Citigroup Reports Second Quarter Net Income of $5.07 Billion; Second Quarter EPS of $0.97; Income from Continuing Operations of $4.73 Billion; EPS from Continuing Operations of $0.91; Revenues of $20.2 Billion.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Citigroup Citigroup U.S. holding company formed in 1998 from the merger of Citicorp (itself a holding company incorporated in 1967) and Travelers Group, Inc. The $70 billion merger included one of the largest U.S. investment banks, Salomon Smith Barney Inc. Inc. (NYSE NYSE See: New York Stock Exchange :C) today reported net income for the second quarter 2005 of $5.07 billion, or $0.97 per share, an increase from $1.14 billion or $0.22 per share in the second quarter 2004. Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $4.73 billion, or $0.91 per share, up from $916 million, or $0.17 per share. Excluding the second quarter 2004 after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge of $4.95 billion for a WorldCom The former name of MCI. Based in Jackson, MS, WorldCom, Inc. was a major, international telecommunications carrier. It was founded in 1983 by Bernard Ebbers as Long Distance Discount Service (LDDS), a reseller of AT&T WATS lines to small businesses. class action settlement and increased litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. reserves and an after-tax gain of $756 million on the sale of a stake in Samba Financial Group Samba Financial Group (formerly known as The Saudi American Bank) is a large banking firm in Saudi Arabia formed by the takeover of Citibank branches in Saudi Arabia by Royal Decree on February,12,1980. , revenues increased 2%, and net income and earnings per share from continuing operations declined 7% and 6%, respectively.
Citigroup Segment Second Quarter Second Quarter
Results Revenues Net Income
------------------ ----------------
(In Millions of % %
Dollars) 2005 2004 Change 2005 2004 Change
----------------------------------------------------------------------
Global Consumer $12,007 $12,215 (2)% $2,897 $3,102 (7)%
excluding Samba
gain(1) 11,631 3 2,724 6
Corporate and
Investment
Banking 5,156 6,067 (15) 1,372 (2,805) NM
excluding May
'04 charge &
Samba gain(1,2) 5,483 (6) 1,767 (22)
Global Wealth
Management 2,100 2,087 1 322 363 (11)
Alternative
Investments 1,112 545 NM 385 278 38
Corporate/Other (206) (59) NM (245) (22) NM
---------------------------------------------------
Results from
Continuing
Operations(3) $20,169 $20,855 (3)% $4,731 $916 NM
excluding May
'04 charge &
Samba gain(1,2) 19,687 2 5,110 (7)%
---------------------------------------------------
Discontinued
Operations(3) 342 228 50%
---------------------------------------------------
Total Citigroup $20,169 $20,855 (3)% $5,073 $1,144 NM
----------------------------------------------------------------------
Total Citigroup
excluding May
'04 charge &
Samba gain(1,2) $19,687 2% $5,338 (5)%
----------------------------------------------------------------------
(1) Gain on sale of stake in Samba of $1.17 billion pre-tax ($756
million after-tax) in the second quarter 2004, split equally between
Global Consumer and Corporate and Investment Banking. (2) May 2004
charge of $4.95 billion after-tax for WorldCom class action settlement
and increased litigation reserves. (3) Income from continuing
operations excludes the results of substantially all of Life Insurance
and Annuities and the Argentine pension business, which was subject to
a sale transaction that closed on July 1, 2005. Income from continuing
operations also excludes the results of substantially all of Asset
Management, which is subject to a pending sale transaction. Results
for the Life Insurance and Annuities and Asset Management businesses
referred to above are each recorded as Discontinued Operations for all
periods.
