0001104659-14-015152.txt : 20140303 0001104659-14-015152.hdr.sgml : 20140303 20140303075717 ACCESSION NUMBER: 0001104659-14-015152 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 42 CONFORMED PERIOD OF REPORT: 20131231 FILED AS OF DATE: 20140303 DATE AS OF CHANGE: 20140303 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIGROUP INC CENTRAL INDEX KEY: 0000831001 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 521568099 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09924 FILM NUMBER: 14658193 BUSINESS ADDRESS: STREET 1: 399 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2125591000 MAIL ADDRESS: STREET 1: 399 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: TRAVELERS GROUP INC DATE OF NAME CHANGE: 19950519 FORMER COMPANY: FORMER CONFORMED NAME: TRAVELERS INC DATE OF NAME CHANGE: 19940103 FORMER COMPANY: FORMER CONFORMED NAME: PRIMERICA CORP /NEW/ DATE OF NAME CHANGE: 19920703 10-K 1 a14-3681_610k.htm 10-K


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
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)
 
10022
(Zip code)
(212) 559-1000
(Registrant's telephone number, including area code)

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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x  No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes x  No o
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x   No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 x
 
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 x
The aggregate market value of Citigroup Inc. common stock held by non-affiliates of Citigroup Inc. on June 30, 2013 was approximately $145.7 billion.
Number of shares of Citigroup Inc. common stock outstanding on January 31, 2014: 3,036,458,909
Documents Incorporated by Reference: Portions of the registrant’s proxy statement for the annual meeting of stockholders scheduled to be held on April 22, 2014, are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III.
Available on the web at www.citigroup.com
 




FORM 10-K CROSS-REFERENCE INDEX
 
 
Item Number
Page
 
 
Part I
 
 
 
1.
 
Business
4–34, 38, 141–145,
 
 
 
148–149, 179,
 
 
 
330–334
 
 
 
 
1A.
 
Risk Factors
57–69
 
 
 
 
1B.
 
Unresolved Staff Comments
Not Applicable
 
 
 
 
2.
 
Properties
332–333
 
 
 
 
3.
 
Legal Proceedings
334
 
 
 
 
4.
 
Mine Safety Disclosures
Not Applicable
 
 
 
 
Part II
 
 
 
5.
 
Market for Registrant’s Common
 
 
 
Equity, Related Stockholder Matters,
 
 
 
and Issuer Purchases of Equity
 
 
 
Securities
158–159, 186, 327,
 
 
 
335–336, 338
 
 
 
 
6.
 
Selected Financial Data
10–11
 
 
 
 
7.
 
Management’s Discussion and
 
 
 
Analysis of Financial Condition and
 
 
 
Results of Operations
6–40, 70–140
 
 
 
 
7A.
 
Quantitative and Qualitative
 
 
 
Disclosures About Market Risk
70–140, 180–182,
 
 
 
209–244, 252–310
 
 
 
 
8.
 
Financial Statements and
 
 
 
Supplementary Data
153–329
 
 
 
 
9.
 
Changes in and Disagreements with
 
 
 
Accountants on Accounting and
 
 
 
Financial Disclosure
Not Applicable
 
 
 
 
 
9A.
 
Controls and Procedures
146–147
 
 
 
 
9B.
 
Other Information
Not Applicable
 
 
 
 
Part III
 
 
10.
 
Directors, Executive Officers and
 
 
 
Corporate Governance
337–338, 340*
 
11.
 
Executive Compensation
**
 
12.
 
Security Ownership of Certain
 
 
 
Beneficial Owners and Management
 
 
 
and Related Stockholder Matters
***
 
13.
 
Certain Relationships and Related
 
 
 
Transactions and Director
 
 
 
Independence
****
 
14.
 
Principal Accountant Fees and
 
 
 
Services
*****
 
Part IV
 
 
15.
 
Exhibits and Financial Statement
 
 
 
Schedules
 
*
For additional information regarding Citigroup’s Directors, see “Corporate Governance,” “Proposal 1: Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the definitive Proxy Statement for Citigroup’s Annual Meeting of Stockholders scheduled to be held on April 22, 2014, to be filed with the SEC (the Proxy Statement), incorporated herein by reference.
**
See “Executive Compensation—The Personnel and Compensation Committee Report,” “—Compensation Discussion and Analysis” and “—2013 Summary Compensation Table” in the Proxy Statement, incorporated herein by reference.
***
See “About the Annual Meeting,” “Stock Ownership” and “Proposal 4, Approval of Amendment to the Citigroup 2009 Stock Incentive Plan” in the Proxy Statement, incorporated herein by reference.
****
See “Corporate Governance—Director Independence,” “—Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation,” and “—Indebtedness” in the Proxy Statement, incorporated herein by reference.
*****
See “Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm” in the Proxy Statement, incorporated herein by reference.


2



CITIGROUP'S 2013 ANNUAL REPORT ON FORM 10-K
OVERVIEW

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

Executive Summary

Five-Year Summary of Selected Financial Data

SEGMENT AND BUSINESS—INCOME (LOSS) AND REVENUES

CITICORP

Global Consumer Banking

North America Regional Consumer Banking

EMEA Regional Consumer Banking

Latin America Regional Consumer Banking

Asia Regional Consumer Banking

Institutional Clients Group

Securities and Banking

Transaction Services

Corporate/Other

CITI HOLDINGS

BALANCE SHEET REVIEW

OFF-BALANCE-SHEET
  ARRANGEMENTS

CONTRACTUAL OBLIGATIONS

CAPITAL RESOURCES

   Current Regulatory Capital Guidelines
 
   Basel III
 
   Regulatory Capital Standards Developments
 
   Tangible Common Equity and Tangible Book
      Value Per Share
 
RISK FACTORS

MANAGING GLOBAL RISK

Risk Management—Overview
 
Risk Management Organization
 
Risk Aggregation and Stress Testing
 
Risk Capital
 
Table of Contents—Credit, Market (Including Funding and Liquidity), Operational, Country and Cross-Border Risk Sections
 
FAIR VALUE ADJUSTMENTS FOR DERIVATIVES AND FAIR VALUE OPTION LIABILITIES

CREDIT DERIVATIVES

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

DISCLOSURE CONTROLS AND PROCEDURES

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

FORWARD-LOOKING STATEMENTS

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM—INTERNAL CONTROL OVER FINANCIAL REPORTING

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM—CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL STATEMENTS AND NOTES TABLE OF CONTENTS

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL DATA SUPPLEMENT

SUPERVISION, REGULATION AND OTHER

Supervision and Regulation
 
Disclosure Pursuant to Section 119 of the Iran Threat Reduction and Syria Human Rights Act
 
Customers
 
Competition
 
Properties
 
LEGAL PROCEEDINGS

UNREGISTERED SALES OF EQUITY, PURCHASES OF EQUITY SECURITIES, DIVIDENDS

CORPORATE INFORMATION
337

        Citigroup Executive Officers
 
CITIGROUP BOARD OF DIRECTORS
340



3



OVERVIEW

Citigroup’s history dates back to the founding of Citibank in 1812. Citigroup’s original corporate predecessor was incorporated in 1988 under the laws of the State of Delaware. Following a series of transactions over a number of years, Citigroup Inc. was formed in 1998 upon the merger of Citicorp and Travelers Group Inc.
Citigroup is a global diversified financial services holding company, whose businesses provide consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. Citi has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions.
At December 31, 2013, Citi had approximately 251,000 full-time employees, compared to approximately 259,000 full-time employees at December 31, 2012.
Citigroup currently operates, for management reporting purposes, via two primary business segments: Citicorp, consisting of Citi’s Global Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of businesses and portfolios of assets that Citigroup has determined are not central to its core Citicorp businesses. For a further description of the business segments and the products and services they provide, see “Citigroup Segments” below, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 to the Consolidated Financial Statements.
Throughout this report, “Citigroup,” “Citi” and “the Company” refer to Citigroup Inc. and its consolidated subsidiaries.
Additional information about Citigroup is available on Citi’s website at www.citigroup.com. Citigroup’s recent annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, as well as other filings with the SEC, are available free of charge through Citi’s website by clicking on the “Investors” page and selecting “All SEC Filings.” The SEC’s website also contains current reports, 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. For information on certain recent such reclassifications, see Citi’s Forms 8-K furnished to the SEC on May 17, 2013 and August 30, 2013.



