EX-99.1 2 a14-22332_1ex99d1.htm EX-99.1

Exhibit 99.1

 

For Immediate Release

 

Citigroup Inc. (NYSE: C)

 

October 14, 2014

GRAPHIC

 

CITIGROUP REPORTS THIRD QUARTER 2014 EARNINGS PER SHARE OF $1.07;

$1.15 EXCLUDING CVA/DVA(1)

 

ANNOUNCES STRATEGIC ACTIONS IN GLOBAL CONSUMER BANKING
TO REDUCE FOOTPRINT FROM 35 TO 24 MARKETS

 

NET INCOME OF $3.4 BILLION; $3.7 BILLION EXCLUDING CVA/DVA

 

REVENUES OF $19.6 BILLION; $20.0 BILLION EXCLUDING CVA/DVA

 

NET INTEREST MARGIN INCREASED TO 2.91%

 

NET CREDIT LOSSES OF $2.1 BILLION DECLINED 14% VERSUS PRIOR YEAR PERIOD

 

UTILIZED APPROXIMATELY $700 MILLION OF DEFERRED TAX ASSETS

 

BASEL III TIER 1 COMMON RATIO OF 10.7%(2)
ESTIMATED BASEL III SUPPLEMENTARY LEVERAGE RATIO OF 6.0%(3)

 

BOOK VALUE PER SHARE INCREASED TO $67.31

TANGIBLE BOOK VALUE PER SHARE(4) INCREASED TO $57.73

 

CITI HOLDINGS ASSETS OF $103 BILLION DECLINED 16% FROM PRIOR YEAR PERIOD
AND REPRESENTED 5% OF TOTAL CITIGROUP ASSETS AT QUARTER END

 

New York, October 14, 2014 — Citigroup Inc. today reported net income for the third quarter 2014 of $3.4 billion, or $1.07 per diluted share, on revenues of $19.6 billion.  This compared to net income of $3.2 billion, or $1.00 per diluted share, on revenues of $17.9 billion for the third quarter 2013.

 

CVA/DVA was negative $371 million (negative $228 million after-tax) in the third quarter 2014, including a $474 million pre-tax charge related to Citigroup’s implementation in the quarter of funding valuation adjustments (FVA)(1), compared to negative $336 million (negative $208 million after-tax) in the prior year period.  Third quarter 2013 results also included a $176 million tax benefit related to the resolution of certain tax audit items (recorded within Corporate/Other).  Excluding CVA/DVA and the tax benefit in the third quarter 2013(5), earnings were $1.15 per diluted share, a 13% increase from prior year earnings of $1.02 per diluted share.

 

Michael Corbat, Chief Executive Officer of Citi, said, “Our consumer bank and institutional business each had solid performance during the quarter and generated stronger revenues both sequentially and year-on-year.  The revenue improvement was evident across regions and products.  With Citi Holdings again turning a profit and the utilization of additional deferred tax assets, we again demonstrated progress against two execution priorities and increased our capital base.  We also continued our work to strengthen our capital planning process to meet the critical goal of returning capital to our shareholders.”

 



 

Strategic Actions: Global Consumer Banking

 

Citigroup today announced strategic actions to accelerate the transformation of Global Consumer Banking (GCB) by focusing on those markets where it has the greatest scale and growth potential. As a result, Citigroup intends to exit its consumer businesses in 11 markets. The new consumer banking footprint will serve nearly 57 million clients in 24 markets that capture over 95% of GCB’s existing revenue base, while further simplifying its operations and improving its performance.

 

The affected businesses include the consumer franchises in Costa Rica, Czech Republic, Egypt, El Salvador, Guam, Guatemala, Hungary, Japan, Nicaragua, Panama and Peru, as well as the consumer finance business in Korea.  Active sales processes are underway for the majority of the businesses, and subject to market conditions and regulatory and other approvals, the strategic actions are currently expected to be substantially completed by year-end 2015. The businesses will be reported as part of Citi Holdings as of the first quarter 2015 to provide greater transparency with respect to the performance of the ongoing operations reported in GCB. Citigroup’s Institutional Clients Group (ICG) will continue to serve clients in these markets.

 

“I am committed to simplifying our company and allocating our finite resources to where we can generate the best returns for our shareholders.  While we have made progress optimizing these 11 consumer markets, we believe our Global Consumer Bank will achieve stronger performance by focusing on the countries where our scale and network provide a competitive advantage,” Mr. Corbat concluded.

 

Manuel Medina-Mora, Citi Co-President and CEO of GCB, said: “Today’s actions are the next step in the execution of our strategy to build an urban-based, globally integrated consumer bank.  Since 2009, the Global Consumer Bank has become more streamlined, efficient and profitable.  Focusing our presence in 100 cities across both the U.S. and top emerging markets where we have the greatest scale and growth potential positions us to win.”

 



 

Third Quarter Financial Results

 

Citigroup
($ in millions, except per share amounts)

 

3Q’14

 

2Q’14

 

3Q’13

 

QoQ%

 

YoY%

 

Citicorp

 

18,016

 

17,879

 

16,646

 

1

%

8

%

Citi Holdings

 

1,588

 

1,463

 

1,258

 

9

%

26

%

Total Revenues

 

$

19,604

 

$

19,342

 

$

17,904

 

1

%

9

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Revenues(a)

 

$

19,975

 

$

19,375

 

$

18,240

 

3

%

10

%

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

$

12,355

 

$

15,521

 

$

11,679

 

-20

%

6

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Expenses(a)

 

$

12,355

 

$

11,772

 

$

11,679

 

5

%

6

%

 

 

 

 

 

 

 

 

 

 

 

 

Net Credit Losses

 

