New York Citigroup Inc. today reported first quarter 2010 net income of $4.4 billion or $0.15 per diluted share, and revenues of $25.4 billion.
Revenues2 grew $7.5 billion and net income increased $5.8 billion, excluding the $10.1 billion pre-tax loss from the TARP repayment and exit of the loss-sharing agreement with the U.S. government in the fourth quarter of 2009. Provisions for credit losses and for benefits and claims2 declined $2.4 billion sequentially to $8.6 billion, the lowest level since the first quarter of 2008. Expenses were down 6% sequentially to $11.5 billion.
"Citi today is fundamentally a very different company from what it was only two years ago," said Vikram Pandit, Citi's Chief Executive Officer. "With its financial strength, strategic clarity, efficiency, world-class business talent, and unique global footprint, Citi is well positioned to benefit from the key drivers of economic growth in developed and emerging markets.
"We are proud of our first quarter results but remain cautious about the environment, given the uncertain economic recovery and high unemployment in the U.S. Realistically, we do not expect our performance to follow an invariable trend-line upward. Longer-term, however, the prospects for Citi are clear and bright. And our first quarter of this year has given us the best glimpse yet of the potential of 'America's global bank'.
"None of this would have been possible without the magnificent work of Citi's people. They produced strong results by focusing on our clients' needs, creating a much more efficient company, maintaining strict risk management discipline, and reducing our portfolio of non-core assets and its losses.
"Our performance was aided by stability in the capital markets and improvement in the global business climate. But the perseverance, hard work, and sacrifice of my colleagues throughout Citi have been the relentless and constant force driving our momentum.
"All of us at Citi recognize that we would not be where we are without the assistance of American taxpayers. We are gratified that Citi has been able to repay their TARP investment in our company, with a substantial return, as well as create a significant increase in the value of their equity in Citi.
"Still, that is not enough. We owe taxpayers a huge debt of gratitude for assisting us at a critical time. We are determined to repay this debt by continuing to build a strong company and contribute to America's economic recovery," Mr. Pandit added.
As previously disclosed, effective January 1, 2010, Citigroup adopted SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140 (SFAS 166) and SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS 167). The adoption of these standards includes the requirement that Citi consolidate certain of its credit card securitization trusts and eliminate sale accounting for transfers of credit card receivables to those trusts. As a result, reported and managed basis presentations are equivalent for periods beginning January 1, 2010. For comparison purposes, prior period revenues, net credit losses, provisions for credit losses and for benefits and claims including managed net credit losses, and loans are presented on a managed basis. Managed presentations were applicable only to Citi's North American branded and retail partner credit card operations in North America Regional Consumer Banking and Citi Holdings—Local Consumer Lending. For additional information, see Citi's Historical Reformatted Quarterly Financial Data Supplement, filed on Form 8-K with the U.S. Securities and Exchange Commission on April 13, 2010.
Citigroup revenues were $25.4 billion, up $17.5 billion from the fourth quarter of 2009. Excluding the $10.1 billion pre-tax loss from the TARP repayment and exit of the loss-sharing agreement in the prior quarter, revenues increased $7.5 billion or 42%. The sequential improvement reflected strong results in Securities and Banking ("S&B"), a positive CVA in the quarter ($289 million in the quarter compared to negative $1.9 billion in the fourth quarter of 2009) and higher positive net revenue marks in the Special Asset Pool ("SAP").
Citicorp revenues were $18.5 billion, up $4.8 billion or 35% from fourth quarter of 2009, driven by growth in S&B. Citicorp's North America, EMEA, and Asia regions had double-digit sequential growth in revenues, up 58%, 64%, and 23%, respectively, while the Latin America region had an 8% decline. Excluding the impact of CVA from both periods4, Citicorp revenues were up 17% sequentially to $18.2 billion.
Citi Holdings revenues were $6.6 billion, up $1.4 billion, or 26%, from the prior quarter. Revenues in the SAP increased $1.3 billion sequentially to $1.5 billion, driven by higher positive net revenue marks, particularly on sub-prime related direct exposures and the Monoline CVA (see Appendix A). Local Consumer Lending ("LCL") revenues were $4.7 billion, up slightly from the prior quarter. Brokerage and Asset Management revenues were $340 million, up $69 million or 25%, mainly due to gains on business dispositions.
