Citigroup Reports Second Quarter 2013 Earnings Per Share of $1.34; $1.25 Excluding CVA/DVA1

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Citigroup Reports Second Quarter 2013 Earnings Per Share of $1.34; $1.25 Excluding CVA/DVA1

Net Income of $4.2 Billion; $3.9 Billion Excluding CVA/DVA

Revenues of $20.5 Billion; $20.0 Billion Excluding CVA/DVA


Net Credit Losses of $2.6 Billion Declined 25% Versus Prior Year Period

Loan Loss Reserve Release of $784 Million Versus $1.0 Billion in Prior Year Period

Utilized Approximately $600 Million of Deferred Tax Assets

Basel I Tier 1 Common Ratio Increased to 12.2%
Estimated Basel III Tier 1 Common Ratio Increased to 10.0%2

Book Value Per Share Increased to $63.02
Tangible Book Value Per Share3Increased to $53.10

Citigroup Deposits of $938 Billion Grew 3% Versus Prior Year Period

Citicorp Loans of $544 Billion Grew 3% Versus Prior Year Period

Citi Holdings Assets of $131 Billion Declined 31% from Prior Year Period and Represented 7% of Total Citigroup Assets at Quarter End

NEW YORK--(BUSINESS WIRE)-- Citigroup Inc. (NYS: C) today reported net income for the second quarter 2013 of $4.2 billion, or $1.34 per diluted share, on revenues of $20.5 billion. This compared to net income of $2.9 billion, or $0.95 per diluted share, on revenues of $18.4 billion for the second quarter 2012.

CVA/DVA was a positive $477 million in the second quarter ($293 million after-tax), largely resulting from the widening of Citi's credit spreads and the tightening of counterparty spreads, compared to a positive $219 million ($140 million after-tax) in the prior year period. Second quarter 2012 results included a loss of $424 million ($274 million after-tax)related to the sale of a 10.1% stake in Akbank T.A.S. Excluding CVA/DVA in both periods and the Akbank loss in the second quarter 2012,4 second quarter 2013 revenues increased 8% from the prior year period to $20.0 billion and second quarter 2013 earnings per diluted share were $1.25, representing a 25% increase from prior year earnings per share of $1.00. The increase in Citi's earnings per diluted share was driven by the higher revenues and lower net credit losses, which were partially offset by higher legal and related costs, a lower loan loss reserve release and a higher effective tax rate.

Michael Corbat, Chief Executive Officer of Citi, said, "Our businesses performed well during the quarter and these results are well-balanced through our products and geographies, especially in the emerging markets, where growth is being challenged. We also continued to make progress in several critical areas. We reduced the earnings drag caused by Citi Holdings, where we saw the largest percentage reduction of assets since 2010. We again consumed a modest amount of DTA, bringing the total utilized to about $1.3 billion for the first half of the year. We increased our already strong capital levels, reaching an estimated Basel III Tier 1 Common ratio of 10%. Generating consistent and quality earnings is a key priority and this quarter met that goal."

Citigroup revenues of $20.5 billion in the second quarter 2013 increased 11% from the prior year period. Excluding CVA/DVA and the Akbank loss in the second quarter 2012, Citigroup revenues of $20.0 billion in the second quarter 2013 increased 8% from the prior year period, with increases in both Citicorp and Citi Holdings.

Citicorp revenues of $19.4 billion in the second quarter 2013 included positive $462 million of CVA/DVA reported within Securities and Banking. Excluding CVA/DVA and the Akbank loss in the second quarter 2012, Citicorp revenues of $18.9 billion increased 7% from the prior year period. Securities and Banking revenues increased 25% (or 21% excluding CVA/DVA) and Global Consumer Banking (GCB) revenues increased 2%, partially offset by a 1% decline in Transaction Services (CTS) revenues, all versus the prior year period.

Citi Holdings revenues of $1.1 billion in the second quarter 2013 included positive $15 million of CVA/DVA. Excluding CVA/DVA, Citi Holdings revenues increased 17% versus the prior year period, driven by higher revenues in Local Consumer Lending and an improvement in Special Asset Pool revenues, partially offset by a decline in Brokerage and Asset Management revenues. Total Citi Holdings assets of $131 billion declined $60 billion, or 31%, from the second quarter 2012. Citi Holdings assets at the end of the second quarter 2013 represented approximately 7% of total Citigroup assets.

Citigroup's net income rose to $4.2 billion in the second quarter 2013 from $2.9 billion in the prior year period. Excluding the impact of CVA/DVA and the Akbank loss in the second quarter of 2012, Citigroup net income increased 26% to $3.9 billion. The increase reflected revenue growth and lower net credit losses, partially offset by higher legal and related expenses, a lower loan loss reserve release and a higher effective tax rate. Operating expenses of $12.1 billion were 1% higher than the prior year period mainly reflecting an increase in legal and related costs. Citigroup's cost of credit in the second quarter 2013 was $2.0 billion, a decrease of 25% over the prior year period, reflecting an $883 million improvement in net credit losses partially offset by a $225 million decline in net loan loss reserve releases. Citi's effective tax rate in the second quarter 2013 was 34%, compared to 19% in the prior year period. The higher effective tax rate reflected higher earnings in North America, a higher effective tax rate on international operations due to the previously disclosed change in Citi's assertion surrounding the permanent reinvestment of earnings in certain international entities, as well as the resolution of certain tax issues in the current quarter.