2,097

 

2,189

 

2,430

 

-4

%

-14

%

Loan Loss Reserve Build/(Release)(b)

 

(552

)

(641

)

(675

)

14

%

18

%

Provision for Benefits and Claims

 

205

 

182

 

204

 

13

%

 

Total Cost of Credit

 

$

1,750

 

$

1,730

 

$

1,959

 

1

%

-11

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Cost of Credit(a)

 

$

1,750

 

$

1,675

 

$

1,959

 

4

%

-11

%

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Cont. Ops. Before Taxes

 

$

5,499

 

$

2,091

 

$

4,266

 

NM

 

29

%

Provision for Income Taxes

 

1,985

 

1,838

 

1,080

 

8

%

84

%

Income from Continuing Operations

 

$

3,514

 

$

253

 

$

3,186

 

NM

 

10

%

Net income (loss) from Disc. Ops.

 

(16

)

(22

)

92

 

27

%

NM

 

Non-Controlling Interest

 

59

 

50

 

51

 

18

%

16

%

Citigroup Net Income

 

$

3,439

 

$

181

 

$

3,227

 

NM

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income(a)

 

$

3,667

 

$

3,927

 

$

3,259

 

-7

%

13

%

 

 

 

 

 

 

 

 

 

 

 

 

Basel III Tier 1 Common ratio(c)

 

10.7

%

10.6

%

10.5

%

 

 

 

 

Estimated Basel III Supplementary Leverage ratio(d)

 

6.0

%

5.7

%

5.1

%

 

 

 

 

Return on Common Equity

 

6.5

%

0.2

%

6.4

%

 

 

 

 

Book Value per Share

 

$

67.31

 

$

66.76

 

$

64.49

 

1

%

4

%

Tangible Book Value per Share

 

$

57.73

 

$

56.89

 

$

54.52

 

1

%

6

%

 


Note:  Please refer to the Appendices and Footnotes at the end of this press release for additional information.

(a) Excludes, as applicable, CVA / DVA in all periods, the impact of the mortgage settlement in 2Q’14 and the tax benefit in 3Q’13. For additional information, please refer to Appendix B.  For additional information on the mortgage settlement in 2Q’14, please refer to Footnote 6.  For additional information on the tax benefit in 3Q’13, please refer to Footnote 5.

(b) Includes provision for unfunded lending commitments.

(c) For additional information, please refer to Footnote 2.

(d) For additional information, please refer to Footnote 3.

 

Citigroup

 

Citigroup revenues of $19.6 billion in the third quarter 2014 increased 9% from the prior year period.  Excluding CVA/DVA, revenues of $20.0 billion increased 10% from the prior year period.  This increase was driven by 8% growth in Citicorp revenues, due to increased revenues in both ICG and GCB, and a 30% increase in Citi Holdings revenues.

 

Citigroup’s net income rose 7% to $3.4 billion in the third quarter 2014 from $3.2 billion in the prior year period.  Excluding CVA/DVA in both periods and the tax benefit in the prior year period, Citigroup net income of $3.7 billion increased 13% versus the prior year period, driven by higher revenues and a decline in credit costs, partially offset by higher operating expenses. Operating expenses were $12.4 billion in the third quarter 2014, 6% higher than the $11.7 billion in the prior year period, driven by higher legal and related expenses and repositioning costs in Citicorp (largely in Corporate/Other), an adjustment to incentive compensation expense as a result of better than anticipated performance year-to-date in ICG, and higher regulatory and compliance costs, partially offset by continued cost reduction initiatives and the overall decline in Citi Holdings assets.  Operating expenses in the third quarter 2014 included legal and related expenses of $951 million, compared to $677 million in the prior year period, and $382 million of repositioning charges, compared to $133 million in the prior year period.  Citigroup’s cost of credit in the third quarter 2014 was $1.8 billion, a decrease of 11% from the prior year period, primarily reflecting a $333 million improvement in net credit losses, partially offset by a lower net release of loan

 



 

loss reserves.  Citi’s effective tax rate was 36% in the current quarter, an increase from 30% in the prior year period, excluding CVA/DVA in both periods and the tax benefit in the prior year period, driven in part by a higher level of non-tax-deductible legal accruals and higher tax costs related to Citigroup’s sales of its consumer operations in Greece and Spain, each in the current period.

 

Citigroup’s allowance for loan losses was $16.9 billion at quarter end, or 2.60% of total loans, compared to $20.6 billion, or 3.16% of total loans, at the end of the prior year period.  The $552 million net release of loan loss reserves in the current quarter compared to a $675 million release in the prior year period.  Citigroup asset quality continued to improve as total non-accrual assets fell to $8.0 billion, a 19% reduction compared to the third quarter 2013.  Corporate non-accrual loans declined 38% to $1.4 billion, while consumer non-accrual loans declined 13% to $6.3 billion.

 

Citigroup’s loans were $654 billion and deposits were $943 billion as of quarter end, each down 1% from the prior year period.  On a constant dollar basis(7), Citigroup’s loans grew by 1%, as growth in Citicorp was partially offset by continued declines in Citi Holdings driven primarily by the North America mortgage portfolio, and deposits were largely unchanged.