"Our businesses faced challenging conditions during the quarter," said Charles Prince For other persons named Charles Prince, see Charles Prince (disambiguation). Charles O. "Chuck" Prince, III, born January_13, 1950, is the chief executive officer (CEO) and chairman of Citigroup. , Chief Executive Officer of Citigroup. "The capital markets environment was one of the worst we have seen in years, and combined with a flattening
The flattening, ellipticity, or oblateness of an oblate spheroid is the "squashing" of the spheroid's pole, down towards its equator. yield curve, led to a significant decline in our fixed income markets revenues. Rising short-term interest rates Short-term interest rates Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commerical paper-having maturities of less than one year. Often called money market rates. and a flattening yield curve resulted in spread compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. across several businesses. New bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most legislation caused a short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. spike A burst of extra voltage in a power line that lasts only a few nanoseconds. See power surge, power swell, sag and surge suppression. (jargon) spike - To defeat a selection mechanism by introducing a (sometimes temporary) device that forces a specific result. in bankruptcy filings, adding approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $175 million to our credit costs in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. cards. Despite these challenges, our diversified diversified (di·verˑ·s business platform generated strong profitability. In our international consumer businesses, strong growth in customer balances drove 10% revenue growth. We saw particularly strong performance in our equity markets business, where we have been investing to expand our product capabilities, with revenues increasing 40%. In transaction services, we achieved record revenues and strong net income growth, with increases of 21% and 10%, respectively." "In the second quarter, we continued to sharpen sharp·en tr. & intr.v. sharp·ened, sharp·en·ing, sharp·ens To make or become sharp or sharper. sharp our focus on Citigroup's leading franchises and invest to extend our competitive advantages. We announced the sale of substantially all of Asset Management and we closed the sale of our Life Insurance and Annuities business on July July: see month. 1st. We expect to significantly enhance our private client business with the addition of Legg Mason's brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. business and announced an important credit card partnership with Federated Connected and treated as one. See federated database and federated directories. . We continued to expand our distribution network globally, adding 135 new retail banking and consumer finance branches, and we expanded our "ThankYou" Rewards Program to our U.S. retail banking customers," continued Prince. "We also made significant progress resolving pending legal and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. matters. We agreed to settle the Enron Enron A U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made the firm become the seventh class action litigation, significantly reducing the amount of claims outstanding for Enron matters. We concluded a settlement with the UK Financial Services Authority The Financial Services Authority ("FSA") is an independent non-departmental public body and quasi-judicial body that regulates the financial services industry in the United Kingdom. Its main office is based in Canary Wharf, London, with another office in Edinburgh. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Eurozone Eurozone Noun same as Euroland Eurozone n → eurozona, zona euro Eurozone n → zona euro bond trade, and we concluded a settlement with the U.S. Securities and Exchange Commission relating to transfer agent matters. We believe resolution of these matters is clearly in the best interest of Citigroup and its owners," said Prince. SECOND QUARTER HIGHLIGHTS - CONTINUING OPERATIONS --Customer volumes. In North America retail banking, average deposits and loans grew 6% and 20%, respectively. Internationally, retail banking deposits and loans increased 9% and 19%, respectively. In cards, North America average managed loans grew by 2% as purchase sales growth of 9% was offset by higher payment rates. In international cards, purchase sales increased 17% and receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed grew 18%. Private bank client business volumes outside of Japan increased 13%, including 27% growth in the U.S. In transaction services, assets under custody The care, possession, and control of a thing or person. The retention, inspection, guarding, maintenance, or security of a thing within the immediate care and control of the person to whom it is committed. The detention of a person by lawful authority or process. rose 14% and liability balances increased 25%. --Revenues. Revenues declined 3%. Excluding the impact of a $1.17 billion pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain on the sale of a stake in Samba samba Ballroom dance of Brazilian origin, popularized in the U.S. and Europe in the 1940s. Danced to music in ⁴⁄₄ time with a syncopated rhythm, the dance is characterized by simple forward and backward steps and tilting, rocking body movements. recorded in the prior year period, revenues increased 2%. Revenue growth reflects 10% growth in international