Citigroup reports pro forma quarterly net income of $729 million,
With Consumer and Insurance businesses strong,
Corporate business sharply down – Diluted per share was $0.30
|
Summary of Results % % %
Change Change Change
(In Millions of From Travelers From Citigroup From
Dollars) Citicorp `97 Group `97 Pro forma `97
(A)
1998 Third Quarter
Revenue (B) $6,071 2 $4,928 (28) $10,999 (14)
Net Income 530 4 199 (81) 729 (53)
Core Income (C) 530 (50) 199 (81) 729 (65)
Return on Common Equity 10.0 - 3.2 - 6.5 -
(C) (%)
1998 Nine Months
Revenue (B) $18,928 9 $18,881 (4) $37,809 2
Net Income 2,692 6 2,433 (11) 5,125 (3)
Core Income (C) 2,692 (13) 2,242 (18) 4,934 (15)
Return on Common Equity 17.6 - 14.2 - 15.9 -
(C) (%)
1998 Third Quarter
Net Income Per Share (Diluted) 0.30 (52)
Core Income Per Share (Basic) 0.30 (67)
Core Income Per Share (Diluted) 0.30 (65)
1998 Nine Months
Net Income Per Share (Diluted) 2.14 -
Core Income Per Share (Basic) 2.12 (15)
Core Income Per Share (Diluted) 2.06 (13)
(A) Citigroup pro forma results combine those of Citicorp and
Travelers Group. See "Calculation of Earnings Per Share" on page 26.
(B) Revenue is shown net of interest expense. Citicorp's revenue is
adjusted principally for the effect of credit card securitization.
(C) Core income represents net income adjusted to exclude the effects
of restructuring charges. Return on Common Equity is based upon Core
Income.
NEW YORK -- Citigroup (NYSE:CCI) today reported pro forma core
income of $729 million ($0.30 per diluted share) in the 1998 third
quarter. This compares with core income of $2.1 billion ($0.86 per
diluted share) in the same 1997 quarter. Pro forma net income in the
1997 third quarter was $1.5 billion ($0.63 per diluted share)
including the effects of a $556 million after-tax restructuring
charge. Revenue was $11.0 billion, down 14% from $12.8 billion in
1997.
In a statement on the earnings, John S. Reed and Sanford I. Weill, who
serve as Chairmen and Co-Chief Executive Officers, commented: "The
results were generally strong across all our consumer businesses, but
show the effects of unusually severe market forces on corporate
businesses and portfolios. Looking ahead, we expect that the consumer
businesses will continue to do well, that the corporate businesses
will stabilize around established franchises, and that our diversified
earnings streams and exceptional capital and reserves will prove their
value in the fourth quarter and the year ahead."
They also stated: "As turbulent as these markets have been, we as a
company are in excellent shape to make necessary adjustments, to ride
out bad periods and hold on to fundamentally sound positions, and to
search out opportunities that arise in times of stress. We are
already acting to assure that business unit expenses are consistent
with their business expectations, and we expect these actions to be
reflected in future results."
Results by Predecessor Company -- 1998 Third Quarter
Citicorp Travelers Group
Global Consumer $ 477 Investment Services ($325)
Global Corporate Banking (127) Consumer Finance Services 83
Investment Activities 71 Life Insurance Services 222
Corporate Items 109 Property & Casualty 245
Insurance
Portfolio Gains 25
Corporate and Other (51)
Total Citicorp $ 530 Total Travelers Group $ 199
Explaining the way the third quarter results are presented, Heidi G.
Miller, Chief Financial Officer, said: "Since Citigroup was created
after the close of the third quarter, we show pro forma results, as
though the companies were together in the quarter, as well as the
results of each of the predecessor companies, Citicorp and Travelers
Group. Citigroup Segment Income (page 3) is a transition toward a
new, clearer way of presenting the results in 1999 along Core Business
lines: Consumer, Corporate, and Asset Management.
"Certain components of the Core Business lines are still being
determined; for example, Salomon Smith Barney's retail operations are
shown this time in the Corporate segment. Also, the methodology for
breaking out the Asset Management segment results could change.
"In addition to the Core Business lines, there will be a separate
breakout of Investment Activities, which include Citicorp's venture
capital activities, Corporate investments, and certain investments in
the former refinancing countries as well as Travelers' portfolio
gains. Citicorp's Investment Activities are reported separately here
for the first time."
Income in Consumer businesses across Citigroup increased by 9% from
the 1997 third quarter. Income in the Corporate businesses, which
excludes Investment Activities, fell by $1.4 billion from the 1997
quarter, reflecting the almost unprecedented instability of fixed
income and certain emerging markets. The Asset Management business
increased assets under management 17% to $296 billion, and income was
$78 million in the quarter. Weakness in the global securities markets
reduced Investment Activities net income to $96 million from $341
million a year ago. Total stockholders' equity was $44 billion.
Selected financial statements and tables follow -- results for
Citicorp are on pages 4-14 and those for Travelers are on pages 15-25.
Additional financial, statistical, and business related information,
as well as business and segment trends, is included in a Financial
Supplement. Both the earnings release and the Financial Supplement
are available on Citigroup's web site (http://www.citigroupinfo.com).
The documents can also be obtained by fax by calling 1-800-853-1754
for callers within the United States or 732-935-2771 for callers
outside the United States.
Further details concerning the Citicorp and Travelers Group Inc.
financial results will be available in November in their respective
Form 10-Q reports.
Citigroup Segment Third Quarter % Nine Months %
Income (A)
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Citibank Global $461 $ 434 6 $1,213 $1,334 (9)
Consumer (B)
Travelers Life & 123 107 16 372 313 19
Annuity
Primerica Financial 99 85 17 297 245 21
Services
Consumer Finance 83 65 27 212 167 27
Services
Personal Lines (C) 68 71 (4) 231 225 3
Consumer 834 762 9 2,325 2,284 2
Salomon Smith Barney (395) 449 NM 395 1,221 (68)
(B)
Citibank Emerging (18) 280 NM 474 837 (43)
Markets (B)
Global Relationship (100) 137 NM 175 438 (60)
Banking (B)
Commercial Lines (C) 177 171 4 522 467 12
Corporate (336) 1,037 NM 1,566 2,963 (47)
Salomon Smith Barney
Asset Management 71 59 19 193 152 27
Citibank Asset 7 18 (61) 42 46 (9)
Management
Asset Management 78 77 1 235 198 19
Core Business Income 576 1,876 (69) 4,126 5,445 (24)
Citibank Investment 71 259 (73) 788 665 18
Activities (D)
Travelers Investment 25 82 (69) 140 97 45
Portfolio Gains
Total Investment 96 341 (72) 928 762 22
Activities
Corporate/Other 57 (121) NM (120) (394) 70
Core Income 729 2,096 (65) 4,934 5,813 (15)
Restructuring - (556) NM 191 (556) NM
Net Income $729 $1,540 (53) $5,125 $5,257 (3)
Citicorp $530 $1,067 (50) $2,692 $3,086 (13)
Travelers 199 1,029 (81) 2,242 2,727 (18)
Core Income $729 $2,096 (65) $4,934 $5,813 (15)
Citicorp $530 $ 511 4 $2,692 $2,530 6
Travelers 199 1,029 (81) 2,433 2,727 (11)
Net Income $729 $1,540 (53) $5,125 $5,257 (3)
(A) Amounts reflect each company's existing policies for revenue,
expense, tax and equity allocations; consequently business results
may not be comparable across companies.
(B) Excludes Asset Management results; consequently amounts differ
from those shown in predecessor company results.
(C) In the aggregate, these represent Citigroup's share of Travelers
Property Casualty Corp. results.
(D) Includes Citicorp's venture capital activities, certain Corporate
investments, and the results of certain investments in the former
refinancing countries.
NM Not meaningful, as percentage equals or exceeds 100%.
CITICORP
Citicorp net income totals $530 million on revenue of $6.1 billion
Summary of Results Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Adjusted Revenue (A) $6,071 $5,944 2 $18,928 $17,318 9
Adjusted Operating 3,923 3,364 17 11,214 9,753 15
Expense (A)
Operating Margin 2,148 2,580 (17) 7,714 7,565 2
Credit Costs (A) 1,275 848 50 3,332 2,553 31
Operating Margin Less 873 1,732 (50) 4,382 5,012 (13)
Credit Costs
Additional Provision 25 25 - 75 75 -
Restructuring Charge - 889 NM - 889 NM
Income Before Taxes $ 848 $ 818 4 $ 4,307 $ 4,048 6
Net Income $530 $511 4 $2,692 $2,530 6
Return on Common Equity 10.0 9.6 - 17.6 17.0 -
(%)
Return on Assets (%) 0.63 0.68 - 1.11 1.16 -
Excluding Restructuring
Charge
Core Income (B) $530 $1,067 (50) $2,692 $3,086 (13)
Return on Common Equity 10.0 20.8 - 17.6 20.8 -
(%)
Return on Assets (%) 0.63 1.42 - 1.11 1.41 -
(A) Citicorp's revenue is presented on a managed basis, principally
adjusting for the effect of credit card securitization activity. See
"Earnings Analysis" table in the Financial Supplement for further
details.
(B) Core income represents net income adjusted to exclude a
restructuring charge of $556 million after-tax ($889 million pretax)
in the 1997 third quarter.
NM Not meaningful, as percentage equals or exceeds 100%.
Citicorp today reported income for the 1998 third quarter of $530
million, down $537 million from $1.1 billion (excluding the $556
million after-tax restructuring charge) in the 1997 third quarter.
