Citigroup Inc. today reported net income for the third quarter 2012 of
$468 million, or $0.15 per diluted share, on revenues of $14.0 billion.
CVA/DVA was a negative $776 million in the third quarter, resulting from the improvement in Citi's credit spreads, compared to a positive $1.9 billion in the prior year period. Third quarter results also included a pre-tax loss of $4.7 billion ($2.9 billion after-tax) from the previously announced sale of a 14% interest and other-than-temporary impairment of the carrying value of Citi's remaining 35% interest in the Morgan Stanley Smith Barney (MSSB) joint venture.
In addition, third quarter results included a $582 million tax benefit related to the resolution of certain tax audit items. Excluding CVA/DVA and the loss on MSSB, third quarter revenues were $19.4 billion, up 3% from the prior period. Excluding CVA/DVA, the loss on MSSB and the tax benefit, earnings were $1.06 per diluted share, up 26% from the prior year period.
"Our core businesses showed momentum during the quarter as we increased lending and generated higher operating revenues," said Vikram Pandit, Citi's CEO. "These earnings highlight the strength of Citicorp and its diversification by product and region. For the third straight quarter, we had positive operating leverage in each of our three core businesses. Citigroup in total also had positive operating leverage as Citi Holdings had a smaller impact on our overall results.
"Last month's price agreement on MSSB has given us more certainty on our exit from that business and added to the reduction of Citi Holdings, which is now only 9% of our balance sheet," he added. "We generated additional capital during the quarter and our Tier 1 Common Ratio was estimated at 8.6% on a Basel III basis at the end of the period. We are managing risk very carefully given global economic conditions so we can continue to grow our businesses safely and soundly."
Citigroup revenues of $19.4 billion, excluding CVA/DVA and the loss on MSSB, were 3% above the prior year period, driven by 5% growth in Citicorp revenues, offset by a 10% decline in Citi Holdings revenues primarily resulting from the ongoing wind down of those assets. Citi Holdings revenues represented 5% of total Citigroup revenues, excluding CVA/DVA and the loss on MSSB.
Citicorp revenues of $17.6 billion in the third quarter 2012 included $(799) million of CVA/DVA reported within Securities and Banking. Excluding CVA/DVA, Citicorp revenues were $18.4 billion, 5% above the prior year period with 15% growth in Securities and Banking revenues and 2% growth in Global Consumer Banking (GCB) revenues, partially offset by a 2% decline in Transaction Services revenues.
Citi Holdings revenues of $(3.7) billion in the third quarter 2012 included $23 million of CVA/DVA and the $4.7 billion pre-tax loss on MSSB. Excluding CVA/DVA and the loss on MSSB, Citi Holdings revenues were $971 million compared to $1.1 billion in the prior year period. Lower revenues in Local Consumer Lending and in Brokerage and Asset Management drove the decline in Citi Holdings revenues from the prior year period, partially offset by an increase in Special Asset Pool revenues. The decline in Local Consumer Lending revenues reflected the ongoing decline in assets while the decline in Brokerage and Asset Management reflected a lower equity contribution from MSSB
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