consumer businesses, driven by strong growth in Asia and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . In North America retail banking, revenue increased 6% including a 16% increase in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. revenue. Transaction services revenues increased 21% to record levels. Revenues declined 5% from the first quarter 2005. Growth in these businesses was partially offset by a 12% decline in capital markets and banking revenues. This included a 28% decrease in fixed income markets, reflecting difficult capital markets conditions and a flattening yield curve, which led to lower trading results in interest rate and credit products. In North America cards, net credit margin increased 7%, as a 3% decline in revenues was offset by lower credit costs. --Capital allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as to expand our leading franchises. Investment spending continued in the second quarter with the addition of 135 new branches, consisting of 73 consumer finance and 62 retail bank branches. In Japan, 65 new automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. loan machines were added. Advertising and marketing expenditures focused on global brand support, rewards programs, and new product offerings in consumer and wealth management. In cards, strategic actions included the announcement of a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. retail partner agreement with Federated department stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. , and the launch of co-branded credit cards with Cespa in Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. , Eurotel Eurotel is former name for Slovak (T-Mobile) and Czech (O2) mobile network. Eurotel, was founded in 1990 as a joint venture between SPT Telecom (51%) and the American joint venture Atlantic West (between US WEST International, Inc. in the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. , and MTV MTV in full Music Television U.S. cable television network, established in 1980 to present videos of musicians and singers performing new rock music. MTV won a wide following among rock-music fans worldwide and greatly affected the popular-music business. in Japan. As part of the agreement to sell Asset Management, Citigroup will add Legg Mason's 1,354 experienced financial advisors and 127 branch offices to its wealth management platform, and will be positioned as the primary domestic provider of Legg Mason's equity fund family. --Expenses. Expenses declined 40%. Excluding the impact of a $7.92 billion charge for the WorldCom settlement and increased litigation reserves recorded in the prior-year period, expenses increased 7%. Approximately 3 points of the increase was due to increased investment spending and 3 points was due to acquisitions and the impact of foreign exchange. Expenses declined 4% from the first quarter 2005. --Stable credit environment. In corporate and investment banking, cash-basis loans declined 8% from the prior quarter to $1.6 billion and are down 62% from a peak of $4.2 billion at June June: see month. 30, 2003. The provision for credit losses was a benefit of $14 million and included a $100 million pre-tax addition to the corporate allowance for unfunded lending commitments due to higher commitments to corporate clients. Global consumer loss rates in the quarter improved to 2.57% on a managed basis, excluding commercial markets, representing a 64 basis point decline from the second quarter of 2004. International consumer results include a $127 million pre-tax charge to increase loan loss reserves in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). retail banking to primarily reflect increased experience with the effects of bankruptcy law liberalization lib·er·al·ize v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es v.tr. To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . . . --Taxes. Results include a $65 million tax benefit relating to resolution of an audit. --Share repurchases. During the quarter, 42 million shares were repurchased for a total cost of $2.0 billion. --Return on capital. Return on common equity was 18.4%, while return on risk capital was 36%. --Discontinued operations. On January January: see month. 31, 2005, Citigroup announced the sale of substantially all of its Life Insurance and Annuities business, including the Argentine Argentine having some relationship with the country Argentina. Argentine tick margaropuswinthemi. Argentine tortoise geochelonechilensis. pension business previously recorded in Asset Management. Results of the Mexico life insurance business, which is not included in the sale transaction, are recorded in North America retail banking - Mexico. The sale was completed on July 1, 2005. On June 24, 2005, Citigroup announced the sale of substantially all of its Asset Management business. The sale transaction does not include the asset management business in Mexico, the retirement services business in Latin America, and interest in the CitiStreet joint venture. Results for the Mexico asset management business are reported in North America retail banking - Mexico. Results for Latin America retirement services are recorded in international retail banking - Latin America and the CitiStreet joint venture is recorded in Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. . Financial results for Life Insurance and Annuities and Asset Management businesses, which are included in the sale transactions described above, are presented as Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. .
