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Citigroup reported Q1 2011 financial results on April 18, 2011
* Charts and commentary have been updated for Citigroup Q1 March 2011 financial results *
Citigroup Reports Improved Earnings for Q1 2011
Citigroup Summary Q1 2011 Citigroup Q1 financial performance was an improved net income of $3.0 billion, which is a 4-quarter high. Financial position improved accordingly, with increasing capital. Compared to the dismal financial results in 2007, 2008, and 2009, the current Q1 2011 performance is improved, but still below peers.
Citigroup Income Statement Q1 2011 Citigroup financial performance improved with net revenues of $19.7B, net income of $3.0B, and earnings per share $0.10. From the prior quarter Q4 2010, net revenues were up +7.4%, net income was up +229.1%, and earnings per share were up +150.0%. From the prior year Q1 2010, net revenues were down -22.4%, net income was down -32.3%, and earnings per share were down -33.3%. Operating and net margins were up significantly from the prior quarter Q4 2010 to 21.4% and 15.2%, respectively.
Citigroup Balance Sheet Q1 2011 Citigroup total assets are $1.95 trillion, an increase of +1.8% from the prior quarter Q4 2010 but a decrease of -2.7% from the prior year Q1 2010. Citigroup last had total assets of greater than $2 trillion in Q1 2010, just for that quarter. Previously total assets dropped below $2 trillion in Q3 2008 and have remained below with the exception of Q1 2010. The capital to assets ratio (stockholder's equity to total assets) improved slightly to 8.90%, which is much improved from 2007 and 2008 and a multi-year high. The financial regulatory Tier 1 capital ratio is 13.30% which is also much improved from prior years and a multi-year high.
Citigroup Financial Performance by the Quarters (Charts)
Citigroup Earnings Per Share (Chart) Below is a chart of quarterly earnings per diluted share. Current earnings per share increased to $0.10, after decreasing for 3 consecutive quarters. After the plunge to -$3.30 in December 2008 during the USA Financial System Crisis, Citigroup rebounded to a peak at $0.49 in June 2009. After a dip, earnings per share continue near $0.00 with the latest 5 quarters at $0.15, $0.09, $0.07, $0.04, and now $0.10.
Citigroup Net Revenues, Operating Income, and Net Income (Chart) Below is a chart of quarterly net revenues, operating income, and net income. After 3 consecutive quarterly decreases for all three, the current quarter is an increase for all three. Because Citigroup is a huge and complex financial organization with several divisions, consolidated revenues are reported net of interest expense. Therefore, there is no gross profit and margin compared to companies in other industries or sectors. Net revenues appear to have stabilized the last 4 quarters, after being volatile. Operating Income and Net Income have remained positive the last 5 quarters and are at 4-quarter highs.
Citigroup Operating Margin and Net Margin (Chart) Below is a chart of quarterly operating margin and net margin. After decreasing for 3 consecutive quarters, the current quarter is much improved. Only the most recent margins are included below because past volatility in financial performance resulted in some extreme percentages that obscure recent data.
Citigroup Capital to Assets Ratio and Tier 1 Capital Ratio (Chart) Below is a chart of the capital to assets ratio and Tier 1 capital ratio. The capital to assets ratio is the total stockholders' equity to total assets ratio. This ratio dropped to 5.19% in December 2007, has slowly increased to the current 8.90%, which is a multi-year high. The Tier 1 capital ratio is a financial regulatory ratio and measurement. This ratio is now 13.30%, which is adequate, a multi-year high, and also much improved from 2007 and 2008.
Citigroup Return on Assets (Chart) Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended. The ROA dipped and remained negative through the USA Financial System Crisis and the Great Recession. In March 2010 Citigroup ROA had been hovering at 0.00% but now has increased to a much improved +0.47% as the previous, poor-performance quarters dropped out of the rolling, moving ROA. The ROA is still sub par, however.
Citigroup Income Statement Components (Chart) Below is a chart of the major income statement components: NonInterest Revenue, Net Interest Income, Provision for Credit Losses, and NonInterest Expense. NonInterest Revenue, appears to have stabilized, after decreasing for 3 consecutive quarters, and has historically been incredibly volatile with large swings upwards or downwards which ultimately affected Net Income either positively or negatively. Net Interest Income has decreased for 4 consecutive quarters. Provision for Credit Losses and for Benefits and Claims has decreased for 4 consecutive quarters and is now the lowest since June 2007. NonInterest Expense, operating expenses, appears to have stabilized, but continues over $12 billion. The Provision for Credit Losses and for Benefit and Claims appears to be contained. NonInterest Revenue now seems to be the major variable that will ultimately determine Net Income or Loss.
Citigroup Operating Expense Ratio (Chart) Below is a chart of the operating expense ratio (NonInterest Expense divided by Total Revenues which are NonInterest Income and Interest Income). Operating expenses appear contained under 50%, which is a positive development. A reasonable share of each dollar of revenues is being spent on operating expenses. Though still a rather high ratio historically, the ratio peaked in September 2010 at an astronomical 83.81%. Ultimately a continuation of this downtrend will increase profitability and already has.
Citigroup Reports First Quarter 2011 Net Income of $3.0 Billion; $0.10 Per Share
New York, April 18, 2011 – Citigroup Inc. today reported first quarter 2011 net income of $3.0 billion, or $0.10 per diluted share. Net income declined $1.4 billion from the first quarter 2010, but more than doubled sequentially.
"After a full year of profitability, we continue to make progress in 2011 by executing our strategy with discipline. Citi Holdings losses continued to decrease; we are investing in our core businesses in Citicorp; our capital strength improved; and the mix of revenues reflects the diversity of our businesses and our depth in both the emerging and developed markets," said Vikram Pandit, Chief Executive Officer of Citigroup.
Citigroup revenues in the first quarter 2011 were $19.7 billion, up 7% sequentially, but down 22% from the first quarter 2010. Citicorp revenues of $16.5 billion were 16% higher sequentially, but 11% lower than the prior year period. The year over year decline was mainly driven by lower revenues in Fixed Income Markets and North America Regional Consumer Banking, as well as negative CVA.
Credit continued to improve during the quarter, as Citigroup net credit losses declined for the seventh consecutive quarter to $6.3 billion. In addition, the current quarter included a net $3.3 billion release of allowance for loan losses and unfunded lending commitments.
Citi Holdings' assets were $337 billion at the end of the first quarter 2011, down $166 billion from the first quarter 2010. Citi Holdings revenues of $3.3 billion were 50% lower than the prior year period, reflecting the continued decline in assets and the revenue impact of a $12.7 billion asset transfer from held-to-maturity ("HTM") to trading.
In the first quarter 2011, Citigroup transferred $12.7 billion of assets in the Special Asset Pool in Citi Holdings from HTM to trading. This transfer permits the sale of those assets, which have disproportionately higher risk-weightings under Basel III. The transfer resulted in a net $709 million pre-tax charge to revenues, from the recognition of $1.7 billion in pre-tax losses ($1.0 after-tax) which were previously reflected in accumulated other comprehensive income (AOCI), partially offset by $946 million of mark-to-market and realized gains on those assets.
Citi continued to improve its capital strength, with a Tier 1 Common ratio of 11.3%, book value per share of $5.85 and tangible book value per share of $4.69, each as of the end of the first quarter 2011.
"As America's global bank, we are focused on supporting the real economy and creating opportunities for our clients to succeed. Our sustained profitability has put us in a good position to accomplish our next goal of responsible growth," concluded Mr. Pandit.
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Additional information may be found at www.citigroup.com or http://www.citi.com/.
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