10-QPeriod: Q1 FY2010

CITIGROUP INC Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 7, 2010For Securities:CC-PNC-PR

Summary

Citigroup Inc. reported a net income of $4.4 billion, or $0.15 per diluted share, for the first quarter of 2010. This performance was driven by strong capital markets revenues and an improving credit environment, alongside disciplined expense management. The adoption of new accounting standards (SFAS 166/167) significantly impacted the balance sheet, leading to the consolidation of $137 billion in assets and $146 billion in liabilities, including securitized credit card receivables. This adoption resulted in a notable increase in risk-weighted assets and the loan loss allowance, but capital ratios remained strong, with Tier 1 Capital at 11.28% and Tier 1 Common at 9.11% at the end of the quarter. While overall revenues saw a 6% decrease year-over-year to $25.4 billion, largely due to lower revenues in Securities and Banking and the absence of Smith Barney revenues from the prior year, core consumer banking segments showed improvement. Regional Consumer Banking revenues increased by 27% year-over-year, with strong performance in North America and Asia. The company also maintained expense discipline, with operating expenses down 1% year-over-year, and a reduction in full-time employees.

Financial Highlights

32 data points
Beta

Revenue

$25.42B

Net Income

$4.43B

17.4% Net Margin

EPS (Diluted)

$1.50

Total Assets

$2.00T

Free Cash Flow

$35.14B

Financial Statements
Beta
Revenue$25.42B
Operating Expenses$11.52B
Operating Income$4.22B
Interest Expense$6.29B
Net Income$4.43B
EPS (Basic)$1.55
EPS (Diluted)$1.50
Shares Outstanding (Basic)2.84B
Shares Outstanding (Diluted)2.93B

Key Highlights

  • 1Net income of $4.4 billion for Q1 2010, a significant increase from $1.6 billion in Q1 2009.
  • 2Diluted Earnings Per Share (EPS) of $0.15, up from $(0.18) in Q1 2009.
  • 3Adoption of SFAS 166/167 led to consolidation of $137 billion in assets and $146 billion in liabilities, impacting capital ratios but maintaining strong regulatory standing.
  • 4Tier 1 Capital ratio stood at 11.28% and Tier 1 Common ratio at 9.11% as of March 31, 2010.
  • 5Total revenues decreased 6% year-over-year to $25.4 billion, primarily due to lower Securities and Banking revenues.
  • 6Operating expenses decreased 1% year-over-year to $11.5 billion, reflecting continued expense discipline and a reduction in headcount.
  • 7Net credit losses decreased 15% year-over-year to $8.4 billion, indicating an improving credit environment.

Frequently Asked Questions

The adoption of SFAS 166/167 resulted in the consolidation of $137 billion of incremental assets and $146 billion of liabilities onto Citigroup's balance sheet, including securitized credit card receivables. This led to a net increase of $10 billion in risk-weighted assets, an increase in the loan loss allowance by $13.4 billion, and a reduction in tangible common equity by $8.4 billion. Consequently, Tier 1 Common, Tier 1 Capital, and Total Capital ratios decreased by approximately 138, 141, and 142 basis points, respectively, as of January 1, 2010.

Citicorp, Citigroup's core franchise, reported net income of $5.1 billion, down from $7.8 billion in the prior year quarter, primarily due to lower Securities and Banking revenues. However, Regional Consumer Banking revenues increased 27% year-over-year to $8.1 billion. Transaction Services revenue grew 3% to $2.4 billion.

Citigroup intends to maintain expense discipline, but anticipates operating expenses may increase in Citicorp as some cost reductions from Citi Holdings are reinvested in the core franchise. The company also expects to absorb a $400 million pre-tax charge in Q2 2010 related to the UK bonus tax. Credit costs are expected to remain a significant driver of near-term results, with stabilization expected in international consumer credit trends, while North American consumer credit trends are also expected to stabilize, dependent on the broader macroeconomic environment.