GLOBAL CONSUMER GROUP
Second Quarter Second Quarter
Revenues Net Income
------------------ ----------------
(In Millions of % %
Dollars) 2005 2004 Change 2005 2004 Change
----------------------------------------------------------------------
N. America Cards $3,581 $3,686 (3)% $861 $850 1%
International
Cards 870 781 11 206 162 27
---------------------------------------------------
Total Cards $4,451 $4,467 0% $1,067 $1,012 5%
N. America
Consumer Finance $1,795 $1,806 (1)% $477 $457 4%
International
Consumer Finance 918 871 5 169 137 23
---------------------------------------------------
Total Consumer
Finance $2,713 $2,677 1% $646 $594 9%
N. America Retail
Banking(1) $3,182 $2,994 6% $885 $785 13%
International
Retail Banking 1,691 1,520 11 356 407 (13)
---------------------------------------------------
Total Retail
Banking $4,873 $4,514 8% $1,241 $1,192 4%
---------------------------------------------------
Other (30) 557 NM (57) 304 NM
---------------------------------------------------
Global Consumer
(1) $12,007 $12,215 (2)% $2,897 $3,102 (7)%
----------------------------------------------------------------------
Global Consumer
excl. Samba
gain(2) $11,631 3% $2,724 6%
----------------------------------------------------------------------
(1) Includes revenues and net income from Mexico insurance operations,
which were previously recorded in Life Insurance and Annuities. Also
includes revenues and net income from Mexico Asset Management, which
were previously recorded in Asset Management. (2) Gain on sale of
stake in Samba of $584MM pre-tax ($378MM after tax) in the second
quarter 2004, recorded in Other.
--North America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. Cards --Revenues declined 3%, as a 9% increase in purchase sales was offset by net interest margin compression, higher payment rates and lower risk-based fees. --Mexico card revenues and net income increased 58% and 42%, respectively, as target market expansion led to 63% growth in managed receivables. --Net credit margin increased 7% as continued favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. credit conditions and asset sales offset the impact of a temporary increase in bankruptcy filings, which added approximately $175 million pre-tax to credit costs. Credit costs in the second quarter of 2004 included a $60 million loan loss reserve release. --International Cards --Revenue and income growth reflects a 17% increase in purchase sales and 18% growth in average loans. Results include strong organic growth in Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. , Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. , India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. , and Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. . --International credit trends continued to improve as the NCL NCL Norwegian Cruise Line NCL New Caledonia (ISO Country code) NCL National Consumers League (Washington, DC) NCL Neuronal Ceroid Lipofuscinosis (adult type) rate declined 41 basis points to 2.84%. --Net credit margin increased 13%. --North America Consumer Finance --Revenues declined 1% from the prior year period, as a 6% increase in average loans was offset by a 52 basis point decline in net interest margin. Spread compression was primarily driven by lower yields on the portfolio. --Income growth reflects continued expense discipline, as well as lower credit costs. The net credit loss rate improved 39 basis points to 2.30%. --In the quarter, investment in branch expansion continued with the opening of 16 new branches in Mexico. Branches have increased by 77 since the second quarter 2004, primarily in Mexico. --International Consumer Finance --Income growth was primarily driven by lower expenses and continued credit improvement in Japan. Outside of Japan, 13% revenue growth was offset by increased investment spending. --Average loans increased 6%, reflecting a decline in Japan of 8% and growth outside of Japan of 22%. --The NCL ratio improved by 84 basis points to 5.73%. --During the quarter, 54 new branches were opened outside of Japan and 65 new automated loan machines were added in Japan. Sales points have increased by 271, or 20%, since the second quarter 2004. --North America Retail Banking --Results reflect growth in average customer deposits and loans of 6% and 20%, respectively, which was partially offset by continuing spread compression and the impact of liquidating portfolios in commercial businesses. --Mexico retail banking income increased significantly as deposits grew 8% and loans increased 23%. Results also include a $78 million pre-tax favorable impact related to a restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of Mexico government notes. --Credit costs increased due to a $127 million general loan loss reserve release recorded in the prior-year period. --International Retail Banking --Revenue growth was driven by growth in deposits and loans of 9% and 19%, respectively, and improved spreads on deposit products. --Expenses include continued investment spending, with 20 new branch openings during the quarter. In addition, 36 new branches were added through the acquisition of Insular insular /in·su·lar/ (-sdbobr-ler) pertaining to the insula or to an island, as the islands of Langerhans. in·su·lar adj. Of or being an isolated tissue or island of tissue. Savings Bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. in the Philippines Philippines officially Republic of the Philippines Island country, western Pacific Ocean, on an archipelago off the southeast coast of Asia. Area: 122,121 sq mi (316,294 sq km). Population (2005 est.): 84,191,000. . Branches have increased by 86 since the second quarter 2004. --Credit costs increased due to a $127 million pre-tax charge to increase loan loss reserves in Germany retail banking to primarily reflect increased experience with the effects of bankruptcy law liberalization.
