Citigroup Third Quarter Core Income up 236% to $2.5 Billion.NEW YORK--(BUSINESS WIRE)--Oct. 18, 1999-- 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. 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. $0.70, UP 250% Global Consumer Income Increases by 38% Revenues Rise 33% to $14.6 Billion NINE MONTH INCOME UP 49% TO $7.3 BILLION 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. (NYSE NYSE See: New York Stock Exchange : C) today reported core income of $2.5 billion for the third quarter ended September September: see month. 30, 1999, up 236% from $729 million in the comparable 1998 period. Year to date, core income of $7.3 billion, or $2.10 per share, is up 49% over the first nine months of the prior year. - Core income per diluted share was $0.70, up 250% from $0.20 in the third quarter of 1998, reflecting revenue growth, expense control and the absence of the severe market conditions experienced in the prior year period. - Net income was $2.4 billion for the quarter and $7.2 billion year to date. - Return on common equity was 21.9% in the quarter, surpassing the Company's stated goal of a 20% return. - Exceptional progress continues to be made in controlling expenses, with the Company reporting an overall revenue to expense ratio of 2.01x in the quarter. Citigroup expects to meet its stated $2 billion annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. expense reduction goal for 1999, and to continue to achieve further efficiencies in 2000. - Business revenues rose 32% in the quarter, reflecting momentum across the Company's consumer businesses and a recovery from the severe market conditions that affected the Global Corporate and Investment Bank in the 1998 period. - Citigroup's total equity capital and trust securities are nearly $52 billion, among the highest of the world's 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. companies. The Tier I capital ratio remains strong, at 9.5%. John S. Reed For other persons of the same name, see John Reed. John Shepard Reed (born 1939) is the former Chairman of the New York Stock Exchange. He previously served as Chairman and CEO of Citicorp, Citibank, and post-merger, Citigroup. and 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. , Chairmen and Co-Chief Executive Officers of Citigroup, said: "The year that has passed since the ground-breaking ground-breaking Adjective innovative business combination that created Citigroup has been marked by significant achievements. Our integrated businesses are performing exceptionally well, revenue building and cross-selling Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. efforts are well underway and demonstrably de·mon·stra·ble adj. 1. Capable of being demonstrated or proved: demonstrable truths. 2. Obvious or apparent: demonstrable lies. successful, and the expense reductions and integration efficiencies achieved to date provide a solid foundation for incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. earnings growth in 2000. "Clearly, the diversity of our businesses and our concerted efforts to increase the income generated from 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 predictable sources, such as the consumer and fee-based businesses, are reducing earnings volatility and positioning the Company for more consistent growth. "The quarter's results were solid, particularly amidst a·midst prep. Variant of amid. [Middle English amiddes : amidde; see amid + -es, adverbial suffix; see -s3.] a challenging trading environment and significant weather-related catastrophes. We demonstrated considerable strength relative to the companies that compete with our various business units and certainly relative to the quarter last year, when economic turmoil exerted such a negative impact on some of our operations. "Looking ahead," said Reed and Weill, "we are well-positioned to realize the benefits from economic recoveries underway in Japan, 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. and Asia, since 30% of our earnings are currently generated internationally and our presence in these markets continues to expand. In addition, we are creating yet another platform for earnings growth as we launch various internet initiatives to augment aug·ment v. aug·ment·ed, aug·ment·ing, aug·ments v.tr. 1. To make (something already developed or well under way) greater, as in size, extent, or quantity: the e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. services we already provide to more than 2 million customers worldwide. The potential for this channel is evidenced by the fact that we added nearly 400,000 on-line customers in the third quarter alone." GLOBAL CONSUMER 3rd Quarter Core Income: $1.1 Billion, Up 38% from $806 Million in 1998 Period The Global Consumer business continued to record very solid growth on the strength of a 12% increase in revenues, with expense growth contained to 4.5%, and stable-to-improving credit trends in nearly all markets. During the quarter, e-Citi continued to develop the Internet channel The Internet Channel is a version of the Opera 9 web browser for use on the Wii by Opera Software and Nintendo.[1] On December 22, 2006, a free beta version (promoted as a "trial version") of the browser was released. , launching several initiatives: Citi f/i, an internet-based banking system, e-Citi on campus, and bizzed.com, a portal targeted to small businesses. In addition, cross marketing pilot programs are gaining momentum throughout the consumer business. For example, 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 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 Consultants have generated $420 million in Citibank mortgage products to date, and application volume is approaching a $2 billion annualized run rate. A full range of personal lines property casualty products are now offered to credit card customers in 29 states through a pilot program. - Banking/Lending income increased 65% to $604 million. Citibanking North America's income benefited from $67 million in fixed expense reductions. CitiFinancial's 118% increase in income reflected 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 improved credit experience. Income from Cards rose 33%, despite competitive pricing