Citigroup Second Quarter Core Income Increases 13% to $3.79 Billion From $3.34 Billion in the Second Quarter of 2000.Business Editors NEW YORK--(BUSINESS WIRE)--July 16, 2001 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): Revenue Growth of 8% to $20.3 Billion Core 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. Growth of 14% to $0.74 Per Share, Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , From $0.65 Citigroup Inc. (NYSE:C) today reported core income for the second quarter ended June June: see month. 30, 2001, of $3.79 billion, or $0.74 per share, diluted, a 14% increase from the second quarter of 2000. Net income for the second quarter of $3.54 billion, or $0.69 per share, included a $116 million after tax charge related to the implementation of a new accounting rule (EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation 99-20) providing guidance on the valuation of certain asset-backed securities Asset-backed security A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate. asset-backed security A debt security collateralized by specific assets. , as well as a $133 million after tax charge for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and other costs in connection with staffing reductions in each major business segment. "The strength and diversity of our global franchises produced results that once again proved Citigroup's ability to increase revenue and earnings, even in light of the difficult market conditions", said Sanford I. Weill Sanford I. Weill, commonly known as Sandy Weill (born March 16 1933) is a banker, financier and philanthropist. He was formerly the chief executive officer and chairman of Citigroup Inc. He served in those positions until October 1 2003 and April 18, 2006 respectively. , Chairman and Chief Executive Officer of Citigroup. "Revenues grew 8%, led by 12% growth in the Global Consumer segment. Given the recent economic trends, we are particularly pleased with 14% growth in our Core EPS". "Our ability to deliver consistent earnings growth was further shown by strong performances in a number of our businesses, including a 40% increase in CitiFinancial, a 17% increase 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, an 18% increase in the Private Bank, and 28% growth in our Emerging Markets businesses. Despite a difficult environment, our Corporate Finance business delivered 12% earnings growth as it continued to increase its 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. market share. We also benefited from disciplined expense management resulting in overall expense growth of 1% versus last year. We exceeded our return targets, with a return on common equity of 22.4% in the quarter. We also continue to pursue new areas of growth as shown by our pending acquisitions of EAB EAB Emerald Ash Borer (insect) EAB Environmental Appeals Board (EPA) EAB Educational Activities Board (IEEE) EAB Environmental Advisory Board EAB Egyptian American Bank and Banacci." Highlights of the quarter included:
- Strengthening global strategic franchises:
- Global Consumer Finance income grew 38%, driven by 13% receivables growth
reflecting strong organic growth in North America and Japan, as well as
significant expense reductions from the consolidation of the Associates
branches.
- Emerging Markets income increased 28%, driven primarily by strong
trading-related revenues, tight cost control and stable credit. Citigroup
continued to build its franchises, announcing its partnership with Grupo
Financiero Banamex-Accival ("Banacci"), the leading financial institution in
Mexico, and launching its tender offer for the shares of Banacci in July.
Citigroup was also named Best Emerging Markets Bank by Global Finance Magazine.
- Global Cards income grew 11%, primarily reflecting 11% receivables growth and
strong expense control. Cards income in Asia and Latin America declined partly
due to weakening currencies. The business further enhanced its market
leadership position with share gains in Taiwan, Mexico and Korea, as well as
the Peoples Bank portfolio acquisition in the United Kingdom.
- Citigroup's Corporate and Investment Bank continued to build its fixed income
and equity underwriting market share, ranking #1 in U.S. investment grade debt
with a 23% market share, #2 in High Yield debt with a 14% share, #5 in U.S.
equities with a 14% share, #1 in Japanese equities with a 58% share, and #2 in
European debt with a 7% market share. Citigroup participated in a number of
significant transactions during the quarter, including lead roles in the $8.7
billion Kraft IPO, the second largest IPO ever in the U.S., and the $11.9
billion WorldCom debt offering. In addition, Euromoney magazine named Citigroup
"Best Bank" and "Best in Foreign Exchange".
- Total expenses of $9.4 billion increased 1% from the second quarter of 2000.