Generally strong Global Consumer results were reduced by a sharp
decline in Global Corporate Banking resulting from previously
disclosed after-tax losses of $240 million related to Russia ($384
million pretax), $97 million from marking to market fixed income
inventories, and lower revenue from venture capital and Brady bonds.
Net income in the 1997 third quarter included a $556 million
restructuring charge ($889 million pretax).
Adjusted revenue increased $127 million or 2%, reflecting a 19%
increase in Global Consumer, predominately in the developed markets,
which was reduced by an 18% decrease in Global Corporate Banking.
Adjusted operating expense increased $559 million or 17% ($320 million
or 10% excluding Universal Card Services -- UCS -- acquired in
April 1998). Increased expense for preparations for the Year 2000 and
EMU and the acquisition of certain assets and liabilities of Confia,
as well as for advertising and marketing programs, and electronic
banking initiatives represented approximately $166 million of the
change from the 1997 third quarter. Foreign currency translation
reduced adjusted revenue and operating expense growth by approximately
4 and 3 percentage points, respectively.
Global Consumer credit costs were $1,044 million ($878 million
excluding UCS) in the quarter, down $42 million from $1,086 million
($910 million excluding UCS) in the preceding quarter, and compared to
$856 million a year ago, reflecting ratios of net credit losses to
average managed loans of 2.69% (2.50% excluding UCS), 2.88% (2.66%
excluding UCS), and 2.50% in the respective quarters. Commercial
credit costs were $231 million, compared with an $8 million benefit in
the year ago quarter, principally reflecting writedowns associated
with Russia, as well as Indonesia and Thailand, all partially offset
by real estate recoveries.
Pretax income in Asia Pacific of $204 million for the quarter was down
$103 million or 34% from last year -- Global Consumer businesses
were down $36 million or 24% while Global Corporate Banking results
were down $67 million or 42%.
Global Consumer business earns $477 million on revenue of $4.2
billion,
Cards income up 18% from 1997
Global Consumer Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Adjusted Revenue $4,199 $3,534 19 $11,748 $10,581 11
Adjusted Operating 2,407 2,011 20 6,779 5,880 15
Expense
Operating Margin 1,792 1,523 18 4,969 4,701 6
Credit Costs (B) 1,044 856 22 3,016 2,672 13
Operating Margin Less 748 667 12 1,953 2,029 (4)
Credit Costs
Additional Provision 25 25 - 75 75 -
Income Before Taxes (C) $ 723 $ 642 13 $ 1,878 $ 1,954 (4)
Core Business Income $477 $452 6 $1,264 $1,384 (9)
(C)
Net Income $477 $101 NM $1,264 $1,033 22
Average Assets (In $144 $134 7 $139 $132 5
Billions of Dollars)
Return on Assets (C) 1.31 1.34 - 1.22 1.40 -
(%)
(A) Reclassified to conform to the latest quarter's presentation.
(B) Includes the effect of credit card securitization activity and
the effect related to credit card receivables held for sale.
(C) Excludes the 1997 third quarter restructuring charge of $580
million pretax ($351 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
* Global Consumer income before taxes in the 1998 third quarter was
$723 million, up $81 million or 13% from $642 million (excluding the
$580 million restructuring charge) in 1997, reflecting outstanding
results in U.S. bankcards and in Japan, partially offset by lower
earnings in Asia Pacific and Latin America. Global Consumer income
before taxes increased $169 million or 31% from the 1998 second
quarter, principally due to the significant improvement in the U.S.
bankcards business. In the quarter, UCS' pretax loss of
approximately $51 million ($32 million after-tax) reflected $107
million of acquisition premium costs (including funding costs
associated with the acquisition purchase premium). The Global
Consumer effective tax rate was 34% in the 1998 third quarter, up
from 30% (excluding the effect of the restructuring charge) in 1997,
reflecting changes in the geographic mix and nature of earnings.
Core Business income was $477 million in the 1998 third quarter, up
from $452 million in 1997.
* Worldwide Citibanking accounts totaled 23 million as of September
30, 1998, up 15% from a year ago, reflecting growth across all
regions. Citibanking customer deposits of $105 billion were up 12%
from a year-ago, reflecting account openings and increased deposit
levels primarily due to a "flight-to-quality" in Asia Pacific and
Japan, and growth in the U.S. and Latin America. Asia Pacific and
Japan added approximately $5.9 billion in customer deposits, up 19%
-- 36% excluding the effect of foreign currency translation --
from 1997.
* Card accounts worldwide totaled 50 million as of September 30,
1998, up from 36 million a year ago, principally reflecting the
acquisition of UCS. Cards in the emerging markets grew 12% from a
year ago, primarily in Latin America. The number of cards in force,
including those issued by affiliates, at quarter-end was 92 million,
up from 64 million a year ago. Cards, including Diners Club,
operates in 47 countries and territories.
* Adjusted revenue of $4.2 billion was up $665 million or 19% from
1997. Revenue growth was led by U.S bankcards, up 46% including
UCS, and increases in the Citibanking businesses in North America,
Europe, and Japan. Latin America benefited from the addition of
certain assets and liabilities of Confia, while revenue in Asia
Pacific was down due to economic conditions in the region. The
acquisition of UCS contributed approximately 10 percentage points to
Global Consumer revenue growth. Foreign currency translation reduced
revenue growth by approximately 4 percentage points.
* Adjusted operating expense increased $396 million or 20% from a
year ago. The additions of UCS (including the amortization of the
acquisition premium) and certain assets and liabilities of Confia,
higher advertising and marketing, and spending on technology
initiatives, primarily related to electronic banking, represented
approximately $315 million of the expense increase from the 1997
third quarter. Foreign currency translation reduced expense growth
by approximately 4 percentage points.
* Credit costs in the quarter were $1.0 billion, compared with $1.1
billion in the 1998 second quarter and $856 million a year ago. The
increase in credit costs from a year ago primarily reflects the
acquisition of UCS. Global Consumer continued to build the
allowance for credit losses, with charges of $25 million in excess
of net write-offs in the quarter.
* On August 5, 1998, Citicorp completed the previously announced
acquisition of certain assets and liabilities of Confia, a consumer
and corporate bank in Mexico. The acquisition added approximately
$4.7 billion in assets.
* The U.S. national launch of Direct Access increased PC Banking
users by 30% from 1997. Direct Access was also introduced in
Germany.
* Travelers variable annuities and Salomon mutual funds were
introduced for sale through Citicorp Investment Services. Citibank
and Primerica Financial Services joined forces to leverage
Citibank's product strengths with Primerica's distribution
capabilities with the introduction of Citibank Preferred Banking in
Atlanta and Las Vegas pilot markets.
* During the quarter, U.S. bankcards introduced the Sony Citibank
Card and a new Drivers Edge card.
Global Consumer
in Emerging Markets Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Adjusted Revenue $982 $970 1 $2,781 $2,905 (4)
Adjusted Operating 638 598 7 1,818 1,728 5
Expense
Operating Margin 344 372 (8) 963 1,177 (18)
Credit Costs 139 91 53 373 280 33
Operating Margin Less 205 281 (27) 590 897 (34)
Credit Costs
Additional Provision 11 15 (27) 33 26 27
Income Before Taxes (B) $194 $266 (27) $ 557 $ 871 (36)
Core Business Income $158 $218 (28) $457 $697 (34)
(B)
Net Income $158 $136 16 $457 $615 (26)
Average Assets (In $45 $43 5 $43 $42 2
Billions of Dollars)
Return on Assets (B) 1.39 2.01 - 1.43 2.22 -
(%)
(A) Reclassified to conform to the latest quarter's presentation.
(B) Excludes the 1997 third quarter restructuring charge of $131
million pretax ($82 million after-tax).
* Income before taxes in the emerging markets was $194 million in
the quarter, down $72 million from $266 million (excluding the $131
million restructuring charge) in 1997, reflecting economic
conditions, including weakened currencies, which reduced income
before taxes in Asia Pacific by approximately $36 million. Earnings
in Latin America benefited from the addition of certain assets and
liabilities of Confia, that was more than offset by higher credit
costs and a decline in Credicard earnings, a 33% owned Brazilian
Card affiliate. Core Business income for the 1998 third quarter was
$158 million compared to $218 million in 1997. Cards represented
20% of emerging markets income in the quarter, compared with 33% in
the 1997 quarter.
* Revenue in Latin America was up 14% from the 1997 third quarter,
primarily reflecting the acquisition of certain assets and
liabilities of Confia. Asia Pacific (excluding Japan and the Indian
subcontinent, but including Australia and New Zealand) revenue
declined 10% in the quarter, primarily in Cards, reflecting economic
conditions in the region including the effect of foreign currency
translation. Foreign currency translation reduced revenue growth
by approximately 13 percentage points.
* Adjusted operating expense grew 7%, reflecting lower expense in
Asia Pacific due to the effect of foreign currency translation,
offset by an increase in Latin America, including the addition of
certain assets and liabilities of Confia. Foreign currency
translation reduced expense growth by approximately 13 percentage
points.
* Credit costs in the emerging markets increased $6 million from
the 1998 second quarter and $48 million from the 1997 third quarter,
reflecting economic conditions in Latin America and Asia Pacific.
The net credit loss ratio in Asia Pacific was 1.10%, down from 1.16%
in the 1998 second quarter and up from 0.63% a year ago. The net
credit loss ratio in Latin America was 2.82%, up from 2.51% in the
1998 second quarter and 2.09% a year ago. Emerging markets managed
loans delinquent 90 days or more were $748 million or 2.20% at
quarter-end, compared with $647 million or 1.95% at June 30, 1998
and $453 million or 1.31% a year ago. The emerging markets
businesses built the allowance for loan losses by $11 million.
