CITIGROUP INC Quarterly Report for Q3 Ended Sep 30, 2011

Summary

Citigroup Inc. reported a net income of $3.8 billion, or $1.23 per diluted share, for the third quarter of 2011, a significant 74% increase compared to the prior year. This strong performance was boosted by a substantial $1.9 billion positive credit valuation adjustment (CVA) related to widening credit spreads. Excluding the CVA, net income was $2.6 billion, or $0.84 per diluted share, up from $0.70 in the prior year, primarily driven by a significant reduction in credit costs, despite lower revenues (excluding CVA) and increased operating expenses. Total revenues remained roughly flat year-over-year at $20.8 billion. Citicorp, the core business, saw a 9% increase in revenues driven by CVA and lower credit losses, though revenues excluding CVA declined. Citi Holdings, however, reported a net loss of $802 million, an improvement from the prior year's loss, as lower operating expenses and credit costs offset lower revenues. The company maintained strong capital ratios, with a Tier 1 Capital ratio of 13.5% and a Tier 1 Common ratio of 11.7%.

Key Highlights

• 1Net income surged by 74% year-over-year to $3.8 billion, aided by a $1.9 billion positive credit valuation adjustment (CVA).
• 2Excluding CVA, net income increased to $2.6 billion, or $0.84 per diluted share, up from $0.70 in the prior year, driven by reduced credit costs.
• 3Total revenues were largely flat at $20.8 billion, with Citicorp revenues up 9% year-over-year.
• 4Citicorp's net income increased 32% to $4.6 billion, supported by CVA and lower net credit losses.
• 5Citi Holdings reported an improved net loss of $802 million, reflecting cost reductions and lower credit costs.
• 6Key capital ratios remained strong: Tier 1 Capital at 13.5% and Tier 1 Common at 11.7%.
• 7Citigroup successfully reduced its long-term debt by $54 billion year-over-year.

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