Citigroup Reports Third Quarter 2013 Earnings Per Share of $1.00; $1.02 Excluding CVA/DVA1 and Tax B
Citigroup Reports Third Quarter 2013 Earnings Per Share of $1.00; $1.02 Excluding CVA/DVA1and Tax Benefit2
Net Income of $3.2 Billion; $3.3 Billion Excluding CVA/DVA and Tax Benefit
Revenues of $17.9 Billion; $18.2 Billion Excluding CVA/DVA
Net Credit Losses of $2.4 Billion Declined 38% versus Prior Year Period
Loan Loss Reserve Release of $675 Million Versus $1.5 Billion in Prior Year Period
Utilized Approximately $500 Million of Deferred Tax Assets
Estimated Basel III Tier 1 Common Ratio3Increased to 10.4%
Book Value Per Share Increased to $64.49
Tangible Book Value Per Share4Increased to $54.52
Citigroup Deposits of $955 Billion and Loans of $658 Billion
Citicorp Loans of $561 Billion Grew 5% versus Prior Year Period
Citi Holdings Assets of $122 Billion Declined 29% from Prior Year Period and Represent 6% of Total Citigroup Assets
NEW YORK--(BUSINESS WIRE)-- Citigroup Inc. (NYS: C) today reported net income for the third quarter 2013 of $3.2 billion, or $1.00 per diluted share, on revenues of $17.9 billion. This compared to net income of $468 million, or $0.15 per diluted share, on revenues of $13.7 billion for the third quarter 2012.
CVA/DVA was a negative $336 million in the third quarter ($208 million after-tax) resulting from the tightening of Citi's credit spreads in the quarter, compared to a negative $776 million ($485 million after-tax) in the prior year period. Third quarter 2013 results also included a $176 million tax benefit related to the resolution of certain tax audit items, compared to a $582 million tax benefit in the prior year period (both recorded within Corporate/Other). In addition, third quarter 2012 results included a pre-tax loss of $4.7 billion ($2.9 billion after-tax) related to the Morgan Stanley Smith Barney joint venture (MSSB).5 Excluding CVA/DVA in both periods and the MSSB loss in the third quarter 2012, third quarter 2013 revenues were $18.2 billion, down 5% from the prior year period. Excluding CVA/DVA and the tax benefit in both periods, as well as the MSSB loss in the third quarter 2012, earnings were $1.02 per diluted share, down 4% from the prior year period.
Michael Corbat, Chief Executive Officer of Citi, said, "We performed relatively well in this challenging, uneven macro environment. While many of the factors which influence our revenues are not within our full control, we certainly can control our costs and I am pleased with our expense discipline and improved efficiency year-to-date.
"We also continued to reduce the size of Citi Holdings, now 6% of our balance sheet, and its drag on our earnings during the quarter. We generated additional capital, primarily through retained earnings and DTA utilization, and our Tier 1 Common ratio increased to an estimated 10.4% on a Basel III basis. Other key capital metrics also strengthened, including our Supplementary Leverage Ratio, which increased to an estimated 5.1%. With the environment remaining challenging, we will continue to focus on all aspects of our business to improve client satisfaction and shareholder results consistent with our strategy," Mr. Corbat concluded.
Citigroup revenues of $17.9 billion in the third quarter 2013 increased 30% from the prior year period. Excluding CVA/DVA and the third quarter 2012 MSSB loss, Citigroup revenues of $18.2 billion in the third quarter 2013 were 5% below the prior year period.
Citicorp revenues of $16.6 billion in the third quarter 2013 included a negative $332 million of CVA/DVA reported within Securities and Banking. Excluding CVA/DVA, Citicorp revenues of $17.0 billion decreased 7% from the prior year period. Securities and Banking revenues declined 2%, or 10% excluding CVA/DVA, and Global Consumer Banking (GCB) revenues declined 7%, while Transaction Services (CTS) revenues were roughly flat, all versus the prior year period.
Citi Holdings revenues of $1.3 billion in the third quarter 2013 included a negative $4 million of CVA/DVA. Excluding CVA/DVA and the third quarter 2012 MSSB loss, Citi Holdings revenues increased 28% versus the prior year period, mainly driven by the absence of repurchase reserve builds for representations and warranty claims in the third quarter 2013. Total Citi Holdings assets of $122 billion declined $49 billion, or 29%, from the third quarter 2012. Citi Holdings assets at the end of the third quarter 2013 represented approximately 6% of total Citigroup assets.
