 1,481   $ 1,287     15 % $ 4,332   $ 3,750     16 %
                           
 

Net credit losses

  $ 406   $ 451     (10 )% $ 1,238   $ 1,417     (13 )%
 

Credit reserve build (release)

    63     (298 )   NM     (105 )   (676 )   84  
 

Provision for benefits and claims

    38     32         98     90     9  
                           

Provisions for loan losses and for benefits and claims

  $ 507   $ 185     NM   $ 1,231   $ 831     48 %
                           

Income from continuing operations before taxes

  $ 432   $ 751     (42 )% $ 1,566   $ 1,817     (14 )%

Income taxes

    88     219     (60 )   342     454     (25 )
                           

Income from continuing operations

  $ 344   $ 532     (35 )% $ 1,224   $ 1,363     (10 )%

Net income (loss) attributable to noncontrolling interests

        (3 )   NM     (1 )   (8 )   88  
                           

Net income

  $ 344   $ 535     (36 )% $ 1,225   $ 1,371     (11 )%
                           

Average assets (in billions of dollars)

  $ 80   $ 73     10 % $ 80   $ 72     11 %

Return on assets

    1.71 %   2.91 %         2.05 %   2.55 %      

Average deposits (in billions of dollars)

  $ 46   $ 40     15     47     40     17  
                           

Net credit losses as a percentage of average loans

    4.37 %   5.72 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 1,397   $ 1,290     8 % $ 4,135   $ 3,704     12 %
 

Citi-branded cards

    1,023     933     10     2,994     2,694     11  
                           
   

Total

  $ 2,420   $ 2,223     9 % $ 7,129   $ 6,398     11 %
                           

Income from continuing operations by business

                                     
 

Retail banking

  $ 173   $ 251     (31 )% $ 714   $ 733     (3 )%
 

Citi-branded cards

    171     281     (39 )   510     630     (19 )
                           
   

Total

  $ 344   $ 532     (35 )% $ 1,224   $ 1,363     (10 )%
                           

3Q11 vs. 3Q10

        LATAM RCB net income declined 36% due to an increase in provisions and expenses, partly offset by higher revenues. Year-over-year, the U.S. dollar generally depreciated versus local currencies. While the impact of FX translation accounted for 4% of the growth in revenues and expenses, it contributed half that amount to net income.

        Revenues were up 9%, driven by the impact of FX translation as well as positive momentum from investment initiatives and sustained economic growth in the region which resulted in continued expansion in business volumes. Net interest revenue increased 11% due to growth in loans and deposits, partially offset by continued spread compression. Average loans expanded in both retail banking and cards by 22% and 12%, respectively, and deposits grew by 14%. While the portfolio expanded, stricter underwriting criteria resulted in a lowering of the risk profile, causing spread compression, which is likely to remain an issue in the near term. Non-interest revenue was up 5%, primarily due to higher fees in cards resulting from a 26% increase in purchase sales and a 7% increase in card accounts.

        Expenses increased 15% mostly due to the higher volumes, investment initiatives and legal and related charges. These increases were partly offset by continued savings initiatives.

        Provisions increased by $322 million, as a prior-year loan loss reserve release was replaced by a build of $63 million in the current quarter, related to certain specific Local Commercial Bank clients. Net credit losses declined by 10%, as credit conditions continued to improve, particularly in Mexico and ACCA (Andean, Caribbean and Central American) cards. The cards net credit loss ratio declined across the region year-over-year, from 10.4% to 8.4%. Similarly, the retail banking net credit loss ratio also improved from 2.7% to 1.9%, reflecting the continued improving credit in the region. Citi expects that as the portfolio continues to grow and to season, provisions could continue to increase.

3Q11 YTD vs. 3Q10 YTD

        Year-to-date, LATAM RCB has experienced similar trends to those described above. Net income declined 11% driven primarily by an increase in provisions, while FX translation contributed 5% to the growth in revenues and expenses and 4% to net income.