Global Consumer
in Developed Markets Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Adjusted Revenue $3,217 $2,564 25 $8,967 $7,676 17
Adjusted Operating 1,769 1,413 25 4,961 4,152 19
Expense
Operating Margin 1,448 1,151 26 4,006 3,524 14
Credit Costs 905 765 18 2,643 2,392 10
Operating Margin Less 543 386 41 1,363 1,132 20
Credit Costs
Additional Provision 14 10 40 42 49 (14)
Income Before Taxes (B) $ 529 $ 376 41 $1,321 $1,083 22
Core Business Income $319 $234 36 $807 $687 17
(B)
Net Income $319 ($35) NM $807 $418 93
Average Assets (In $99 $91 9 $96 $90 7
Billions of Dollars)
Return on Assets (B) 1.28 1.02 - 1.13 1.02 -
(%)
(A) Reclassified to conform to the latest quarter's presentation.
(B) Excludes the 1997 third quarter restructuring charge of $449
million pretax ($269 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
* Income before taxes in the developed markets was $529 million in
the quarter, up $153 million or 41%, despite $107 million of UCS
acquisition premium costs, from $376 million (excluding the $449
million restructuring charge) in 1997, reflecting outstanding
performance in U.S. bankcards and in Japan. Core Business income
for the 1998 third quarter was $319 million compared to $234 million
in 1997.
* Adjusted revenue was up 25% in the quarter, reflecting
improvements in U.S. bankcards, including the acquisition of UCS in
the 1998 second quarter, and increases in Citibanking and the
Private Bank. Excluding UCS, U.S. bankcards revenue was up 16% in
the quarter, benefiting from risk-based pricing strategies and
higher interchange fee revenue. Charge volume of $36.4 billion
increased $9.8 billion from the 1997 third quarter, reflecting UCS
and 8% overall growth in other U.S. bankcard portfolios.
* Adjusted operating expense grew 25%, reflecting UCS (including
the amortization of the acquisition premium), increased advertising
and marketing, and spending on technology initiatives primarily
related to electronic banking, together with business volume growth.
* Credit costs in the developed markets were down $48 million from
the 1998 second quarter, reflecting improvements in U.S bankcards.
Credit costs in U.S. bankcards were $795 million or 5.23% of average
managed loans for the quarter, compared to $842 million or 5.73% in
the 1998 second quarter, and $639 million or 5.58% a year ago.
Excluding UCS, the 12-month-lagged loss ratio was 5.49% in the
quarter, compared with 5.98% in the 1998 second quarter and 5.93% a
year ago. U.S. bankcards managed loans delinquent 90 days or more
were $924 million or 1.51% at quarter-end, compared with $942
million or 1.58% for the prior quarter and $806 million or 1.76% a
year-ago. The developed markets businesses built the allowance for
loan losses by $14 million.
Citibanking Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Revenue $1,680 $1,532 10 $4,803 $4,536 6
Operating Expense 1,260 1,148 10 3,647 3,318 10
Operating Margin 420 384 9 1,156 1,218 (5)
Credit Costs 144 135 7 425 428 (1)
Operating Margin Less 276 249 11 731 790 (7)
Credit Costs
Additional Provision (1) - NM (7) - NM
Income Before Taxes (B) $ 277 $ 249 11 $ 738 $ 790 (7)
Core Business Income $178 $168 6 $485 $535 (9)
(B)
Net Income $178 ($107) NM $485 $260 87
Average Assets (In $92 $85 8 $89 $84 6
Billions of Dollars)
Return on Assets (B)(%) 0.77 0.78 - 0.73 0.85 -
(A) Reclassified to conform to the latest quarter's presentation.
(B) Excludes the 1997 third quarter restructuring charge of $457
million pretax ($275 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
Cards Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Adjusted Revenue $2,225 $1,707 30 $6,064 $5,200 17
Adjusted Operating 942 673 40 2,529 2,024 25
Expense
Operating Margin 1,283 1,034 24 3,535 3,176 11
Credit Costs 907 729 24 2,609 2,254 16
Operating Margin Less 376 305 23 926 922 -
Credit Costs
Additional Provision 26 25 4 82 75 9
Income Before Taxes (B) $ 350 $ 280 25 $ 844 $ 847 -
Core Business Income $227 $193 18 $557 $597 (7)
(B)
Net Income $227 $135 68 $557 $539 3
Average Assets (In $35 $32 9 $33 $31 6
Billions of Dollars)
Return on Assets (B) 2.57 2.39 - 2.26 2.57 -
(%)
(A) Reclassified to conform to the latest quarter's presentation.
(B) Excludes the 1997 third quarter restructuring charge of $95
million pretax ($58 million after-tax).
Private Bank Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Adjusted Revenue $294 $295 - $881 $845 4
Adjusted Operating 205 190 8 603 538 12
Expense
Operating Margin 89 105 (15) 278 307 (9)
Credit Benefits (7) (8) (13) (18) (10) 80
Income Before Taxes (B) $ 96 $113 (15) $296 $317 (7)
Core Business Income $72 $91 (21) $222 $252 (12)
(B)
Net Income $72 $73 (1) $222 $234 (5)
Average Assets (In $17 $17 - $17 $17 -
Billions of Dollars)
Return on Assets (B) 1.68 2.12 - 1.75 1.98 -
(%)
(A) Reclassified to conform to the latest quarter's presentation.
(B) Excludes the 1997 third quarter restructuring charge of $28
million pretax ($18 million after-tax).
|
Global Corporate Banking net loss was $127 million on revenue of $1.5
billion
Global Corporate Third Quarter % Nine Months %
Banking
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Adjusted Revenue $1,472 $1,785 (18) $5,377 $5,204 3
Adjusted Operating 1,424 1,267 12 4,138 3,619 14
Expense
Operating Margin 48 518 (91) 1,239 1,585 (22)
Credit Costs (Benefits) 231 (3) NM 326 (55) NM
Income (Loss) Before ($ 183) $ 521 NM $ 913 $1,640 (44)
Taxes (B)
Core Business Income ($127) $417 NM $640 $1,271 (50)
(Loss) (B)
Net Income (Loss) ($127) $249 NM $640 $1,103 (42)
Average Assets (In $173 $151 15 $169 $145 17
Billions of Dollars)
Return on Assets (B) - 1.10 - 0.51 1.17 -
(%)
(A) Reclassified to conform to the latest quarter's presentation,
including the reclassification of Citicorp's venture capital
activities and the results of certain investments in the former
refinancing countries to a new business segment called "Investment
Activities."
(B) Excludes the 1997 third quarter restructuring charge of $281
million pretax ($168 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
* Global Corporate Banking reported a loss of $127 million in the
1998 third quarter, down $544 million from Core Business income of
$417 million in the 1997 third quarter. Loss before taxes totaled
$183 million and declined from $521 million (excluding a
restructuring charge of $281 million) in the 1997 third quarter.
The 1998 third quarter included a loss of $384 million attributable
to the financial market turmoil in Russia, which affected both
revenue and credit costs, as well as a $138 million write-down of
fixed income inventories.
* Adjusted revenue of $1.5 billion in the quarter declined $313
million or 18% (13% excluding the effect of foreign currency
translation) from the year-ago quarter, reflecting a $170 million
decline in the Emerging Markets business and a $143 million decline
in Global Relationship Banking. Adjusted operating expense of $1.4
billion increased $157 million or 12% (15% excluding the effect of
foreign currency translation) from 1997, with a $32 million increase
in the Emerging Markets business and a $125 million increase in
Global Relationship Banking. Credit costs of $231 million in the
quarter compared with a net benefit of $3 million in 1997.
* Cash-basis loans of $1.3 billion declined $13 million from the
1998 second quarter but increased $312 million from the 1997 third
quarter. Cash-basis loans in Global Relationship Banking of $286
million declined $14 million from the 1998 second quarter and
declined $150 million from the year-ago quarter, primarily in the
real estate portfolio. Cash-basis loans in the Emerging Markets of
$982 million were essentially unchanged from the 1998 second
quarter, but grew $462 million from a year ago. The increase from
the year-ago quarter is primarily due to the economic turmoil
affecting Indonesia and Thailand. At September 30, 1998 and June 30,
1998, Emerging Markets cash-basis loans included $44 million of
balance sheet credit exposures related to foreign currency
derivative contracts for which the recognition of revaluation gains
has been suspended. The amounts included a year ago were not
material. Commercial OREO of $345 million was essentially unchanged
from the 1998 second quarter and improved $134 million from the
year-ago quarter, primarily in the real estate portfolio.
* Exposure to hedge funds under foreign exchange and derivatives
contracts totaled $45 million at September 30, 1998 and was fully
collateralized by cash and U.S. Treasury securities. Other
outstandings and commitments to hedge funds totaled $162 million, of
which $129 million was secured and $33 million was unsecured. The
value of foreign exchange and derivatives contracts, and the value
of collateral, will fluctuate with market conditions. There was no
equity investment in hedge funds.
Emerging Markets Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Adjusted Revenue $713 $883 (19) $2,536 $2,511 1
Adjusted Operating 531 499 6 1,549 1,415 9
Expense
Operating Margin 182 384 (53) 987 1,096 (10)
Credit Costs 212 35 NM 378 82 NM
Income (Loss) Before ($30) $349 NM $ 609 $1,014 (40)
Taxes (B)
Core Business Income ($19) $280 NM $473 $839 (44)
(Loss) (B)
Net Income (Loss) ($19) $248 NM $473 $807 (41)
Average Assets (In $81 $68 19 $79 $64 23
Billions of Dollars)
Return on Assets (B) - 1.63 - 0.80 1.75 -
(%)
(A) Reclassified to conform to the latest quarter's presentation,
including the reclassification of the results of certain investments
in the former refinancing countries to a new business segment called
"Investment Activities."