Citigroup's net income increased to $3.2 billion in the third quarter 2013 from $468 million in the prior year period. Excluding CVA/DVA and the tax benefit in both periods, as well as the third quarter 2012 MSSB loss, Citigroup net income of $3.3 billion was roughly flat compared to the prior year period, as lower operating expenses and lower credit costs were offset by the decline in revenues and a higher tax rate. Operating expenses of $11.7 billion were 4% lower than the prior year period. Citigroup's cost of credit in the third quarter 2013 was $2.0 billion, 25% below the prior year period, reflecting a $1.5 billion improvement in net credit losses partially offset by a $827 million decline in net loan loss reserve releases. Citigroup's net credit losses in the third quarter 2012 included approximately $635 million of incremental mortgage charge-offs required by OCC guidance regarding the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy. These incremental charge-offs were substantially offset by a related reserve release of approximately $600 million. Citi's effective tax rate in the third quarter 2013 was 25% (30% excluding CVA/DVA and the tax benefit, compared to 26% in the prior year period on the same basis).
Citigroup's allowance for loan losses was $20.6 billion at quarter end, or 3.2% of total loans, compared to $25.9 billion, or 4.0%, at the end of the prior year period. The loan loss reserve release of $675 million in the quarter was 55% lower than in the prior year period, reflecting a $4 million reserve build in Citicorp (compared to a $689 million reserve release in the third quarter 2012) and a reserve release in Citi Holdings of $679 million, 16% lower than the prior year period. Citigroup asset quality continued to improve as total non-accrual assets fell to $9.8 billion, a 23% reduction compared to the third quarter 2012. Corporate non-accrual loans declined 10% to $2.2 billion, while consumer non-accrual loans declined 26% to $7.2 billion.
Citigroup's capital levels and book value increased versus the prior year period. As of the quarter end, book value per share was $64.49 and tangible book value per share was $54.52, 1% and 3% increases respectively versus the prior year period. At quarter end, Citigroup's Basel I Tier 1 Capital Ratio was 13.6% and its Tier 1 Common Ratio was 12.6%, while its Basel III Tier 1 Common Ratio was estimated at 10.4%. Citigroup's estimated Basel III Supplementary Leverage Ratio for the third quarter 2013 was 5.1%.6
($ millions, except per share amounts)
|Total Revenues (Ex-CVA/DVA & Loss on MSSB)|
|Net Credit Losses||2,430||2,608||3,897||-7%||-38%|
|Loan Loss Reserve Build/(Release) (a)||(675||)||(784||)||(1,502||)||14%||55%|
|Provision for Benefits and Claims||204||200||225||2%||-9%|
|Total Cost of Credit|
|Income (Loss) from Cont. Ops. Before Taxes|
|Provision for Income Taxes||1,080||2,127||(1,494||)||-49%||NM|
|Income from Continuing Operations|
|Net income (loss) from Disc. Ops.||92||30||8||NM||NM|
|Citigroup Net Income|
Net Income (Ex-CVA/DVA, Loss
|Tier 1 Common Ratio(b)||12.6||%||12.2||%||12.7||%|
|Tier 1 Capital Ratio(b)||13.6||%||13.2||%||13.9||%|
|Return on Common Equity||6.4||%||8.8||%||1.0||%|
|Book Value per Share|
|Tangible Book Value per Share|
|Note: Please refer to the Appendices and Footnotes at the end of this press release for additional information.|
Includes provision for unfunded lending commitments.
Tier 1 Common and Tier 1 Capital ratios reflect Basel I credit risk capital rules and, beginning January 1, 2013, the final (revised) market risk capital rules (Basel II.5). The Basel I credit risk and market risk capital rules are reflected prior to January 1, 2013.
|(in millions of dollars)||3Q'13||2Q'13||3Q'12||QoQ%||YoY%|
|Global Consumer Banking||9,235||9,711||9,915||-5%||-7%|
|Securities and Banking||4,749||6,841||4,847||-31%||-2%|
|Total Revenues (Ex-CVA/DVA)|
|Net Credit Losses||1,795||1,838||2,090||-2%||-14%|
|Loan Loss Reserve Build/(Release) (a)||4||(311||)||(689||)||NM||NM|
|Provision for Benefits and Claims||51||46||65||11%||-22%|
|Total Cost of Credit|
|Net Income (Ex-CVA/DVA & Tax Benefit)|