 

Citigroup’s capital levels and book value per share increased versus the prior year period.  As of quarter end, book value per share was $67.31 and tangible book value per share was $57.73, 4% and 6% increases, respectively, versus the prior year period.  At quarter end, Citigroup’s Basel III Tier 1 Common ratio was 10.7%, up from 10.5% in the prior year period, largely driven by earnings and the utilization of deferred tax assets (DTA).  Citigroup utilized approximately $700 million of DTA in the third quarter 2014 and $2.9 billion year-to-date 2014.  Citigroup’s estimated Basel III Supplementary Leverage ratio for the third quarter 2014 was 6.0% as calculated under the revised final U.S. Basel III rules, up from 5.1% in the prior year period.(3)

 



 

Citicorp
($ in millions) 

 

3Q’14

 

2Q’14

 

3Q’13

 

QoQ%

 

YoY%

 

Global Consumer Banking

 

9,637

 

9,381

 

9,232

 

3

%

4

%

Institutional Clients Group

 

8,371

 

8,463

 

7,372

 

-1

%

14

%

Corporate/Other

 

8

 

35

 

42

 

-77

%

-81

%

Total Revenues

 

$

18,016

 

$

17,879

 

$

16,646

 

1

%

8

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Revenues(a)

 

$

18,332

 

$

17,911

 

$

16,978

 

2

%

8

%

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

$

11,463

 

$

11,007

 

$

10,283

 

4

%

11

%

 

 

 

 

 

 

 

 

 

 

 

 

Net Credit Losses

 

1,750

 

1,790

 

1,795

 

-2

%

-3

%

Loan Loss Reserve Build/(Release)(b)

 

(408

)

(442

)

4

 

8

%

NM

 

Provision for Benefits and Claims

 

52

 

39

 

51

 

33

%

2

%

Total Cost of Credit

 

$

1,394

 

$

1,387

 

$

1,850

 

1

%

-25

%

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

3,201

 

$

3,663

 

$

3,342

 

-13

%

-4

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income(a)

 

$

3,395

 

$

3,683

 

$

3,372

 

-8

%

1

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Revenues(a)

 

 

 

 

 

 

 

 

 

 

 

North America

 

8,150

 

7,958

 

7,318

 

2

%

11

%

EMEA

 

2,887

 

2,785

 

2,687

 

4

%

7

%

LATAM

 

3,395

 

3,483

 

3,374

 

-3

%

1

%

Asia

 

3,892

 

3,650

 

3,557

 

7

%

9

%

Corporate/Other

 

8

 

35

 

42

 

-77

%

-81

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Income from Continuing Ops.(a)

 

 

 

 

 

 

 

 

 

 

 

North America

 

2,063

 

2,163

 

1,490

 

-5

%

38

%

EMEA

 

632

 

563

 

499

 

12

%

27

%

LATAM

 

646

 

735

 

695

 

-12

%

-7

%

Asia

 

1,123

 

726

 

797

 

55

%

41

%

Corporate/Other

 

(998

)

(432

)

(156

)

NM

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

EOP Assets ($B)

 

1,780

 

1,799

 

1,778

 

-1

%

 

EOP Loans ($B)

 

576

 

585

 

561

 

-2

%

3

%

EOP Deposits ($B)

 

928

 

946

 

914

 

-2

%

2

%

 


Note:  Please refer to the Appendices and Footnotes at the end of this press release for additional information.

(a)         Excludes, as applicable, CVA / DVA in all periods and the tax benefit in 3Q’13.  For additional information, please refer to Appendix B.  For additional information on the tax benefit in 3Q’13, please refer to Footnote 5.

(b)         Includes provision for unfunded lending commitments.

 

Citicorp

 

Citicorp revenues of $18.0 billion in the third quarter 2014 increased 8% from the prior year period.  CVA/DVA, reported within ICG, was negative $316 million in the third quarter 2014 (negative $194 million after-tax), compared to negative $332 million (negative $206 million after-tax) in the prior year period.  Excluding CVA/DVA, revenues were up 8% from the third quarter 2013, reflecting increases in ICG and GCB revenues of 13% and 4%, respectively.  Corporate/Other revenues were $8 million versus $42 million in the prior year period, primarily due to hedging activities.

 

Citicorp net income decreased 4% from the prior year period to $3.2 billion.  Excluding CVA/DVA and the tax benefit in the prior year period, net income increased 1% compared to the prior year period, as higher revenues and continued improvement in credit were partially offset by higher operating expenses.

 

Citicorp operating expenses increased 11% from the prior year period to $11.5 billion primarily reflecting higher legal and related expenses and repositioning charges, an adjustment to incentive compensation expense in ICG, and higher regulatory and compliance costs, partially offset by continued efficiency savings.

 

Citicorp cost of credit of $1.4 billion in the third quarter 2014 declined 25% from the prior year period.  The decline reflected a 3% decline in net credit losses and a net loan loss reserve release, which increased $412

 



 

million versus the prior year period.  Citicorp’s consumer loans 90+ days delinquent increased 2% from the prior year period to $2.8 billion, but the 90+ days delinquency ratio remained roughly stable at 0.92% of loans.

 

Citicorp end of period loans grew 3% versus the prior year period to $576 billion, with 3% growth in corporate loans to $277 billion and 2% growth in consumer loans to $299 billion.  On a constant dollar basis, Citicorp end of period loans grew 4% versus the prior year period, with 5% growth in corporate loans and 3% growth in consumer loans.

