10-KPeriod: FY2004

CITIGROUP INC Annual Report, Year Ended Dec 31, 2004

Filed February 28, 2005For Securities:CC-PNC-PR

Summary

Citigroup Inc. reported a net income of $17.05 billion for the fiscal year ended December 30, 2004, a slight decrease from $17.85 billion in 2003. This was largely impacted by a significant $4.95 billion after-tax charge related to the WorldCom class action lawsuit settlement and increased litigation reserves. Excluding this charge and a gain from the sale of an investment in Samba, net income would have increased by 19%, with a return on common equity of 20%. The company experienced revenue growth of 11% to $86.2 billion, driven by strong performance in its Global Consumer segment, which contributed 72% of net income, and growth across Cards, Transaction Services, Smith Barney, and Global Investment Management. Strategic acquisitions, including KorAm Bank and Washington Mutual Finance Corporation, bolstered the Global Consumer segment, while divestitures of non-core businesses sharpened the company's focus. The company demonstrated progress in strengthening its internal controls and risk management framework. Looking ahead to 2005, Citigroup aims for further growth in its Global Consumer franchise and international businesses, alongside enhanced competitiveness through technology investments and expense discipline. The company anticipates a return to double-digit income growth in 2005, though it expects a higher effective tax rate compared to 2004 due to the non-recurrence of certain tax benefits.

Key Highlights

  • 1Net income for 2004 was $17.05 billion, a 5% decrease from $17.85 billion in 2003, primarily due to a $4.95 billion after-tax charge related to the WorldCom litigation and increased litigation reserves.
  • 2Total revenues increased 11% to $86.2 billion, driven by 15% growth in Global Consumer businesses and double-digit growth in Cards, Transaction Services, Smith Barney, and Global Investment Management.
  • 3The Global Consumer segment was the largest contributor to net income, accounting for 72% of the total.
  • 4Strategic acquisitions were completed in 2004, including KorAm Bank and Washington Mutual Finance Corporation, to expand the Global Consumer franchise.
  • 5Operating expenses increased 33% to $52.0 billion, significantly impacted by the WorldCom and Litigation Reserve Charge ($4.95 billion after-tax) and other legal and regulatory charges.
  • 6The company increased its quarterly common dividend by 14% during 2004 and by an additional 10% in January 2005.
  • 7Citigroup's equity capital base and trust-preferred securities grew to over $115 billion at December 31, 2004, with stockholders' equity increasing by $11.3 billion to $109.3 billion.

Frequently Asked Questions

Citigroup reported a net income of $17.05 billion for the year ended December 30, 2004, which was a decrease of 5% compared to $17.85 billion in 2003. This decrease was primarily due to a significant after-tax charge of $4.95 billion related to the WorldCom class action lawsuit settlement and increased litigation reserves.

Total revenues increased by 11% to $86.2 billion in 2004. This growth was primarily driven by strong performance in the Global Consumer segment, which saw a 15% increase in revenues, and double-digit growth rates in the Cards, Transaction Services, Smith Barney, and Global Investment Management businesses.

In 2004, Citigroup focused on strengthening its business franchises through strategic acquisitions, including KorAm Bank in Korea and the consumer finance business of Washington Mutual, Inc. The company also continued to dispose of non-core businesses, such as its equity investment in Samba.

Operating expenses increased by 33% to $52.0 billion in 2004. This significant increase was largely attributable to the $7.9 billion pretax charge for the WorldCom and Litigation Reserve Charge ($4.95 billion after-tax) recorded in the second quarter, as well as increased investment spending, expenses from acquisitions, and the impact of foreign exchange.

Citigroup aims for continued growth in its Global Consumer franchise and international businesses, enhanced competitiveness through technology investments, and improved expense discipline. The company anticipates delivering strong earnings growth, with expectations of returning to double-digit income growth, though it foresees a higher effective tax rate in 2005 compared to 2004.