CORPORATE AND INVESTMENT BANKING
Second Quarter Second Quarter
Revenues Net Income
---------------- -----------------
(In Millions of % %
Dollars) 2005 2004 Change 2005 2004 Change
----------------------------------------------------------------------
Capital Markets and
Banking $3,965 $4,495 (12)% $1,043 $1,502 (31)%
Transaction Services 1,191 987 21 288 262 10
Other - 585 NM 41 (4,569) NM
--------------------------------------------------
Corporate and
Investment Banking $5,156 $6,067 (15)% $1,372 $(2,805) NM
----------------------------------------------------------------------
Corporate and
Investment Banking
excl. May '04
charge and
Samba(1) $5,483 (6)% $1,767 (22)%
----------------------------------------------------------------------
(1) May 2004 charge of $4.95 billion after-tax for WorldCom class
action settlement and increased litigation reserves and gain on sale
of a stake in Samba of $584MM pretax ($378MM after-tax) in the second
quarter 2004.
--Capital Markets and Banking --Fixed income markets revenues declined 28%. Difficult capital markets conditions and a flattening yield curve led to lower trading results in interest rate and credit products, which were partially offset by increased revenues from foreign exchange and commodities. --Equity markets revenues increased 40%, driven by improved performance and growth in cash trading, derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. products and equity finance. --Investment banking revenues declined 1%, as lower high yield debt underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. revenues were partially offset by strong growth in completed M&A transactions, which led to a 13% increase in advisory and other fees. --The provision for credit losses was a benefit of $20 million, and included a $96 million pre-tax charge to increase the allowance for unfunded commitments. The increased allowance reflects higher unfunded commitments to corporate clients. Credit costs increased $256 million due to a general loan loss reserve release of $276 million pre-tax in the prior-year period. --Results also include a $19 million pre-tax favorable impact related to a restructuring of Mexico government notes. --Transaction Services --Record revenues were driven by higher customer volumes, reflecting increased liability balances held on behalf of customers, up 25%, and assets under custody, up 14%, and the positive impact of rising short-term interest rates. --Expenses increased 13%, reflecting the impact of acquisitions and new product introductions. --Credit costs increased due to a general loan loss reserve release of $74 million pre-tax recorded in the prior year period.