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



4



As described above, Citigroup is managed pursuant to the following segments:
* Effective in the first quarter of 2014, certain business activities within Securities and Banking and Transaction Services will be realigned and aggregated as Banking and Markets and Securities Services components within the ICG segment. The change is due to the realignment of the management structure within the ICG segment and will have no impact on any total segment-level information. Citi intends to release a revised Quarterly Financial Data Supplement reflecting this realignment prior to the release of first quarter of 2014 earnings information.
The following are the four regions in which Citigroup operates. The regional results are fully reflected in the segment results above.

5



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

EXECUTIVE SUMMARY
Overview

2013—Steady Progress on Execution Priorities and Strategy Despite Continued Challenging Operating Environment
2013 represented a continued challenging operating environment for Citigroup in several respects, including:

changing expectations regarding the Federal Reserve Board’s tapering of quantitative easing and the impact of this uncertainty on the markets, trading environment and customer activity;
the increasing costs of legal settlements across the financial services industry as Citi continued to work through its legacy legal issues; and
a continued low interest rate environment.


These issues significantly impacted Citi’s results of operations, particularly during the second half of 2013. Despite these challenges, however, Citi made progress on its execution priorities as identified in early 2013, including:

Efficient resource allocation, including disciplined expense management—During 2013, Citi completed the significant repositioning actions announced in the fourth quarter of 2012, which resulted in the exit of markets that do not fit Citi’s strategy and contributed to the reduction in its operating expenses year-over-year (see discussion below).
Continued focus on the wind down of Citi Holdings and getting Citi Holdings closer to “break even”—Citi Holdings’ assets declined by $39 billion, or 25%, during 2013, and the net loss for this segment improved by approximately 49% (see discussion below). Citi also was able to resolve certain of its legacy legal issues during 2013, including entering into agreements with Fannie Mae and Freddie Mac relating to residential mortgage representation and warranty repurchase matters.
Utilization of deferred tax assets (DTAs)—Citi utilized approximately $2.5 billion of its DTAs during 2013, including $700 million in the fourth quarter.

While making good progress on these initiatives in 2013, Citi expects the operating environment in 2014 to remain challenging. Short-term interest rates likely will remain low for some time, and thus spread compression could continue to impact most of Citi’s major geographies during the year. (As used throughout this Form 10-K, spread compression refers to the reduction in net interest revenue as a percentage of loans or deposits, as applicable, driven by either lower yields on interest-earning assets or higher costs to fund such assets, or a combination thereof). Given the current litigation and regulatory environment, Citi expects its legal and related expenses will likely remain elevated in 2014. There continues to be uncertainty regarding tapering by the Federal Reserve
 
Board and its impact on the markets, including the emerging markets, and global trading environment. In addition, despite an improved economic environment in 2013, there continues to be questions about the sustainability and pace of ongoing improvement in various markets. Finally, Citi continues to face significant regulatory changes, uncertainties and costs in the U.S. and non-U.S. jurisdictions in which it operates. For a more detailed discussion of these and other risks that could impact Citi’s businesses, results of operations and financial condition during 2014, see “Risk Factors” below.
Despite these ongoing challenges, however, Citi remains highly focused on the continued execution of the priorities discussed above and its strategy, which continues to be to wind down Citi Holdings as soon as practicable in an economically rational manner and leverage its unique global network to:

be a leading provider of financial services to the world’s largest multi-national corporations and investors; and
be the preeminent bank for the emerging affluent and affluent consumers in the world’s largest urban centers.

2013 Summary Results

Citigroup
Citigroup reported net income of $13.7 billion and diluted earnings per share of $4.35 in 2013, compared to $7.5 billion and $2.44 per share, respectively, in 2012. In 2013, results included a credit valuation adjustment (CVA) on derivatives (counterparty and own-credit), net of hedges, and debt valuation adjustment (DVA) on Citi’s fair value option debt of a pretax loss of $342 million ($213 million after-tax) as Citi’s credit spreads tightened during the year, compared to a pretax loss of $2.3 billion ($1.4 billion after-tax) in 2012. Results in the third quarter of 2013 also included a $176 million tax benefit, compared to a $582 million tax benefit in the third quarter of 2012, each of which related to the resolution of certain tax audit items and were recorded in Corporate/Other. In addition, 2013 results included a $189 million after-tax benefit related to the divestiture of Credicard, Citi’s non-Citibank branded cards and consumer finance business in Brazil (Credicard), recorded in Corporate/Other (see Note 2 to the Consolidated Financial Statements). Citigroup’s 2012 results included a pretax loss of $4.6 billion ($2.9 billion after-tax) related to the sale of minority investments (for additional information, see “Corporate/Other” below), as well as approximately $1.0 billion of fourth quarter 2012 pretax repositioning charges ($653 million after-tax).
Excluding the items above, Citi’s net income was $13.5 billion, or $4.30 per diluted share in 2013, up 11% compared to $11.9 billion, or $3.86 per share, in the prior year, as higher revenues, lower operating expenses and lower net credit losses were partially offset by a lower net loan loss reserve release and a higher effective tax rate in 2013 (see Note 9 to the Consolidated Financial Statements). (Citi’s results of operations excluding the impact of CVA/DVA, the impact of the Credicard divestiture, the impact of minority investments,


6



the repositioning charges in the fourth quarter of 2012 and the impact of the tax benefits, each as discussed above, are non-GAAP financial measures. Citi believes the presentation of its results of operations excluding these impacts provides a more meaningful depiction of the underlying fundamentals of its businesses.)
Citi’s revenues, net of interest expense, were $76.4 billion in 2013, up 10% versus the prior year. Excluding CVA/DVA and the impact of minority investments in 2012, revenues were $76.7 billion, up 1%, as revenues in Citi Holdings increased 22% compared to the prior year, while revenues in Citicorp were broadly unchanged. Net interest revenues of $46.8 billion were unchanged versus the prior year, largely driven by continued spread compression in Transaction Services in Citicorp, offset by improvements in Citi Holdings, principally reflecting lower funding costs. Excluding CVA/DVA and the impact of minority investments in 2012, non-interest revenues of $29.9 billion were up 2% from the prior year, principally driven by higher revenues in Securities and Banking, Latin America Regional Consumer Banking (RCB) and Transaction Services in Citicorp, as well as the absence of repurchase reserve builds for representation and warranty claims in Citi Holdings. The increase was partially offset by a decline in mortgage origination revenues, due to significantly lower U.S. mortgage refinancing activity in North America RCB, particularly in the second half of 2013.

Operating Expenses
Citigroup expenses decreased 3% versus the prior year to $48.4 billion. In 2013, Citi incurred legal and related costs of $3.0 billion, compared to $2.8 billion in the prior year. Excluding legal and related costs, the repositioning charges in the fourth quarter of 2012 and the impact of foreign exchange translation into U.S. dollars for reporting purposes (FX translation), which lowered reported expenses by approximately $600 million in 2013 compared to 2012, operating expenses remained relatively unchanged at $45.4 billion compared to $45.5 billion in the prior year. (Citi’s results of operations excluding the impact of FX translation are non-GAAP financial measures. Citigroup believes the presentation of its results of operations excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of its businesses impacted by FX translation.)
Citicorp’s expenses were $42.5 billion, down 5% from the prior year, primarily reflecting efficiency savings and lower legal and related costs and repositioning charges, partially offset by volume-related expenses and ongoing investments in the businesses. In addition, as disclosed on February 28, 2014, Citicorp’s expenses in the fourth quarter of 2013 were impacted as a result of a fraud discovered in Banco Nacional de Mexico (Banamex), a Citi subsidiary in Mexico. The fraud increased fourth quarter of 2013 operating expenses in Transaction Services by an estimated $400 million, with an offset to compensation expense of approximately $40 million associated with the Banamex variable compensation plan. For further information, see “Institutional Clients Group—Transaction Services” below and Note 29 to the Consolidated Financial Statements.
 
Citi Holdings expenses increased 13% year-over-year to $5.9 billion, primarily due to higher legal and related expenses, partially offset by the continued decline in assets and the resulting decline in operating expenses.

