"As economic expansion continues throughout the world, we are seizing opportunities to build our capabilities and share in both well-established and emerging markets," continued Weill. "Our Nikko Salomon Smith Barney joint venture celebrated its first anniversary by attaining the number one position in Japanese M&A and number two position in equities. This quarter alone, we announced a number of transactions that strengthen our strategic presence in key markets. Our acquisition of the investment banking business of Schroders, expected to close in the second quarter, will enhance our ability to benefit from the major structural changes occurring in Europe, and the benefits are already apparent to the clients of both organizations. Our purchase of Reliance's surety business will enable us to expand our insurance presence, as will our pending tender offer to purchase the remaining 15% of Travelers Property Casualty that we do not own. Consolidating ownership of pension fund companies in Argentina and Mexico and the launch of our CitiStreet joint venture will enable us to more fully benefit from the growth in the retirement services business globally."
"We believe that those companies with brand and distribution will be the winners on the Internet, and we are committed to being a leader in electronic payments and commerce on the Web. This quarter, we took significant steps towards our goal by introducing new internet-based applications to our consumer, retail brokerage, Private Banking and institutional clients around the world. We look forward to continuing to build our capability on the Internet through the leadership of our new Internet Operating Group, headed by Deryck Maughan, working closely with Ed Horowitz at e-Citi," concluded Weill.
Citigroup's Global Consumer business achieved its seventh consecutive quarter of record earnings, increasing income by 23% on the strength of 12% revenue growth, and a continued improvement in operating margin as a result of cost-reduction programs put into place throughout 1999. Expense growth of 10% included charges related to the termination of certain contracts and other initiatives at e-Citi. Excluding the results of e-Citi, expense growth for Global Consumer was 7% while income rose 28%.
The Global Consumer business also benefited from stable to improving credit quality across nearly all segments as well as growth in the international segment. Both long-standing and new cross-marketing programs contributed to results in the quarter, including strong individual annuity sales and investment sales globally. Also contributing to growth was Citigroup's worldwide cards business, which includes operations in 47 countries, and which generated income growth of 15% over the prior year period.
Consumer usage of the company's Internet products and services continued to grow during the quarter, bringing the total number of customers accessing Citigroup on-line to over four million worldwide. e-Citi also continued to pioneer innovative delivery methods to reach both new and existing Citigroup customers. In the fast-growing mobile phone market of Poland, Citigroup is testing cell-phone banking, which already has 37,000 customers.
The Global Corporate and Investment Bank posted record earnings in the quarter as a result of the strength of the capital markets worldwide and the enhanced customer service and value provided by the Citibank/SSB organization. The strong platform created by the merger and the business's ability to benefit from market trends was evident in the number of leadership positions earned during the quarter in global underwriting, M&A advisory, foreign exchange and derivatives. The Nikko Salomon Smith Barney joint venture continues to post strong results. During the quarter, the Company increased its ownership in Nikko Securities from 9.5% to approximately 20%, reflecting its commitment to Japan and to its strategic partnership with Nikko. The results of this investment are now reported together with Salomon Smith Barney.
The Global Investment Management and Private Banking business continues to strengthen its organization and position itself to capture significant asset flows. The business segment reported strong growth in revenue and core income from both the Private Bank and Asset Management. The Group continued to build its position in Retirement Services, increasing its ownership in Garante in Mexico and announcing its intention to acquire the remaining 50% of Siembra in Argentina, and launched the CitiStreet joint venture on April 1, 2000.
Institutional client assets rose 7% to $151 billion aided by cross-selling efforts including $4 billion in client assets raised through the Global Corporate and Investment Bank channel. Sales of the Group's long-term mutual funds and managed account products through the SSB retail sales channel rose 22% to $4.7 billon although market share declined to 29%, the result of a mix shift towards sector-based funds, which were introduced later in the quarter. In addition, Primerica sold $465 million of the Group's U.S. mutual and money funds in the quarter, representing 48% of Primerica's sales. The Group sold $684 million of mutual and money funds through the Citibank consumer bank in Europe for the quarter and $347 million of mutual and money funds through the Citibank consumer bank and non-proprietary channels in Japan.
The loss from Corporate/Other was 67% higher than the prior year period, as increased treasury and technology costs offset reduced corporate staff expenses. The loss also included a $108 million pre-tax contribution of appreciated venture capital securities to the company's Foundation, which had minimal impact on Citigroup's earnings after related tax benefits and investment gains, reflected in Investment Activities.
Income from Investment Activities rose to $634 million, due to strong results from Citigroup's Venture Capital business, and gains on a number of investments in other proprietary investment portfolios, reflecting strong equity markets. These gains were reduced by losses relating to the repositioning of certain securities in the insurance portfolio and writedowns in the refinancing portfolios.
|Citigroup Segment Income||First Quarter||%|
|(In Millions of Dollars)||2000||1999||Change|
|Citibanking North America||$ 138||$ 72||92|
|Travelers Life and Annuity||187||147||27|
|Primerica Financial Services||119||110||8|
|Total North America||991||820||21|
|Europe, Middle East, & Africa||99||67||48|
|Total Global Consumer||1,207||981||23|
|Global Corporate and Investment Bank|
|Salomon Smith Barney||957||648||48|
|Global Relationship Banking||247||196||26|
|Total Global Corporate Bank||643||520||24|
|Commercial Lines Insurance||240||189||27|
|Total Global Corporate and Investment Bank||1,840||1,357||36|
|Global Investment Management and Private Banking|
|SSB Citi Asset Management Group||90||80||13|
|Total Global Investment Management and Private Banking||172||137||26|
|Restructuring-Related Items -- After Tax (A)||(12)||74||(116)|
|Cumulative Effect of Accounting Changes (B)||-||(127)||NM|
|Diluted Earnings Per Share:|