GLOBAL WEALTH MANAGEMENT
Second Quarter Second Quarter
Revenues Net Income
---------------- -----------------
(In Millions of % %
Dollars) 2005 2004 Change 2005 2004 Change
----------------------------------------------------------------------
Smith Barney $1,647 $1,582 4% $239 $211 13%
Private Bank 453 505 (10) 83 152 (45)
--------------------------------------------------
Global Wealth
Management $2,100 $2,087 1% $322 $363 (11)%
----------------------------------------------------------------------
--Smith Barney barney - In Commonwealth hackish, "barney" is to fred as bar is to foo. That is, people who commonly use "fred" as their first metasyntactic variable will often use "barney" second. The reference is, of course, to Fred Flintstone and Barney Rubble in the Flintstones cartoons. --Revenue growth reflects a 12% increase in fee-based revenues, partially offset by a 5% decline in transactional revenues due to lower client trading activity. --Assets under fee-based management increased 10%, to $245 billion, and net flows were $5 billion for the quarter. --The pre-tax margin of 24% increased from the prior year and the prior quarter. --The Private Bank --Results reflect continued wind-down of the Japan business, with Japan revenue and net income down $73 million and $64 million, respectively. --Ex-Japan, revenues increased 5%. Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. and net interest revenues grew 7% as growth in customer volumes offset net interest margin compression. Transactional revenues ex-Japan declined 4% due to lower client trading activity. --Excluding a $45 million loss in Japan, income declined 4%, as revenue growth was offset by investment spending on front office sales and support. --Client business volumes rose 8%, to $220 billion. Growth outside of Japan was 13%, led by a 27% increase in the U.S. Assets under fee-based management grew 18%.
ALTERNATIVE INVESTMENTS
Second Quarter Second Quarter
Revenues Net Income
---------------- ----------------
(In Millions of % %
Dollars) 2005 2004 Change 2005 2004 Change
----------------------------------------------------------------------
Alternative
Investments $1,112 $545 NM $385 $278 38%
----------------------------------------------------------------------
--Alternative Investments --Income of $385 million primarily reflects mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. valuations and realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. in private equity portfolios. CORPORATE/OTHER Corporate/Other results, which declined to a loss of $245 million, were driven by lower treasury results due to increased short-term interest rates and the flattening of the U.S. yield curve.
DISCONTINUED OPERATIONS
Second Quarter Net
Income
-------------------
(In Millions of Dollars) %
2005 2004 Change
---------------------------------------------------------
Life Insurance & Annuities $280 $164 71%
Asset Management 62 64 (3)
---------------------------
Discontinued Operations $342 $228 50%
---------------------------------------------------------
INTERNATIONAL OPERATIONS (1)
Second Quarter
Net Income
------------------
%
(In Millions of Dollars) 2005 2004 Change
------------------------------------------------------------ ---------
Global Consumer......................... $368 $235 57%
Corporate and Investment Banking........ 76 184 (59)
Global Wealth Management................ 10 12 (17)
----------------------------
Mexico $454 $431 5%
Global Consumer......................... $122 $601 (80)%
excluding Samba gain(2)................ 223 (45)
Corporate and Investment Banking........ 336 662 (49)
excluding Samba gain(2)................ 284 18
Global Wealth Management................ 3 4 (25)
----------------------------
Europe, Middle East and Africa (EMEA) $461 $1,267 (64)%
excluding Samba gain(2) 511 (10)
Global Consumer......................... $188 $147 28%
Corporate and Investment Banking........ 54 87 (38)
Global Wealth Management................ (45) 19 NM
----------------------------
Japan $197 $253 (22)%
Global Consumer......................... $341 $280 22%
Corporate and Investment Banking........ 249 321 (22)
Global Wealth Management................ 31 34 (9)
----------------------------
Asia (excluding Japan) $621 $635 (2)%
Global Consumer......................... $80 $54 48%
Corporate and Investment Banking........ 195 185 5
Global Wealth Management................ 8 12 (33)
----------------------------
Latin America $283 $251 13%
----------------------------
Total International from Continuing
Operations $2,016 $2,837 (29)%
excluding Samba gain(2) 2,081 (3)
----------------------------------------------------------------------
(1) International results for the quarter are fully reflected in the
product disclosures. (2) Excludes a $756 million after-tax gain on
sale of a stake in Samba, split equally between Global Consumer and
Corporate and Investment Banking.