Credit Costs and Allowance for Loan Losses
Citi’s total provisions for credit losses and for benefits and claims of $8.5 billion declined 25% from the prior year. Net credit losses of $10.5 billion were down 26% from 2012. Consumer net credit losses declined 27% to $10.3 billion, reflecting improvements in the North America mortgage portfolio within Citi Holdings, as well as North America Citi-branded cards and Citi retail services portfolios in Citicorp. Corporate net credit losses decreased 10% year-over-year to $201 million, driven primarily by continued credit improvement in Securities and Banking in Citicorp.
The net release of allowance for loan losses and unfunded lending commitments was $2.8 billion in 2013, 27% lower than 2012. Citicorp’s net reserve release declined 66% to $736 million, primarily due to a lower reserve release in North America Citi-branded cards and Citi retail services and volume-related loan loss reserve builds in international Global Consumer Banking (GCB). Citi Holdings net reserve release increased 27% to $2.0 billion, substantially all of which related to the North America mortgage portfolio. $2.6 billion of the $2.8 billion net reserve release related to Consumer lending, with the remainder applicable to Corporate.
Citigroup’s total allowance for loan losses was $19.6 billion at year-end 2013, or 2.98% of total loans, compared to $25.5 billion, or 3.92%, at the end of the prior year. The decline in the total allowance for loan losses reflected the continued wind down of Citi Holdings and overall continued improvement in the credit quality of the loan portfolios.
The Consumer allowance for loan losses was $17.1 billion, or 4.35% of total Consumer loans, at year-end 2013, compared to $22.7 billion, or 5.57% of total loans, at year-end 2012. Total non-accrual assets fell to $9.4 billion, a 22% reduction compared to year-end 2012. Corporate non-accrual loans declined 18% to $1.9 billion, while Consumer non-accrual loans declined 23% to $7.0 billion, both reflecting continued credit improvement.

Capital
Citigroup’s Tier 1 Capital and Tier 1 Common ratios were 13.7% and 12.6% as of December 31, 2013, respectively, compared to 14.1% and 12.7% as of December 31, 2012. Citi’s estimated Tier 1 Common ratio under Basel III was 10.6% at year-end 2013, up from an estimated 8.7% at year-end 2012. Citigroup’s estimated Basel III Supplementary Leverage ratio for the fourth quarter 2013 was 5.4%. (For additional information on Citi’s estimated Basel III Tier 1 Common ratio, Supplementary Leverage ratio and related components, see “Risk Factors—Regulatory Risks” and “Capital Resources” below.)

Citicorp
Citicorp net income increased 11% from the prior year to $15.6 billion. The increase largely reflected a lower impact of CVA/DVA and lower repositioning charges, partially offset by


7



higher provisions for income taxes. CVA/DVA, recorded in Securities and Banking, was a negative $345 million in 2013, compared to negative $2.5 billion in the prior year (for a summary of CVA/DVA by business within Securities and Banking for 2013 and comparable periods, see “Institutional Clients Group” below). Results in the third quarter of 2013 also included the $176 million tax benefit in 2013, compared to the $582 million tax benefit in the third quarter of 2012, and the $189 million after-tax benefit related to the divestiture of Credicard. Citicorp’s full year 2012 results included a pretax loss of $53 million ($34 million after-tax) related to the sale of minority investments as well as $951 million of pretax repositioning charges in the fourth quarter of 2012 ($604 million after-tax).
Excluding these items, Citicorp’s net income was $15.4 billion, down 1% from the prior year, as lower operating expenses and lower net credit losses were largely offset by a lower net loan loss reserve release and a higher effective tax rate in 2013.
Citicorp revenues, net of interest expense, increased 3% from the prior year to $71.8 billion. Excluding CVA/DVA and the impact of minority investments, Citicorp revenues were $72.2 billion in 2013, relatively unchanged from 2012. GCB revenues of $38.2 billion declined 2% versus the prior year. North America GCB revenues declined 6% to $19.8 billion, and international GCB revenues (consisting of Asia RCB, Latin America RCB and EMEA RCB) increased 1% year-over-year to $18.4 billion. Excluding the impact of FX translation, international GCB revenues rose 3% year-over-year, driven by 7% revenue growth in Latin America RCB, partially offset by a 1% revenue decline in both EMEA RCB and Asia RCB. Securities and Banking revenues were $23.0 billion in 2013, up 15% from the prior year. Excluding CVA/DVA, Securities and Banking revenues were $23.4 billion, or 4% higher than the prior year. Transaction Services revenues were $10.6 billion, down 1% from the prior year, but relatively unchanged excluding the impact of FX translation (for the impact of FX translation on 2013 results of operations for each of EMEA RCB, Latin America RCB, Asia RCB and Transaction Services, see the table accompanying the discussion of each respective business’ results of operations below). Corporate/Other revenues, excluding the impact of minority investments, increased to $77 million from $17 million in the prior year, mainly reflecting hedging gains.
In North America RCB, the revenue decline was driven by lower mortgage origination revenues due to the significant decline in U.S. mortgage refinancing activity, particularly in the second half of the year, partially offset by higher revenues in Citi retail services, mostly driven by the Best Buy portfolio acquisition in the third quarter of 2013. North America RCB average deposits of $166 billion grew 8% year-over-year and average retail loans of $43 billion grew 3%. Average card loans of $107 billion declined 2%, driven by increased payment rates resulting from ongoing consumer deleveraging, while card purchase sales of $240 billion increased 3% versus the prior year. For additional information on the results of operations of North America RCB for 2013, see “Global Consumer BankingNorth America Regional Consumer Banking” below.
 
Year-over-year, international GCB average deposits declined 2%, while average retail loans increased 6%, investment sales increased 15%, average card loans increased 3%, and international card purchase sales increased 7%, all excluding Credicard and the impact of FX translation. The decline in Asia RCB revenues, excluding the impact of FX translation, reflected the continued impact of spread compression, regulatory changes in certain markets and the ongoing repositioning of Citi’s franchise in Korea. For additional information on the results of operations of Asia RCB for 2013, see “Global Consumer Banking—Asia Regional Consumer Banking” below.
In Securities and Banking, fixed income markets revenues of $13.1 billion, excluding CVA/DVA, declined 7% from the prior year, primarily reflecting industry-wide weakness in rates and currencies, partially offset by strong performance in credit-related and securitized products and commodities. Equity markets revenues of $3.0 billion in 2013, excluding CVA/DVA, were 22% above the prior year driven primarily by market share gains, continued improvement in cash and derivative trading performance and a more favorable market environment. Investment banking revenues rose 8% from the prior year to $4.0 billion, principally driven by higher revenues in equity underwriting and advisory, partially offset by lower debt underwriting revenues. Lending revenues of $1.2 billion increased 40% from the prior year, driven by lower mark-to-market losses on hedges related to accrual loans due to less significant credit spread tightening versus 2012. Excluding the mark-to-market on hedges related to accrual loans, core lending revenues decreased 4%, primarily due to increased hedge premium costs and moderately lower loan balances, partially offset by higher spreads. Private Bank revenues of $2.5 billion increased 4% from the prior year, excluding CVA/DVA, with growth across all regions and products, particularly in managed investments and capital markets. For additional information on the results of operations of Securities and Banking for 2013, see “Institutional Clients Group—Securities and Banking” below.
In Transaction Services, growth from higher deposit balances, trade loans and fees from increased market volumes was offset by continued spread compression. Excluding the impact of FX translation, Securities and Fund Services revenues increased 4%, as growth in settlement volumes and assets under custody were partially offset by spread compression related to deposits. Treasury and Trade Solutions revenues decreased 1% excluding the impact of FX translation, as the ongoing impact of spread compression globally was partially offset by higher balances and fee growth. For additional information on the results of operations of Transaction Services for 2013, see “Institutional Clients GroupTransaction Services” below.
Citicorp end-of-period loans increased 6% year-over-year to $573 billion, with 2% growth in Consumer loans and 11% growth in Corporate loans.