Compared to the first quarter of 2001, total expenses decreased $1.0 billion,
or 10%, with each major business segment reporting decreases.
- Compared to the first quarter of 2001, overall credit loss rates increased
modestly. Losses in consumer loans increased 25 basis points, as flat
performance in CitiFinancial and the international portfolios was offset by an
increase of 67 basis points in North America Cards, driven by deterioration in
the general credit environment and increased bankruptcies. Ninety-day
delinquency rates in North America Cards improved modestly. Credit loss rates
in the Global Corporate segment remained flat, while Cash Basis Loans increased
9%.
- Cross-marketing continued to deliver improving results. The share of sales of
our own investment products through Citigroup distribution channels reached a
record 60% for the six months to June 30, 2001, up from 44% during the same
period last year, maintaining consistent year-on-year sales in a declining
general market environment. For the first six months of 2001, sales of
investment banking products to Global Relationship Banking clients increased
21% to approximately $1.3 billion and Global Relationship clients represented
35% of new national accounts sales in Commercial Lines.
- Quarter-end total equity, including trust preferred securities, increased to
$75.0 billion.
GLOBAL CONSUMER Core income of $1.89 billion, up 19%. Highlights included: - Global Consumer revenue increased 12% to $10.7 billion, while expense growth was held to 2%. - CitiFinancial income rose 40% on substantial cost savings from the Associates integration, as well as 13% 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 growth and a lower cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. . Cost savings from the integration of Associates are running well ahead of targets. CitiFinancial continues to focus on raising standards in the industry and recently announced that it would stop selling single premium credit insurance. In addition, after instituting a stringent new broker code of conduct, it severed sev·er v. sev·ered, sev·er·ing, sev·ers v.tr. 1. To set or keep apart; divide or separate. 2. To cut off (a part) from a whole. 3. relationships with more than 1000 mortgage brokers. - North America Cards income rose 17%, driven by 13% growth in receivables and a 95 basis point increase in the net interest margin, more than offsetting a 119 basis point deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the net credit loss ratio to 5.51%. - Japan income rose 32% led by double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth in consumer finance receivables. - Emerging Markets Consumer income increased 10% as a result of growth in new markets, in addition to improved credit and expense controls. - Travelers Life and Annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. income increased 14% as a result of strong group annuity volumes and higher net investment income. Despite a declining market, individual annuity sales were up 5% from last year, resulting in increased market share. GLOBAL CORPORATE Core income of $1.67 billion, up 10%. Highlights included: - Global Corporate revenues of $8.6 billion increased 4%, while expenses decreased 2%. Expenses were down $886 million or 16% from the first quarter of 2001. - Income from Emerging Markets Corporate and Global Transaction Services increased 35% to a record $467 million, driven by strong trading-related revenues, continued expense control and lower credit costs. - The Corporate & Investment Bank posted 2% earnings growth over the second quarter of 2000 on the strength of its product and geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. diversity, as well as continued expense controls and lower incentive compensation and benefits expense. Earnings increased 12%, excluding an $86 million decrease in income from Citigroup's 20.7% investment in Nikko Nikko (nēk`kō), town (1990 pop. 20,128), Tochigi prefecture, central Honshu, Japan, in Nikko National Park. It is a tourist resort and religious center, famous for its ornate temples and shrines, dating from the Yedo period (1600–1868) Securities reflecting Japan's continued weak retail brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. environment. - Income in the Corporate Finance unit increased 28% before the Nikko investment, driven by stronger investment banking revenues. Citigroup ranked #1 in disclosed fees In business disclosed fees is debt and equity underwriting and advisory revenue reported by investment banks. See also