Citigroup's allowance for loan losses was $21.6 billion at quarter end, or 3.4% of total loans, compared to $27.6 billion, or 4.3% of total loans, at the end of the prior year period. The loan loss reserve release of $784 million in the quarter was 22% lower than in the prior year period. Reserve releases in Citicorp of $311 million compared to $740 million in the second quarter 2012, predominantly reflecting lower releases in North America GCB, largely related to cards, with a net build in international GCB (Asia, Latin America and EMEA), reflecting portfolio growth as well as builds for specific credits in the commercial market businesses. Citi Holdings recorded a net loan loss reserve release of $473 million in the second quarter 2013, compared to a net reserve release of $269 million in the prior year period. Citigroup asset quality improved in the second quarter 2013 as total non-accrual assets fell to $10.1 billion, a 12% reduction compared to the second quarter 2012. Corporate non-accrual loans decreased 17% from the second quarter 2012 to $2.1 billion, while consumer non-accrual loans decreased 9% to $7.6 billion. The decline in consumer non-accrual loans versus the prior year period occurred despite the third quarter 2012 OCC guidance regarding the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy, which added $1.5 billion to consumer non-accrual loans. Consumer loans that were 90+ days delinquent, excluding the Special Asset Pool, declined 31% versus the prior year period to $5.9 billion, or 1.6% of consumer loans.

Citigroup's capital levels and book value per share increased versus the prior year period. As of quarter end, book value per share was $63.02 and tangible book value per share was $53.10, 1% and 2% increases respectively, versus the prior year period. At quarter end, Citigroup's Basel I Tier 1 Capital Ratio was 13.3% and its Basel I Tier 1 Common Ratio was 12.2%. Citigroup's estimated Basel III Tier 1 Common Ratio was 10.0% at the end of the second quarter 2013. Citigroup's estimated Basel III supplementary leverage ratio for the second quarter 2013 was 4.9%.5

 

CITIGROUP

     
($ millions, except per share amounts)2Q'131Q'132Q'12QoQ%YoY%
 

Citicorp

19,38719,32617,449-11%
Citi Holdings1,092 901 938 21%16%
Total Revenues$20,479 $20,227 $18,387 1%11%
Total Revenues (Ex-CVA/DVA & (Loss)     

  on sale of Akbank)

$20,002 $20,546 $18,592 -3%8%
     
Expenses$12,140 $12,267 $11,994 -1%1%
 
Net Credit Losses2,6082,8783,491-9%-25%
Loan Loss Reserve Build/(Release) (a)(784)(650)(1,009)-21%22%
Provision for Benefits and Claims200 231 214 -13%-7%
Total Cost of Credit$2,024 $2,459 $2,696 -18%-25%
     
Income (Loss) from Cont. Ops. Before Taxes$6,315 $5,501 $3,697 15%71%
Provision for Income Taxes2,1271,57071835%NM
 
Income from Continuing Operations$4,188$3,931$2,9797%41%
Net income (loss) from Disc. Ops.30(33)7NMNM
Non-Controlling Interest36 90 40 -60%-10%
Citigroup Net Income$4,182 $3,808 $2,946 10%42%
 
Net Income (Ex-CVA/DVA & (Loss) on     

  sale of Akbank)

$3,889 $4,006 $3,080 -3%26%
           
 
Tier 1 Common Ratio(b)12.2%11.8%12.7%
Tier 1 Capital Ratio(b)13.3%13.1%14.5%
Return on Common Equity8.8%8.2%6.5%
Book Value per Share$63.02$62.51$62.611%1%
Tangible Book Value per Share$53.10$52.35$51.811%2%
           
Note: Please refer to the Appendices and Footnotes at the end of this press release for additional information.
(a) Includes provision for unfunded lending commitments.
(b) As of January 1, 2013, Tier 1 Capital and Tier 1 Common Ratios under Basel I reflect the final (revised) U.S. market risk capital rules (Basel II.5).
 
 
CITICORP
     
(in millions of dollars)2Q'131Q'132Q'12QoQ%YoY%
 
Global Consumer Banking9,7119,7499,507-2%
Securities and Banking6,8416,9785,471-2%25%
Transaction Services2,7322,6062,7675%-1%
Corporate/Other103 (7)(296)NMNM
Total Revenues$19,387 $19,326 $17,449 -11%
 
Total Revenues (Ex-CVA/DVA & (Loss)     

  on sale of Akbank)

$18,925 $19,636 $17,675 -4%7%
     
Expenses$10,593 $10,765 $10,759 -2%-2%
 
Net Credit Losses1,8381,9482,162-6%-15%
Loan Loss Reserve Build/(Release) (a)(311)(299)(740)-4%58%
Provision for Benefits and Claims46 63 49 -27%-6%
Total Cost of Credit$1,573 $1,712 $1,471 -8%7%
     
Net Income$4,752 $4,602 $3,856 3%23%
           
 
Revenues
North America8,3188,7067,782-4%7%
EMEA3,4513,1022,87811%20%
LATAM3,5413,5283,271-8%
Asia3,9743,9973,814-1%4%
Corporate/Other103(7)(296)NMNM
 
Net Income
North America2,1362,3771,835-10%16%
EMEA1,01463967359%51%
LATAM9008558285%9%
Asia1,0661,116969-4%10%
Corporate/Other(364)(385)(449)5%19%
           
 
EOP Assets ($B)1,7531,7331,7251%2%
EOP Loans ($B)(b)5445395271%3%
EOP Deposits ($B)8748688521%3%
           
Note: Please refer to the Appendices and Footnotes at the end of this press release for additional information.
(a) Includes provision for unfunded lending commitments.
(b) EOP loans includes Credicard loans of $3.1B in 1Q'13 and $3.2B in 2Q'12. Credicard was moved to discontinued operations as of 2Q'13.
 

Citicorp

Citicorprevenues of $19.4 billion in the second quarter 2013 increased by 11% from the prior year

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