        Revenues increased 11%, mainly due to higher business volumes as well as the impact of FX translation. Net interest

19


revenue increased 10%, driven by the continued growth in lending and deposit volumes, partly offset by spread compression. Non-interest revenue was up 14%, mostly due to higher cards fees resulting from a 27% growth in purchase sales.

        Expenses increased 16%, mostly due to higher volumes and investment spending (mainly marketing and account acquisition), partly offset by continued savings initiatives.

        Provisions increased 48%, as lower loan loss reserve releases were only partially offset by a decline in net credit losses. Mexico and ACCA cards continued to experience improving credit conditions. As mentioned above, provisions could continue to increase as the portfolio continues to grow and season.

20


ASIA REGIONAL CONSUMER BANKING

        Asia Regional Consumer Banking (Asia RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, with the largest Citi presence in South Korea, Japan, Taiwan, Singapore, Australia, Hong Kong, India and Indonesia. At September 30, 2011, Asia RCB had 673 retail branches, 16.5 million retail banking accounts, $64.5 billion in retail banking loans and $109.3 billion in deposits. In addition, the business had 15.8 million Citi-branded card accounts with $20.0 billion in outstanding loan balances.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

Net interest revenue

  $ 1,360   $ 1,229     11 % $ 4,033   $ 3,776     7 %

Non-interest revenue

    707     605     17     1,956     1,694     15  
                           

Total revenues, net of interest expense

  $ 2,067   $ 1,834     13 % $ 5,989   $ 5,470     9 %
                           

Total operating expenses

  $ 1,133   $ 1,035     9 % $ 3,419   $ 2,915     17 %
                           
 

Net credit losses

  $ 236   $ 246     (4 )% $ 673   $ 777     (13 )%
 

Credit reserve build (release)

    (40 )   (94 )   57     (94 )   (244 )   61  
                           

Provisions for loan losses

  $ 196   $ 152     29 % $ 579   $ 533     9 %
                           

Income from continuing operations before taxes

  $ 738   $ 647     14 % $ 1,991   $ 2,022     (2 )%

Income taxes

    171     151     13     479     398     20  
                           

Income from continuing operations

  $ 567   $ 496     14 % $ 1,512   $ 1,624     (7 )%

Net income attributable to noncontrolling interests

                         
                           

Net income

  $ 567   $ 496     14 % $ 1,512   $ 1,624     (7 )%
                           

Average assets (in billions of dollars)

  $ 123   $ 108     14 % $ 121   $ 106     14 %

Return on assets

    1.83 %   1.82 %         1.67 %   2.05 %      

Average deposits (in billions of dollars)

  $ 112   $ 101     11     111     98     13  
                           

Net credit losses as a percentage of average loans

    1.08 %   1.30 %                        
                           

Revenue by business

                                     
 

Retail banking

  $ 1,255   $ 1,142     10 % $ 3,638   $ 3,401     7 %
 

Citi-branded cards

    812     692     17     2,351     2,069     14  
                           
   

Total

  $ 2,067   $ 1,834     13 % $ 5,989   $ 5,470     9 %
                           

Income from continuing operations by business

                                     
 

Retail banking

  $ 356   $ 323     10 % $ 942   $ 1,103     (15 )%
 

Citi-branded cards

    211     173     22     570     521     9  
                           
   

Total

  $ 567   $ 496     14 % $ 1,512   $ 1,624     (7 )%
                           

3Q11 vs. 3Q10

        Net income increased 14% year-over-year driven by positive operating leverage which contributed to increased margin, partially offset by an increase in provisions. Year-over-year, the U.S. dollar generally depreciated versus local currencies. While the impact of FX translation accounted for approximately 7% of the growth in revenues and expenses, it contributed about half that amount to net income.

        Revenues increased 13%, driven by higher business volumes and the impact of FX translation, partly offset by continued spread compression. Net interest revenue increased 11%, as past investment initiatives and sustained economic growth in the region continue to drive higher lending and deposit volumes. Spread compression partly offset the benefit of higher balances. Stricter underwriting criteria also resulted in a lowering of the risk profile. While spread compression will likely remain a headwind in the near-term, there are other indications that it is beginning to abate. Non-interest revenue increased 17%, primarily due to an 18% increase in cards purchase sales and higher revenues from FX products. Investment sales declined 16% as a result of market volatility, particularly in Japan and Taiwan.

