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Citigroup reported Q2 June 2011 financial results on Friday, July 15
* Charts and commentary have been updated for Citigroup Q2 June 2011 financial results *
Citigroup Reports Continued Improvement for Q2 2011: Net Income & EPS Increase
Citigroup Summary Q2 2011 Citigroup Q2 financial performance was an improved net income of $3.3 billion, which is a 5-quarter high. Financial position strengthened accordingly, with increasing capital ratios. Compared to the dismal financial results in 2007, 2008, and 2009, the current Q2 2011 performance is continued improvement, but still below peers. Annual return on assets are +0.50%, which is greatly improved, but also below peers.
Citigroup Income Statement Q2 2011 Citigroup financial performance improved with net revenues of $20.62B, net income of $3.34B, and earnings per share of $1.09. A 1-for-10 reverse stock split was effective May 6, 2011. Prior quarters were restated by Citigroup and increased EPS by ten times. From the prior quarter Q1 2011, net revenues were up +4.54%, net income was up +11.40%, and earnings per share were up +10.10%. From the prior year Q2 2010, net revenues were down -6.57%, net income was up +23.88%, and earnings per share were up +21.11%. Operating margin of 20.85% was down slightly and net margin of 16.20% was up from the prior quarter Q1 2011. Both margins were up significantly from the prior year Q2 2010.
Citigroup Balance Sheet Q2 2011 Citigroup total assets are $1.956 trillion, an increase of +0.45% from the prior quarter Q1 2011 and an increase of +0.98% from the prior year Q2 2010. Citigroup last had total assets of greater than $2 trillion in Q1 2010, and 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 to 9.13%, which is much improved from 2007 and 2008 and a multi-year high. The financial regulatory Tier 1 common ratio is 11.60% and the Tier 1 capital ratio is 13.60% which are also much improved from prior years and a multi-year high.All the capital ratios are adequate.
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 $1.09, the 2nd consecutive quarterly increase, after decreasing for 3 consecutive quarters. A 1-for-10 reverse stock split was effective May 6, 2011. Prior quarters were restated by Citigroup and increased EPS by ten times. Only recent, restated quarters are included in the chart below.
Citigroup Net Revenues, Operating Income, and Net Income (Chart) Below is a chart of quarterly net revenues, operating income, and net income. The current Q2 2011 is the second quarterly increase in all three measures, after 3 consecutive quarterly decreases for all three. Citigroup has yet to regain the Q1 and Q2 2010 peaks. 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. Current Net Revenues of $20.62B increased QoQ, but decreased YoY. Peak Net Revenues were $29.97B in Q2 2009. Net Revenues appear to have stabilized the last 5 quarters, after being volatile. Current Operating Income of $4.3B has remained positive for 6 consecutive quarters and is at a 5-quarter high. Current Net Income has also remained positive for 6 consecutive quarters and is at a 5-quarter high.
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 most recent 2 quarters are much improved. Current Operating Margin of 20.85% is just below the prior Q1 2011 of 21.37%. Current Net Margin of 16.20% is above the prior Q1 2011 of 15.20% and a 5-quarter high. Only the most recent margins are included below because past volatility in financial performance resulted in some extreme percentages that obscure recent data on the chart.
Citigroup Capital to Assets, Tier 1 Common, and Tier 1 Capital Ratios (Chart) Below is a chart of the capital-to-assets (capital ratio), Tier 1 common, and Tier 1 capital ratios. The capital to assets ratio is the total stockholders' equity to total assets ratio. The current Capital Ratio ratio of 9.13% has increased 5 consecutive quarters and is at a multi-year high. The Tier 1 Common Ratio of 11.60% is at multi-year high. The Tier 1 Capital Ratio of 13.60% is also at a multi-year high. All 3 rations are financial regulatory ratios and measurements.
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. Return on Assets dipped and remained negative during the USA Financial System Crisis and the Great Recession. Beginning in March 2010, Citigroup ROA hovered at 0.00% but is now much improved. Current Return on Assets of +0.50% continues the trend of ROA at about +0.50%. If the current financial performance continues, the ROA should ascend towards +0.60%. The ROA
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. Current NonInterest Revenue of $8.47B is much improved, has stabilized, and has historically been incredibly volatile with large swings upwards or downwards which ultimately affected Net Income either positively or negatively. Current Net Interest Income of $12.15B continues historically low, but is stable. Current Provision for Credit Losses and for Benefits and Claims of $3.39B slightly increased QoQ, after decreasing for 4 consecutive quarters, but is much improved the most recent 2 quarters. Current NonInterest Expense, operating expenses, of $12.94B appears to have stabilized, but has continued over $12 billion for 3 consecutive quarters and is trending upwards. 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). The current Operation Expense Ratio of 47.80% is essentially unchanged QoQ from Q1 2011 of 47.81%. Operating expenses appear contained under 50%, which is a positive development. Though still a high ratio historically, the ratio peaked in December 2009 at an astronomical 103.07%.
Citigroup Reports Second Quarter 2011 Net Income of $3.3 Billion, Earnings per Share $1.09
New York, July 15, 2011 – Citigroup Inc. today reported second quarter 2011 net income of $3.3 billion, or $1.09 per diluted share, on revenues of $20.6 billion. Second quarter net income grew 24% from the prior year period and 11% from the first quarter 2011, while net revenues were 7% lower versus the prior year period and 5% higher than the first quarter 2011.
Vikram Pandit, Citi's Chief Executive Officer, said: "Citi achieved another solid quarter of operating performance as we continue to execute our strategy. We produced growth in both loans and deposits in Citicorp, reduced assets in Citi Holdings, continued to invest in our core businesses and improved our financial strength. Although the near-term macroeconomic outlook is uneven, Citi is consistently profitable, and we remain focused on producing responsible growth by serving our clients."
John Gerspach, Citi's Chief Financial Officer, said: "We expect to begin returning capital to shareholders next year and end that year with an 8%-9% Tier 1 Common Capital Ratio under Basel III. During the first half of 2011, we added an estimated $9 billion in Basel III regulatory capital through the ‘multiplier effect' created by the combined impact of earnings and the utilization of our deferred tax assets. In addition, at the end of 2012, we currently expect Citigroup's risk-weighted assets under Basel III to be in the range of 135% of what they would be under Basel I and, more importantly, Citicorp's risk-weighted assets to be approximately 120% of what they would be under Basel I."
Citicorp revenues were essentially flat from the prior year period, while the overall decline in Citigroup revenues from the prior year largely reflected lower results in Citi Holdings and Corporate/Other.
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. 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..
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