underwriting in the quarter. - Private Client income declined 19% from the second quarter of 2000, primarily due to lower transactional volumes. Income increased 7% over the first quarter and profit margins increased to 22%, due to expense reductions of $59 million, which more than offset lower revenues and gross production per Financial Consultant. Assets under fee based management increased 6% to $206 billion reflecting a continued emphasis on fee based services. Franchise growth continued with the number of FC's increasing by 863 year-over-year to 12,549. GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING Core income of $180 million, up 6%. Highlights included: - Revenues increased 6% despite a difficult market environment and lower market values. Tight expense controls led to a $23 million reduction in expenses from the first quarter of 2001. - Private Bank income rose 18%, with increased customer activity across most products generating revenue growth of 11%, while expense growth was held to 7%. - Assets under Management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. grew 5% as strong net flows of $16 billion year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. more than offset lower market values. - Asset Management market share increased in nearly all proprietary channels, with market shares of 58% in the 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. retail channel, 66% at Primerica Financial Services Primerica Financial Services, a wholly owned subsidiary of Citigroup, is a multi-level marketing[1] company headquartered in Duluth, Georgia. It is the largest financial services marketing organization in North America, with more than 100,000 licensed independent and 77% in the Citibank CITIBANK First National City Bank North America channel. INVESTMENT ACTIVITIES AND CORPORATE/OTHER Income from Investment Activities was $227 million, down 12% from the second quarter of 2000; income consisted of net 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 the insurance and venture capital portfolios as well as an increase in the value of the mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. venture capital portfolio. Expenses in Corporate/Other decreased by $8 million or 4% versus the second quarter of 2000, due primarily to expense reduction initiatives and lower funding costs. Citigroup (NYSE: C), the preeminent pre·em·i·nent or pre-em·i·nent adj. Superior to or notable above all others; outstanding. See Synonyms at dominant, noted. [Middle English, from Latin prae 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, provides some 120 million consumers, corporations, governments and institutions in over 100 countries with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage and asset management Major brand names under Citigroup's trademark 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 are Citibank, CitiFinancial, Primerica, Salomon Noun 1. Salomon - American financier and American Revolutionary War patriot who helped fund the army during the American Revolution (1740?-1785) Haym Salomon Smith Barney, and Travelers under Citigroup's trademark red umbrella. Additional information may be found at www.citigroup.com A financial summary follows. 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 (http://www.citigroup.com). This document can also be obtained by calling 1-800-853-1754 within the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or 732-935-2771 outside the United States.
Citigroup Segment Income Second Quarter % Six Months %
(In Millions of Dollars) 2001 2000 Change 2001 2000 Change
----------------------------------------------------------------------
Global Consumer
Citibanking
North America $ 157 $ 134 17 $ 314 $ 265 18
Mortgage Banking 88 71 24 165 137 20
North America Cards 455 388 17 922 768 20
CitiFinancial 286 205 40 498 384 30
----------------- ----------------
Banking / Lending 986 798 24 1,899 1,554 22
Travelers Life
and Annuity 231 202 14 441 389 13
Primerica Financial
Services 128 125 2 253 244 4
Personal Lines 39 82 (52) 126 156 (19)
----------------- ---------------
Insurance 398 409 (3) 820 789 4
----------------- ---------------
Western Europe 106 91 16 216 187 16
Japan 229 173 32 427 323 32
Emerging Markets
Consumer Banking 213 193 10 408 413 (1)
----------------- ---------------
Total International 548 457 20 1,051 923 14
----------------- ---------------