        Expenses increased 9%, due to continued investment spending and growth in business volumes as well as the impact of FX translation, while ongoing productivity savings were a partial offset.

        Provisions increased 29% as lower loan loss reserve releases were partially offset by lower net credit losses. The increase in credit provisions reflected the increasing volumes in the region, partially offset by continued credit quality improvement. India remained a significant driver of the improvement in credit quality, as it continued to de-risk elements of its legacy portfolio. Citi expects that provisions could continue to increase as the portfolio continues to grow and season.

3Q11 YTD vs. 3Q10 YTD

        Year-to-date, Asia RCB has experienced similar trends to those described above. Net income decreased 7%, driven by higher operating expenses and lower loan loss reserve releases. The impact of FX translation accounted for 6% of the growth in revenue and expenses and 5% for net income.

        Revenues increased 9%, primarily driven by the impact of FX translation and higher business volumes, partially offset by lower spreads and an $80 million charge for the repurchase of certain securities in the current year-to-date period. Net interest revenue increased 7% mainly due to higher lending and deposit volumes. This was partially offset by spread

21


compression. The 15% increase in non-interest revenue was primarily due to a 20% increase in cards purchase sales and a 6% increase in investment sales, partially offset by the charge for the repurchase of certain securities.

        Expenses increased 17% year-to-date in part due to higher legal and related expenses, continued investment spending and increases in business volumes. The increase in operating expenses was partially offset by ongoing productivity savings.

        Provisions were 9% higher year-to-date as lower loan loss reserve releases were partially offset by lower net credit losses. The increase in provisions reflected the increasing volumes in the region, partially offset by continued credit quality improvement, particularly in India. As described above, provisions could continue to increase as the portfolio continues to grow and season.

22


INSTITUTIONAL CLIENTS GROUP

        Institutional Clients Group (ICG) includes Securities and Banking and Transaction Services. ICG provides corporate, institutional, public sector and high-net-worth clients around the world with a full range of products and services, including cash management, foreign exchange, trade finance and services, securities services, sales and trading, 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 September 30, 2011, ICG had $1,029 billion of assets and $466 billion of deposits.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

Commissions and fees

  $ 1,159   $ 1,016     14 % $ 3,423   $ 3,210     7 %

Administration and other fiduciary fees

    649     674     (4 )   2,127     2,012     6  

Investment banking

    590     829     (29 )   2,384     2,374      

Principal transactions

    1,665     1,539     8     5,213     6,623     (21 )

Other

    1,528     346     NM     1,705     1,297     31  
                           
 

Total non-interest revenue

  $ 5,591   $ 4,404     27 % $ 14,852   $ 15,516     (4 )%
 

Net interest revenue (including dividends)

    3,846     3,740     3     11,320     11,557     (2 )
                           

Total revenues, net of interest expense

  $ 9,437   $ 8,144     16 % $ 26,172   $ 27,073     (3 )%

Total operating expenses

    5,025     4,846     4     15,441     14,591     6  
 

Net credit losses

    87     290     (70 )   447     436     3  
 

Provision (release) for unfunded lending commitments

    45     1     NM     41     (29 )   NM  
 

Credit reserve build (release)

    32     (27 )   NM     (418 )   (436 )   4  
                           

Provisions for loan losses and benefits and claims

  $ 164   $ 264     (38 )% $ 70   $ (29 )   NM  
                           

Income from continuing operations before taxes

  $ 4,248   $ 3,034     40 % $ 10,661   $ 12,511     (15 )%

Income taxes

    1,214     723     68     3,001     3,473     (14 )
                           

Income from continuing operations

  $ 3,034   $ 2,311     31 % $ 7,660   $ 9,038     (15 )%

Net income attributable to noncontrolling interests

    5     34     (85 )   27     80     (66 )
                           

