Summary
Citigroup Inc. reported a net income of $181 million ($0.03 per diluted share) for the second quarter of 2014, a significant decrease from $4.2 billion ($1.34 per diluted share) in the same period of 2013. This decline was primarily due to a substantial $3.8 billion pre-tax charge related to a settlement with U.S. regulatory bodies concerning legacy RMBS and CDO activities. Excluding this settlement charge and CVA/DVA impacts, Citigroup's net income remained stable at $3.9 billion, or $1.24 per diluted share, compared to $3.9 billion, or $1.25 per diluted share, in the prior year. The company's revenues, net of interest expense, decreased by 6% to $19.3 billion. This was mainly driven by lower revenues in the Institutional Clients Group (ICG), particularly in fixed income and equities due to market uncertainty and low volatility, which impacted client activity. However, ICG saw growth in corporate lending and investment banking, while Global Consumer Banking (GCB) revenues declined primarily due to lower mortgage refinancing activity in North America. Operationally, Citigroup continued to make progress on its strategic priorities, including the winding down of Citi Holdings, which saw its assets decline by $20 billion and reported its first net profit (excluding the settlement charge). The company also benefited from disciplined expense management and savings from repositioning actions. Capital ratios remained strong, with estimated Basel III Tier 1 Common and Tier 1 Capital ratios at 10.6% and 11.4% respectively, showing improvement from the prior year.
Financial Highlights
37 data points| Revenue | $19.43B |
| Operating Expenses | $15.52B |
| Operating Income | $4.11B |
| Interest Expense | $3.62B |
| Net Income | $181.00M |
| EPS (Basic) | $0.03 |
| EPS (Diluted) | $0.03 |
| Shares Outstanding (Basic) | 3.03B |
| Shares Outstanding (Diluted) | 3.04B |
Key Highlights
- 1Net income significantly impacted by a $3.8 billion pre-tax charge for a legacy mortgage-related settlement, resulting in reported net income of $181 million.
- 2Excluding the settlement charge, net income was stable year-over-year at $3.9 billion, or $1.24 per diluted share, indicating underlying operational resilience.
- 3Total revenues, net of interest expense, decreased 6% to $19.3 billion, primarily due to a 7% decline in Institutional Clients Group (ICG) revenues, impacted by lower client activity in fixed income and equities markets.
- 4Global Consumer Banking (GCB) revenues decreased 3% to $9.4 billion, with North America GCB revenues down 5% largely due to lower retail banking revenue from reduced mortgage refinancing activity.
- 5Citi Holdings reported a net profit of $244 million excluding the settlement charge, an improvement from a loss in the prior year, as it continues to wind down non-core businesses.
- 6Citigroup's estimated Basel III Tier 1 Common ratio improved to 10.6% and Tier 1 Capital ratio to 11.4% as of June 30, 2014, reflecting ongoing capital strengthening.
- 7Operating expenses increased 28% to $15.5 billion, but excluding the settlement charge, operating expenses declined 3% due to efficiency savings and reduced Citi Holdings expenses.