 

Global Consumer Banking
($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

QoQ%

 

YoY%

 

North America

 

4,989

 

4,782

 

4,739

 

4

%

5

%

EMEA

 

347

 

359

 

359

 

-3

%

-3

%

LATAM

 

2,357

 

2,324

 

2,272

 

1

%

4

%

Asia

 

1,944

 

1,916

 

1,862

 

1

%

4

%

Total Revenues

 

$

9,637

 

$

9,381

 

$

9,232

 

3

%

4

%

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

$

5,281

 

$

5,461

 

$

5,189

 

-3

%

2

%

 

 

 

 

 

 

 

 

 

 

 

 

Net Credit Losses

 

1,738

 

1,781

 

1,730

 

-2

%

 

Loan Loss Reserve Build/(Release)(a)

 

(375

)

(321

)

(70

)

-17

%

NM

 

Provision for Benefits and Claims

 

52

 

39

 

51

 

33

%

2

%

Total Cost of Credit

 

$

1,415

 

$

1,499

 

$

1,711

 

-6

%

-17

%

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

1,928

 

$

1,599

 

$

1,531

 

21

%

26

%

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

North America

 

1,185

 

1,077

 

894

 

10

%

33

%

EMEA

 

1

 

15

 

13

 

-93

%

-92

%

LATAM

 

338

 

299

 

264

 

13

%

28

%

Asia

 

413

 

214

 

364

 

93

%

13

%

 

 

 

 

 

 

 

 

 

 

 

 

(in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

Avg. Cards Loans

 

142

 

142

 

139

 

 

2

%

Avg. Retail Banking Loans

 

158

 

157

 

147

 

1

%

7

%

Avg. Deposits

 

333

 

335

 

324

 

-1

%

3

%

Investment Sales

 

30

 

27

 

24

 

11

%

27

%

Cards Purchase Sales

 

94

 

95

 

90

 

-1

%

4

%

 


Note:  Please refer to the Appendices and Footnotes at the end of this press release for additional information.

(a) Includes provision for unfunded lending commitments.

 

Global Consumer Banking

 

GCB revenues of $9.6 billion increased 4% from the prior year period, driven by growth in North America, Latin America and Asia.

 

GCB net income rose 26% versus the prior year period to $1.9 billion, reflecting the increase in revenues and a lower cost of credit, partially offset by higher operating expenses.  Operating expenses increased 2% to $5.3 billion versus the prior year period, mostly reflecting higher legal and related expenses and repositioning charges, partially offset by ongoing cost reduction initiatives.

 

North America GCB revenues rose 5% to $5.0 billion versus the prior year period reflecting higher revenues in each of retail banking, Citi-branded card and Citi retail services. Retail banking revenues rose 9% to $1.2 billion from the third quarter 2013, reflecting 9% growth in average loans and 2% growth in average deposits, as well as higher revenues in the U.S. mortgage business driven by a repurchase reserve release of approximately $50 million in the current quarter.  Citi-branded cards revenues of $2.1 billion were up 1% versus last year, as purchase sales grew and an improvement in spreads mostly offset the impact of lower average loans.  Citi retail services revenues increased 8% to $1.6 billion, mainly reflecting the impact of the Best Buy portfolio acquisition.

 

North America GCB net income was $1.2 billion, up 33% versus the third quarter 2013, driven by the increase in revenues, a decline in net credit losses and a higher loan loss reserve release.  Operating expenses were

 



 

slightly lower versus the prior year period at $2.4 billion, as ongoing cost reduction initiatives were partially offset by the impact of higher expenses associated with the Best Buy portfolio and increased legal and related expenses and repositioning charges.

 

North America GCB credit quality continued to improve as net credit losses of $1.0 billion decreased 6% versus the prior year period.  Net credit losses improved versus the prior year period in Citi-branded cards (down 14% to $526 million) but increased 5% in Citi retail services to $457 million, due to the Best Buy portfolio acquisition.  Delinquency rates continued to improve in both Citi-branded cards and Citi retail services. The reserve release in the third quarter 2014 was $340 million, $115 million higher than in the third quarter 2013, due to the continued improvement in each of the cards portfolios.

 

International GCB revenues increased 3% versus the third quarter 2013 to $4.6 billion.  On a constant dollar basis, international GCB revenues were up 5% versus the third quarter 2013, with growth in each region.  In constant dollars, revenues in Latin America increased 6% to $2.4 billion as volume growth more than offset spread compression.  In Asia, revenues rose by 4% to $1.9 billion primarily due to volume growth and an increase in investment sales revenues, partially offset by the ongoing impact of regulatory changes and the franchise repositioning in Korea. In EMEA, revenues increased 1% to $347 million due to higher volumes, partially offset by the previously-announced market exits in 2013.

 

International GCB net income increased 16% from the prior year period to $742 million, and increased 22% in constant dollars.  On a constant dollar basis, higher revenues and lower credit costs more than offset higher operating expenses. Operating expenses in the third quarter 2014 increased 5% in constant dollars (increased 4% on a reported basis) as higher legal and related expenses and repositioning charges, the impact of business growth and higher regulatory and compliance costs were partially offset by ongoing efficiency savings. Credit costs declined 13% versus the prior year period driven by a net loan loss reserve release in the current quarter.

 

International GCB credit quality primarily reflected portfolio seasoning as well as the ongoing impact of fiscal reforms and slower economic growth in Mexico.  Net credit losses rose 11% to $721 million, primarily reflecting the impact of portfolio growth as well as portfolio seasoning in Latin America.  The international net credit loss rate was 1.99% of average loans in the third quarter 2014, compared to 1.89% in the prior year period.