Net income

  $ 3,029   $ 2,277     33 % $ 7,633   $ 8,958     (15 )%
                           

Average assets (in billions of dollars)

  $ 1,043   $ 943     11 % $ 1,028   $ 938     10 %

Return on assets

    1.15 %   0.96 %         0.99 %   1.28 %      
                           

Revenues by region

                                     
 

North America

  $ 3,065   $ 2,824     9 % $ 8,736   $ 10,280     (15 )%
 

EMEA

    3,192     2,570     24     8,630     8,531     1  
 

Latin America

    961     1,032     (7 )   3,080     2,916     6  
 

Asia

    2,219     1,718     29     5,726     5,346     7  
                           

Total

  $ 9,437   $ 8,144     16 % $ 26,172   $ 27,073     (3 )%
                           

Income from continuing operations by region

                                     
 

North America

  $ 787   $ 557     41 % $ 1,833   $ 3,113     (41 )%
 

EMEA

    1,026     805     27     2,702     2,803     (4 )
 

Latin America

    377     451     (16 )   1,283     1,234     4  
 

Asia

    844     498     69     1,842     1,888     (2 )
                           

Total

  $ 3,034   $ 2,311     31 % $ 7,660   $ 9,038     (15 )%
                           

Average loans by region (in billions of dollars)

                                     
 

North America

  $ 70   $ 66     6 % $ 68   $ 68      
 

EMEA

    48     38     26     46     37     24 %
 

Latin America

    30     23     30     28     23     22  
 

Asia

    54     38     42     49     34     44  
                           

Total

  $ 202   $ 165     22 % $ 191   $ 162     18 %
                           

NM
Not meaningful

23


SECURITIES AND BANKING

        Securities and Banking (S&B) offers a wide array of investment and commercial banking services and products for corporations, governments, institutional and 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 and investment banking services and other such activities. Revenue generated from these activities is recorded in Commissions and fees. In addition, as a market maker, S&B facilitates transactions, including 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.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

Net interest revenue

  $ 2,347   $ 2,301     2 % $ 6,904   $ 7,319     (6 )%

Non-interest revenue

    4,376     3,300     33     11,320     12,255     (8 )
                           

Revenues, net of interest expense

  $ 6,723   $ 5,601     20 % $ 18,224   $ 19,574     (7 )%

Total operating expenses

    3,582     3,610     (1 )   11,288     11,011     3  
 

Net credit losses

    70     289     (76 )   424     433     (2 )
 

Provisions for unfunded lending commitments

    54     1     NM     50     (29 )   NM  
 

Credit reserve build (release)

    50     (11 )   NM     (427 )   (368 )   (16 )
                           

Provisions for loan losses and benefits and claims

  $ 174   $ 279     (38 )% $ 47   $ 36     31 %
                           

Income before taxes and noncontrolling interests

  $ 2,967   $ 1,712     73 % $ 6,889   $ 8,527     (19 )%

Income taxes

    830     327     NM     1,855     2,285     (19 )

Income from continuing operations

    2,137     1,385     54     5,034     6,242     (19 )

Net income attributable to noncontrolling interests

        29     (100 )   13     65     (80 )
                           

Net income

  $ 2,137   $ 1,356     58 % $ 5,021   $ 6,177     (19 )%
                           

Average assets (in billions of dollars)

  $ 910   $ 834     9 % $ 899   $ 835     8 %

Return on assets

    0.93 %   0.65 %         0.75 %   0.99 %      
                           

Revenues by region

                                     
 

North America

  $ 2,445   $ 2,203     11 % $ 6,898   $ 8,384     (18 )%
 

EMEA

    2,299     1,735     33     6,002     6,015      
 

Latin America

    519     643     (19 )   1,786     1,815     (2 )
 

Asia

    1,460     1,020     43     3,538     3,360     5  
                           

Total revenues

  $ 6,723   $ 5,601     20 % $ 18,224   $ 19,574     (7 )%
                           

Net income from continuing operations by region

                                     
 