Citi Holdings
Citi Holdings’ net loss was $1.9 billion in 2013 compared to a $6.5 billion net loss in 2012. The decline in the net loss year-over-year was primarily driven by the absence of the 2012


8



pretax loss of $4.7 billion ($2.9 billion after-tax) related to the Morgan Stanley Smith Barney joint venture (MSSB). Excluding the 2012 MSSB loss, $77 million ($49 million after-tax) of repositioning charges in the fourth quarter 2012 and CVA/DVA (positive $3 million in 2013 compared to positive $157 million in 2012), Citi Holdings net loss of $1.9 billion in 2013 improved 49% from a net loss of $3.7 billion in the prior year. The improvement in the net loss was due to significantly lower provisions for credit losses and higher revenue, partially offset by the increase in expenses driven by higher legal and related costs, as discussed above.
Citi Holdings revenues increased to $4.5 billion, compared to a negative $792 million in the prior year. Excluding the 2012 MSSB loss and CVA/DVA, Citi Holdings revenues were $4.5 billion in 2013 compared to $3.7 billion in the prior year. Net interest revenues increased 22% year-over-year to $3.2 billion, largely driven by lower funding costs. Non-interest revenues, excluding the 2012 MSSB loss and CVA/DVA, increased 21% to $1.4 billion, primarily driven by lower asset marks and the lower repurchase reserve builds, partially offset by lower consumer revenues and gains on asset sales.
Citi Holdings assets declined 25% year-over-year to $117 billion as of year-end 2013, and represented approximately 6% of total Citi’s GAAP assets and 19% of its estimated risk-weighted assets under Basel III (based on the “Advanced Approaches” for determining risk-weighted assets).




9



RESULTS OF OPERATIONS
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA—PAGE 1
In millions of dollars, except per-share amounts and ratios
2013
2012
2011
2010
2009
Net interest revenue
$
46,793

$
46,686

$
47,649

$
53,539

$
47,973

Non-interest revenue
29,573

22,442

29,682

32,237

31,592

Revenues, net of interest expense
$
76,366

$
69,128

$
77,331

$
85,776

$
79,565

Operating expenses
48,355

49,974

50,250

46,851

47,371

Provisions for credit losses and for benefits and claims
8,514

11,329

12,359

25,809

39,970

Income (loss) from continuing operations before income taxes
$
19,497

$
7,825

$
14,722

$
13,116

$
(7,776
)
Income taxes (benefits)
5,867

7

3,575

2,217

(6,716
)
Income (loss) from continuing operations
$
13,630

$
7,818

$
11,147

$
10,899

$
(1,060
)
Income (loss) from discontinued operations, net of taxes (1)
270

(58
)
68

(16
)
(451
)
Net income (loss) before attribution of noncontrolling interests
$
13,900

$
7,760

$
11,215

$
10,883

$
(1,511
)
Net income (loss) attributable to noncontrolling interests
227

219

148

281

95

Citigroup’s net income (loss)
$
13,673

$
7,541

$
11,067

$
10,602

$
(1,606
)
Less:
 
 
 
 
 
Preferred dividends-Basic
$
194

$
26

$
26

$
9

$
2,988

Impact of the conversion price reset related to the $12.5 billion convertible preferred stock private issuance-Basic




1,285

Preferred stock Series H discount accretion-Basic




123

Impact of the public and private preferred stock exchange offers




3,242

Dividends and undistributed earnings allocated to employee restricted and deferred shares that contain nonforfeitable rights to dividends, applicable to Basic EPS
263

166

186

90

2

Income (loss) allocated to unrestricted common shareholders for Basic EPS
$
13,216

$
7,349

$
10,855

$
10,503

$
(9,246
)
Less: Convertible preferred stock dividends




(540
)
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
1

11

17

2


Income (loss) allocated to unrestricted common shareholders for diluted EPS (2)
$
13,217

$
7,360

$
10,872

$
10,505

$
(8,706
)
Earnings per share (3)
 
 
 
 
 
Basic (3)
 
 
 
 
 
Income (loss) from continuing operations
$
4.27

$
2.53

$
3.71

$
3.64

$
(7.60
)
Net income (loss)
4.35

2.51

3.73

3.65

(7.99
)
Diluted (2)(3)
 
 
 
 
 
Income (loss) from continuing operations
$
4.26

$
2.46

$
3.60

$
3.53

$
(7.60
)
Net income (loss)
4.35

2.44

3.63

3.54

(7.99
)
Dividends declared per common share (3)
0.04

0.04

0.03


0.10


Statement continues on the next page, including notes to the table.


10



FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA—PAGE 2
 
Citigroup Inc. and Consolidated Subsidiaries
 
In millions of dollars, except per-share amounts, ratios and direct staff
2013
2012
2011
2010
2009
At December 31:
 
 
 
 
 
Total assets
$
1,880,382

$
1,864,660

$
1,873,878

$
1,913,902

$
1,856,646

Total deposits
968,273

930,560

865,936

844,968

835,903

Long-term debt
221,116

239,463

323,505

381,183

364,019

Citigroup common stockholders’ equity
197,601

186,487

177,494

163,156

152,388

Total Citigroup stockholders’ equity
204,339

189,049

177,806

163,468

152,700

Direct staff (in thousands)
251

259

266

260

265

Ratios
 
 
 
 
 
Return on average assets
0.73
%
0.39
%
0.55
%
0.53
%
(0.08
)%
Return on average common stockholders’ equity (4)
7.0

4.1

6.3

6.8

(9.4
)
Return on average total stockholders’ equity (4)
6.9

4.1

6.3

6.8

(1.1
)
Efficiency ratio
63

72

65

55

60

Tier 1 Common (5)(8)
12.64
%
12.67
%
11.80
%
10.75
%
9.60
 %
Tier 1 Capital (8)
13.68

14.06

13.55

12.91

11.67

Total Capital (8)
16.65

17.26

16.99

16.59

15.25

Leverage (6)
8.21

7.48

7.19

6.60

6.87

Citigroup common stockholders’ equity to assets
10.51
%
10.00
%
9.47
%
8.52
%
8.21
 %
Total Citigroup stockholders’ equity to assets
10.87

10.14

9.49

8.54

8.22

Dividend payout ratio (7)
0.9

1.6

0.8

NM

NM

Book value per common share (3)
$
65.23

$
61.57

$
60.70

$
56.15

$
53.50

Ratio of earnings to fixed charges and preferred stock dividends
2.16x

1.37x

1.60x

1.51x

NM

(1)
Discontinued operations for 2009-2013 include the sale of Credicard. Discontinued operations in 2012 include a carve-out of Citi’s liquid strategies business within Citi Capital Advisors. Discontinued operations in 2012 and 2011 reflect the sale of the Egg Banking credit card business. Discontinued operations for 2009 reflect the sale of Nikko Cordial Securities, Citi’s German retail banking operations and the sale of CitiCapital’s equipment finance unit. Discontinued operations for 2009–2010 also include the sale of Citi’s Travelers Life & Annuity, substantially all of Citigroup’s international insurance business, and Citi’s Argentine pension business. Discontinued operations for the second half of 2010 also reflect the sale of the Student Loan Corporation. See Note 2 to the Consolidated Financial Statements for additional information on Citi’s discontinued operations.
(2)
The diluted EPS calculation for 2009 utilizes basic shares and income allocated to unrestricted common stockholders (Basic) due to the negative income allocated to unrestricted common stockholders. Using diluted shares and income allocated to unrestricted common stockholders (Diluted) would result in anti-dilution.
(3)
All per share amounts and Citigroup shares outstanding for all periods reflect Citi’s 1-for-10 reverse stock split, which was effective May 6, 2011.
(4)
The return on average common stockholders’ equity is calculated using net income less preferred stock dividends divided by average common stockholders’ equity. The return on average total Citigroup stockholders’ equity is calculated using net income divided by average Citigroup stockholders’ equity.
(5)
As currently defined by the U.S. banking regulators, the Tier 1 Common ratio represents Tier 1 Capital less non-common elements, including qualifying perpetual preferred stock, qualifying noncontrolling interests in subsidiaries and qualifying trust preferred securities divided by risk-weighted assets.
(6)
The leverage ratio represents Tier 1 Capital divided by quarterly adjusted average total assets.
(7)
Dividends declared per common share as a percentage of net income per diluted share.
(8) Effective January 1, 2013, computed under Basel I credit risk capital rules and final (revised) market risk capital rules (Basel II.5).




Note: The following accounting changes were adopted by Citi during the respective years:
On January 1, 2010, Citi adopted ASC 810, Consolidation (formerly SFAS 166/167). Prior periods have not been restated as the standards were adopted prospectively.
On January 1, 2009, Citi adopted SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (now ASC 810-10-45-15, Consolidation: Noncontrolling Interest in a Subsidiary), and FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (now ASC 260-10-45-59A, Earnings Per Share: Participating Securities and the Two-Class Method). All prior periods have been restated to conform to the current period’s presentation.

