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C » Topics » INTEREST REVENUE/EXPENSE AND YIELDS

This excerpt taken from the C 10-Q filed Nov 3, 2006.

INTEREST REVENUE/EXPENSE AND YIELDS

GRAPHIC

In millions of dollars

   3rd Qtr.
2006
   2nd Qtr.
2006
   3rd Qtr.
2005
   % Change
3Q06 vs. 3Q05
  
Interest Revenue(1)   $ 24,729   $ 23,572   $ 19,344   28 %
Interest Expense     14,901     13,717     9,649   54  
   
 
 
 
 
Net Interest Revenue(1)   $ 9,828   $ 9,855   $ 9,695   1 %
   
 
 
 
 
Interest Revenue—Average Rate     6.59 %   6.52 %   5.95 % 64 bps  
Interest Expense—Average Rate     4.38 %   4.20 %   3.33 % 105 bps  
Net Interest Margin     2.62 %   2.73 %   2.98 % (36) bps  
   
 
 
 
 
Interest Rate Benchmarks:                        
Federal Funds Rate—End of Period     5.25 %   5.25 %   3.75 % 150 bps  
   
 
 
 
 
2 Year U.S. Treasury Note—Average Rate     4.93 %   4.99 %   3.94 % 99 bps  
10 Year U.S. Treasury Note—Average Rate     4.89 %   5.07 %   4.20 % 69 bps  
   
 
 
 
 
  10 Year vs. 2 Year Spread     (4) bps     8 bps     26 bps      
   
 
 
 
 
(1)
Excludes taxable equivalent adjustment based on the U.S. Federal statutory tax rate of 35%.

        A significant portion of the Company's business activities is based upon gathering deposits and borrowing money and then lending or investing those funds, including in market-making activities in tradable securities. Net interest margin is calculated by dividing gross interest revenue less gross interest expense by average interest earning assets.

        In the 2006 third quarter, pressure on net interest margin continued, though driven by several factors. Interest expense increased due to both a rise in short-term interest rates and funding actions the Company has taken to lengthen its debt maturity profile.

        The average rate on the Company's assets increased during the period, but by less than the increase in average rates on borrowed funds or deposits. The average rate on loans or investments reflected a highly competitive loan pricing environment, as well as a shift in the Company's loan portfolio from higher-yielding credit card receivables to assets that carry lower yields, such as mortgages and home equity loans. The shift partially reflects continued high payment rates on credit card receivables. The majority of the sequential decline in net interest margin was due to trading activities in Capital Markets and Banking.

67

This excerpt taken from the C 10-Q filed Aug 4, 2006.

INTEREST REVENUE/EXPENSE AND YIELDS

GRAPHIC

In millions of dollars
   2nd Qtr.
2006
   1st Qtr.
2006
   4th Qtr.
2005
   2nd Qtr.
2005
   % Change
2Q06 vs. 2Q05
  
Interest Revenue(1)   $ 23,552   $ 21,893   $ 20,699   $ 18,501   27 %
Interest Expense     13,717     12,107     10,935     8,668   58  
   
 
 
 
 
 
Net Interest Revenue(1)   $ 9,835   $ 9,786   $ 9,764   $ 9,833   —  
   
 
 
 
 
 
Interest Revenue—Average Rate     6.52 %   6.39 %   6.19 %   5.86 % 66   bps
Interest Expense—Average Rate     4.20 %   3.94 %   3.66 %   3.04 % 116   bps
Net Interest Margin     2.72 %   2.86 %   2.92 %   3.12 % (40 ) bps
   
 
 
 
 
 
Interest Rate Benchmarks:                              
Federal Funds Rate—End of Period     5.25 %   4.75 %   4.25 %   3.25 % 200   bps
   
 
 
 
 
 
2 Year U.S. Treasury Note—Average Rate     4.99 %   4.60 %   4.36 %   3.63 % 136   bps
10 Year U.S. Treasury Note—Average Rate     5.07 %   4.57 %   4.48 %   4.15 % 92   bps
   
 
 
 
 
 
  10 Year vs. 2 Year Spread     8   bps   (3 ) bps   12   bps   52   bps    
   
 
 
 
 
 
(1)
Includes taxable equivalent adjustment based on the U.S. Federal statutory tax rate of 35%.

        A significant portion of the Company's business activities is based upon gathering deposits and borrowing money and then lending or investing those funds, including in market-making activities in tradable securities. Net interest margin is calculated by dividing gross interest revenue less gross interest expense by average interest earning assets.

        In the 2006 second quarter, pressure on net interest margin continued, though driven by several factors. Interest expense increased due to both a rise in short-term interest rates and funding actions the Company has taken to lengthen its debt maturity profile.

        The average rate on the Company's assets increased during the period, but by less than the increase in average rates on borrowed funds or deposits. The average rate on loans or investments reflected a highly competitive loan pricing environment, as well as a shift in the Company's loan portfolio from higher-yielding credit card receivables to assets that carry lower yields, such as mortgages and home equity loans. The shift partially reflects continued high payment rates on credit card receivables.

64

This excerpt taken from the C 10-Q filed May 5, 2006.

INTEREST REVENUE/EXPENSE AND YIELDS

GRAPHIC

In millions of dollars
   1st Qtr.
2006
   4th Qtr.
2005
   1st Qtr.
2005
   % Change
1Q06 vs. 1Q05
  
Interest Revenue(1)   $ 21,893   $ 20,699   $ 17,563   25 %
Interest Expense     12,107     10,935     7,424   63  
   
 
 
 
 
Net Interest Revenue(1)   $ 9,786   $ 9,764   $ 10,139   (3 )%
   
 
 
 
 
Interest Revenue—Average Rate     6.39 %   6.19 %   5.72 % 67   bps
Interest Expense—Average Rate     3.94 %   3.66 %   2.68 % 126   bps
Net Interest Margin     2.86 %   2.92 %   3.30 % (44 ) bps

Interest Rate Benchmarks:
 
 
 
 
 
 
 
 
 
 
 
 
Federal Funds Rate—End of Period     4.75 %   4.25 %   2.75 % 200   bps
   
 
 
 
 
2 Year U.S. Treasury Note—Average Rate     4.60 %   4.36 %   3.44 % 116   bps
10 Year U.S. Treasury Note—Average Rate     4.57 %   4.48 %   4.30 % 27   bps
   
 
 
 
 
  2 Year vs. 10 Year Spread     (3)   bps   12   bps   86   bps    
   
 
 
 
 
(1)
Includes taxable equivalent adjustment based on the U.S. Federal statutory tax rate of 35%.

        A significant portion of the Company's business activities is based upon gathering deposits and borrowing money and then lending or investing those funds, including in market-making activities in tradable securities. Net interest margin is calculated by dividing gross interest revenue less gross interest expense by average interest earning assets.

        In the 2006 first quarter, pressure on net interest margin continued, though at a lessened pace, driven by several factors. Interest expense increased due to both a rise in short-term interest rates and funding actions the Company has taken to lengthen its debt maturity profile.

        The average rate on the Company's assets increased during the period, but by less than the increase in average rates on borrowed funds or deposits. The average rate on loans or investments reflected a highly competitive loan pricing environment, as well as a shift in the Company's loan portfolio from higher-yielding credit card receivables to assets that carry lower yields, such as mortgages and home equity loans. The shift partially reflects continued high payment rates on credit card receivables.

61

EXCERPTS ON THIS PAGE:

10-Q
Nov 3, 2006
10-Q
Aug 4, 2006
10-Q
May 5, 2006

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