New York, NY Citigroup Inc. (NYSE: C) today reported a net loss for the 2008 third quarter of $2.8 billion, or $0.60 per share, based on 5,342 million shares outstanding. Results included $4.4 billion in net pre-tax write-downs in Securities and Banking (See Schedule B on page 10), $4.9 billion in net credit losses, and a $3.9 billion net charge to increase loan loss reserves.
"I am very proud of my Citi colleagues for staying focused on our priorities and for their relentless commitment to serving our clients during these turbulent times. While our third quarter results reflect both a difficult environment as well as continued write-downs on our legacy assets, we are making excellent progress on the parts of our business we control, including expense reduction, headcount, and balance sheet and capital management. We expect these improvements will enable us to realize the full earnings power of our franchise as the economy stabilizes," said Vikram Pandit, Chief Executive Officer of Citi.
Mr. Pandit also noted: "We have also been very focused on aggressively managing our risks during this credit cycle and have been taking steps to add hedges as appropriate. We end the quarter with a very strong Tier 1 ratio of 8.2% and a loan loss reserve of $25 billion. Our capital will be further strengthened by the sale of our Germany retail banking operations in the fourth quarter, continued focus on reducing our legacy assets, as well as the latest steps taken by the U.S. Department of the Treasury."
Revenues grew 2%, driven by growth in North America, partially offset by declines in Latin America and Asia. Average loans and deposits were both up 1%, while investment sales declined 26%. Expenses declined 2%, as benefits from re-engineering efforts more than offset the impact of acquisitions and higher credit management costs. Expenses also included a $152 million write-down of customer intangibles and fixed assets in Consumer Finance Japan recorded in the prior-year period, offset by a $150 million repositioning charge in the current quarter. Credit costs increased 82% or $2.3 billion, reflecting significantly higher net credit losses, up $1.6 billion, as well as a $679 million incremental net charge to increase loan loss reserves in North America.
The improvement in Corporate/Other revenues was mainly due to lower funding costs and effective hedging activities, partially offset by funding of higher tax assets and enhancements to Citi's liquidity position. Net income of $232 million reflected higher tax benefits held at Corporate.
Discontinued operations income of $608 million primarily reflected the impact of the sale of Citi's German retail banking operations, including $112 million of net income from the business in the current quarter, a $213 million after-tax benefit related to foreign exchange hedging of the expected gain on the sale, and a tax benefit of $279 million related to German tax losses arising as a result of the sale.
A reconciliation of non-GAAP financial information contained in this press release is on page 13.
Gary Crittenden, Chief Financial Officer, will host a conference call today at 10:00 AM (EDT). A live webcast of the presentation, as well as financial results and presentation materials, will be available at http://www.citigroup.com/citigroup/fin. A replay of the webcast will be available at http://www.citigroup.com/citigroup/fin/pres.htm. Dial-in numbers for the conference call are as follows: (877) 700-4194 or (888) 633-9566 in the U.S.; (706) 679-8401 or (973) 532-4984 outside of the U.S. The passcode for all numbers is 63723407.
Citi, the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi's major brand names include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex, and Nikko. Additional information may be found at www.citigroup.com or www.citi.com.
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 Citi's website at www.citigroup.com or www.citi.com.
Certain statements in this document are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in Citigroup's filings with the Securities and Exchange Commission.