 



 

Institutional Clients Group
($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

QoQ%

 

YoY%

 

Treasury & Trade Solutions

 

1,965

 

2,009

 

1,950

 

-2

%

1

%

Investment Banking

 

1,248

 

1,338

 

942

 

-7

%

32

%

Private Bank

 

663

 

656

 

614

 

1

%

8

%

Corporate Lending(a)

 

442

 

454

 

379

 

-3

%

17

%

Total Banking

 

4,318

 

4,457

 

3,885

 

-3

%

11

%

Fixed Income Markets

 

2,981

 

2,996

 

2,838

 

-1

%

5

%

Equity Markets

 

763

 

659

 

670

 

16

%

14

%

Securities Services

 

600

 

598

 

553

 

 

8

%

Other

 

(66

)

(171

)

(95

)

61

%

31

%

Total Markets & Securities Services

 

4,278

 

4,082

 

3,966

 

5

%

8

%

Product Revenues(b)

 

$

8,596

 

$

8,539

 

$

7,851

 

1

%

9

%

Gain / (loss) on Loan Hedges

 

91

 

(44

)

(147

)

NM

 

NM

 

Total Revenues ex-CVA / DVA

 

8,687

 

8,495

 

7,704

 

2

%

13

%

CVA / DVA

 

(316

)

(32

)

(332

)

NM

 

5

%

Total Revenues

 

$

8,371

 

$

8,463

 

$

7,372

 

-1

%

14

%

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

$

5,040

 

$

4,891

 

$

4,888

 

3

%

3

%

 

 

 

 

 

 

 

 

 

 

 

 

Net Credit Losses

 

12

 

9

 

65

 

33

%

-82

%

Credit Reserve Build/(Release)(c)

 

(33

)

(121

)

74

 

73

%

NM

 

Total Cost of Credit

 

$

(21

)

$

(112

)

$

139

 

81

%

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

2,291

 

$

2,543

 

$

1,721

 

-10

%

33

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income(d)

 

$

2,485

 

$

2,563

 

$

1,927

 

-3

%

29

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Revenues(d)

 

 

 

 

 

 

 

 

 

 

 

North America

 

3,161

 

3,176

 

2,579

 

 

23

%

EMEA

 

2,540

 

2,426

 

2,328

 

5

%

9

%

LATAM

 

1,038

 

1,159

 

1,102

 

-10

%

-6

%

Asia

 

1,948

 

1,734

 

1,695

 

12

%

15

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Income from Continuing Ops.(d)

 

 

 

 

 

 

 

 

 

 

 

North America

 

878

 

1,086

 

596

 

-19

%

47

%

EMEA

 

631

 

548

 

486

 

15

%

30

%

LATAM

 

308

 

436

 

431

 

-29

%

-29

%

Asia

 

710

 

512

 

433

 

39

%

64

%

 


Note:  Please refer to the Appendices and Footnotes at the end of this press release for additional information.

(a)         Excludes gain / (loss) on loan hedges.  For additional information, please refer to Footnote 8.

(b)         Excludes CVA / DVA and gain / (loss) on loan hedges.

(c)          Includes provision for unfunded lending commitments.

(d)         Excludes, as applicable, CVA / DVA in all periods.  For a reconciliation of these measures to reported results, see Appendix B.

 

Institutional Clients Group

 

ICG revenues rose 14% from the prior year period to $8.4 billion.  Excluding the impact of CVA/DVA, revenues were $8.7 billion, 13% higher than the prior year period, reflecting higher revenues in each of Banking and Markets and Securities Services.

 

Banking revenues of $4.3 billion increased 11% from the prior year period, primarily reflecting growth in Investment Banking revenues.  Investment Banking revenues increased 32% versus the prior year period, driven by a 90% increase in advisory revenues to $318 million, a 51% increase in equity underwriting revenues to $298 million, and a 9% increase in debt underwriting revenues to $632 million.  Private Bank revenues increased 8% to $663 million from the prior year period (excluding negative $6 million of CVA/DVA) as growth in client volumes was partially offset by the impact of spread compression.  Corporate Lending revenues rose 17% versus the prior year period to $442 million reflecting growth in average loans and improved funding costs, partially offset by lower loan yields.  Treasury and Trade Solutions revenues of $2.0 billion were up 1% versus the prior year period as volume and fee growth was partially offset by the impact of spread compression globally.

 



 

Markets and Securities Services revenues of $4.3 billion (excluding negative $310 million of CVA/DVA, versus negative $326 million in the third quarter 2013) rose 8% from the prior year period.  Fixed Income Markets revenues of $3.0 billion in the third quarter 2014 (excluding negative $306 million of CVA/DVA) increased 5% from the prior year period reflecting strength in securitized products as well as an improvement in rates and currencies.  Equity Markets revenues of $763 million (excluding negative $4 million of CVA/DVA) were up 14% versus the prior year period, reflecting improved client activity in derivatives.  Securities Services revenues of $600 million grew 8% versus the prior year period due to increased client balances and activity.

 

ICG net income was $2.3 billion in the third quarter 2014.  Excluding CVA/DVA, net income of $2.5 billion grew 29% from the prior year period, primarily reflecting the increase in revenues and improved credit costs, partially offset by an increase in operating expenses.  Operating expenses grew 3% to $5.0 billion due to an adjustment to incentive compensation expense as a result of better than anticipated performance year-to-date, higher regulatory and compliance costs and higher repositioning charges, partially offset by ongoing efficiency savings.

 

ICG average loans grew 7% versus the prior year period to $278 billion while end of period deposits remained roughly unchanged at $567 billion.  In constant dollars, average loans were up 7% versus the prior year period, while end of period deposits increased 2%.

 

Citi Holdings
($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

QoQ%

 

YoY%

 

Total Revenues

 

$

1,588

 

$

1,463

 

$

1,258

 

9

%

26

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Revenues(a)

 

$

1,643

 

$

1,464

 

$

1,262

 

12

%

30

%

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

$

892

 

$

4,514

 

$

1,396

 

-80

%

-36

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Expenses(a)

 

$

892

 

$

765

 

$

1,396

 

17

%

-36

%

 

 

 

 

 

 

 

 

 

 

 

 

Net Credit Losses

 

347

 

399

 

635

 

-13

%

-45

%

Loan Loss Reserve Build/(Release)(b)

 

(144

)

(199

)

(679

)

28

%

79

%

Provision for Benefits and Claims

 

153

 

143

 

153

 

7

%

 

Total Cost of Credit

 

$

356

 

$

343

 

$

109

 

4

%

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Cost of Credit(a)

 

$

356

 

$

288

 

$

109

 

24

%

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

238

 

$

(3,482

)

$

(115

)

NM

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income(a)

 

$

272

 

$

244

 

$

(113

)

11

%

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

EOP Assets ($ in billions)

 

103

 

111

 

122

 

-7

%

-16

%

EOP Loans ($B)

 

78

 

82

 

96

 

-6

%

-19

%

EOP Deposits ($B)

 

14

 

20

 

42

 

-26

%

-66

%

 


Note:  Please refer to the Appendices and Footnotes at the end of this press release for additional information.