North America

  $ 666   $ 430     55 % $ 1,461   $ 2,669     (45 )%
 

EMEA

    737     499     48     1,846     1,874     (1 )
 

Latin America

    208     277     (25 )   779     747     4  
 

Asia

    526     179     NM     948     952      
                           

Total net income from continuing operations

  $ 2,137   $ 1,385     54 % $ 5,034   $ 6,242     (19 )%
                           

Securities and Banking revenue details

                                     
 

Total investment banking

  $ 736   $ 930     (21 )% $ 2,672   $ 2,661      
 

Lending

    1,030     (11 )   NM     1,638     769     NM  
 

Equity markets

    634     1,040     (39 )   2,516     2,905     (13 )%
 

Fixed income markets

    3,802     3,501     9     10,630     12,596     (16 )
 

Private bank

    557     497     12     1,627     1,503     8  
 

Other

    (36 )   (356 )   90     (859 )   (860 )    
                           

Total Securities and Banking revenues

  $ 6,723   $ 5,601     20 % $ 18,224   $ 19,574     (7 )%
                           

NM
Not meaningful

24


3Q11 vs. 3Q10

        Third quarter of 2011 S&B results of operations were significantly impacted by continued macroeconomic concerns, including the U.S. debt ceiling debate and subsequent downgrade of U.S. sovereign credit, the ongoing sovereign debt crisis in Europe and general continued concerns about the health of the global economy. Market fears led to a broad widening of credit spreads and heightened volatility during the quarter, combined with declining liquidity in many markets as many participants stayed on the sidelines.

        Net Income of $2.1 billion increased 58% primarily due to $1.9 billion of CVA recorded in the current quarter (see table below). Expenses and provisions both declined.

        Revenues of $6.7 billion increased 20%, including $1.8 billion higher CVA gains driven by the widening of Citigroup's credit spreads. Excluding CVA, revenues decreased 12%, reflecting lower results in fixed income markets, equity markets and investment banking, partially offset by increased lending revenues. Fixed income markets revenues decreased 33% excluding CVA, driven by lower results in credit and securitized products as the market volatility and widening credit spreads negatively impacted market making revenues. These declines were partially offset by growth in rates and currencies.

        Equity markets revenues decreased 73% excluding CVA, reflecting the difficult market conditions which drove declines in derivatives and equity proprietary trading (which Citi also refers to as equity principal strategies). The decline in equity proprietary trading was also driven in part by the ongoing wind down of positions in Citi's equity proprietary trading business. As of September 30, 2011, Citi estimates it is approximately two-thirds through with the wind down of this business. Overall, "bright line" proprietary trading, as described and defined in the Financial Stability Oversight Committee's study released in January 2011, did not have a material impact on S&B's revenues during the periods reported herein.

        Investment banking revenues declined 21%, as the macroeconomic concerns and market uncertainty drove lower volumes in mergers and acquisitions and debt and equity issuance. Lending revenues increased $1.0 billion due to gains on hedges as credit spreads widened during the quarter. Private Bank revenues increased 11% excluding CVA, due to higher loan and deposit balances, improved customer pricing, and stronger capital markets-related activity.

        Expenses decreased 1%, as lower incentive compensation and ongoing productivity savings more than offset continued investment spending and the impact of FX translation.

        Provisions decreased 38%, primarily attributable to lower net credit losses, partly offset by loan loss reserve builds due to portfolio growth.

3Q11 YTD vs. 3Q10 YTD

        Net Income of $5.0 billion decreased 19% as CVA gains (see table below) were more than offset by declines in fixed income and equity trading activities and higher expenses.

        Revenues of $18.2 billion decreased 7%, despite $1.2 billion of higher CVA gains. Excluding CVA, revenues decreased 13%, primarily driven by lower results in fixed income markets and equity markets, partially offset by increases in lending. Fixed income markets revenues decreased 23% excluding CVA, reflecting lower results in rates and currencies, securitized products and credit products. Equity markets revenues decreased 25% excluding CVA, reflecting lower results in derivatives and equity proprietary trading (which Citi also refers to as equity principal strategies) revenues due to the difficult market conditions. The decrease was partially offset by higher revenues in lending, driven by gains on hedges as credit spreads widened during the year compared to a contraction of spreads in the prior year period, and an increase in Private Bank revenues of 8% excluding CVA.