(B) Excludes the 1997 third quarter restructuring charge of $54
million pretax ($32 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
* Emerging Markets reported a loss of $19 million in the 1998 third
quarter, down $299 million from Core Business income of $280 million
in the 1997 third quarter. Loss before taxes totaled $30 million
and declined from $349 million (excluding a restructuring charge of
$54 million) in the 1997 third quarter. The 1998 third quarter
included a loss of $301 million attributable to the financial market
turmoil in Russia, which affected revenue and credit costs. Average
assets of $81 billion rose $13 billion from the 1997 third quarter,
reflecting growth in the loan portfolio and treasury initiatives,
together with trade finance products.
* Adjusted revenue in the quarter of $713 million declined $170
million or 19% (10% excluding the effect of foreign currency
translation) from the 1997 third quarter. Revenue reflected an $84
million decline in trading-related revenue attributable to the
volatility experienced in the global capital markets during the
quarter (including $57 million attributable to Russia), a $148
million writedown of impaired Russian available-for-sale securities,
and lower corporate finance revenue, partially offset by double-
digit growth in transaction banking services and loan product
revenue. Trading-related revenue reflects double-digit growth in
foreign exchange products more than offset by lower results in
derivatives and other trading products. Revenue in Asia Pacific
(excluding Japan and the Indian subcontinent, but including
Australia and New Zealand) declined 2% from the 1997 third quarter
due primarily to lower trading-related revenue, partially offset by
improved treasury results. Revenue attributed to the Embedded Bank
and Emerging Local Corporate strategies, together with new
franchises, accounted for 9% of Emerging Markets revenue, up 59%
from the comparable 1997 quarter. About 37% of the revenue in the
Emerging Markets business was attributable to business from
multinational companies managed jointly with Global Relationship
Banking, with that revenue having grown 6% from the 1997 third
quarter.
* Adjusted operating expense of $531 million in 1998 increased $32
million or 6% (13% excluding the effect of foreign currency
translation) from the year-ago quarter. The growth reflected
investment spending to build the franchise, including costs
associated with Citicorp's plan to gain market share in selected
emerging market countries, and volume-related expense growth.
* Credit costs totaled $212 million in the quarter, up from $35
million in the 1997 quarter. Credit costs included $96 million
attributable to the financial market turmoil in Russia, with the
balance concentrated in Indonesia and Thailand.
Global Relationship Third Quarter % Nine Months %
Banking
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Adjusted Revenue $ 759 $902 (16) $2,841 $2,693 5
Adjusted Operating 893 768 16 2,589 2,204 17
Expense
Operating Margin (134) 134 NM 252 489 (48)
Credit Costs (Benefits) 19 (38) NM (52) (137) 62
Income (Loss) Before ($153) $172 NM $ 304 $ 626 (51)
Taxes (B)
Core Business Income ($108) $137 NM $167 $432 (61)
(Loss) (B)
Net Income (Loss) ($108) $1 NM $167 $296 (44)
Average Assets (In $92 $83 11 $90 $81 11
Billions of Dollars)
Return on Assets (B) (%) - 0.65 - 0.25 0.71 -
(A) Reclassified to conform to the latest quarter's presentation,
including the reclassification of Citicorp's venture capital
activities to a new business segment called "Investment Activities."
(B) Excludes the 1997 third quarter restructuring charge of $227
million pretax ($136 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
* The Global Relationship Banking business in North America,
Europe, and Japan reported a loss of $108 million in the 1998 third
quarter, compared with Core Business income of $137 million in the
1997 third quarter. Loss before taxes totaled $153 million and
declined from $172 million (excluding a restructuring charge of $227
million) in the 1997 third quarter. The 1998 third quarter
included a loss of $83 million attributable to the financial market
turmoil in Russia, which affected revenue and credit costs. Average
assets of $92 billion rose $9 billion from the 1997 third quarter,
primarily reflecting an increase in the fair value of trading
assets, including derivative and foreign exchange contracts.
* Adjusted revenue of $759 million declined $143 million or 16%
from the 1997 third quarter. The decline is attributable to a $183
million decline in trading-related revenue resulting from the
volatility experienced in global capital markets during the quarter
(including $30 million attributable to Russia and a $138 million
write-down of fixed income inventories), partially offset by
moderate growth in transaction banking services revenue. Trading-
related revenue reflects double-digit growth in foreign exchange
products more than offset by lower results in fixed income and other
trading products.
* Adjusted operating expense of $893 million grew $125 million or
16% compared with the 1997 third quarter, primarily from increased
spending on technology, including costs related to the Year 2000 and
the European EMU, volume-related growth in transaction banking
services, and increases in asset management, partially offset by a
decline in incentive compensation.
* Credit costs in the quarter of $19 million compared with a net
benefit of $38 million in the 1997 third quarter, and included
write-offs of $53 million attributable to the financial market
turmoil in Russia, partially offset by real estate recoveries.
Investment Activities Third Quarter % Nine Months %
(A)
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Revenue $117 $348 (66) $1,024 $802 28
Operating Expense 11 9 22 34 26 31
Operating Margin 106 339 (69) 990 776 28
Credit Benefits - (5) NM (10) (64) (84)
Income Before Taxes 106 344 (69) 1,000 840 19
Income Taxes 35 85 (59) 212 175 21
Core Income $ 71 $259 (73) $ 788 $665 18
Average Assets (In $8 $9 (11) $9 $9 -
Billions of Dollars)
Return on Assets (%) 3.52 11.42 - 11.75 9.88 -
(A) Investment Activities comprises Citicorp's venture capital
activities, certain Corporate investments, and the results of
certain investments in the former refinancing countries.
NM Not meaningful, as percentage equals or exceeds 100%.
* Adjusted revenue from Investment Activities of $117 million
declined $231 million or 66% from the 1997 third quarter. The
decline reflected a $266 million reduction in venture capital
revenue primarily attributable to the volatility in the U.S. equity
markets during the quarter, and a $129 million decline in securities
transactions, partially offset by a $165 million net gain on
investments in Latin America. Revenue in the 1997 quarter included
a $23 million investment writedown in Latin America. The increase
in the effective income tax rate to 33% from 25% reflects changes in
the nature and geographic mix of earnings.
Corporate Items Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Revenue $283 $277 2 $779 $731 7
Operating Expense 81 77 5 263 228 15
Income Before Taxes (B) $202 $200 1 $516 $503 3
Core Income (Loss) (B) $109 ($61) NM $ - ($234) NM
Net Income (Loss) $109 ($98) NM $ - ($271) NM
Average Assets (In $7 $5 40 $7 $6 17
Billions of Dollars)
(A) Reclassified to conform to the latest quarter's presentation,
including the reclassification of certain Corporate investments and
the results of certain investments in the former refinancing
countries to a new business segment called "Investment Activities."
(B) Excludes the 1997 third quarter restructuring charge of $28
million pretax ($37 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
* Corporate Items includes revenue derived from charging businesses
for funds employed, based upon a marginal cost of funds concept,
unallocated corporate costs, and the offset created by attributing
income taxes to core business activities on a local tax-rate basis.
* Income taxes are attributed to businesses on the basis of
local tax rates. Changes in the nature and geographic mix of
earnings, resulted in an unusually high effective business tax rate
of 35% in the 1998 quarter, up from 25% a year ago. The increase in
the effective rate charged to the businesses resulted in a reduction
in the tax offset expense held in Corporate Items. The effective
rate allocated to the businesses was 29% and 25% for the 1998 and
1997 nine month periods, respectively. Citicorp's effective tax
rate was 37.5% in both 1998 and 1997 periods.
Other Items
* Of the $889 million restructuring charge recorded in the 1997
third quarter, approximately $339 million remained in the reserve as
of September 30, 1998. The utilization of the reserve included $245
million of premises and equipment writedowns and $300 million of
primarily severance and related costs (of which $229 million has
been paid in cash and $71 million is legally obligated), together
with translation effects.
* The effects of market fluctuations on the available-for-sale
investment portfolio resulted in net unrealized losses, recorded
against stockholders equity, of $242 million after-tax at September
30, 1998, down from net unrealized gains of $308 million at June 30,
1998.
* The Tier 1 capital ratio at September 30, 1998 was estimated at
8.0%, consistent with the traditional 8.0%-8.3% target range. The
decline in the ratio during the quarter was primarily attributable
to customer driven growth in risk-adjusted assets, and the
redemption of Graduated Rate Cumulative Preferred Stock, Series 8A
and 7.5% Non-Cumulative Preferred Stock, Series 17 (for a total of
$412 million).
* The amounts shown below for Citibank Global Asset Management are
also included in the results of Global Consumer, Emerging Markets,
and Global Relationship Banking.
Citibank Global Asset Third Quarter % Nine Months %
Management
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Revenue $103 $104 (1) $324 $286 13
Operating Expense 98 86 14 280 238 18
Income Before Taxes 5 18 (72) 44 48 (8)
Income Taxes (Benefit) (2) - NM 2 2 -
Core Business Income $ 7 $ 18 (61) $ 42 $ 46 (9)
(In Billions of
Dollars)
Assets Under Management $126 $107 18 $126 $107 18
NM Not meaningful, as percentage equals or exceeds 100%.
* Although included in the results of Global Consumer and Global
Corporate Banking, this division is focused upon as a separate Core
Business.
* Citibank Global Asset Management (CGAM) manages $126 billion of
assets worldwide for major institutional clients as well as for high
net worth individuals and other retail mutual fund shareholders.
