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Citigroup 10-Q 2011

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

Commission file number 1-9924

Citigroup Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
  52-1568099
(I.R.S. Employer Identification No.)

399 Park Avenue, New York, NY
(Address of principal executive offices)

 

10043
(Zip code)

(212) 559-1000
(Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý   Accelerated filer o   Non-accelerated filero
(Do not check if a smaller
reporting company)
  Smaller reporting company o

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

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

Common stock outstanding as of June 30, 2011: 2,917,949,115

Available on the web at www.citigroup.com

1



CITIGROUP INC.
SECOND QUARTER 2011—FORM 10-Q

OVERVIEW

    3  

CITIGROUP SEGMENTS AND REGIONS

   
4
 

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

   
5
 

EXECUTIVE SUMMARY

   
5
 

RESULTS OF OPERATIONS

   
7
 

SUMMARY OF SELECTED FINANCIAL DATA

   
7
 

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

   
9
 

CITICORP

   
11
 
 

Regional Consumer Banking

   
12
 
     

North America Regional Consumer Banking

   
13
 
     

EMEA Regional Consumer Banking

   
15
 
     

Latin America Regional Consumer Banking

   
17
 
     

Asia Regional Consumer Banking

   
19
 
 

Institutional Clients Group

   
21
 
     

Securities and Banking

   
22
 
     

Transaction Services

   
24
 

CITI HOLDINGS

   
26
 
 

Brokerage and Asset Management

   
27
 
 

Local Consumer Lending

   
28
 
 

Special Asset Pool

   
29
 

CORPORATE/OTHER

   
31
 

SEGMENT BALANCE SHEET AT JUNE 30, 2011

   
32
 

CAPITAL RESOURCES AND LIQUIDITY

   
33
 
   

Capital Resources

   
33
 
   

Funding and Liquidity

   
38
 

OFF-BALANCE-SHEET ARRANGEMENTS

   
43
 

MANAGING GLOBAL RISK

   
44
 
   

Credit Risk

   
44
 
       

Loans Outstanding

   
44
 
       

Details of Credit Loss Experience

   
45
 
       

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

   
46
 
       

North America Consumer Mortgage Lending

   
50
 
       

North America Cards

   
57
 
       

Consumer Loan Details

   
60
 
       

Consumer Loan Modification Programs

   
62
 
       

Consumer Mortgage Representations and Warranties

   
66
 
       

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

   
70
 
       

Corporate Loan Details

   
71
 
       

Exposure to Commercial Real Estate

   
73
 
   

Market Risk

   
74
 
   

Country and Cross-Border Risk

   
84
 

DERIVATIVES

   
87
 

INCOME TAXES

   
90
 

DISCLOSURE CONTROLS AND PROCEDURES

   
91
 

FORWARD-LOOKING STATEMENTS

   
91
 

FINANCIAL STATEMENTS AND NOTES—TABLE OF CONTENTS

   
94
 

CONSOLIDATED FINANCIAL STATEMENTS

   
95
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   
101
 

LEGAL PROCEEDINGS

   
207
 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

   
207
 

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OVERVIEW

Introduction

        Citigroup operates, for management reporting purposes, via two primary business segments: Citicorp, consisting of Citi's Regional Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of Citi's Brokerage and Asset Management and Local Consumer Lending businesses, and a Special Asset Pool. There is also a third segment, Corporate/Other. For a further description of the business segments and the products and services they provide, see "Citigroup Segments" below, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 3 to the Consolidated Financial Statements.

        Throughout this report, "Citigroup," "Citi" and "the Company" refer to Citigroup Inc. and its consolidated subsidiaries.

        This Quarterly Report on Form 10-Q should be read in conjunction with Citigroup's Annual Report on Form 10-K for the year ended December 31, 2010 (2010 Annual Report on Form 10-K) and Citigroup's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011. Additional information about Citigroup is available on the company's Web site at www.citigroup.com. Citigroup's recent annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, as well as its other filings with the SEC are available free of charge through the company's Web site by clicking on the "Investors" page and selecting "All SEC Filings." The SEC's Web site also contains periodic and current reports, proxy and information statements, and other information regarding Citi at www.sec.gov.

