01—Abstract
Summary
Summary of the 10-K filed February 25, 2015. Cited figures are marked; the original filing is the authoritative source.
Citigroup Inc. filed its 2014 10-K on February 24, 2015, detailing a year marked by "steady progress on execution priorities despite a continued challenging operating environment." Key challenges highlighted include macroeconomic uncertainty, significant legal settlement costs (notably a $3.8 billiona mortgage settlement), uneven global economic growth, and a low interest rate environment.
Despite these headwinds, Citigroup made progress in efficiently allocating resources, disciplined expense management, and continuing the wind-down of Citi Holdings, reducing its assets by $19 billionb. Financially, the company reported net income of $7.3 billion ($2.20 per diluted share) in 2014, a decrease from $13.7 billion ($4.35 per diluted share) in 2013. This decline was primarily attributed to higher legal and related expenses and repositioning costs.
Excluding these items and other specific charges, adjusted net income was $11.5 billionc. Revenues, net of interest expense, saw a slight increase of 1% to $76.9 billion. The company maintained strong regulatory capital ratios, with Basel III Common Equity Tier 1 Capital at 10.6% and Tier 1 Capital at 11.5% as of December 31, 2014.
02—Key points
Key Highlights
- Net income for 2014 was $7.3 billion, a significant decrease from $13.7 billion in 2013, largely due to substantial legal settlement costs and higher operating expenses.
- Citigroup incurred a $3.8 billion charge related to a mortgage settlement announced in July 2014.
- Revenues, net of interest expense, increased slightly by 1% to $76.9 billion, driven by growth in Citi Holdings, partially offset by a decline in Citicorp.
- Operating expenses increased by 14% to $55.1 billion, primarily due to higher legal and related expenses and repositioning costs.
- Citigroup continued to wind down Citi Holdings, reducing its assets by $19 billion, or 16%, from year-end 2013.
- Basel III Common Equity Tier 1 Capital ratio remained strong at 10.6% as of December 31, 2014.
- Citigroup announced strategic actions to exit consumer businesses in 11 markets and certain businesses in the Institutional Clients Group (ICG) to focus on core franchises.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 25, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $77.22B$76.72B | +0.6% |
| Operating Expenses | $55.05B$48.41B | +13.7% |
| Operating Income | $7.31B$13.39B | −45.4% |
| Interest Expense | $13.69B$16.18B | −15.4% |
| Net Income | $7.31B$13.66B | −46.5% |
| EPS (Basic) | $2.21$4.35 | −49.2% |
| EPS (Diluted) | $2.20$4.34 | −49.3% |
| Shares Outstanding (Basic) | 3.03B3.04B | −0.1% |
| Shares Outstanding (Diluted) | 3.04B3.04B | −0.2% |
05—Questions
Frequently Asked Questions
What was Citigroup's net income in 2014 and what drove the change from 2013?
Citigroup reported net income of $7.3 billion ($2.20 per diluted share) in 2014, compared to $13.7 billion ($4.35 per diluted share) in 2013. The decrease was primarily driven by higher legal and related expenses, including a $3.8 billion charge related to a mortgage settlement, and increased repositioning costs, which impacted operational expenses.
How did Citigroup's revenue performance trend in 2014?
Citigroup's revenues, net of interest expense, increased by 1% to $76.9 billion in 2014. This increase was largely driven by a 28% rise in revenues from Citi Holdings, which offset a 1% decline in Citicorp. Net interest revenues grew 3% due to lower funding costs.
What is the status of Citi Holdings and the strategic exits?
Citigroup continued to wind down Citi Holdings, reducing its assets by $19 billion (16%) from year-end 2013. The company also announced strategic actions to exit consumer businesses in 11 markets and certain businesses in the Institutional Clients Group (ICG) to focus on core businesses with greater scale and growth potential. These exited businesses will be reported under Citi Holdings starting in the first quarter of 2015.
How are Citigroup's capital ratios performing under the new Basel III regulations?
Citigroup maintained strong capital ratios under the Basel III framework. As of December 31, 2014, its Common Equity Tier 1 Capital ratio was 10.6%, Tier 1 Capital ratio was 11.5%, and Total Capital ratio was 12.8%. The estimated Supplementary Leverage ratio was 6.0%. These ratios were in excess of the stated minimum requirements and positioned the company as 'well capitalized' under regulatory definitions.
06—Continue