--Mexico --Consumer income growth reflects increased customer deposits and loans, improved spreads in retail banking, and a $78 million pre-tax favorable impact in retail banking related to a restructuring of Mexico government notes. --Corporate and Investment Banking income declined as increased corporate customer activity was offset by lower treasury results due to a flat yield curve Flat Yield Curve A chart that shows that the yields of bonds with short maturities are equal to the yields of bonds with longer maturities. and lower volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the . Credit costs increased due to a $200 million pre-tax loan loss reserve release recorded in the prior-year period. Corporate credit conditions remain stable. Results also include a $19 million pre-tax favorable impact related to a restructuring of Mexico government notes. --Europe, Middle East and Africa --Excluding the impact of a $378 million after-tax gain on the sale of a stake in Samba recorded in the second quarter 2004, consumer income declined 45%. Consumer results reflect increased investment spending on branches and a $127 million pre-tax charge to increase loan loss reserves in Germany retail banking. During the quarter, 27 new branches were opened, consisting of 18 consumer finance and 9 retail banking branches. --Excluding the impact of a $378 million after-tax gain on the sale of a stake in Samba recorded in the second quarter 2004, corporate and investment banking income increased 18%. Corporate and Investment Banking results reflect strong increases in fixed income markets and transaction services, and lower credit costs. --Japan --Consumer income increased primarily due to reduced expenses and lower credit costs in consumer finance. --Corporate and Investment Banking income declined as reduced customer transaction volumes and lower volatility led to weaker fixed income and equity markets results. --Wealth Management results reflect the continued wind-down of the Private Bank operations. --Asia --Consumer income continued to grow strongly, as growth in customer volumes led to continued double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. revenue growth across cards, retail banking, and consumer finance. During the quarter, 32 new branches were opened, consisting of 26 consumer finance and 6 retail banking branches. In addition, 36 branches were added through the acquisition of Insular Savings Bank in the Philippines. --Corporate and Investment Banking results reflect double-digit revenue growth in transaction services and investment banking, which was more than offset by a decline in fixed income markets results due to a flattening yield curve and unfavorable interest rate positioning. --Latin America --Consumer results reflect double-digit revenue growth in cards and retail banking, driven by increased receivables balances and a favorable credit environment. During the quarter, 15 new branches were opened, consisting of 10 consumer finance and 5 retail banking branches. --Corporate and Investment Banking income increased, driven by double-digit revenue growth in fixed income markets and transaction services, partially offset by lower lending revenues. A reconciliation of non-GAAP financial information contained in this press release is set forth on page 8 and 9. Citigroup (NYSE:C), the leading global financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. 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. Major brand names under Citigroup's trademark red umbrella umbrella, a small canopy used as a protection against the sun in China, Egypt, and elsewhere in remote antiquity. It was often an emblem of rank. During the Middle Ages the umbrella became almost extinct in Europe; its usefulness was not rediscovered until the late include Citibank CITIBANK First National City Bank , CitiFinancial, Primerica, Smith Barney and Banamex. Additional information may be found at www.citigroup.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 web site at www.citigroup.com. Certain statements in this document are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and . These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . 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. Non-GAAP Financial Measures Income, Revenues, Expenses and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. excluding litigation charges and the gain on sale of Samba are "non-GAAP financial measures" under SEC guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. . The Company believes that these non-GAAP financial measures provide a fuller understanding of ongoing operations. Investors may find these non-GAAP financial measures useful in analyzing financial performance without the impact of unusual items that may obscure OBSCURE - "A Formal Description of the Specification Language OBSCURE", J. Loeckx, TR A85/15, U Saarlandes, Saarbrucken, 1985. underlying trends. Reconciliation of the GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measures to the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. non-GAAP measures follows:
TOTAL CITIGROUP
(in millions, except EPS) 2Q05 vs.
