Summary
Citigroup Inc. reported a net income of $468 million, or $0.15 per diluted share, for the third quarter of 2012, a significant decrease from $3.77 billion in the same period of 2011. This decline was primarily attributed to a pre-tax loss of $4.7 billion ($2.9 billion after-tax) from the sale of its interest in the Morgan Stanley Smith Barney (MSSB) joint venture and a negative $776 million pre-tax impact from credit valuation adjustments (CVA) and debt valuation adjustments (DVA) on derivatives and fair value option debt, compared to a positive $1.9 billion pre-tax CVA/DVA in the prior year. Excluding these items, Citigroup's adjusted net income was $3.3 billion, or $1.06 per diluted share, an increase from $0.84 per diluted share in the prior-year period, driven by higher Citicorp revenues and lower expenses and credit costs. Citicorp, the core banking business, saw net income decline 18% year-over-year to $4.1 billion, largely due to the aforementioned CVA/DVA impact. Excluding these, Citicorp net income increased 20%, with revenues up 5% driven by Global Consumer Banking and Securities and Banking segments. Citi Holdings, which contains businesses not central to its core strategy, reported a net loss of $3.6 billion compared to a $1.2 billion loss in the prior year, primarily due to the substantial loss on the MSSB transaction. The company also announced senior management changes, with Vikram Pandit resigning as CEO and Michael Corbat appointed as his successor, with no expected change to the overall strategy.
Financial Highlights
37 data points| Revenue | $13.70B |
| Operating Expenses | $12.09B |
| Operating Income | $6.32B |
| Interest Expense | $5.03B |
| Net Income | $468.00M |
| EPS (Basic) | $0.15 |
| EPS (Diluted) | $0.15 |
| Shares Outstanding (Basic) | 2.93B |
| Shares Outstanding (Diluted) | 3.02B |
Key Highlights
- 1Net income for Q3 2012 was $468 million, down significantly from $3.77 billion in Q3 2011, primarily due to a large loss on the MSSB joint venture sale and negative CVA/DVA impacts.
- 2Adjusted net income, excluding the MSSB loss and CVA/DVA, increased to $3.3 billion, or $1.06 per diluted share, up from $0.84 in the prior year's quarter.
- 3Citicorp's adjusted net income rose 20% year-over-year, driven by a 5% revenue increase, a 2% expense reduction, and a 14% decline in credit provisions.
- 4Citi Holdings reported a net loss of $3.6 billion, a substantial increase from a $1.2 billion loss in Q3 2011, largely due to the $2.9 billion after-tax loss from the MSSB transaction.
- 5Total revenues, net of interest expense, declined 33% year-over-year to $14.0 billion, but excluding CVA/DVA and the MSSB loss, revenues grew 3% to $19.4 billion.
- 6Operating expenses decreased 2% year-over-year to $12.2 billion, with Citicorp expenses down 2% and Citi Holdings expenses down 21%.
- 7Provisions for credit losses decreased 20% year-over-year to $2.7 billion, with net credit losses falling 12% to $4.0 billion, though this was impacted by $635 million in incremental mortgage charge-offs due to new OCC guidance.