pressures, reflecting growth in U.S. bankcards of 11% in receivables and 8% in sales volume, flat operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , and continued improvements in credit costs. Citigroup's U.S. cards business continues to be the market leader in sales volumes and benefits from one of the most favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. ratios in the industry. - International income rose 31% to $270 million on strong revenue growth in all regions. In Asia, improved spreads and volume growth, particularly in Japan, contributed to 26% revenue growth. In Latin America, contributions from acquisitions and improvements in efficiency offset credit deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in certain countries. Accounts in the International division grew 11% and deposits increased 13%. - Insurance income increased 5% from the 1998 third quarter to $305 million, but declined 16% from the second quarter of 1999, as strong performance from 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. and Primerica were offset by lower results from Travelers Property Casualty Personal Lines. TAP's results in the quarter were affected by a $33 million charge related to the curtailing of sales of the SECURE product line, sold through Primerica, as well as $48 million in catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses primarily related to Hurricane Floyd. GLOBAL CORPORATE AND INVESTMENT BANK 3rd Quarter Core Income: $1.1 Billion Versus $221 Million loss in 1998 Period The Global Corporate and Investment Bank experienced a rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective for the quarter from the loss in the 1998 period that resulted from severe global economic turmoil. In comparison with the second quarter of 1999, a healthy customer business at the Global Corporate and Investment Bank and continued stability in Salomon Smith Barney's Private Client business were offset by the impact of a relatively weaker trading environment. SSB SSB Statistisk Sentralbyrå (Statistics Norway) SSB Super Smash Bros (video game) SSB Space Studies Board SSB Single Side Band SSB Single Stranded DNA-Binding Protein SSB Salomon Smith Barney continues to scale back its exposure to the Global Arbitrage arbitrage: see foreign exchange. arbitrage Business operation involving the purchase of foreign currency, gold, financial securities, or commodities in one market and their almost simultaneous sale in another market, in order to profit from price business, with the balance sheet commitment to this business reduced by over 90% from its peak, to $7 billion of assets at the end of the quarter. The remaining Global Arbitrage operations are being folded into the core fixed income customer business. The unit achieved several notable distinctions in the quarter. Citibank was named the "Best Global Transaction Services Bank" and "Best Emerging Markets Bank" by Euromoney magazine, and Salomon Smith Barney advanced to second place from fourth last year in Institutional Investor Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. magazine's "All America Research Team" survey. SSB's franchise continues to show positive momentum. In the rankings, SSB maintained the position as the world's second largest underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. , with over a 10% market share. The Nikko Salomon Smith Barney joint venture, which began operations last March, has attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. a number one or two ranking in Japan in equity 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. , debt underwriting and mergers and acquisitions. In addition, Citibank's long-standing presence in Asia Pacific has been instrumental in enabling SSB to become the number one equity underwriter in the region. SSB's rankings also improved from number eight to number two in international bond underwriting. Following the close of the quarter, it was announced that SSB played a leading role in the proposed $115 billion acquisition of Sprint Corp. by MCI (1) (Media Control Interface) A high-level programming interface from Microsoft and IBM for controlling multimedia devices. It provides commands and functions to open, play and close the device. (2) (Microwave Communications Inc. 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. , which stands as the largest announced acquisition to date. - Salomon Smith Barney reported core income of $432 million versus a loss in the prior year quarter. Comparisons with the second quarter of 1999 reflect a decline in revenue from principal transactions as a result of weaker securities markets, partially offset by record underwriting fees Underwriting fee The portion of the gross underwriting spread that compensates the securities firms that underwrite a public offering for their services. and continued improvement in asset management activities retained in this segment. Annualized gross production per financial consultant remained strong at $465,000, demonstrating the stability of the Private Client business. - The Global Corporate Bank reported $461 million in income versus a loss of $2 million in the comparable 1998 period. Income increased 2% from the 1999 second quarter, as lower securities transactions were offset by expense controls and a $73 million lower provision for credit losses resulting from an improved credit outlook in the Emerging Markets. - Travelers Property Casualty Commercial Lines' income increased 44% to $255 million, reflecting a $58 million benefit from a legislative change in state workers compensation assessments, as well as favorable prior year development. Net written premiums declined from the prior year period as the company continues to focus on maintaining the profitability of its business. GLOBAL INVESTMENT MANAGEMENT & PRIVATE BANKING 3rd Quarter Core Income: $155 Million, Up 17% from $133 Million in 1998 Period Global Investment Management & Private Banking, created to meet the investment and wealth management needs of institutional and individual clients, reported strong growth in core income from Asset Management and improving momentum at the Private Bank. - Asset Management income rose 22% to $82 million as a 20% increase in 