11



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
In millions of dollars
2013
2012
2011
% Change
2013 vs. 2012
% Change
2012 vs. 2011
Income (loss) from continuing operations
 
 
 
 
 
CITICORP
 
 
 
 
 
Global Consumer Banking
 
 
 
 
 
North America
$
4,068

$
4,728

$
4,011

(14
)%
18
 %
EMEA
59

(37
)
79

NM

NM

Latin America
1,435

1,468

1,673

(2
)
(12
)
Asia
1,570

1,796

1,903

(13
)
(6
)
Total
$
7,132

$
7,955

$
7,666

(10
)%
4
 %
Securities and Banking


 
 




North America
$
2,701

$
1,250

$
1,284

NM

(3
)%
EMEA
1,562

1,360

2,005

15

(32
)
Latin America
1,189

1,249

916

(5
)
36

Asia
1,263

834

904

51

(8
)
Total
$
6,715

$
4,693

$
5,109

43
 %
(8
)%
Transaction Services


 
 




North America
$
541

$
466

$
408

16
 %
14
 %
EMEA
926

1,184

1,072

(22
)
10

Latin America
451

642

623

(30
)
3

Asia
998

1,108

1,148

(10
)
(3
)
Total
$
2,916

$
3,400

$
3,251

(14
)%
5
 %
    Institutional Clients Group
$
9,631

$
8,093

$
8,360

19
 %
(3
)%
Corporate/Other
$
(1,259
)
$
(1,702
)
$
(808
)
26
 %
NM

Total Citicorp
$
15,504

$
14,346

$
15,218

8
 %
(6
)%
Citi Holdings
$
(1,874
)
$
(6,528
)
$
(4,071
)
71
 %
(60
)%
Income from continuing operations
$
13,630

$
7,818

$
11,147

74
 %
(30
)%
Discontinued operations
$
270

$
(58
)
$
68

NM

NM

Net income attributable to noncontrolling interests
227

219

148

4
 %
48
 %
Citigroup’s net income
$
13,673

$
7,541

$
11,067

81
 %
(32
)%
NM Not meaningful

12




CITIGROUP REVENUES
In millions of dollars
2013
2012
2011
% Change
2013 vs. 2012
% Change
2012 vs. 2011
CITICORP
 
 
 
 
 
Global Consumer Banking
 
 
 
 
 
North America
$
19,778

$
20,949

$
20,026

(6
)%
5
 %
EMEA
1,449

1,485

1,529

(2
)
(3
)
Latin America
9,318

8,758

8,547

6

2

Asia
7,624

7,928

8,023

(4
)
(1
)
Total
$
38,169

$
39,120

$
38,125

(2
)%
3
 %
Securities and Banking


 
 




North America
$
9,045

$
6,473

$
7,925

40
 %
(18
)%
EMEA
6,462

6,437

7,241


(11
)
Latin America
2,840

2,913

2,264

(3
)
29

Asia
4,671

4,199

4,270

11

(2
)
Total
$
23,018

$
20,022

$
21,700

15
 %
(8
)%
Transaction Services


 
 




North America
$
2,502

$
2,554

$
2,437

(2
)%
5
 %
EMEA
3,533

3,488

3,397

1

3

Latin America
1,822

1,770

1,684

3

5

Asia
2,703

2,896

2,913

(7
)
(1
)
Total
$
10,560

$
10,708

$
10,431

(1
)%
3
 %
    Institutional Clients Group
$
33,578

$
30,730

$
32,131

9
 %
(4
)%
Corporate/Other
$
77

$
70

$
762

10
 %
(91
)%
Total Citicorp
$
71,824

$
69,920

$
71,018

3
 %
(2
)%
Citi Holdings
$
4,542

$
(792
)
$
6,313

NM

NM

Total Citigroup net revenues
$
76,366

$
69,128

$
77,331

10
 %
(11
)%
NM Not meaningful

13



CITICORP
Citicorp is Citigroup’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, including many of the world’s emerging economies. 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 its large multinational clients and for meeting the needs of retail, private banking, commercial, public sector and institutional clients around the world.
Citicorp consists of the following operating businesses: Global Consumer Banking (which consists of Regional Consumer Banking in North America, EMEA, Latin America and Asia) and Institutional Clients Group (which includes Securities and Banking and Transaction Services). Citicorp also includes Corporate/Other. At December 31, 2013, Citicorp had approximately $1.8 trillion of assets and $932 billion of deposits, representing 94% of Citi’s total assets and 96% of Citi’s total deposits, respectively.
In millions of dollars except as otherwise noted
2013
2012
2011
% Change
2013 vs. 2012
% Change
2012 vs. 2011
Net interest revenue
$
43,609

$
44,067

$
43,923

(1
)%
 %
Non-interest revenue
28,215

25,853

27,095

9

(5
)
Total revenues, net of interest expense
$
71,824

$
69,920

$
71,018

3
 %
(2
)%
Provisions for credit losses and for benefits and claims


 
 




Net credit losses
$
7,393

$
8,389

$
11,111

(12
)%
(24
)%
Credit reserve build (release)
(826
)
(2,222
)
(5,074
)
63

56

Provision for loan losses
$
6,567

$
6,167

$
6,037

6
 %
2
 %
Provision for benefits and claims
212

236

193

(10
)
22

Provision for unfunded lending commitments
90

40

92

NM

(57
)
Total provisions for credit losses and for benefits and claims
$
6,869

$
6,443

$
6,322

7
 %
2
 %
Total operating expenses
$
42,455

$
44,731

$
43,793

(5
)%
2
 %
Income from continuing operations before taxes
$
22,500

$
18,746

$
20,903

20
 %
(10
)%
Provisions for income taxes
6,996

4,400

5,685

59

(23
)
Income from continuing operations
$
15,504

$
14,346

$
15,218

8
 %
(6
)%
Income (loss) from discontinued operations, net of taxes
270

(58
)
68

NM

NM

Noncontrolling interests
211

216

29

(2
)
NM

Net income
$
15,563

$
14,072

$
15,257

11
 %
(8
)%
Balance sheet data (in billions of dollars)


 
 




Total end-of-period (EOP) assets
$
1,763

$
1,709

$
1,649

3
 %
4
 %
Average assets
1,748

1,717

1,684

2

2

Return on average assets
0.89
%
0.82
%
0.91
%




Efficiency ratio (Operating expenses/Total revenues)
59

64

62





Total EOP loans
$
573

$
540

$
507

6

7

Total EOP deposits
932

863

804

8

7

NM Not meaningful

14



GLOBAL CONSUMER BANKING
Global Consumer Banking (GCB) consists of Citigroup’s four geographical Regional Consumer Banking (RCB) businesses that provide traditional banking services to retail customers through retail banking, commercial banking, Citi-branded cards and Citi retail services. GCB is a globally diversified business with 3,729 branches in 36 countries around the world as of December 31, 2013. For the year ended December 31, 2013, GCB had approximately $395 billion of average assets and $328 billion of average deposits.
GCB’s overall strategy is to leverage Citi’s global footprint and seek to be the preeminent bank for the emerging affluent and affluent consumers in large urban centers. As of December 31, 2013, Citi had consumer banking operations in 121, or 81%, of the world’s top 150 cities. In credit cards and in certain retail markets, Citi serves customers in a somewhat broader set of segments and geographies. Consistent with its overall strategy, Citi intends to continue to optimize its branch footprint and further concentrate its presence in major metropolitan areas.
In millions of dollars except as otherwise noted
2013
2012
2011
% Change
2013 vs. 2012
% Change
2012 vs. 2011
Net interest revenue
$
28,668

$
28,686

$
28,930

 %
(1
)%
Non-interest revenue
9,501

10,434

9,195

(9
)
13

Total revenues, net of interest expense
$
38,169

$
39,120

$
38,125

(2
)%
3
 %
Total operating expenses
$
20,608

$
21,316

$
20,753

(3
)%
3
 %
Net credit losses
$
7,211

$
8,107

$
10,489

(11
)%
(23
)%
Credit reserve build (release)
(669
)
(2,176
)
(4,515
)
69

52

Provisions for unfunded lending commitments
37


3


(100
)
Provision for benefits and claims
212

237

192

(11
)
23

Provisions for credit losses and for benefits and claims
$
6,791

$
6,168

$
6,169

10
 %
 %
Income from continuing operations before taxes
$
10,770

$
11,636

$
11,203

(7
)%
4
 %
Income taxes
3,638

3,681

3,537

(1
)
4

Income from continuing operations
$
7,132

$
7,955

$
7,666

(10
)%
4
 %
Noncontrolling interests
17

3


NM


Net income
$
7,115

$
7,952

$
7,666

(11
)%
4
 %
Balance Sheet data (in billions of dollars)


 
 




Average assets
$
395

$
388

$
377

2
 %
3
 %
Return on average assets
1.81
%
2.07
%
2.06
%




Efficiency ratio
54

54

54





Total EOP assets
$
405

$
404

$
385


5

Average deposits
328

322

314

2

3

Net credit losses as a percentage of average loans
2.50
%
2.87
%
3.85
%




Revenue by business
.