e-Consumer (32) (46) 30 (67) (114) 41
Other Consumer (9) (33) 73 (5) (71) 93
----------------- ---------------
Total Global Consumer 1,891 1,585 19 3,698 3,081 20
----------------- ---------------
Global Corporate
Corporate Finance 717 643 12 1,519 1,505 1
Private Client 205 253 (19) 396 612 (35)
CitiCapital (3) 8 NM 16 64 (75)
----------------- ---------------
Corporate and
Investment Bank 919 904 2 1,931 2,181 (11)
Emerging Markets
Corporate Banking
and Global Transaction
Services 467 345 35 923 685 35
Commercial Lines
Insurance 286 272 5 564 519 9
----------------- ----------------
Total Global Corporate 1,672 1,521 10 3,418 3,385 1
----------------- ----------------
Global Investment Management and
Private Banking
Citigroup Asset
Management 87 91 (4) 182 185 (2)
The Citigroup
Private Bank 93 79 18 190 159 19
----------------- ----------------
Total Global Investment
Management and
Private Banking 180 170 6 372 344 8
----------------- ----------------
Investment Activities 227 258 (12) 359 907 (60)
Corporate / Other (185) (193) 4 (402) (437) 8
----------------- -----------------
Core Income (B) 3,785 3,341 13 7,445 7,280 2
----------------- -----------------
Restructuring and
Merger Related Items
-- After Tax (A) (133) (2) NM (213) (85) NM
----------------- -----------------
Income Before Cumulative
Effect of Accounting
Changes $ 3,652 $ 3,339 9 $ 7,232 $ 7,195 1
Cumulative Effect of
Accounting Changes (B)(116) - NM (158) - NM
------------------ ------------------
Net Income $ 3,536 $ 3,339 6 $ 7,074 $ 7,195 (2)
Diluted Earnings Per Share:
Core Income $ 0.74 $ 0.65 14 $ 1.45 $ 1.41 3
Income Before
Cumulative Effect of
Accounting Changes $ 0.71 $ 0.65 9 $ 1.40 $ 1.39 1
Net Income $ 0.69 $ 0.65 6 $ 1.37 $ 1.39 (1)
Core Diluted Earnings
Per Share Excl. Goodwill
Amortization $ 0.76 $ 0.67 13 $ 1.49 $ 1.45 3
(A) Restructuring and merger-related items in the 2001 first quarter
related principally to severance and costs associated with the
reduction of staff in the Global Corporate businesses, and in the
2001 second quarter related principally to severance and costs
associated with the reduction of staff in most businesses.
(B) Accounting Changes refer to the first quarter 2001 adoption of
Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities", as amended
(SFAS 133) and the second quarter 2001 adoption of EITF issue
99-20 "Recognition of Interest Income and Impairment on Purchased
and Retained Beneficial Interests in Securitized Financial Assets"
(EITF 99-20).
Core Income Supplemental
Disclosure Second Quarter % Six Months %
(In Millions of Dollars) 2001 2000 Change 2001 2000 Change
----------------------------------------------------------------------
Citigroup Emerging Markets
(excluding Investment Activities)
Asia
Consumer Banking $ 149 $ 137 9 $ 297 $ 276 8
Corporate 210 124 69 371 261 42
Asset Management
& Private Banking 13 16 (19) 41 38 8
----------------- --------------
Total Asia 372 277 34 709 575 23
----------------- --------------
Latin America
Consumer Banking 50 41 22 83 106 (22)
Corporate 179 149 20 363 323 12
Asset Management &
Private Banking 34 38 (11) 72 68 6
------------------ -------------
Total Latin America 263 228 15 518 497 4
------------------ -------------
Central and Eastern Europe,
Middle East and Africa
Consumer Banking 20 14 43 38 29 31
Corporate 107 94 14 265 186 42
Asset Management
& Private Banking 5 - NM 9 7 29
------------------ --------------
Total Central and
Eastern Europe,
Middle East and Africa 132 108 22 312 222 41
------------------ --------------
Other 10 (5) NM (8) 2 NM
------------------ --------------
Total Emerging Markets $ 777 $ 608 28 $ 1,531 $ 1,296 18
------------------ --------------
Global Wealth Management
Private Client $ 205 $ 253 (19) $ 396 $ 612 (35)
Citigroup Asset
Management 87 91 (4) 182 185 (2)
The Citigroup
Private Bank 93 79 18 190 159 19
Global Consumer Investment,
Life Insurance and
Annuity Products 362 346 5 710 694 2
------------------ ---------------
Total Global
Wealth Management $ 747 $ 769 (3) $ 1,478 $ 1,650 (10)
Global Cards
North America $ 455 388 17 $ 922 768 20
International 115 124 (7) 241 219 10
------------------ ----------------
Total Global Cards $ 570 $ 512 11 $ 1,163 $ 987 18
Global Consumer Finance
North America $ 286 $ 205 40 $ 498 $ 384 30
International 207 151 37 384 277 39
------------------ ----------------
Total Global
Consumer Finance $ 493 $ 356 38 $ 882 $ 661 33
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion