CITIGROUP INC Quarterly Report for Q2 Ended Jun 30, 2013

Summary

Citigroup Inc. reported a strong second quarter of 2013, with net income rising 42% year-over-year to $4.2 billion, or $1.34 per diluted share. This growth was driven by robust performance in its core businesses, particularly within the Securities and Banking segment, and an improved credit environment. Total revenues, net of interest expense, increased 11% to $20.5 billion. Despite the overall positive results, Citigroup noted a challenging operating environment, including slower growth in emerging markets and continued spread compression impacting its Global Consumer Banking and Transaction Services businesses. The company also incurred elevated legal and related expenses related to "legacy" legal issues, which are expected to remain elevated. However, Citigroup made progress in resolving some of these issues, notably an agreement with Fannie Mae concerning representation and warranty issues. Capital ratios remained strong, with the estimated Basel III Tier 1 Common ratio increasing to 10.0%. The company continued its strategy of reducing the negative impact of Citi Holdings on its overall results, with Citi Holdings reporting a net loss that decreased significantly compared to the prior year.

Key Highlights

• 1Net income increased 42% to $4.2 billion, or $1.34 per diluted share.
• 2Total revenues, net of interest expense, rose 11% to $20.5 billion.
• 3Securities and Banking revenues surged 25% (21% excluding CVA/DVA), driven by strong equity and fixed income markets.
• 4Net credit losses decreased 25% year-over-year, reflecting an improved credit environment.
• 5Operating expenses increased 1% overall, but excluding legal and related expenses, they were down 1%, reflecting efficiency savings.
• 6Citigroup's Basel III Tier 1 Common ratio improved to an estimated 10.0%.
• 7The company continued to reduce the net loss from Citi Holdings, down 37% compared to the prior year.

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