(a)         Excludes, as applicable, CVA / DVA in all periods and the impact of the mortgage settlement in 2Q’14.  For additional information, please refer to Appendix B.  For additional information on the mortgage settlement in 2Q’14, please refer to Footnote 6.

(b)         Includes provision for unfunded lending commitments.

 

Citi Holdings

 

Citi Holdings revenues in the third quarter 2014 increased 26% versus the prior year period to $1.6 billion.  Revenues in the third quarter 2014 included CVA/DVA of negative $55 million, compared to negative $4 million in the prior year period.  Excluding CVA/DVA, Citi Holdings revenues increased 30%, primarily driven by gains on the sales of consumer operations in Greece and Spain as well as lower funding costs, partially offset by losses on the redemption of debt associated with funding Citi Holdings assets.  As of the end of the quarter, Citi Holdings assets were $103 billion, 16% below the prior year period, and represented approximately 5% of total Citigroup assets.

 

Citi Holdings net income was $238 million in the third quarter 2014, compared to a net loss of $115 million in the prior year period.  Excluding CVA/DVA, net income was $272 million, up from a loss of $113 million in the prior year period, reflecting the higher revenues, lower operating expenses and lower net credit losses, partially

 



 

offset by a lower net loan loss reserve release.  Operating expenses in the third quarter 2014 declined 36% from the prior year period, principally reflecting lower legal and related expenses ($126 million in the third quarter 2014, compared to $595 million in the prior year period) as well as productivity savings and the ongoing decline in Citi Holdings assets, partially offset by $59 million of costs related to the sales of the consumer operations in Greece and Spain.  Net credit losses decreased 45% from the prior year period to $347 million, primarily driven by continued improvements in the North America mortgage portfolio. The net loan loss reserve release decreased 79% from the prior year period to $144 million, primarily due to lower releases related to the North America mortgage portfolio.

 

Citi Holdings allowance for credit losses was $5.0 billion at the end of the third quarter 2014, or 6.44% of loans, compared to $7.3 billion, or 7.59% of loans, in the prior year period.  90+ days delinquent consumer loans in Citi Holdings decreased 29% to $2.1 billion, or 2.93% of loans.

 

Citicorp Results by Region(a)

 

Revenues

 

Income from Continuing Ops.

 

($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

3Q’14

 

2Q’14

 

3Q’13

 

North America

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Consumer Banking

 

4,989

 

4,782

 

4,739

 

1,185

 

1,077

 

894

 

Institutional Clients Group

 

3,161

 

3,176

 

2,579

 

878

 

1,086

 

596

 

Total North America

 

$

8,150

 

$

7,958

 

$

7,318

 

$

2,063

 

$

2,163

 

$

1,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Consumer Banking

 

347

 

359

 

359

 

1

 

15

 

13

 

Institutional Clients Group

 

2,540

 

2,426

 

2,328

 

631

 

548

 

486

 

Total EMEA

 

$

2,887

 

$

2,785

 

$

2,687

 

$

632

 

$

563

 

$

499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Latin America

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Consumer Banking

 

2,357

 

2,324

 

2,272

 

338

 

299

 

264

 

Institutional Clients Group

 

1,038

 

1,159

 

1,102

 

308

 

436

 

431

 

Total Latin America

 

$

3,395

 

$

3,483

 

$

3,374

 

$

646

 

$

735

 

$

695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Consumer Banking

 

1,944

 

1,916

 

1,862

 

413

 

214

 

364

 

Institutional Clients Group

 

1,948

 

1,734

 

1,695

 

710

 

512

 

433

 

Total Asia

 

$

3,892

 

$

3,650

 

$

3,557

 

$

1,123

 

$

726

 

$

797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate/Other

 

$

8

 

$

35

 

$

42

 

$

(998

)

$

(432

)

$

(156

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Citicorp

 

$

18,332

 

$

17,911

 

$

16,978

 

$

3,466

 

$

3,755

 

$

3,325

 

 


Note: Totals may not sum due to rounding. Please refer to the Appendices and Footnotes at the end of this press release for additional information.

(a)         Excludes, as applicable, CVA / DVA in all periods and the tax benefit in 3Q’13. For additional information, please refer to Appendix B. For additional information on the tax benefit in 3Q’13, please refer to Footnote 5.

 

Citigroup will host a conference call today at 11:30 AM (ET).  A live webcast of the presentation, as well as financial results and presentation materials, will be available at http://www.citigroup.com/citi/investor.  Dial-in numbers for the conference call are as follows: (866) 516-9582 in the U.S. and Canada; (973) 409-9210 outside of the U.S. and Canada.  The conference code for both numbers is 90833821.

 

Citigroup, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citigroup provides 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.

 

Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://new.citi.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi

 

Additional financial, statistical, and business-related information, as well as business and segment trends, is included in a Quarterly Financial Data Supplement.  Both this earnings release and Citigroup’s Third Quarter 2014 Quarterly Financial Data Supplement are available on Citigroup’s website at www.citigroup.com.