 
 




Retail banking
$
16,945

$
18,182

$
16,517

(7
)%
10
 %
Cards (1)
21,224

20,938

21,608

1

(3
)
Total
38,169

39,120

38,125

(2
)%
3
 %
Income from continuing operations by business


 
 




Retail banking
$
2,136

$
3,048

$
2,591

(30
)%
18
 %
Cards (1)
4,996

4,907

5,075

2

(3
)
Total
$
7,132

$
7,955

$
7,666

(10
)%
4
 %
(Table continues on following page.)

15




Foreign Currency (FX) Translation Impact
 
 
 
 
 
Total revenue-as reported
$
38,169

$
39,120

$
38,125

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

(286
)
(896
)
 
 
Total revenues-ex-FX
$
38,169

$
38,834

$
37,229

(2
)%
4
 %
Total operating expenses-as reported
$
20,608

$
21,316

$
20,753

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

(254
)
(655
)
 
 
Total operating expenses-ex-FX
$
20,608

$
21,062

$
20,098

(2
)%
5
 %
Total provisions for LLR & PBC-as reported
$
6,791

$
6,168

$
6,169

10
 %
 %
Impact of FX translation (2)

(40
)
(146
)
 
 
Total provisions for LLR & PBC-ex-FX
$
6,791

$
6,128

$
6,023

11
 %
2
 %
Net income-as reported
$
7,115

$
7,952

$
7,666

(11
)%
4
 %
Impact of FX translation (2)

10

(107
)
 
 
Net income-ex-FX
$
7,115

$
7,962

$
7,559

(11
)%
5
 %
(1)
Includes both Citi-branded cards and Citi retail services.
(2)
Reflects the impact of foreign exchange (FX) translation into U.S. dollars at 2013 average exchange rates for all periods presented.
NM Not meaningful

16



NORTH AMERICA REGIONAL CONSUMER BANKING
North America Regional Consumer Banking (NA RCB) provides traditional banking and Citi-branded cards and Citi retail services to retail customers and small- to mid-size businesses in the U.S. NA RCB’s 983 retail bank branches as of December 31, 2013 are largely concentrated in the greater metropolitan areas of New York, Los Angeles, San Francisco, Chicago, Miami, Washington, D.C., Boston, Philadelphia, Dallas, Houston, San Antonio and Austin.
At December 31, 2013, NA RCB had approximately 12.0 million customer accounts, $44.1 billion of retail banking loans and $170.2 billion of deposits. In addition, NA RCB had approximately 113.9 million Citi-branded and Citi retail services credit card accounts, with $116.8 billion in outstanding card loan balances, including approximately 13.0 million credit card accounts and $7 billion of loans added in September 2013 as a result of the acquisition of Best Buy’s U.S. credit card portfolio.
In millions of dollars, except as otherwise noted
2013
2012
2011
% Change
2013 vs. 2012
% Change
2012 vs. 2011
Net interest revenue
$
16,659

$
16,461

$
16,785

1
 %
(2
)%
Non-interest revenue
3,119

4,488

3,241

(31
)
38

Total revenues, net of interest expense
$
19,778

$
20,949

$
20,026

(6
)%
5
 %
Total operating expenses
$
9,591

$
9,931

$
9,691

(3
)%
2
 %
Net credit losses
$
4,634

$
5,756

$
8,101

(19
)%
(29
)%
Credit reserve build (release)
(1,036
)
(2,389
)
(4,181
)
57

43

Provisions for benefits and claims
60

70

62

(14
)
13

Provision for unfunded lending commitments
6

1

(1
)
NM

NM

Provisions for credit losses and for benefits and claims
$
3,664

$
3,438

$
3,981

7
 %
(14
)%
Income from continuing operations before taxes
$
6,523

$
7,580

$
6,354

(14
)%
19
 %
Income taxes
2,455

2,852

2,343

(14
)
22

Income from continuing operations
$
4,068

$
4,728

$
4,011

(14
)%
18
 %
Noncontrolling interests
2

1


100


Net income
$
4,066

$
4,727

$
4,011

(14
)%
18
 %
Balance Sheet data (in billions of dollars)


 
 




Average assets
$
175

$
172

$
166

2
 %
4
 %
Return on average assets
2.32
%
2.75
%
2.42
%




Efficiency ratio
48

47

48





Average deposits
$
166

$
154

$
145

8

6

Net credit losses as a percentage of average loans
3.09
%
3.83
%
5.50
%




Revenue by business


 
 




Retail banking
$
5,378

$
6,686

$
5,118

(20
)%
31
 %
Citi-branded cards
8,211

8,234

8,641


(5
)
Citi retail services
6,189

6,029

6,267

3

(4
)
Total
$
19,778

$
20,949

$
20,026

(6
)%
5
 %
Income from continuing operations by business


 
 




Retail banking
$
478

$
1,244

$
470

(62
)%
NM

Citi-branded cards
2,009

2,020

2,092

(1
)
(3
)
Citi retail services
1,581

1,464

1,449

8

1

Total
$
4,068

$
4,728

$
4,011

(14
)%
18
 %


NM Not meaningful


17



2013 vs. 2012
Net income decreased 14%, mainly driven by lower revenues and lower loan loss reserve releases, partially offset by lower net credit losses and expenses.
Revenues decreased 6% primarily due to lower retail banking revenues. Retail banking revenues of $5.4 billion declined 20% due to lower mortgage origination revenues driven by the significantly lower U.S. mortgage refinancing activity, particularly during the second half of 2013 due to higher interest rates. In addition, retail banking continued to experience ongoing spread compression in the deposit portfolios within the consumer and commercial banking businesses. Partially offsetting the spread compression was growth in average deposits (8%), average commercial loans (15%) and average retail loans (3%). While Citi believes mortgage revenues may have broadly stabilized as of year-end 2013, retail banking revenues will likely continue to be negatively impacted in 2014 by the lower mortgage origination revenues and spread compression in the deposit portfolios.
Cards revenues increased 1%. In Citi-branded cards, revenues were unchanged at $8.2 billion as continued improvement in net interest spreads, reflecting higher yields as promotional balances represented a smaller percentage of the portfolio total as well as lower funding costs, were offset by a 5% decline in average loans. Citi-branded cards net interest revenue increased 1%, reflecting the higher yields and lower cost of funds, partially offset by the decline in average loans and a continued increased payment rate from consumer deleveraging. Citi-branded cards non-interest revenue declined 5% due to higher affinity rebates.
Citi retail services revenues increased 3% primarily due to the acquisition of the Best Buy portfolio, partially offset by declining non-interest revenues, driven by improving credit and the resulting impact on contractual partner payments. Citi retail services net interest revenues increased 6% driven by a 4% increase in average loans, primarily due to the Best Buy U.S. portfolio acquisition, although net interest spreads declined as the percentage of promotional balances within the portfolio increased and could continue to increase into 2014. Total card purchase sales of $240 billion increased 3% from the prior year, with 3% growth in Citi-branded cards and 5% growth in retail services. Citi expects cards revenues could continue to be negatively impacted by higher payment rates for consumers, reflecting the relatively slow economic recovery and deleveraging as well as Citi’s shift to higher credit quality borrowers.
Expenses decreased 3%, primarily due to lower legal and related costs and repositioning savings, partially offset by higher mortgage origination costs in the first half of 2013 and expenses in cards as a result of the Best Buy portfolio acquisition during the second half of the year.
Provisions increased 7%, as lower net credit losses in the Citi-branded cards and Citi retail services portfolios were offset by continued lower loan loss reserve releases ($1.0 billion in 2013 compared to $2.4 billion in 2012), primarily related to cards, as well as reserve builds for new loans originated in the Best Buy portfolio during the latter part of 2013, which are expected to continue into 2014.
 
