01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
Citigroup's 2009 Form 10-K reveals a company in transition, significantly reducing its net loss from $27.7 billion in 2008 to $1.6 billiona in 2009.
This improvement was driven by substantial gains from the sale of Smith Barney and favorable revenue marks, partially offset by increasing credit loss provisions and a significant loss related to the repayment of TARP funding and exit from the loss-sharing agreement. The company demonstrated strengthened capital ratios, with Tier 1 Common increasing to 9.6%b and Tangible Common Equity to 10.9% by year-end 2009, largely due to capital raises and exchange offers. Citigroup also improved its liquidity position and continued to reduce its total assets, moving towards a simpler, more focused structure with Citicorp as the core franchise and Citi Holdings managing non-core assets.
Despite the improved profitability and capital position, the company faces a challenging outlook for 2010 due to ongoing macroeconomic headwinds, elevated unemployment, and uncertainties surrounding government support programs. Investors should note the company's continued focus on cost management, risk mitigation, and strategic investments in its core businesses, particularly in growth regions like Asia and Latin America.
02—Key points
Key Highlights
- Reduced net loss to $1.6 billion in 2009 from $27.7 billion in 2008, primarily due to the sale of Smith Barney and improved revenue marks.
- Significantly strengthened capital position with Tier 1 Common ratio increasing to 9.6% and Tangible Common Equity ratio to 10.9% by year-end 2009.
- Repaid $20 billion of TARP funding and exited its loss-sharing agreement with the U.S. government.
- Continued to de-risk and reduce total assets, with total assets decreasing by 4% to $1.86 trillion.
- Restructured into two primary operating segments: Citicorp (core businesses) and Citi Holdings (non-core businesses) to enhance focus and value realization.
- Operating expenses were reduced by 31% year-over-year due to divestitures and re-engineering efforts, leading to a headcount reduction of over 100,000 employees.
- Anticipates continued challenging macroeconomic conditions in 2010, with credit costs remaining a significant driver of results, particularly in North America.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $80.28B$51.60B | +55.6% |
| Operating Expenses | $47.82B$69.24B | −30.9% |
| Operating Income | -$1.16B-$31.69B | +96.3% |
| Interest Expense | $27.90B$52.75B | −47.1% |
| Net Income | -$1.61B-$27.68B | +94.2% |
| EPS (Basic) | $-7.99$-56.30 | +85.8% |
| EPS (Diluted) | $-7.99$-56.30 | +85.8% |
| Shares Outstanding (Basic) | 1.16B526.54M | +119.7% |
| Shares Outstanding (Diluted) | 1.21B576.89M | +109.7% |
05—Questions
Frequently Asked Questions
What was Citigroup's net income or loss for 2009?
Citigroup reported a net loss of $1.6 billion for 2009, a significant improvement from the $27.7 billion net loss reported in 2008.
How did Citigroup strengthen its capital position?
Citigroup significantly increased its common capital ratios in 2009 primarily due to its exchange offers completed in the third quarter and capital raised in connection with the repayment of TARP funding. The Tier 1 Common ratio improved to 9.6% and the Tangible Common Equity ratio to 10.9% by December 31, 2009, compared to 2.3% and 3.1% respectively at December 31, 2008.
What is the outlook for Citigroup's credit costs in 2010?
Citigroup expects credit costs to remain a significant driver of its financial performance in 2010, particularly in North America. Modest increases in U.S. consumer net credit losses are expected in the first quarter of 2010, with potential slight improvement thereafter, heavily dependent on the macroeconomic environment and loss mitigation efforts.
What significant accounting changes will impact Citigroup in 2010?
Citigroup will adopt new accounting standards SFAS 166 and SFAS 167 on January 1, 2010, which will eliminate Qualifying Special Purpose Entities (QSPEs) and change the consolidation model for Variable Interest Entities (VIEs). This is expected to lead to the consolidation of previously off-balance-sheet assets and liabilities, significantly impacting GAAP assets, risk-weighted assets, and regulatory capital ratios, with an estimated after-tax charge to retained earnings of $8.3 billion.
06—Continue