CGAM offers a broad range of equity, fixed-income, and liquidity
products through its investment centers in twenty countries. CGAM's
$126 billion in assets under management are comprised of 14% in
money market funds, 42% in mutual and institutional commingled
funds, and 44% in accounts managed for high net worth individuals,
pension funds, corporations, and other institutions.
* Declines in market prices depressed third quarter revenue growth.
Revenue of $324 million for the 1998 nine months is up 13% from 1997
reflecting an 18% increase in assets under management since last
year. Expense growth reflects CGAM's continuing build-up of its
fundamental research and quantitative analysis investment teams, as
well as incremental technology costs, including costs associated
with Year 2000 and EMU.
* In the 1998 nine months, CGAM raised over $2 billion from 32 new
funds distributed worldwide through the Global Consumer and Global
Corporate Banking channels.
TRAVELERS
Travelers Group reports third quarter Core Income of $199.2 million
Summary of Earnings
(In Millions of Third Quarter % Nine Months %
Dollars,
Except Per Share 1998 1997 Change 1998 1997 Change
Amounts)
Gross Revenue $8,221.9 $9,960.1 (17) $28,685.5 $27,843.6 3
Revenue, Net of 4,927.6 6,880.1 (28) 18,880.9 19,593.9 (4)
Interest Expense
Core Income (A) 199.2 1,028.7 (81) 2,242.0 2,727.0 (18)
(A) Represents net income for all periods presented, adjusted to
exclude the reversal of $191.2 million after-tax ($324.1 million
pretax) of the 1997 restructuring charge in the 1998 second quarter.
Travelers Group
Segment Revenues Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Investment Services
Investment Banking $3,690.1 $5,660.4 (35) $15,104.6 $15,467.3 (2)
and Brokerage
Asset Management 244.2 213.1 15 695.9 592.8 17
Total Investment 3,934.3 5,873.5 (33) 15,800.5 16,060.1 (2)
Services
Consumer Finance 542.3 448.1 21 1,541.5 1,204.8 28
Services
Life Insurance Services
Travelers Life and 721.0 716.0 1 2,292.5 1,999.6 15
Annuity
Primerica Financial 414.5 384.2 8 1,236.9 1,134.8 9
Services
Total Life Insurance 1,135.5 1,100.2 3 3,529.4 3,134.4 13
Services
Property and Casualty
Insurance Services
Commercial Lines 1,654.9 1,651.1 - 4,971.5 4,887.5 2
Personal Lines 943.5 852.7 11 2,746.7 2,472.6 11
Other 2.0 2.9 (31) 8.6 8.8 (2)
Total Property and
Casualty Insurance 2,600.4 2,506.7 4 7,726.8 7,368.9 5
Services
Corporate and Other 9.4 31.6 (70) 87.3 75.4 16
Total Gross Revenue 8,221.9 9,960.1 (17) 28,685.5 27,843.6 3
Interest Expense 3,294.3 3,080.0 7 9,804.6 8,249.7 19
Total Revenue,
Net of Interest $4,927.6 $6,880.1 (28) $18,880.9 $19,593.9 (4)
Expense
Travelers Group
Segment Core Income (A) Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Investment Services
Investment Banking and ($395.4) $449.0 NM $394.7$1,220.6 (68)
Brokerage
Asset Management 70.5 59.4 19 193.3 152.4 27
Total Investment (324.9) 508.4 NM 588.0 1,373.0 (57)
Services
Consumer Finance 83.3 65.4 27 211.9 166.8 27
Services
Life Insurance Services
Travelers Life and 123.3 106.5 16 371.5 312.5 19
Annuity
Primerica Financial 98.8 84.7 17 297.0 244.8 21
Services
Total Life Insurance 222.1 191.2 16 668.5 557.3 20
Services
Property and Casualty
Insurance Services
Commercial Lines 230.6 223.9 3 683.1 626.7 9
Personal Lines 90.3 95.4 (5) 306.0 304.2 1
Total Insurance-Related 320.9 319.3 1 989.1 930.9 6
Financing Costs and (26.9) (29.3) 8 (84.9) (92.6) 8
Other
Minority Interest (49.1) (48.0) (2) (151.1) (146.4) (3)
Total Property and
Casualty Insurance 244.9 242.0 1 753.1 691.9 9
Services
Total Core Business 225.4 1,007.0 (78) 2,221.5 2,789.0 (20)
Investment Portfolio 25.4 82.0 (69) 139.7 96.6 45
Gains
Corporate and Other (51.6) (60.3) 14 (119.2) (158.6) 25
Total Core Income $199.2$1,028.7 (81)$2,242.0$2,727.0 (18)
(A) Represents net income for all periods presented, adjusted to
exclude the reversal of $191.2 million after-tax ($324.1 million
pretax) of the 1997 restructuring charge in the 1998 second quarter.
(B) The 1998 third quarter effective tax rate for Travelers Group is
approximately 18%, reflecting the impact of municipal bond interest
at Travelers Property Casualty and Salomon Smith Barney on a lower
overall level of earnings, plus lower state tax expense at Salomon
Smith Barney.
NM Not meaningful, as percentage equals or exceeds 100%.
Investment Services
Salomon Smith Barney reports net loss of $324.9 million
Salomon Smith Barney Third Quarter % Nine Months %
(In Billions of 1998 1997 Change 1998 1997 Change
Dollars)
Revenue,
Net of Interest $ 921.0$3,032.8 (70)$6,797.4$8,472.5 (20)
Expense (In Millions)
Net Income (A) (In (324.9) 508.4 - 779.2 1,373.0 (43)
Millions)
Return on Equity (B) % - 25.3 - 8.8 24.3 -
Pretax Profit Margin - 27.4 - 13.7 26.6 -
Assets Under Fee-Based
Management
Internally Managed
Salomon Smith Barney
Asset Management $169.6 $146.7 16 $169.6 $146.7 16
Financial Consultant
Managed Accounts 13.8 11.1 24 13.8 11.1 24
Externally Managed
Consulting Group 63.9 58.4 9 63.9 58.4 9
Managed Assets
Total Assets Under
Fee-Based Management $247.3 $216.2 14 $247.3 $216.2 14
Total Client Assets $697.5 $630.4 11 $697.5 $630.4 11
Annualized Retail Gross
Production per FC (In $431 $428 1 $441 $393 12
Thousands)
Underwriting (Full
Credit to Lead
Manager)
Global Debt and Equity 3 2 - 4 2 -
Rank
U.S. Debt and Equity 3 2 - 2 2 -
Rank
Municipals Rank 1 2 - 1 1 -
(A) Includes the reversal of $191.2 million after-tax ($324.1 million
pretax) of the 1997 restructuring charge in the 1998 second quarter.
(B) Based on income excluding restructuring charge.
* Salomon Smith Barney reported a loss of $325 million for the
quarter. Included in this is an after-tax loss of $700 million
related to Global Arbitrage and Russian related credit losses.
Extreme volatility in the global fixed income markets affected
trading results negatively for the quarter, while Private Client and
Asset Management performance continued at high levels.
* Total revenues, net of interest expense, were $921 million in the
1998 quarter and $6.797 billion in the nine months ended September
30, 1998 compared to $3,033 million in the 1997 quarter and $8.473
billion in the nine months ended September 30, 1997.
* Commission revenues were relatively unchanged from the prior year
quarter. An increase in listed commissions was offset by decreases
in other commissions. In the nine months ended September 30, 1998
commission revenues increased over the comparable 1997 period due to
an increase in listed, OTC, and mutual fund commissions.
* Investment banking revenues decreased to $531 million in the 1998
quarter compared with $597 million in the 1997 quarter. Record
merger and acquisition fees were more than offset by declines in
equity, high yield, high grade debt, and unit trust underwritings.
Salomon Smith Barney held its number one rank in municipal
underwriting for the third quarter of 1998. For the nine months of
1998, Salomon Smith Barney held its number two ranking in overall
U.S. debt and equity underwriting. For the nine months ended
September 30, 1998, investment banking revenues increased over the
comparable 1997 period primarily due to increased merger and
acquisition fees.
* Principal transaction revenues decreased in the quarter to a loss
of $1.331 billion. Decreases in fixed income trading results
include losses due to risk reduction of U.S. fixed income arbitrage,
losses in other Global Arbitrage, and losses in the customer
business. These were partially offset by an increase in equity
trading results. Fixed income trading results were adversely
impacted by significant dislocations in the global fixed income
markets, including greatly reduced liquidity and widening credit
spreads. Included in these results are Russia-related credit losses.
* Asset management fees increased to a record $563 million and
$1.614 billion in the 1998 quarter and nine months ended September
30, as a result of increased client assets under management.
* Net interest decreased to $326 million in the 1998 quarter from
$366 million in the 1997 quarter. Net interest in the nine months
ended September 30, 1998 was relatively unchanged from the
comparable 1997 period.
* Total expenses declined by $758 million, reflecting a reduction
in compensation and benefits of $711 million, largely related to
performance based compensation accruals.
* As of October 1, 1998, Salomon Smith Barney had mark-to-market
exposure to hedge funds of $2.122 billion, collateralized by $2.167
billion of cash and government securities, resulting in excess
collateral of $45 million. Within these results, a portion of hedge
funds have collateral in excess of the mark-to-market deficit, and a
portion of hedge funds have deficits in excess of collateral held.
The total exposure to hedge funds with mark-to-market deficits in
excess of collateral held is $48 million. No single hedge fund had
a mark-to-market deficit which was more than $8 million in excess of
collateral held from that hedge fund. Mark-to-market exposure
includes those hedge funds which owe Salomon Smith Barney on foreign
exchange and derivative contracts such as swaps, swap options, and
other over-the-counter options and only the uncollateralized portion
of receivables on reverse repurchase and repurchase agreements.