Corporate/Other revenues were $349 million compared to negative $11.0 billion in the prior quarter, which reflected the $10.1 billion pre-tax loss of the TARP repayment and the exit of the loss-sharing agreement.
Citigroup expenses were $11.5 billion, down $796 million, or 6%, from the prior quarter, reflecting continued expense discipline across businesses.
Citicorp expenses were $8.5 billion, down $266 million, or 3%, from the prior quarter.
Citi Holdings expenses were $2.6 billion, down $434 million, or 14%, from the prior quarter.
Citigroup total provisions for credit losses and for benefits and claims of $8.6 billion declined $2.4 billion or 22% sequentially, to the lowest level since the first quarter of 2008.
Citicorp credit costs of $2.8 billion were down $527 million, or 16% from the prior quarter, and included net credit losses of $3.1 billion and a $367 million net release for loan losses and unfunded lending commitments. The decline in credit costs reflected continued improvement in corporate credit and key consumer markets, particularly Mexico and India cards.
Citi Holdings credit costs were $5.8 billion, which included $5.2 billion of net credit losses, a net build for loan losses and unfunded lending commitments of $314 million, and a $243 million provision for policyholder benefits and claims. Net credit losses and reserve builds declined 21% and 59%, respectively, from the fourth quarter of 2009.
The effective tax rate on continuing operations was 20%, reflecting taxable earnings in lower tax rate jurisdictions, as well as tax advantaged earnings.
Citigroup net income was $4.4 billion compared to a net loss of $7.6 billion in the prior quarter. Excluding the $6.2 billion after-tax loss of the TARP repayment and the exit of the loss-sharing agreement in the fourth quarter of 2009, net income increased $5.8 billion. The sequential growth in net income was due to improved revenues, continued expense discipline, and lower credit costs.
Citicorp net income of $5.1 billion was $3.3 billion higher than the prior quarter, mainly driven by strong results in Securities and Banking, as well as lower credit costs. All four Citicorp regions showed sequential growth, with particular improvement in North America and EMEA.
Citi Holdings reported a net loss of $887 million, compared to a net loss of $2.6 billion in the prior quarter. The sequential improvement was driven by higher positive revenue marks in SAP, and lower credit costs and expenses.
Corporate/Other reported a net loss of $36 million compared to a loss of $7.0 billion in the prior quarter, which reflected the impact of the TARP repayment and exit of the loss-sharing agreement.
Citi will host a conference call today at 11:00 AM (EDT). A live webcast of the presentation, as well as financial results and presentation materials, will be available at http://www.citigroup.com/citi/fin. A replay of the webcast will be available at http://www.citigroup.com/citi/fin/pres.htm. Dial-in numbers for the conference call are as follows: (877) 700-4194 in the U.S.; (706) 679-8401 outside of the U.S. The passcode for both numbers is 59481218.
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 140 countries. Through Citicorp and Citi Holdings, Citi provides 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, transaction services, and wealth management. 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 Citigroup'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 of 1995. 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 U.S. Securities and Exchange Commission.
1 Tier 1 Common and related ratios, as used throughout this release, are non-GAAP financial measures. See Appendix B for additional information on these metrics.
2 For comparison purposes, prior period revenues and provisions for credit losses are on a managed basis. See page 2 for a discussion of managed basis presentation.
3 For comparison purposes, prior period revenues and net credit losses are on a managed basis. See above for a discussion of managed basis presentation.
4 See Appendix A for quarterly CVA amounts.
5 Tangible Book Value is a non-GAAP financial measure. See Appendix B for additional information on this metric.
6 For comparison purposes, prior period revenues and loans are on a managed basis. See page 2 for a discussion of managed basis presentation.
7 For comparison purposes, prior period net credit losses are on a managed basis and total provision for credit losses and benefits and claims reflect managed basis net credit losses. See page 2 for a discussion of managed basis presentation.