        Expenses increased 3%. Excluding the impact of the U.K. bonus tax and a litigation reserve release in the first half of 2010, operating expenses grew 4%, primarily due to continued investment spending, increased business volumes and the impact of FX translation, partially offset by productivity saves.

        Provisions increased 31%, primarily due to loan loss reserve builds as a result of portfolio growth.

Securities and Banking Credit Valuation Adjustments

        The table below summarizes pretax gains (losses) related to changes in credit valuation adjustments on debt liabilities for which Citi has elected the fair value option, and on derivative positions, net of hedges, in S&B:

 
  Credit valuation adjustment gain (loss)  
In millions of dollars   Third
Quarter
2011
  Third
Quarter
2010
  Nine
months
ended
Sept. 30,
2011
  Nine
months
ended
Sept. 30,
2010
 

Fixed Income Markets

  $ 1,531   $ 116   $ 1,452   $ 634  

Equity Markets

    345     (22 )   347     5  

Private Bank

    12     5     7     (0 )
                   

Total S&B CVA

  $ 1,888   $ 99   $ 1,806   $ 639  
                   

25


TRANSACTION SERVICES

        Transaction Services is composed of Treasury and Trade Solutions and Securities and Fund Services. Treasury and Trade Solutions provides comprehensive cash management and trade finance and services for corporations, financial institutions and public sector entities worldwide. Securities and Fund Services provides securities services to investors, such as global asset managers, custody and clearing services to intermediaries such as broker-dealers, and depository and agency/trust services to multinational corporations and governments globally. Revenue is generated from net interest revenue on deposits in these businesses, as well as from trade loans and fees for transaction processing and fees on assets under custody and administration in Securities and Fund Services.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

Net interest revenue

  $ 1,499   $ 1,439     4 % $ 4,416   $ 4,238     4 %

Non-interest revenue

    1,215     1,104     10     3,532     3,261     8  
                           

Total revenues, net of interest expense

  $ 2,714   $ 2,543     7 % $ 7,948   $ 7,499     6 %

Total operating expenses

    1,443     1,236     17     4,153     3,580     16  

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

    (10 )   (15 )   33     23     (65 )   NM  
                           

Income before taxes and noncontrolling interests

  $ 1,281   $ 1,322     (3 )% $ 3,772   $ 3,984     (5 )%

Income taxes

    384     396     (3 )   1,146     1,188     (4 )

Income from continuing operations

    897     926     (3 )   2,626     2,796     (6 )

Net income attributable to noncontrolling interests

    5     5         14     15     (7 )
                           

Net income

  $ 892   $ 921     (3 )% $ 2,612   $ 2,781     (6 )%
                           

Average assets (in billions of dollars)

  $ 133   $ 109     22 % $ 129   $ 103     25 %

Return on assets

    2.66 %   3.35 %         2.71 %   3.61 %      
                           

Revenues by region

                                     
 

North America

  $ 620   $ 621       $ 1,838   $ 1,896     (3 )%
 

EMEA

    893     835     7 %   2,628     2,516     4  
 

Latin America

    442     389     14     1,294     1,101     18  
 

Asia

    759     698     9     2,188     1,986     10  
                           

Total revenues

  $ 2,714   $ 2,543     7 % $ 7,948   $ 7,499     6 %
                           

Income from continuing operations by region

                                     
 

North America

  $ 121   $ 127     (5 )% $ 372   $ 444     (16 )%
 

EMEA

    289     306     (6 )   856     929     (8 )
 

Latin America

    169     174     (3 )   504     487     3  
 

Asia

    318     319         894     936     (4 )
                           

Total net income from continuing operations

  $ 897   $ 926     (3 )% $ 2,626   $ 2,796     (6 )%
                           

Key indicators (in billions of dollars)

                                     

Average deposits and other customer liability balances

  $ 365   $ 340     7 % $ 362   $ 326     11 %

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

    12.5     12.4     1                    
                           

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

NM Not meaningful

3Q11 vs. 3Q10

        Net income decreased 3%, mainly due to higher investment spending and the revenue impact of the low interest rate environment, which is expected to remain a headwind in the near term. Year-over-year, the U.S. dollar generally depreciated versus local currencies. The impact of FX translation accounted for 2% of the growth in revenues and 1% of the growth in expenses, while reducing the decline in net income by 4%.