This exposure can change significantly as a result of extreme
market movements.
* In addition, Salomon Smith Barney has no unsecured loans or loan
commitments to hedge funds. Salomon Smith Barney has no investments
in hedge funds other than the previously disclosed investment in
Long-Term Capital Management, LP, made in concert with a consortium
of banks and securities firms.
Salomon Smith Barney Asset Management earns $70.5 million,
Up 19% from year-ago quarter
Salomon Smith Barney Third Quarter % Nine Months %
Asset Management 1998 1997 Change 1998 1997 Change
Division
Revenue (In Millions) $244.2 $213.1 15 $695.9 $592.8 17
Core Business Income $70.5 $59.4 19 $193.3 $152.4 27
(In Millions)
Pretax Profit Margin % 47.8 46.2 - 46.0 42.6 -
SSBAM Assets Under
Management (In
Billions)
Money Market Funds $55.1 $45.3 22 $55.1 $45.3 22
Mutual Funds 53.5 46.4 15 53.5 46.4 15
Private Client 17.0 14.8 15 17.0 14.8 15
Institutional 44.0 40.2 9 44.0 40.2 9
Managed Accounts 61.0 55.0 11 61.0 55.0 11
Salomon Smith Barney
Asset Management $169.6 $146.7 16 $169.6 $146.7 16
Number of Morningstar
4- and 5- Star Funds 22 17 29 22 17 29
Cross Marketing Long
Term Open-
End Mutual Fund Sales
Through
SSB $1,210 $1,079 12 $3,750 $2,804 34
PFS 431 184 NM 1,171 525 NM
TL&A 109 72 51 321 185 74
Proprietary Funds
Distribution through $1,750 $1,335 31 $5,242 $3,514 49
Travelers
Proprietary Funds
Percent of Total 31 25 - 28 24 -
Sales Throughout
Travelers Group %
NM Not meaningful, as percentage equals or exceeds 100%.
* Although included in Salomon Smith Barney's overall results, this
division is being focused upon as a separate Core Business.
* The division's strong recurring revenues reflect continued
strength in mutual funds, retail and institutional managed accounts,
and its share of unit trust revenues. SSBAM's $169.6 billion in
assets under management breaks down as 33% in money market funds,
31% in mutual funds, and 36% in accounts managed for high net worth
individuals, pension funds, corporations, and other institutions.
The slight increase in money market funds as a percentage of total
assets reflects investor reaction to recent market volatility.
* Investment advisory, administration, and distribution fees rose
16% to $217.3 million from the prior-year quarter, paralleling a 16%
increase in assets under management. The pretax profit margin from
this unit was 47.8%, up from 46.2% in the prior-year period, and
among the highest in the industry.
* During the quarter, SSBAM completed its acquisition of the
Australian asset management business of JP Morgan, which added $4.8
billion in assets under management and establishes an important
franchise in what is expected to be the sixth largest investment
market in the world by 2001. Included in this projected market
growth are the rapid changes taking place in the retirement market
in Australia.
* In the mutual fund sector, there was a significant increase not
only in dollar sales, but also in performance, with the number of
Morningstar 4- and 5-star funds rising to 22, up from 17 in the
prior-year period. Sales of proprietary Smith Barney mutual funds
rose 34%, and they account for an increasing percentage -- 29.3%
year-to-date compared to 26.6% for the prior year-to-date -- of
Salomon Smith Barney's total mutual fund sales.
* New products successfully introduced in the third quarter include
the Smith Barney Mid-Cap Blend Fund which helps to round out the
unit's group of style pure funds.
* During the quarter, the division successfully offered the 1998
Uncommon Values Unit Investment Trust Series, comprised of three
portfolios, Uncommon Values, Aggressive Growth, and Growth and
Income, raising over $2.1 billion in assets.
* In addition, in mid September, Citicorp Investment Services began
distributing Salomon Brothers mutual funds. This initiative is the
division's first rollout of several planned Citigroup cross-sell
opportunities.
Consumer Finance
Consumer Finance earns $83.3 million in the third quarter,
Up 27% from year-ago quarter
Consumer Finance Third Quarter % Nine Months %
Services
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Revenue $542.3 $448.1 21 $1,541.5 $1,204.8 28
Core Business Income 83.3 65.4 27 211.9 166.8 27
Receivables Owned 12,669.9 10,652.4 19 12,669.9 10,652.4 19
Average Yield % 14.21 14.57 - 14.18 14.55 -
Charge-off Rate % 2.39 2.50 - 2.60 2.74 -
Average Assets $14,350.7 $11,075.5 29 $13,654.7 $9,956.8 37
Return on Assets % 2.32 2.35 - 2.07 2.24 -
* This excellent performance reflects continued internal
receivables growth in all major products, an improved charge-off
rate, and the integration of Security Pacific Financial Services
into the Commercial Credit branch system since July 1997.
* Receivables owned reached a record $12.67 billion, up 19% from
the prior year period, and up $1.62 billion or 15% since year-end
1997. This excludes $255.1 million in credit card receivables
securitized on March 6, 1998. Much of the growth in real estate-
secured loans resulted from the continued strong performance of the
$.M.A.R.T. program, as well as solid sales in the branch network.
On a managed basis, including securitized assets, receivables
totaled $13.01 billion, an increase of $1.77 billion since year-end
1997.
* The average yield on owned receivables at 14.21%, was down from
14.57% in the 1997 quarter, reflecting the shift in the portfolio
mix toward lower-risk real estate-secured loans, which have lower
prices. At quarter-end, the owned portfolio consisted of 48% real
estate-secured loans, 34% personal loans, 11% credit cards, and 7%
sales finance and other.
* The charge-off rate on owned receivables continued to improve to
2.39%, down from 2.50% in the 1997 period and from 2.66% in the
previous quarter. Delinquencies over 60 days on owned receivables
were 2.27% of receivables, down from 2.35% at year-end 1997, but up
from 2.17% at the end of the comparable quarter last year, which
contained a short-term benefit from the transition of Security
Pacific's portfolio to Commercial Credit's charge-off policies.
Life Insurance
Primerica Financial Services earns $98.8 million in the third quarter,
Up 17% from a year-ago
Primerica Financial Third Quarter % Nine Months %
Services
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Revenue $414.5 $384.2 8 $1,236.9 $1,134.8 9
Core Business Income
Life Insurance 76.8 67.5 14 232.4 200.2 16
Other Financial 22.0 17.2 28 64.6 44.6 45
Products (A)
Total Core Business $ 98.8 $ 84.7 17 $297.0 $244.8 21
Income
Financial Needs
Analyses (FNA's) 132,791 132,141 - 403,957 331,633 22
Submitted (B)
Life Insurance Issued
(In Billions of $ 14.2 $ 13.1 8 $43.0 $39.2 10
Dollars)
Other Financial
Products
Mutual Fund Sales at NAV 725.0 635.9 14 2,326.9 2,027.3 15
Cash Advanced on
$.M.A.R.T. and 351.1 315.5 11 1,078.3 943.1 14
$.A.F.E. Loans (C)
Variable Annuity
Net Written Premiums 171.9 100.6 71 473.4 234.6 NM
SECURE Net Written 60.8 19.5 NM 154.6 44.4 NM
Premiums (D)
(A) Earnings reflect commissions earned from cross marketing sister
company products and other non-life products.
(B) 1997 FNA's were adjusted to be consistent with 1998.
(C) The $.M.A.R.T. and $.A.F.E. loan products are marketed by PFS,
and the receivables are reflected in the assets of Consumer Finance
Services.
(D) The SECURE property casualty insurance products are marketed by
PFS, and the premiums are reflected in the operating earnings of
Travelers Property Casualty Corp.
NM Not meaningful, as percentage equals or exceeds 100%.
* Core business income for the quarter advanced 17% over last
year's period, reflecting PFS's continued success at cross-selling a
range of products, growth in life insurance in force, favorable
mortality experience, and disciplined expense management.
* New term life insurance sales were $14.2 billion in face value,
up from $13.1 billion in the 1997 quarter. Although the number of
policies issued were basically flat quarter-over-quarter, the
average face amount per policy issued rose 11% to $223,485.
* Life insurance in force reached a record $380.6 billion, up 3%
from the prior year quarter, reflecting good policy persistency and
stable sales growth.
* Cross-selling initiatives continued to enhance the company's
earnings. Distribution of non-life insurance products accounted for
$22.0 million or 22% of the company's operating earnings, an
increase of 28% from the prior year quarter.
* Sales of mutual funds rose more than 14% to $725.0 million (at
net asset value), despite significant market volatility in both the
U.S. and Canada. Salomon Smith Barney funds accounted for almost
61% of PFS's U.S. sales and approximately 53% of total sales.
* Variable annuity sales continued to show momentum, reaching net
written premiums and deposits of $171.9 million, increasing 71% over
last year's period.
* Cash advanced on $.M.A.R.T. and $.A.F.E. Loans underwritten by
Commercial Credit was up 11% to $351.1 million. The Secure line of
property casualty insurance products showed strong growth, with net
written premiums up almost three-fold to $60.8 million, and the
number of policies sold in the quarter up 60% to 41,483. The number
of agents licensed to sell auto and homeowners insurance jumped 59%
to 12,683 people.
* One of the primary factors in PFS's cross-selling success, the
Financial Needs Analysis, continues to help the company's Personal
Financial Analysts define and address their client's needs. They
submitted more than 132,000 FNA's in the quarter bringing the nine
month total to nearly 404,000, indicating the potential that more
than one-half million people will have an analysis done for them
before year-end 1998.