2012 vs. 2011
Net income increased 18%, mainly driven by higher mortgage revenues in retail banking and a decline in net credit losses, partially offset by a reduction in loan loss reserve releases.
Revenues increased 5%, driven by a 38% increase in retail banking mortgage revenues resulting from the high level of U.S. refinancing activity as well as higher margins resulting from the shift to retail as compared to third-party origination channels. Excluding mortgages, revenue from the retail banking business was essentially unchanged, as volume growth and improved mix in the deposit and lending portfolios within the consumer and commercial portfolios were offset by significant spread compression.
Cards revenues declined 4%. In Citi-branded cards, both average loans and net interest revenue declined year-over-year, reflecting continued increased payment rates resulting from consumer deleveraging and the impact of the look-back provisions of The Credit Card Accountability Responsibility and Disclosure Act (CARD Act). In Citi retail services, net interest revenues improved slightly but were offset by declining non-interest revenues, driven by improving credit and the resulting impact on contractual partner payments.
Expenses increased 2%, primarily due to increased mortgage origination costs resulting from the higher retail channel mortgage volumes and $100 million of repositioning charges in the fourth quarter of 2012 as well as higher legal and related costs, partially offset by lower expenses in cards.
Provisions decreased 14%, due to a 29% decline in net credit losses, primarily in the cards portfolios, partly offset by lower loan loss reserve releases ($2.4 billion in 2012 compared to $4.2 billion in 2011).





18



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 and the Middle East. The countries in which EMEA RCB has the largest presence are Poland, Russia and the United Arab Emirates.
At December 31, 2013, EMEA RCB had 172 retail bank branches with approximately 3.4 million customer accounts, $5.6 billion in retail banking loans, $13.1 billion in deposits, and 2.1 million Citi-branded card accounts with $2.4 billion in outstanding card loan balances.
In millions of dollars, except as otherwise noted
2013
2012
2011
% Change
2013 vs. 2012
% Change
2012 vs. 2011
Net interest revenue
$
948

$
1,010

$
915

(6
)%
10
 %
Non-interest revenue
501

475

614

5

(23
)
Total revenues, net of interest expense
$
1,449

$
1,485

$
1,529

(2
)%
(3
)%
Total operating expenses
$
1,323

$
1,433

$
1,337

(8
)%
7
 %
Net credit losses
$
68

$
105

$
172

(35
)%
(39
)%
Credit reserve build (release)
(18
)
(5
)
(118
)
NM

96

Provision for unfunded lending commitments

(1
)
4

100

NM

Provisions for credit losses
$
50

$
99

$
58

(49
)%
71
 %
Income (loss) from continuing operations before taxes
$
76

$
(47
)
$
134

NM

NM

Income taxes (benefits)
17

(10
)
55

NM

NM

Income (loss) from continuing operations
$
59

$
(37
)
$
79

NM

NM

Noncontrolling interests
11

4


NM

 %
Net income (loss)
$
48

$
(41
)
$
79

NM

NM

Balance Sheet data (in billions of dollars)


 
 




Average assets
$
10

$
9

$
10

11
 %
(10
)%
Return on average assets
0.48
%
(0.46
)%
0.79
%




Efficiency ratio
91

96

87





Average deposits
$
12.6

$
12.6

$
12.5


1

Net credit losses as a percentage of average loans
0.85
%
1.40
 %
2.37
%




Revenue by business


 
 




Retail banking
$
868

$
873

$
874

(1
)%
 %
Citi-branded cards
581

612

655

(5
)
(7
)
Total
$
1,449

$
1,485

$
1,529

(2
)%
(3
)%
Income (loss) from continuing operations by business


 
 




Retail banking
$
(23
)
$
(92
)
$
(45
)
75
 %
NM

Citi-branded cards
82

55

124

49

(56
)
Total
$
59

$
(37
)
$
79

NM

NM

Foreign Currency (FX) Translation Impact


 
 




Total revenue (loss)-as reported
$
1,449

$
1,485

$
1,529

(2
)%
(3
)%
Impact of FX translation (1)

(15
)
(90
)




Total revenues-ex-FX
$
1,449

$
1,470

$
1,439

(1
)%
2
 %
Total operating expenses-as reported
$
1,323

$
1,433

$
1,337

(8
)%
7
 %
Impact of FX translation (1)

(20
)
(89
)




Total operating expenses-ex-FX
$
1,323

$
1,413

$
1,248

(6
)%
13
 %
Provisions for credit losses-as reported
$
50

$
99

$
58

(49
)%
71
 %
Impact of FX translation (1)

(1
)
(3
)




Provisions for credit losses-ex-FX
$
50

$
98

$
55

(49
)%
78
 %
Net income (loss)-as reported
$
48

$
(41
)
$
79

NM

NM

Impact of FX translation (1)

5

1





Net income (loss)-ex-FX
$
48

$
(36
)
$
80

NM

NM

(1)
Reflects the impact of foreign exchange (FX) translation into U.S. dollars at 2013 average exchange rates for all periods presented.
NM
Not meaningful

19




The discussion of the results of operations for EMEA RCB below excludes the impact of FX translation for all periods presented. Presentation of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of EMEA RCB’s results excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of certain of these metrics to the reported results, see the table above.

2013 vs. 2012
Net income of $48 million compared to a net loss of $36 million in 2012 as lower expenses and lower net credit losses were partially offset by lower revenues, primarily due to the sales of Citi’s consumer operations in Turkey and Romania during 2013.
 Revenues decreased 1%, mainly driven by the lower revenues resulting from the sales of the consumer operations referenced above, partially offset by higher volumes in core markets and a gain on sale related to the Turkey sale. Net interest revenue decreased 5%, due to continued spread compression in cards and an 8% decrease in average cards loans, primarily due to the sales in Turkey and Romania, partially offset by growth in average retail loans of 13%. Interest rate caps on credit cards, particularly in Poland, the continued liquidation of a higher yielding non-strategic retail banking portfolio and the continued low interest rate environment were the main contributors to the lower net interest spreads. Citi expects continued regulatory changes, including caps on interchange rates, and spread compression to continue to negatively impact revenues in this business during 2014. Non-interest revenue increased 6%, mainly reflecting higher investment fees and card fees due to increased sales volume and the gain on sale related to Turkey, partially offset by lower revenues due to the sales in Turkey and Romania. Cards purchase sales decreased 4% and investment sales decreased 5% due to the sales in Turkey and Romania. Excluding the impact of these divestitures, cards purchase sales increased 9% and investment sales increased 12%.
 Expenses declined 6%, primarily due to repositioning savings as well as lower repositioning charges, partially offset by higher volume-related expenses and continued investment spending on new internal operating platforms.
 Provisions declined 49% due to a 35% decrease in net credit losses largely resulting from the sales in Turkey and Romania and a net credit recovery in the second quarter 2013. Net credit losses also continued to reflect stabilizing credit quality and Citi’s strategic move toward lower-risk customers.

 

2012 vs. 2011
The net loss of $36 million compared to net income of $80 million in 2011 and was mainly due to higher expenses and lower loan loss reserve releases, partially offset by higher revenues.
Revenues increased 2%, with growth across the major products, particularly in Russia. Year-over-year, cards purchase sales increased 12%, investment sales increased 15% and retail loan volume increased 17%. Revenue growth year-over-year was partly offset by the absence of Akbank T.A.S. (Akbank), Citi’s equity investment in Turkey, which was moved to Corporate/Other in the first quarter of 2012. Net interest revenue increased 18%, driven by the absence of Akbank investment funding costs and growth in average deposits of 5%, average retail loans of 16% and average cards loans of 6%, partially offset by spread compression. Interest rate caps on credit cards, particularly in Turkey and Poland, the continued liquidation of the higher yielding non-strategic retail banking portfolio and the continued low interest rate environment were the main contributors to the lower net interest spreads. Non-interest revenue decreased 20%, mainly reflecting the absence of Akbank.
Expenses increased 13%, primarily due to $57 million of fourth quarter of 2012 repositioning charges in Turkey, Romania and Pakistan and the impact of continued investment spending on new internal operating platforms during 2012.
Provisions increased $43 million due to lower loan loss reserve releases, partially offset by lower net credit losses across most countries. Net credit losses decreased 36% due to the ongoing improvement in credit quality and the move toward lower-risk customers.



