10-QPeriod: Q2 FY2010

CITIGROUP INC Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 6, 2010For Securities:CC-PNC-PR

Summary

Citigroup Inc. reported a net income of $2.7 billion, or $0.09 per diluted share, for the second quarter of 2010. This represents a decrease from the prior year, primarily due to a significant gain on the sale of Smith Barney in the second quarter of 2009. The results for the current quarter were impacted by a challenging capital markets environment in Securities and Banking and a U.K. bonus tax of approximately $400 million, partially offset by a stabilizing credit environment and growth in Asia and Latin America consumer banking and transaction services. Citicorp, Citigroup's core franchise, reported a net income of $3.8 billion, while Citi Holdings, the segment winding down non-core assets, incurred a net loss of $1.2 billion. Total revenues decreased by 33% year-over-year, mainly due to the absence of the Smith Barney gain. However, key businesses like Regional Consumer Banking and Transaction Services showed revenue growth. Net credit losses decreased by 31% compared to the prior year, indicating an improving credit environment for the fourth consecutive quarter. The company's capital position remained strong, with a Tier 1 Capital Ratio of 11.99%, an increase from the previous quarter.

Financial Highlights

33 data points
Beta

Revenue

$22.07B

Net Income

$2.70B

12.2% Net Margin

EPS (Diluted)

$0.90

Total Assets

$1.94T

Free Cash Flow

$5.93B

Financial Statements
Beta
Revenue$22.07B
Operating Expenses$11.87B
Operating Income$6.92B
Interest Expense$6.43B
Net Income$2.70B
EPS (Basic)$0.93
EPS (Diluted)$0.90
Shares Outstanding (Basic)2.88B
Shares Outstanding (Diluted)2.98B

Key Highlights

  • 1Citigroup reported a net income of $2.7 billion ($0.09 per diluted share) for Q2 2010, down from $4.3 billion in Q2 2009 due to a large gain on the sale of Smith Barney in the prior year.
  • 2Citicorp's net income was $3.8 billion, while Citi Holdings reported a net loss of $1.2 billion.
  • 3Total revenues were $22.1 billion, a 33% decrease year-over-year, largely attributable to the absence of the Smith Barney gain.
  • 4Net credit losses decreased 31% year-over-year to $8.0 billion, showing improvement for the fourth consecutive quarter.
  • 5The company's Tier 1 Capital Ratio stood at 11.99%, up from 11.28% in the prior quarter, indicating a strong capital position.
  • 6Operating expenses decreased 1% year-over-year, driven by lower Citi Holdings expenses, though partially offset by increases in Citicorp and the U.K. bonus tax.
  • 7Regional Consumer Banking revenues increased 30% year-over-year, driven by growth in Asia and Latin America.

Frequently Asked Questions

The decrease in net income was primarily due to a significant after-tax gain of $6.7 billion recognized in the second quarter of 2009 from the sale of Smith Barney. This gain was not present in the second quarter of 2010.

Citigroup's capital position remained strong. The Tier 1 Capital Ratio increased to 11.99% at June 30, 2010, from 11.28% at March 31, 2010, and the company maintained its 'well-capitalized' status.

Citigroup continues to focus on winding down Citi Holdings, which contains non-core assets and businesses, as quickly as practicable in an economically rational manner. They have made substantial progress in divesting and exiting these businesses.

Net credit losses decreased by 31% compared to the prior year's second quarter, indicating an improvement for the fourth consecutive quarter. Consumer credit losses were down 23% year-over-year.

The adoption of SFAS 166/167, effective January 1, 2010, resulted in the consolidation of certain securitization trusts, increasing GAAP assets by $137 billion and risk-weighted assets by $10 billion. This adoption also led to a decrease in Tier 1 Common, Tier 1 Capital, and Total Capital ratios by approximately 138-142 basis points due to various adjustments, including a reduction in retained earnings.