Travelers Life & Annuity earns $123.3 million in the third quarter,
Up 16% from year-ago quarter
Travelers Life & Third Quarter % Nine Months %
Annuity
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Revenue $721.0 $716.0 1 $2,292.5 $1,999.6 15
Total Core Business $123.3 $106.5 16 $371.5 $312.5 19
Income
Pretax Contribution by
Source
Deferred and Payout $ 82.0 $ 74.7 10 $263.4 $224.4 17
Annuities
Group Annuities 36.4 26.2 39 96.2 75.5 27
Life and Long Term Care 34.6 35.0 (1) 111.8 106.1 5
Insurance
Subtotal 153.0 135.9 13 471.4 406.0 16
Other (Principally
Return on Excess 37.6 26.9 40 99.3 70.4 41
Capital and Run-off
Business)
Total Core Business $190.6 $162.8 17 $570.7 $476.4 20
Income Pretax
Cross Marketing %
Percent of Deferred
Annuities 78 78 - 78 77 -
Sold Through
Citigroup Affiliates
Percent of New
Individual Life
and Long Term Care 40 38 - 43 38 -
Sales Sold
Through Citigroup
Affiliates
* Earnings growth for the quarter reflects strong double-digit
business volume growth in annuity account balances and life and long
term care premiums. A decline in investment income yields for the
quarter, which vary by product line, results primarily from
participation in partnership investment interests being negatively
impacted by the downturn in marketplace conditions. This decline
was substantially offset by a favorable reserve settlement in the
runoff group life and health business.
* In deferred annuities, significant sales through established
Citigroup distribution channels, Salomon Smith Barney Financial
Consultant's, and The Copeland Companies, were complemented by the
successful third quarter launches of the Primerica Financial
Services and Citibank branch network cross-selling initiatives.
Total premium deposits for the quarter increased 52% to $872.9
million. Account balances aggregated $17.5 billion at September 30,
1998, up 12% from a year ago, but down 3% since June 30, reflecting
the downturn in the market value of the variable annuity account
balances.
* Payout and group annuity account balances and benefit reserves
reached $13.3 billion at September 30, 1998, up 14% from a year ago.
The revitalization of this business is reflected in the 208%
increase in net written premiums and deposits (excluding old
Travelers Group employee pension plan deposits) to $1.082 billion
for the quarter ended September 30, 1998.
* For individual life insurance, net premiums and deposits were
$78.5 million, up 13%. Single deposits rose to $17.1 million, and
new periodic premium sales increased 73%, reflecting a 30% increase
in sales at Salomon Smith Barney. For the quarter, Salomon Smith
Barney life sales increased to over 33% of new periodic premium and
single deposits. Life insurance in force was $54.2 billion at
September 30, 1998, up $3.3 billion from a year ago.
* Earned premiums for the growing long term care insurance product
line increased 26% to $51.8 million.
* Strong sustained operating performance over the past several
quarters was recognized by Standard & Poor's in their September 1998
upgrade of Travelers Insurance Company's claims paying rating to AA
(Excellent).
Travelers Property Casualty Corp. (83.4% owned by Travelers Group)
Travelers Property Casualty earns $294.0 million before Minority
Interest,
With Travelers Group's share $244.9 million
Property Casualty Third Quarter % Nine Months %
Insurance Services
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Revenues
Commercial Lines $1,654.9 $1,651.1 - $4,971.5 $4,887.5 2
Personal Lines 943.5 852.7 11 2,746.7 2,472.6 11
Other 2.0 2.9 (31) 8.6 8.8 (2)
Total Revenues $2,600.4 $2,506.7 4 $7,726.8 $7,368.9 5
Core Business Income
(Loss)
Commercial Lines $230.6 $223.9 3 $ 683.1 $ 626.7 9
Personal Lines 90.3 95.4 (5) 306.0 304.2 1
Financing Costs and (26.9) (29.3) 8 (84.9) (92.6) 8
Other
Minority Interest (49.1) (48.0) (2) (151.1) (146.4) (3)
Total Core Business $244.9 $242.0 1 $ 753.1 $ 691.9 9
Income
Statutory Combined
Ratio,
As Adjusted (A) (B)
(%)
Loss and Loss
Adjustment 74.8 71.8 73.7 72.7
Expense Ratio
Other Underwriting 28.2 30.8 28.7 30.0
Expense Ratio
Combined Ratio 103.0 102.6 102.4 102.7
Cross-Marketing,
Net Written Premiums
SECURE (C) $60.8 $19.5 NM $154.6 $44.4 NM
(A) The 1997 nine month net written premiums include an increase of
$142.4 million due to a change to conform Aetna P&C's and Travelers
P&C's methods of recording net written premiums, and an increase of
$68.7 million due to an adjustment associated with a reinsurance
transaction in the 1997 first quarter. The statutory combined
ratio, as adjusted, excludes these transactions.
(B) Before policyholder dividends.
(C) The SECURE property casualty insurance products are marketed by
PFS.
NM Not meaningful, as percentage equals or exceeds 100%.
* Results for the quarter were solid compared to the third quarter
of 1997, especially in view of the current quarter's catastrophe
losses, after taxes and reinsurance, of $36.7 million and unusually
high losses from other weather-related claims. Contributing to
earnings were lower expenses and growth in Personal Lines agency
distribution.
Commercial Lines earns $230.6 million (before Minority Interest),
Up 3% from the 1997 third quarter
* The 3% rise in core business income reflects continued expense
savings and, as anticipated, a decline in asbestos and environmental
incurred losses. Catastrophe losses, after taxes and reinsurance,
were $14.9 million versus none in the prior-year quarter.
* Pricing remains very soft in Commercial Lines. However, through
a combination of disciplined underwriting and good customer
retention, net written premiums of $1.168 billion stayed level with
last year's quarter.
* The statutory combined ratio improved to 108.0% from 109.2% as a
result of continued expense savings, partially offset by higher
catastrophes and weather-related losses.
Personal Lines earns $90.3 million (before Minority Interest),
Down 5% from the year-ago quarter
* Core business income reflects catastrophe losses of $21.8
million, after taxes and reinsurance, compared with no catastrophe
losses in the prior-year quarter. Excluding catastrophes, core
income increased as a result of expense management, higher net
investment income, and increased production.
* Net written premiums rose 17% to $908.7 million as a result of
strong sales through both the independent agent and alternative
distribution systems.
* The statutory combined ratio rose to 96.3% from 93.0% in the 1997
third quarter due to higher catastrophe losses, partially offset by
expense efficiencies.
Financing Costs and Other was ($26.9) million,
down from ($29.3) million in the year-ago quarter
* The primary component of Financing Costs and Other operating
expense for the quarter was interest expense of $26.0 million.
Travelers Group Investment Portfolio
* The Investment Portfolio, which consists largely of the fixed
income securities holdings in the Travelers Life & Annuity and
Travelers Property Casualty portfolios, reported gains of $25.4
million in the quarter, down from $82.0 million in the year-earlier
quarter.
* Travelers Group's $67 billion investment portfolio consists
primarily of fixed income investments with average quality ratings
of A+/A1. The effective duration of the fixed income portfolio,
including short-term fixed income investments, is 4.8 years.
Travelers Group Corporate and Other Operating Expense was ($51.6)
million, versus ($60.3) million in the year-ago quarter
* Corporate expenses include a reduction in incentive compensation
accruals and an increase in net treasury expense.
Other Information
* Travelers Group, which as of September 30, 1998 had assets of
$358 billion, was a diversified, integrated financial services
company engaged in investment services, asset management, consumer
finance, and life and property casualty insurance services.
Calculation of Earnings Per Share
Third Quarter Nine Months
Citicorp Citigroup Citicorp Citigroup
(In Millions, except Travelers Pro-Forma Travelers Pro-Forma
Per Share Amounts) Group (A) Group (A)
Core Income $530 $199 $729 $2,692 $2,242 $4,934
Dividends on (19) (31) (50) (79) (93) (172)
Preferred Stock
Core Income
Applicable to 511 168 679 2,613 2,149 4,762
Common Stock --
Basic EPS
Effect of Dilutive - 6 6 - 19 19
Securities
Income Applicable to
Common Stock -- $511 $174 $685 $2,613 $2,168 $4,781
Diluted EPS
Weighted-Average
Common 451.2 1,120.3 2,248.3 450.9 1,118.6 2,245.9
Shares Outstanding
-- Basic EPS
Effect of Dilutive
Securities:
Convertible - 13.2 13.2 - 13.2 13.2
Securities
Options (B) 10.3 13.2 38.9 11.4 15.7 44.1
Warrants - 0.7 0.7 - 3.1 3.1
Restricted Stock 0.3 18.8 19.6 0.3 17.4 18.2
Adjusted -- Diluted 461.8 1,166.2 2,320.7 462.6 1,168.0 2,324.5
EPS
Citigroup Core
Earnings
Per Share
Basic - - $0.30 - - $2.12
Diluted - - 0.30 - - 2.06
(A) Citigroup pro-forma results combine those of Citicorp and
Travelers Group. Pro-forma core income per share reflects the
exchange of 2.5 Citigroup common shares for each Citicorp common
share effective October 8, 1998, when the merger was completed.
(B) Includes the dilutive effect of stock options and stock purchase
agreements, computed using the treasury stock method, and shares
issuable under deferred stock awards.