2Q 2Q 2Q04 Increase/
2005 2004 (Decrease)
-------- -------- --------------
GAAP Revenues from Continuing Ops. $ 20,169 $ 20,855 (3%)
Excluding Gain on Samba - (1,168)
-------- --------
Non-GAAP Revenues from Continuing
Ops. as Adjusted $ 20,169 $ 19,687 2%
======== ========
GAAP Expenses from Continuing Ops. $ 10,972 $ 18,172 (40%)
Excluding Litigation Charges - (7,915)
-------- --------
Non-GAAP Expenses from Continuing
Ops. as Adjusted $ 10,972 $ 10,257 7%
======== ========
GAAP Income from Continuing Ops. $ 4,731 $ 916 NM
Excluding Gain on Samba - (756)
Excluding Litigation Charges - 4,950
-------- --------
Non-GAAP Income from Continuing
Ops. as Adjusted $ 4,731 $ 5,110 (7%)
======== ========
GAAP Diluted Earnings Per Share
from Continuing Ops. $ 0.91 $ 0.17 NM
Excluding Gain on Samba - (0.15)
Excluding Litigation Charges - 0.95
-------- --------
Non-GAAP Diluted EPS from
Continuing Ops. as Adjusted $ 0.91 $ 0.97 (6%)
======== ========
GAAP Net Income $ 5,073 $ 1,144 NM
Excluding Gain on Samba - (756)
Excluding Litigation Charges - 4,950
-------- --------
Non-GAAP Net Income as Adjusted $ 5,073 $ 5,338 (5%)
======== ========
GAAP Diluted Earnings Per Share $ 0.97 $ 0.22 NM
Excluding Gain on Samba - (0.15)
Excluding Litigation Charges - 0.95
-------- --------
Non-GAAP Diluted EPS as Adjusted $ 0.97 $ 1.02 (5%)
======== ========
SEGMENT DETAIL
(in millions)
2Q05 vs.
2Q 2Q 2Q04 Increase/
2005 2004 (Decrease)
-------- -------- --------------
Global Consumer Group
GAAP Revenues $ 12,007 $ 12,215 (2%)
Excluding Gain on Samba - (584)
-------- --------
Non-GAAP Revenues as Adjusted $ 12,007 $ 11,631 3%
======== ========
GAAP Net Income $ 2,897 $ 3,102 (7%)
Excluding Gain on Samba - (378)
-------- --------
Non-GAAP Net Income as Adjusted $ 2,897 $ 2,724 6%
======== ========
Corporate & Investment Banking
GAAP Revenues $ 5,156 $ 6,067 (15%)
Excluding Gain on Samba - (584)
-------- --------
Non-GAAP Revenues as Adjusted $ 5,156 $ 5,483 (6%)
======== ========
GAAP Net Income $ 1,372 $ (2,805) NM
Excluding Gain on Samba - (378)
Excluding Litigation Charges - 4,950
-------- --------
Non-GAAP Net Income as Adjusted $ 1,372 $ 1,767 (22%)
======== ========
2Q05 vs.
2Q 2Q 2Q04 Increase/
Europe, Middle East and Africa 2005 2004 (Decrease)
-------- -------- --------------
Global Consumer Group
GAAP Net Income $ 122 $ 601 (80%)
Excluding Gain on Samba - (378)
-------- --------
Non-GAAP Net Income as Adjusted $ 122 $ 223 (45%)
======== ========
Corporate & Investment Banking
GAAP Net Income $ 336 $ 662 (49%)
Excluding Gain on Samba - (378)
-------- --------
Non-GAAP Net Income as Adjusted $ 336 $ 284 18%
======== ========
Total International from Continuing Ops.
GAAP Net Income $ 2,016 $ 2,837 (29%)
Excluding Gain on Samba - (756)
-------- --------
Non-GAAP Net Income as Adjusted $ 2,016 $ 2,081 (3%)
======== ========
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