20



LATIN AMERICA REGIONAL CONSUMER BANKING
Latin America Regional Consumer Banking (Latin America 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. Latin America RCB includes branch networks throughout Latin America as well as Banco Nacional de Mexico, or Banamex, Mexico’s second-largest bank, with nearly 1,700 branches. At December 31, 2013, Latin America RCB had 2,021 retail branches, with approximately 32.2 million customer accounts, $30.6 billion in retail banking loans and $47.7 billion in deposits. In addition, the business had approximately 9.2 million Citi-branded card accounts with $12.1 billion in outstanding loan balances.
In millions of dollars, except as otherwise noted
2013
2012
2011
% Change
2013 vs. 2012
% Change
2012 vs. 2011
Net interest revenue
$
6,305

$
6,061

$
5,853

4
 %
4
 %
Non-interest revenue
3,013

2,697

2,694

12


Total revenues, net of interest expense
$
9,318

$
8,758

$
8,547

6
 %
2
 %
Total operating expenses
$
5,244

$
5,186

$
5,093

1
 %
2
 %
Net credit losses
$
1,727

$
1,405

$
1,333

23
 %
5
 %
Credit reserve build (release)
376

254

(153
)
48

NM

Provision for benefits and claims
152

167

130

(9
)
28

Provisions for loan losses and for benefits and claims (LLR & PBC)
$
2,255

$
1,826

$
1,310

23
 %
39
 %
Income from continuing operations before taxes
$
1,819

$
1,746

$
2,144

4
 %
(19
)%
Income taxes
384

278

471

38

(41
)
Income from continuing operations
$
1,435

$
1,468

$
1,673

(2
)%
(12
)%
Noncontrolling interests
4

(2
)

NM


Net income
$
1,431

$
1,470

$
1,673

(3
)%
(12
)%
Balance Sheet data (in billions of dollars)
 
 
 
 
 
Average assets
$
82

$
80

$
80

3
 %
 %
Return on average assets
1.77
%
1.93
%
2.21
%
 
 
Efficiency ratio
56

59

60

 
 
Average deposits
$
46.2

$
45

$
45.8

3

(2
)
Net credit losses as a percentage of average loans
4.16
%
3.81
%
4.12
%
 
 
Revenue by business
 
 
 
 
 
Retail banking
$
6,135

$
5,857

$
5,557

5
 %
5
 %
Citi-branded cards
3,183

2,901

2,990

10

(3
)
Total
$
9,318

$
8,758

$
8,547

6
 %
2
 %
Income from continuing operations by business
 
 
 
 
 
Retail banking
$
833

$
909

$
952

(8
)%
(5
)%
Citi-branded cards
602

559

721

8

(22
)
Total
$
1,435

$
1,468

$
1,673

(2
)%
(12
)%
Foreign Currency (FX) Translation Impact
 
 
 
 
 
Total revenue-as reported
$
9,318

$
8,758

$
8,547

6
 %
2
 %
Impact of FX translation (1)

(33
)
(477
)
 
 
Total revenues-ex-FX
$
9,318

$
8,725

$
8,070

7
 %
8
 %
Total operating expenses-as reported
$
5,244

$
5,186

$
5,093

1
 %
2
 %
Impact of FX translation (1)

(62
)
(326
)
 
 
Total operating expenses-ex-FX
$
5,244

$
5,124

$
4,767

2
 %
7
 %
Provisions for LLR & PBC-as reported
$
2,255

$
1,826

$
1,310

23
 %
39
 %
Impact of FX translation (1)

(19
)
(104
)
 
 
Provisions for LLR & PBC-ex-FX
$
2,255

$
1,807

$
1,206

25
 %
50
 %
Net income-as reported
$
1,431

$
1,470

$
1,673

(3
)%
(12
)%
Impact of FX translation (1)

25

(82
)
 
 
Net income-ex-FX
$
1,431

$
1,495

$
1,591

(4
)%
(6
)%
(1)
Reflects the impact of foreign exchange (FX) translation into U.S. dollars at 2013 average exchange rates for all periods presented.
NM Not Meaningful

21




The discussion of the results of operations for Latin America RCB below excludes the impact of FX translation for all periods presented. Presentation of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of Latin America RCB’s results excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of certain of these metrics to the reported results, see the table above.
2013 vs. 2012
Net income decreased 4% as higher credit costs, higher expenses and a higher effective tax rate (see Note 9 to the Consolidated Financial Statements) were partially offset by higher revenues.
Revenues increased 7%, primarily due to volume growth in retail banking and cards, partially offset by continued spread compression. Net interest revenue increased 4% due to increased volumes, partially offset by spread compression. Non-interest revenue increased 12%, primarily due to higher fees from increased business volumes in retail and cards. Retail banking revenues increased 5% as average loans increased 12%, investment sales increased 13% and average deposits increased 3%. Cards revenues increased 11% as average loans increased 10% and purchase sales increased 13%, excluding the impact of Credicard (see Note 2 to the Consolidated Financial Statements). Citi expects revenues in Latin America RCB could continue to be negatively impacted by spread compression during 2014, particularly in Mexico.
Expenses increased 2% due to increased volume-related costs, mandatory salary increases in certain countries and higher regulatory costs, partially offset by lower repositioning charges and higher repositioning savings.
Provisions increased 25%, primarily due to higher net credit losses as well as a higher loan loss reserve build. Net credit losses increased 25%, primarily in the Mexico cards and personal loan portfolios, reflecting both volume growth and portfolio seasoning, which Citi expects to continue into 2014. The loan loss reserve build increased 50%, primarily due to an increase in reserves in Mexico related to the top three Mexican homebuilders, with the remainder due to portfolio growth and seasoning and the impact of potential losses related to hurricanes in the region during September 2013.
During 2013, homebuilders in Mexico began to experience financial difficulties, primarily due to, among other things, decreases in government subsidies, new government policies promoting vertical housing and an overall renewed government emphasis on urban planning. The loan loss reserve build related to the Mexican homebuilders in 2013 was driven by deterioration in the financial and operating conditions of these companies and decreases in the value of Citi’s collateral securing its loans. Citi’s outstanding loans to the top three homebuilders totaled $251 million at year-end 2013. Citi continues to monitor the performance of its Mexico homebuilder clients, as well as the value of its collateral, to determine whether additional reserves or charge-offs may be required in future periods.
Going into 2014, absent any significant market developments, including further deterioration in Citi’s Mexican homebuilders clients or losses from the hurricanes in 2013, Citi expects net credit losses and reserve builds to be in line with portfolio growth and seasoning.
 
For information on the potential impact to Latin America RCB from foreign exchange controls, see “Managing Global Risk—Country and Cross-Border Risk—Cross-Border Risk” below.

2012 vs. 2011
Net income declined 6% as higher revenues were offset by higher credit costs and expenses.
Revenues increased 8%, primarily due to revenue growth in Mexico and higher volumes, mostly related to personal loans and credit cards. Net interest revenue increased 9% due to increased volumes, partially offset by continued spread compression. Non-interest revenue increased 6%, primarily due to increased business volumes in the private pension fund and insurance businesses.
Expenses increased 7%, primarily due to $131 million of repositioning charges in the fourth quarter of 2012, higher volume-driven expenses and increased legal and related costs.
Provisions increased 50%, primarily due to increased loan loss reserve builds driven by underlying business volume growth, primarily in Mexico and Colombia. In addition, net credit losses increased in the retail portfolios, primarily in Mexico, reflecting volume growth.



22



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 Korea, Australia, Singapore, Hong Kong, Taiwan, Japan, India, Malaysia, Indonesia, Thailand and the Philippines.
At December 31, 2013, Asia RCB had 553 retail branches, approximately 16.8 million customer accounts, $71.6 billion in retail banking loans and $101.4 billion in deposits. In addition, the business had approximately 16.6 million Citi-branded card accounts with $19.1 billion in outstanding loan balances.
In millions of dollars, except as otherwise noted
2013
2012
2011
% Change
2013 vs. 2012
% Change
2012 vs. 2011
Net interest revenue
$
4,756

$
5,154

$
5,377

(8
)%
(4
)%
Non-interest revenue
2,868

2,774

2,646

3

5

Total revenues, net of interest expense
$
7,624

$
7,928

$
8,023

(4
)%
(1
)%
Total operating expenses
$
4,450

$
4,766

$
4,632

(7
)%
3
 %
Net credit losses
$
782

$
841

$
883

(7
)%
(5
)%
Credit reserve build (release)
9

(36
)
(63
)
NM

43

Provision for unfunded lending commitments
31





Provisions for loan losses
$
822

$
805

$
820

2
 %
(2
)%
Income from continuing operations before taxes
$