 



 

Certain statements in this release, including without limitation those related to Citigroup’s intended exit from its consumer businesses in 11 markets and its consumer finance business in Korea, are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances.  These statements are not guarantees of future results or occurrences.  Actual results and capital and other financial condition may differ materially from those included in these statements due to a variety of factors, including market conditions, transaction closing conditions and regulatory and other approvals as well as the precautionary statements included in this release and those contained in Citigroup’s filings with the U.S. Securities and Exchange Commission, including without limitation the “Risk Factors” section of Citigroup’s 2013 Annual Report on Form 10-K. Any forward-looking statements made by or on behalf of Citigroup speak only as to the date they are made, and Citigroup does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made.

 

Contacts:

 

 

 

 

 

 

 

 

 

 

Press:

 

Mark Costiglio

 

(212) 559-4114

 

Investors:

 

Susan Kendall

 

(212) 559-2718

 

 

Kamran Mumtaz

 

(212) 793-7682

 

Fixed Income Investors:

 

Peter Kapp

 

(212) 559-5091

 



 

Appendix A: CVA / DVA

 

CVA / DVA 

($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

Institutional Clients Group

 

 

 

 

 

 

 

Counterparty CVA(1)

 

$

(25

)

$

62

 

$

(50

)

Asset FVA

 

(436

)

 

 

Own-Credit CVA(1)

 

27

 

(50

)

(43

)

Liability FVA

 

6

 

 

 

 

 

 

 

 

 

 

 

Derivatives CVA(1)

 

$

(427

)

$

12

 

$

(93

)

 

 

 

 

 

 

 

 

DVA on Citi Liabilities at Fair Value

 

111

 

(44

)

(239

)

 

 

 

 

 

 

 

 

Total Institutional Clients Group CVA / DVA

 

$

(316

)

$

(32

)

$

(332

)

 

 

 

 

 

 

 

 

Citi Holdings

 

 

 

 

 

 

 

Counterparty CVA(1)

 

$

0

 

$

1

 

$

2

 

Asset FVA

 

(44

)

 

 

Own-Credit CVA(1)

 

(12

)

(2

)

(4

)

Liability FVA

 

0

 

 

 

 

 

 

 

 

 

 

 

Derivatives CVA(1)

 

$

(55

)

$

(1

)

$

(2

)

 

 

 

 

 

 

 

 

DVA on Citi Liabilities at Fair Value

 

1

 

 

(2

)

Total Citi Holdings CVA / DVA

 

$

(55

)

$

(1

)

$

(4

)

 

 

 

 

 

 

 

 

Total Citigroup CVA / DVA

 

$

(371

)

$

(33

)

$

(336

)

 


Note:  Totals may not sum due to rounding.

(1)  Net of hedges.

 

Appendix B: Non-GAAP Financial Measures - Adjusted Items

 

Citigroup

($ in millions, except per share amounts)

 

3Q’14

 

2Q’14

 

3Q’13

 

Reported Revenues (GAAP)

 

$

19,604

 

$

19,342

 

$

17,904

 

Impact of:

 

 

 

 

 

 

 

CVA / DVA

 

(371

)

(33

)

(336

)

Adjusted Revenues

 

$

19,975

 

$

19,375

 

$

18,240

 

 

 

 

 

 

 

 

 

Reported Expenses (GAAP)

 

$

12,355

 

$

15,521

 

$

11,679

 

Impact of:

 

 

 

 

 

 

 

Mortgage Settlement

 

 

(3,749

)

 

Adjusted Expenses

 

$

12,355

 

$

11,772

 

$

11,679

 

 

 

 

 

 

 

 

 

Reported Cost of Credit (GAAP)

 

$

1,750

 

$

1,730

 

$

1,959

 

Impact of:

 

 

 

 

 

 

 

Mortgage Settlement

 

 

(55

)

 

Adjusted Cost of Credit

 

$

1,750

 

$

1,675

 

$

1,959

 

 

 

 

 

 

 

 

 

Reported Net Income (GAAP)

 

$

3,439

 

$

181

 

$

3,227

 

Impact of:

 

 

 

 

 

 

 

CVA / DVA

 

(228

)

(20

)

(208

)

Tax Item

 

 

 

176

 

Mortgage Settlement

 

 

(3,726

)

 

Adjusted Net Income

 

$

3,667

 

$

3,927

 

$

3,259

 

Preferred Dividends

 

128

 

100

 

110

 

Adjusted Net Income to Common

 

$

3,539

 

$

3,827

 

$

3,149

 

Reported EPS (GAAP)

 

$

1.07

 

$

0.03

 

$

1.00

 

Impact of:

 

 

 

 

 

 

 

CVA / DVA

 

(0.08

)

(0.01

)

(0.07

)

Tax Item

 

 

 

0.06

 

Mortgage Settlement

 

 

(1.21

)

 

Adjusted EPS

 

$

1.15

 

$

1.24

 

$

1.02

 

 



 

Appendix B: Non-GAAP Financial Measures - Adjusted Items (Cont.)