        Revenues grew 7%, driven by international growth. Improvement in fees and increased deposit balances in both the Treasury and Trade Solutions and Securities and Fund Services businesses more than offset spread compression. Average assets grew 22%, driven by a 51% increase in trade assets as a result of focused investments in the trade finance business. Average deposits grew 7% from the prior-year period with a favorable shift to operating balances, as the business continued to emphasize more stable, lower cost deposits as a way to mitigate spread compression. Assets under custody remained relatively flat from the prior year. Treasury and Trade Solutions revenues increased 5%, driven primarily by growth in the trade and commercial cards businesses and increased deposits, partially offset by the impact of the continued low rate environment. Securities and Fund Services revenues increased 11% due to growth in transaction and settlement volumes, driven in part by the increase in activity resulting from market volatility, and new client mandates.

        Expenses increased 17%, reflecting higher volumes and increased investment spending, partially offset by productivity savings.

        Provisions increased 33%, primarily attributable to increased net credit losses, offset by slightly larger credit reserve releases.

3Q11 YTD vs. 3Q10 YTD

        Net income decreased 6%, primarily due to the reasons discussed above as well as higher credit provisions. The impact of FX translation accounted for 2% of the growth in

26


revenues and 1% of the growth in expenses, while reducing the decline in net income by 4%.

        Revenues grew 6%, primarily due to the reasons set forth above. Treasury and Trade Solutions revenues increased 5%, driven primarily by growth in the trade and commercial cards businesses, partially offset by spread compression. Securities and Fund Services revenues increased 9%, driven by higher volumes and client activity.

        Expenses increased 16%, due to higher volumes and increased investment spending.

        Provisions increased by $88 million to positive $23 million, primarily attributable to the current year absence of credit reserve releases recorded in the prior year.

27



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 and portfolios 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 third quarter of 2011, the assets in Citi Holdings declined by approximately $19 billion, composed of nearly $10 billion of asset sales and business dispositions, $7 billion of net run-off and pay-downs and approximately $2 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 $289 billion at September 30, 2011 have been reduced by approximately $132 billion from September 30, 2010 and $538 billion from the peak in the first quarter of 2008. Citi Holdings represented approximately 15% of Citi's assets as of September 30, 2011, while Citi Holdings' risk-weighted assets of approximately $261 billion at September 30, 2011 represented approximately 27% of Citi's risk-weighted assets as of such date.

        As previously announced, Citi will transfer the substantial majority of the retail partner cards business from Citi Holdings—Local Consumer Lending to Citicorp—NA RCB. Citi intends to complete this transfer during the first quarter of 2012. This transfer will further decrease the assets within Citi Holdings as well as materially impact the earnings profile of Citi Holdings, particularly Local Consumer Lending.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

Net interest revenue

  $ 2,473   $ 3,519     (30 )% $ 7,755   $ 11,865     (35 )%

Non-interest revenue

    353     334     6     2,365     3,457     (32 )
                           

Total revenues, net of interest expense

  $ 2,826   $ 3,853     (27 )% $ 10,120   $ 15,322     (34 )%
                           

Provisions for credit losses and for benefits and claims

                                     

Net credit losses

  $ 2,581   $ 4,640     (44 )% $ 9,526   $ 14,879     (36 )%

Credit reserve build (release)

    (835 )   (1,567 )   47     (4,004 )   (2,027 )   (98 )
                           