CITICORP and Subsidiaries Consolidated Statement of Income
(In Millions of Third Quarter % Nine Months %
Dollars,
Except Per Share 1998 1997 Change 1998 1997 Change
Amounts)
Interest Revenue $6,976 $6,195 13 $19,937 $18,193 10
Interest Expense 3,878 3,319 17 11,005 9,650 14
Net Interest Revenue 3,098 2,876 8 8,932 8,543 5
Provision for Credit 736 486 51 1,807 1,421 27
Losses
Net Interest Revenue
after 2,362 2,390 (1) 7,125 7,122 -
Provision for Credit
Losses
Fees, Commissions,
and Other Revenue
Fees and Commissions 1,575 1,478 7 4,569 4,271 7
Foreign Exchange 474 435 9 1,288 1,043 23
Trading Account (159) 134 NM 175 429 (59)
Securities Transactions (56) 186 NM 485 418 16
Other Revenue 562 432 30 1,852 1,344 38
Total Fees,
Commissions, 2,396 2,665 (10) 8,369 7,505 12
and Other Revenue
Operating Expense
Salaries 1,505 1,356 11 4,331 3,906 11
Employee Benefits 325 317 3 1,038 1,039 -
Total Employee Expense 1,830 1,673 9 5,369 4,945 9
Net Premises & 550 496 11 1,577 1,465 8
Equipment Expense
Restructuring Charge - 889 NM - 889 NM
Other Expense 1,530 1,179 30 4,241 3,280 29
Total Operating Expense 3,910 4,237 (8) 11,187 10,579 6
Income Before Taxes 848 818 4 4,307 4,048 6
Income Taxes 318 307 4 1,615 1,518 6
Net Income $ 530 $ 511 4 $ 2,692 $ 2,530 6
NM Not meaningful, as percentage equals or exceeds 100%.
CITICORP and Subsidiaries Consolidated Balance Sheet
Sept. Dec. %
(In Millions of Dollars) 30, 31, Change
1998 1997
Assets
Cash and Due from Banks $ 9,107 $ 8,585 6
Deposits at Interest with Banks 14,085 13,049 8
Securities, at Fair Value:
Available for Sale 35,552 30,762 16
Venture Capital 3,285 2,599 26
Trading Account Assets 40,018 40,356 (1)
Loans Held for Sale 5,183 3,515 47
Federal Funds Sold and Securities Purchased 13,412 10,233 31
Under Resale Agreements
Loans, Net:
Consumer 112,103 108,066 4
Commercial 87,706 75,947 15
Loans, Net of Unearned Income 199,809 184,013 9
Allowance for Credit Losses (6,240) (5,816) 7
Total Loans, Net 193,569 178,197 9
Customers' Acceptance Liability 1,609 1,726 (7)
Premises and Equipment, Net 5,019 4,474 12
Interest and Fees Receivable 3,549 3,288 8
Other Assets 18,952 14,113 34
Total $343,340 $310,897 10
Liabilities
Non-Interest-Bearing Deposits in U.S. Offices $ 16,315 $ 16,901 (3)
Interest-Bearing Deposits in U.S. Offices 42,318 40,361 5
Non-Interest-Bearing Deposits in Offices 10,925 9,627 13
Outside the U.S.
Interest-Bearing Deposits in Offices Outside 152,877 132,232 16
the U.S.
Total Deposits 222,435 199,121 12
Trading Account Liabilities 30,692 30,986 (1)
Purchased Funds and Other Borrowings 24,305 21,231 14
Acceptances Outstanding 1,685 1,826 (8)
Accrued Taxes and Other Expense 7,284 6,464 13
Other Liabilities 15,811 10,288 54
Long-Term Debt 19,982 19,785 1
Stockholders' Equity
Preferred Stock (Without par value) 863 1,903 (55)
Common Stock ($1.00 par value) 506 506 -
Issued Shares: 506,298,235 in each period
Surplus 6,525 6,501 -
Retained Earnings 18,621 16,789 11
Accumulated Other Changes in Equity from (871) (91) NM
Nonowner Sources (A)
Common Stock in Treasury, at Cost (4,498) (4,412) 2
Shares: 53,583,079 and 52,355,947,
respectively
Total Stockholders' Equity 21,146 21,196 -
Total $343,340 $310,897 10
(A) Amounts at September 30, 1998 and December 31, 1997 include the
after-tax amounts for net unrealized gains (losses) on securities
available for sale of ($242) million and $535 million, respectively,
and foreign currency translation of ($629) million and ($626)
million, respectively.
NM Not meaningful, as percentage equals or exceeds 100%.
CITICORP Consumer Loan Delinquency Amounts, Net Credit Losses, and
Ratios
Total
(In Millions Loans 90 Days or More Past Avg. Net Credit Losses
of Dollars, Due (A) Loans (A)
except Loan Sept. Sept. June Sept. 3rd 3rd 2nd 3rd
Amounts in 30, 30, 30, 30, Qtr. Qtr. Qtr. Qtr.
Billions) 1998 1998 1998 1997 1998 1998 1998 1997
Citibanking $ 70.1 $2,119 $1,995 $2,082 $ 69.0 $144 $144 $135
Ratio 3.02% 2.93% 3.07% 0.83% 0.85% 0.80%
Cards:
U.S. 61.2 924 942 806 60.3 795 842 639
Bankcards (B)
Ratio 1.51% 1.58% 1.76% 5.23% 5.73% 5.58%
Other (C) 10.0 230 220 182 9.5 112 103 90
Ratio 2.31% 2.30% 1.98% 4.66% 4.42% 3.92%
Private Bank 16.4 195 197 146 16.3 1 - (4)
Ratio 1.19% 1.23% 0.94% 0.02% NM NM
Total Managed 157.7 3,468 3,354 3,216 155.1 1,052 1,089 860
Ratio 2.20% 2.19% 2.32% 2.69% 2.88% 2.50%
Securitization
Activity
Credit Card (40.4) (611) (601) (452) (39.9) (539) (542) (378)
Receivables
Loans Held (5.2) (38) (40) (34) (5.2) (34) (37) (30)
for Sale
Total Loans $112.1 $2,819 $2,713 $2,730 $110.0 $479 $510 $452
Ratio 2.51% 2.53% 2.51% 1.72% 1.86% 1.67%
Managed
Portfolio:
Developed $123.7 $2,720 $2,707 $2,763 $121.6 $913 $956 $769
Ratio 2.20% 2.25% 2.66% 2.97% 3.24% 2.98%
Emerging 34.0 748 647 453 33.5 139 133 91
Ratio 2.20% 1.95% 1.31% 1.65% 1.61% 1.06%
Emerging
Portfolio (D):
Asia Pacific $22.6 $448 $374 $253 $22.2 $60 $63 $38
Ratio 1.99% 1.70% 1.04% 1.10% 1.16% 0.63%
Latin America 9.9 254 227 162 9.9 70 61 45
Ratio 2.56% 2.28% 1.83% 2.82% 2.51% 2.09%
CEEMEA (E) 1.5 46 46 38 1.4 9 9 8
Ratio 3.13% 3.40% 2.67% 2.71% 2.86% 2.13%
(A) The ratios of 90 days or more past due and net credit losses are
calculated based on end-of-period and average loans, respectively,
both net of unearned income.
(B) The U.S. bankcards managed ratios of 90 days or more past due and
net credit losses were reduced by 11 basis points and 23 basis
points, respectively, in the current quarter, and by 12 basis points
and 24 basis points in the preceding quarter, due to the addition of
the UCS portfolio.
(C) Includes bankcards outside of the U.S., worldwide Diners Club,
and private label cards.
(D) Includes Private Bank and excludes Japan.
(E) Central and Eastern Europe, Middle East, and Africa.
NM Not meaningful.
CITICORP Other Revenue Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Credit Card $374 $134 NM $ 863 $ 417 NM
Securitization Activity
Venture Capital (31) 235 NM 404 501 (19)
Affiliate Earnings 47 51 (8) 118 222 (47)
Net Asset Gains 142 (6) NM 371 150 NM
Other Items 30 18 67 96 54 78
Total $562 $432 30 $1,852 $1,344 38
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
CITICORP
Provision for Credit Third Quarter % Nine Months %
Losses
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Global Consumer Net $479 $452 6 $1,415 $1,399 1
Write-Offs
Global Corporate
Banking 232 9 NM 317 (53) NM
Net Write-Offs
(Recoveries)
Additional Provision 25 25 - 75 75 -
Total $736 $486 51 $1,807 $1,421 27
NM Not meaningful, as percentage equals or exceeds 100%.
CITICORP Credit Loss Reserves Sept. Dec. Sept.
(In Millions of Dollars) 30, 31, 30,
1998 1997 1997
Aggregate Allowance for Credit Losses:
Global Consumer (A) $2,911 $2,487 $2,470
Global Corporate Banking 3,429 3,429 3,429
Total Aggregate Allowance for Credit Losses 6,340 5,916 5,899
(B)
Reserves for Securitization Activities (C) 66 85 89
Total Credit Loss Reserves $6,406 $6,001 $5,988
Allowance As a Percent of Total Loans:
Global Consumer 2.60% 2.30% 2.27%
Global Corporate Banking (D) 3.80% 4.38% 4.60%
Total 3.12% 3.16% 3.20%
(A) The balance at September 30, 1998 includes $320 million of credit
loss reserves related to the acquisition of UCS.
(B) Includes $6.2 billion attributable to loans and loan commitments
as a deduction from Loans, $50 million attributable to standby
letters of credit and guarantees included in Other Liabilities, and
$50 million attributable to derivative and foreign exchange
contracts reported as a deduction from Trading Account Assets at
September 30, 1998.
(C) Attributable to mortgage loans sold with recourse.
(D) Excludes allowance portion attributable to standby letters of
credit and guarantees, and derivative and foreign exchange contracts.
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