 

Citicorp

($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

Reported Revenues (GAAP)

 

$

18,016

 

$

17,879

 

$

16,646

 

Impact of:

 

 

 

 

 

 

 

CVA / DVA

 

(316

)

(32

)

(332

)

Adjusted Revenues

 

$

18,332

 

$

17,911

 

$

16,978

 

 

 

 

 

 

 

 

 

Reported Net Income (GAAP)

 

$

3,201

 

$

3,663

 

$

3,342

 

Impact of:

 

 

 

 

 

 

 

CVA / DVA

 

(194

)

(20

)

(206

)

Tax Item

 

 

 

176

 

Adjusted Net Income

 

$

3,395

 

$

3,683

 

$

3,372

 

 

Institutional Clients Group

($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

Reported Revenues (GAAP)

 

$

8,371

 

$

8,463

 

$

7,372

 

Impact of:

 

 

 

 

 

 

 

CVA / DVA

 

(316

)

(32

)

(332

)

Adjusted Revenues

 

$

8,687

 

$

8,495

 

$

7,704

 

 

 

 

 

 

 

 

 

Reported Net Income (GAAP)

 

$

2,291

 

$

2,543

 

$

1,721

 

Impact of:

 

 

 

 

 

 

 

CVA / DVA

 

(194

)

(20

)

(206

)

Adjusted Net Income

 

$

2,485

 

$

2,563

 

$

1,927

 

 

Corp / Other

($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

Reported Net Income (GAAP)

 

$

(1,018

)

$

(479

)

$

90

 

Impact of:

 

 

 

 

 

 

 

Tax Item

 

 

 

176

 

Adjusted Net Income

 

$

(1,018

)

$

(479

)

$

(86

)

 

Citi Holdings

($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

Reported Revenues (GAAP)

 

$

1,588

 

$

1,463

 

$

1,258

 

Impact of:

 

 

 

 

 

 

 

CVA / DVA

 

(55

)

(1

)

(4

)

Adjusted Revenues

 

$

1,643

 

$

1,464

 

$

1,262

 

 

 

 

 

 

 

 

 

Reported Expenses (GAAP)

 

$

892

 

$

4,514

 

$

1,396

 

Impact of:

 

 

 

 

 

 

 

Mortgage Settlement

 

 

(3,749

)

 

Adjusted Expenses

 

$

892

 

$

765

 

$

1,396

 

 

 

 

 

 

 

 

 

Reported Cost of Credit (GAAP)

 

$

356

 

$

343

 

$

109

 

Impact of:

 

 

 

 

 

 

 

Mortgage Settlement

 

 

(55

)

 

Adjusted Cost of Credit

 

$

356

 

$

288

 

$

109

 

 

 

 

 

 

 

 

 

Reported Net Income (GAAP)

 

$

238

 

$

(3,482

)

$

(115

)

Impact of:

 

 

 

 

 

 

 

CVA / DVA

 

(34

)

 

(2

)

Mortgage Settlement

 

 

(3,726

)

 

Adjusted Net Income

 

$

272

 

$

244

 

$

(113

)

 



 

Appendix C: Non-GAAP Financial Measures - Excluding Impact of FX Translation

 

Int’l Consumer Banking

($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

Reported Revenues

 

$

4,648

 

$

4,599

 

$

4,493

 

Impact of FX Translation

 

 

(71

)

(51

)

Revenues in Constant Dollars

 

$

4,648

 

$

4,528

 

$

4,442

 

 

 

 

 

 

 

 

 

Reported Expenses

 

$

2,877

 

$

3,119

 

$

2,766

 

Impact of FX Translation

 

 

(45

)

(29

)

Expenses in Constant Dollars

 

$

2,877

 

$

3,074

 

$

2,737

 

 

 

 

 

 

 

 

 

Reported Credit Costs

 

$

726

 

$

813

 

$

836

 

Impact of FX Translation

 

 

(16

)

(6

)

Credit Costs in Constant Dollars

 

$

726

 

$

797

 

$

830

 

 

 

 

 

 

 

 

 

Reported EBT

 

$

1,045

 

$

667

 

$

891

 

Impact of FX Translation

 

 

(10

)

(16

)

EBT in Constant Dollars

 

$

1,045

 

$

657

 

$

875

 

 

 

 

 

 

 

 

 

Reported Net Income

 

$

742

 

$

521

 

$

637

 

Impact of FX Translation

 

 

(4

)

(28

)

Net Income in Constant Dollars

 

$

742

 

$

517

 

$

609

 

 

EMEA Consumer Banking

 

 

 

 

 

 

 

($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

Reported Revenues

 

$

347

 

$

359

 

$

359

 

Impact of FX Translation

 

 

(13

)

(14

)

Revenues in Constant Dollars

 

$

347

 

$

346

 

$

345

 

 

 

 

 

 

 

 

 

Reported Expenses

 

$

326

 

$

313

 

$

315

 

Impact of FX Translation

 

 

(12

)

(10

)

Expenses in Constant Dollars

 

$

326

 

$

301

 

$

305

 

 

Latam Consumer Banking

 

 

 

 

 

 

 

($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

Reported Revenues

 

$

2,357

 

$

2,324

 

$

2,272

 

Impact of FX Translation

 

 

(45

)

(48

)

Revenues in Constant Dollars

 

$

2,357

 

$

2,279

 

$

2,224

 

 

 

 

 

 

 

 

 

Reported Expenses

 

$

1,378

 

$

1,360

 

$

1,319

 

Impact of FX Translation

 

 

(23

)

(25

)

Expenses in Constant Dollars

 

$

1,378

 

$

1,337

 

$

1,294

 

 

Asia Consumer Banking
($ in millions)

 

3Q’14

 

2Q’14

 

3Q’13

 

Reported Revenues

 

$

1,944

 

$

1,916

 

$

1,862

 

Impact of FX Translation

 

 

(13

)

11

 

Revenues in Constant Dollars

 

$

1,944

 

$

1,903

 

$

1,873

 

 

 

 

 

 

 

 

 

Reported Expenses

 

$

1,173

 

$

1,446

 

$

1,132

 

Impact of FX Translation

 

 

(10

)

6

 

Expenses in Constant Dollars

 

$

1,173

 

$

1,436

 

$

1,138