CITIGROUP INC Quarterly Report for Q2 Ended Jun 30, 2011

Summary

Citigroup Inc. reported a net income of $3.3 billion, or $1.09 per diluted share, for the second quarter of 2011. This represents a 24% increase year-over-year, primarily driven by a significant decline in credit costs which more than offset lower revenues and increased operating expenses. Total revenues, net of interest expense, decreased by 7% to $20.6 billion, with net interest revenue down 13% due to declining loan balances and lower interest-earning assets. However, non-interest revenues increased by 4%, bolstered by realized gains on asset sales within Citi Holdings. Operating expenses rose by 9% year-over-year to $12.9 billion, with increases attributed to foreign exchange translation, higher legal costs, and investment spending, partially offset by productivity savings. Credit costs saw a substantial reduction, with total provisions for credit losses declining by 49% and net credit losses down 35%, largely due to improvements in consumer credit, particularly in North America Citi-branded cards and retail partner cards. The company's capital position remained strong, with a Tier 1 Capital ratio of 13.6% and a Tier 1 Common ratio of 11.6%.

Key Highlights

• 1Net income of $3.3 billion, a 24% increase year-over-year, driven by lower credit costs.
• 2Revenues, net of interest expense, decreased 7% to $20.6 billion.
• 3Operating expenses increased 9% to $12.9 billion, impacted by FX translation and legal costs.
• 4Provisions for credit losses and net credit losses decreased significantly (49% and 35% respectively).
• 5Citicorp's net income declined 2% to $3.7 billion, with international operations contributing over 68% of net income.
• 6Citi Holdings reported a reduced net loss of $218 million, an 82% improvement year-over-year.
• 7Tier 1 Common ratio improved to 11.62% and Tier 1 Capital ratio to 13.55%.

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