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

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

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

GRAPHIC

        The following are the four regions in which Citigroup operates. The regional results are fully reflected in the segment results above.

GRAPHIC


(1)
Asia includes Japan, Latin America includes Mexico, and North America comprises the U.S., Canada and Puerto Rico.

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

SECOND QUARTER 2011 EXECUTIVE SUMMARY

Citigroup

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

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

Operating Expenses

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

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

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

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

Credit Costs

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

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

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

Capital and Loan Loss Reserve Positions

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

        Citigroup's total allowance for loan losses was $34.4 billion at quarter-end, or 5.35%, of total loans, down from $46.2 billion, or 6.72%, in the prior-year period. The decline in the total allowance for loan losses reflected asset sales, lower non-accrual loans, and overall continued improvement in the credit quality of the loan portfolio.

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

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

Citicorp

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

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

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

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

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

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

Citi Holdings

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

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

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

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RESULTS OF OPERATIONS

SUMMARY OF SELECTED FINANCIAL DATA

Citigroup Inc. and Consolidated Subsidiaries

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

Net interest revenue

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

Non-interest revenue

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

Revenues, net of interest expense

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

Operating expenses

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

Provisions for credit losses and for benefits and claims

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

Income from continuing operations before income taxes

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

Income taxes

    967     812     19     2,152     1,848     16  
                           

Income from continuing operations

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

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

    71     (3 )   NM     111     208     (47 )
                           

Net income before attribution of noncontrolling interests

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

Net income attributable to noncontrolling interests

    62     28     NM     134     60     NM  
                           

Citigroup's net income

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

Less: Preferred dividends–Basic

  $ 9   $     NM   $ 13   $     NM  

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

    62     26     NM     96     57     68 %
                           

Income allocated to unrestricted common shareholders for basic EPS

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

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

    6     1     NM     7     2     NM  
                           

Income allocated to unrestricted common shareholders for diluted EPS

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

Earnings per share(2)

                                     

Basic

                                     

Income from continuing operations

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

Net income

    1.12     0.93     20     2.14     2.47     (13 )
                           

Diluted

                                     

Income from continuing operations

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

Net income

    1.09     0.90     21     2.08     2.39     (13 )
                           

At June 30:

                                     

Total assets

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

Total deposits

    866,310     813,951     6                    

Long-term debt

    352,458     413,297     (15 )                  

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

    16,077     20,218     (20 )                  

Common stockholders' equity

    176,052     154,494     14                    

Total stockholders' equity

    176,364     154,806     14                    

Direct staff (in thousands)

    263     259     2                    
                           

Ratios:

                                     

Return on average common stockholders' equity(3)

    7.7 %   7.0 %         7.5 %   9.5 %      

Return on average total stockholders' equity(3)

    7.7     7.0           7.5     9.5        
                           

Tier 1 Common(4)

    11.62 %   9.71 %                        

Tier 1 Capital

    13.55     11.99                          

Total Capital

    17.18     15.59                          

Leverage(5)

    7.05     6.31                          
                           

Common stockholders' equity to assets

    9.00 %   7.97 %                        

Total stockholders' equity to assets

    9.01     7.99                          

Book value per common share(2)

  $ 60.34   $ 53.32                          

Tangible book value per share(2)(6)

    48.75     41.86                          

Ratio of earnings to fixed charges and preferred stock dividends

    1.65     1.54           1.67     1.68        
                           

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

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

(3)
The return on average common stockholders' equity is calculated using net income less preferred stock dividends divided by average common stockholders' equity. The return on total stockholders' equity is calculated using net income divided by average stockholders' equity.

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

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

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

NM Not meaningful

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SEGMENT AND BUSINESS—INCOME (LOSS) AND REVENUES

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

CITIGROUP INCOME (LOSS)

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

Income (loss) from continuing operations

                                     

CITICORP

                                     

Regional Consumer Banking

                                     
 

North America

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

EMEA

    29     48     (40 )%   78     72     8 %
 

Latin America

    412     473     (13 )   896     840     7  
 

Asia

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

Total

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

Securities and Banking

                                     
 

North America

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

EMEA

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

Latin America

    292     200     46     564     469     20  
 

Asia

    212     301     (30 )   422     770     (45 )
                           
   