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. and a 15% rise in revenues outpaced higher costs associated with the business's continued investments in research, quantitative and technology expertise. Aided by cross selling efforts, institutional client assets rose 24% to $149 billion. The Group's products represented 40% of SSB's retail channel mutual fund sales and 60% of Primerica's U.S. mutual and money fund sales, and sales of Private Client separately managed accounts were up more than 100% from last year. In addition, the Group sold $626 million in mutual and money funds through the Citibank consumer bank in Europe, and $561 million in Japan through the Citibank consumer bank and non-proprietary channels. - Improving revenues in Private Banking, led by the U.S., resulted in an 11% increase in income to $73 million. Client account balances under management rose 22% from the year ago period to $128 billion. CORPORATE/OTHER AND INVESTMENT ACTIVITIES The loss from Corporate/Other of $162 million for the quarter was 82% greater than the prior year period as a result of higher treasury costs at the parent company and certain Year 2000 remediation costs. Income from Investment Activities rose 94% to $194 million, reflecting gains in the Company's venture capital business. Citigroup (NYSE:C), the most global financial services company, provides some 100 million consumers, corporations, governments and institutions in 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. The 1998 merger of Citicorp and Travelers Group brought together such brand names as Citibank, Travelers, Salomon Smith Barney, Commercial Credit (now named CitiFinancial), and Primerica 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 Error! Bookmark A stored location for quick retrieval at a later date. Web browsers provide bookmarks that contain the addresses (URLs) of favorite sites. Most electronic references, large text databases and help systems provide bookmarks that mark a location users want to revisit in the future. not defined. are available on Citigroup's web site (http://www.citigroup.com). The documents can also be obtained by fax 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. Contacts Press Michael Schlein (212) 793-0141 Dick Howe (212) 559-9425 Investor Bill Pike pike, in zoology pike, common name for the family Esocidae, freshwater game and food fishes of Europe, Asia, and North America. The pike, the muskellunge, and the pickerel form a small but well-known group of long, thin fishes with spineless dorsal fins, (212) 793-8874 Sheri Ptashek (212) 559-4658 -0-
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Citigroup Segment Income
(In Millions of Dollars)
Third Quarter % Nine Months %
--------------- -------------
1999 1998 Change 1999 1998 Change
----------------------------------------------------------------------
Global Consumer
Citibanking
North America $ 111 $25 344 $ 292 $ 89 228
Mortgage Banking 61 57 7 174 157 11
Cards 297 223 33 847 515 64
CitiFinancial 135 62 118 284 159 79
----------------- --------------
Banking/Lending 604 367 65 1,597 920 74
----------------- --------------
Travelers
Life & Annuity 168 123 37 488 369 32
Primerica Financial
Services 114 99 15 337 297 13
Personal Lines (A) 23 68 (66) 185 231 (20)
----------------- --------------
Insurance 305 290 5 1,010 897 13
----------------- --------------
Total ----------------- --------------
North America 909 657 38 2,607 1,817 43
----------------- --------------
Europe, Middle East,
& Africa 98 64 53 237 166 43
Asia Pacific 117 100 17 325 267 22
Latin America 55 42 31 145 122 19
----------------- --------------
Total
International 270 206 31 707 555 27
----------------- --------------
e-Citi (51) (33) (55) (130) (99) (31)
Other (13) (24) 46 (62) (34) (82)
----------------- --------------
Total
Global Consumer 1,115 806 38 3,122 2,239 39
----------------- --------------
Global Corporate
and Investment Bank
Salomon
Smith Barney 432 (396) 209 1,690 395 328
Emerging Markets 308 7 NM 925 511 81
Global Relationship
Banking 153 (9) NM 510 388 31
----------------- --------------
Total Global
Corporate Bank 461 (2) NM 1,435 899 60
----------------- --------------
Commercial
Lines (A) 255 177 44 645 522 24
----------------- --------------
Total Global
Corporate and
Investment Bank 1,148 (221) 619 3,770 1,816 108
----------------- --------------
Global Investment
Management and
Private Banking
SSB Citi Asset
Management Group 82 67 22 246 204 21
Global Private Bank 73 66 11 203 189 7
----------------- --------------
Total Global
Investment
Management and
Private Banking 155 133 17 449 393 14
----------------- --------------
Corporate/Other (162) (89) (82) (446) (327) (36)
----------------- --------------
Business Income 2,256 629 259 6,895 4,121 67
----------------- --------------
Investment
Activities 194 100 94 447 818 (45)
----------------- --------------
Core Income 2,450 729 236 7,342 4,939 49
----------------- --------------
Restructuring-Related
Items --
After Tax (B) (15) - NM 30 191 (84)
Cumulative Effect
of Accounting
Changes (C) - - - (127) - NM
----------------- --------------
Net Income $2,435 $729 234 $7,245 $5,130 41
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(A) In the aggregate, these represent Citigroup's share of Travelers
Property Casualty Corp. results.
(B) The restructuring-related items in the third quarter of 1999
include $31 million of severance, $25 million of accelerated
depreciation, and a $41 million credit for the reversal of prior
charges; and in the 1999 nine month period includes $31 million
of severance, $105 million of accelerated depreciation, and a
$166 million credit for the reversal of prior charges. In the
1998 nine month period, includes a $191 million credit for the
reversal of prior charges.
(C) Refers to adoption of Statement of Position "SOP" 97-3,
"Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments" of ($135) million; adoption of SOP
98-7, "Deposit Accounting: Accounting for Insurance and
Reinsurance Contracts That Do Not Transfer Insurance Risk" of $23
million; and the adoption of SOP 98-5, "Reporting on the Costs of
Start-Up Activities" of ($15) million.
NM Not meaningful
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