Provision for loan losses

  $ 1,746   $ 3,073     (43 )% $ 5,522   $ 12,852     (57 )%

Provision for benefits and claims

    215     189     14     624     617     1  

Provision (release) for unfunded lending commitments

    (3 )   26     NM     10     (45 )   NM  
                           

Total provisions for credit losses and for benefits and claims

  $ 1,958   $ 3,288     (40 )% $ 6,156   $ 13,424     (54 )%
                           

Total operating expenses

  $ 2,104   $ 2,228     (6 ) $ 6,327     7,236     (13 )%
                           

Loss from continuing operations before taxes

  $ (1,236 ) $ (1,663 )   26 % $ (2,363 ) $ (5,338 )   56 %

Benefits for income taxes

    (441 )   (597 )   26     (853 )   (2,193 )   61 %
                           

Loss from continuing operations

  $ (795 ) $ (1,066 )   25 % $ (1,510 ) $ (3,145 )   52 %

Net income attributable to noncontrolling interests

    7     80     (91 )   118     99     19 %
                           

Citi Holdings net loss

  $ (802 ) $ (1,146 )   30 % $ (1,628 ) $ (3,244 )   50 %
                           

Balance sheet data (in billions of dollars)

                                     

Total EOP assets

  $ 289   $ 421     (31 )%                  
                           

Total EOP deposits

  $ 71   $ 82     (13 )%                  
                           

NM
Not meaningful

28



BROKERAGE AND ASSET MANAGEMENT

        Brokerage and Asset Management (BAM) consists of Citi's global retail brokerage and asset management businesses. At September 30, 2011, BAM had approximately $26 billion of assets, or approximately 9% of Citi Holdings' 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.

 
  Third Quarter    
  Nine Months    
 
 
  %
Change
  %
Change
 
In millions of dollars   2011   2010   2011   2010  

Net interest revenue (expense)

  $ (42 ) $ (87 )   52 % $ (132 ) $ (223 )   41 %

Non-interest revenue

    97     79     23     371     696     (47 )
                           

Total revenues, net of interest expense

  $ 55   $ (8 )   NM   $ 239   $ 473     (49 )%
                           

Total operating expenses

  $ 145   $ 231     (37 )% $ 549   $ 771     (29 )%
                           
 

Net credit losses

  $ 3   $ 2     50 % $ 4   $ 14     (71 )%
 

Credit reserve build (release)

        (4 )   100     (3 )   (14 )   79  
 

Provision (release)for unfunded lending commitments

    (1 )               (6 )   100  
 

Provision for benefits and claims

    11     9     22     28     27     4  
                           

Provisions for credit losses and for benefits and claims

  $ 13   $ 7     86 % $ 29   $ 21     38 %
                           

Income (loss) from continuing operations before taxes

  $ (103 ) $ (246 )   58 % $ (339 ) $ (319 )   (6 )%

(Benefits) for taxes

    (20 )   (93 )   78     (146 )   (148 )   1  
                           

Income (loss) from continuing operations

  $ (83 ) $ (153 )   46 % $ (193 ) $ (171 )   (13 )%

Net income attributable to noncontrolling interests

    7     6     17     10     8     25  
                           

Net income (loss)

  $ (90 ) $ (159 )   43 % $ (203 ) $ (179 )   (13 )%
                           

EOP assets (in billions of dollars)

  $ 26   $ 28     (7 )%                  

EOP deposits (in billions of dollars)

    54     57     (5 )                  
                           

NM
Not meaningful

3Q11 vs. 3Q10

        Brokerage and Asset Management net loss decreased 43%, driven both by higher revenues and lower expenses. The revenues increase of $63 million was driven by the absence of losses on private equity marks recorded in the prior-year period while expenses decreased 37% due to the sale of Citi's private equity business and lower legal expenses.

        Provisions increased by 86%, reflecting the absence of a credit reserve release recorded in the prior year.

        Assets decreased 7% to $26 billion, driven by the sale of the private equity business referenced above and the continued run-off of loan portfolios.

3Q11 YTD vs. 3Q10 YTD </