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