Total

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

Transaction Services

                                     
 

North America

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

EMEA

    289     320     (10 )   567     623     (9 )
 

Latin America

    157     154     2     327     306     7  
 

Asia

    290     296     (2 )   574     615     (7 )
                           
   

Total

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

Institutional Clients Group

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

Total Citicorp

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

CITI HOLDINGS

                                     
 

Brokerage and Asset Management

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

Local Consumer Lending

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

Special Asset Pool

    678     116     NM     740     994     (26 )
                           

Total Citi Holdings

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

Corporate/Other

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

Income from continuing operations

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

Income loss (from) discontinued operations

  $ 71   $ (3 )       $ 111   $ 208        

Net income attributable to noncontrolling interests

    62     28           134     60        
                           

Citigroup's net income

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

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

NM Not meaningful

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CITIGROUP REVENUES

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

CITICORP

                                     

Regional Consumer Banking

                                     
 

North America

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

EMEA

    391     376     4     789     781     1  
 

Latin America

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

Asia

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

Total

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

Securities and Banking

                                     
 

North America

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

EMEA

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

Latin America

    675     558     21     1,257     1,165     8  
 

Asia

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

Total

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

Transaction Services

                                     
 

North America

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

EMEA

    898     848     6     1,734     1,681     3  
 

Latin America

    428     356     20     836     700     19  
 

Asia

    728     662     10     1,424     1,283     11  
                           
   

Total

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

Institutional Clients Group

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

Total Citicorp

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

CITI HOLDINGS

                                     

Brokerage and Asset Management

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

Local Consumer Lending

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

Special Asset Pool

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

Total Citi Holdings

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

Corporate/Other

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

Total net revenues

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

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CITICORP

        Citicorp is the Company's global bank for consumers and businesses and represents Citi's core franchises. Citicorp is focused on providing best-in-class products and services to customers and leveraging Citigroup's unparalleled global network. Citicorp is physically present in approximately 100 countries, many for over 100 years, and offers services in over 160 countries and jurisdictions. Citi believes this global network provides a strong foundation for servicing the broad financial services needs of large multinational clients and for meeting the needs of retail, private banking, commercial, public sector and institutional clients around the world. Citigroup's global footprint provides coverage of the world's emerging economies, which Citi believes represent a strong area of growth. At June 30, 2011, Citicorp had approximately $1.4 trillion of assets and $788 billion of deposits, representing approximately 71% of Citi's total assets and approximately 91% of its deposits.

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

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

Net interest revenue

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

Non-interest revenue

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

Total revenues, net of interest expense

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

Provisions for credit losses and for benefits and claims

                                     
 

Net credit losses

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

Credit reserve build (release)

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

Provision for loan losses

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

Provision for benefits and claims

    26     27     (4 )   70     71     (1 )
 

Provision for unfunded lending commitments

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

Total provisions for credit losses and for benefits and claims

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

Total operating expenses

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

Income from continuing operations before taxes

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

Provisions for income taxes

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

Income from continuing operations

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

Net income attributable to noncontrolling interests

    12     20     (40 )   23     41     (44 )
                           

Citicorp's net income

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

Balance sheet data (in billions of dollars)

                                     

Total EOP assets

  $ 1,380   $ 1,211     14 %                  

EOP Loans:

                                     
 

Consumer

    244     219     11                    
 

Corporate

    197     161     22                    

Average assets

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

Total EOP deposits

    788     719     10                    
                           

NM Not meaningful

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REGIONAL CONSUMER BANKING

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

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

Net interest revenue

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

Non-interest revenue

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

Total revenues, net of interest expense

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

Total operating expenses

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

Net credit losses

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

Credit reserve build (release)

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

Provisions for unfunded lending commitments

    3     (4 )   NM     3     (4 )   NM  
 

Provision for benefits and claims

    26     27     (4 )   70     71     (1 )
                           

Provisions for credit losses and for benefits and claims

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

Income from continuing operations before taxes

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

Income taxes

    650     317     NM     1,275     524     NM  
                           

Income from continuing operations

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

Net income (loss) attributable to noncontrolling interests

    3             1     (5 )   NM  
                           

Net income

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

Average assets (in billions of dollars)

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

Return on assets

    1.90 %   1.49