- Net Income of $350 Million
- Revenues of $17.8 Billion
- Legal and Related Expenses and Repositioning Charges Totaled $3.5 Billion
- Net Interest Margin Increased to 2.92%
- Net Credit Losses of $2.2 Billion Declined 12% Versus Prior Year Period
- Utilized Approximately $200 Million of Deferred Tax Assets; DTA Utilization of Approximately $3.1 Billion in 2014
- Basel III Common Equity Tier 1 Capital Ratio of 10.5%1
- Estimated Basel III Supplementary Leverage Ratio of 6.0%2
- Book Value per Share of $66.16
- Tangible Book Value per Share3 of $56.83
- Citi Holdings Assets of $98 Billion Declined 16% from Prior Year Period and Represented 5% of Total Citigroup Assets at Quarter End

New York – Citigroup Inc. today reported net income for the fourth quarter 2014 of $350 million, or $0.06 per diluted share, on revenues of $17.8 billion. This compared to net income of $2.5 billion, or $0.77 per diluted share, on revenues of $17.8 billion for the fourth quarter 2013. Legal and related expenses and repositioning charges totaled $3.5 billion in the current quarter, compared to $1.0 billion in the prior year period.

CVA/DVA4 was $7 million ($4 million after-tax) in the fourth quarter 2014, compared to negative $164 million (negative $100 million after-tax) in the prior year period. Fourth quarter 2013 results also included a $189 million after-tax benefit related to the divestiture of Citi's Credicard business in Brazil and a $235 million after-tax charge related to the net fraud loss in Mexico.5 Excluding CVA/DVA and the items in the fourth quarter 2013, earnings were $0.06 per diluted share, compared to prior year earnings of $0.82 per diluted share.

Michael Corbat, Chief Executive Officer of Citigroup, said, "While the overall results for 2014 fell short of our expectations, we did make significant progress on our top priorities. During the year, we increased our market share among our target institutional clients, grew our core loan book, and improved both our net interest revenue and margin from 2013 levels. For the first time since its establishment, Citi Holdings was profitable for the full year and we accelerated the utilization of our deferred tax assets. We strengthened our capital planning process and made Citi a safer and stronger institution, as evidenced by the increases to our capital, leverage and liquidity ratios. Although we made some difficult decisions over the course of the year, I believe they allowed us to put our franchise in a position to have a successful 2015."

Citigroup full year 2014 net income was $7.3 billion on revenues of $76.9 billion, compared to net income of $13.7 billion on revenues of $76.4 billion for the full year 2013. Full year 2014 results included CVA/DVA of negative $390 million (negative $240 million after-tax), compared to negative $342 million (negative $213 million after-tax) in the prior year period. Citigroup full year 2014 results also included a charge of $3.8 billion ($3.7 billion after-tax) to settle RMBS and CDO-related claims.6 Full year 2013 results also included the benefit related to the impact of the Credicard divestiture and the net fraud loss. In addition, Citigroup recorded a tax charge of $210 million in the first quarter of 2014 related to corporate tax reforms enacted in two states, and a tax benefit of $176 million in the third quarter 2013 related to the resolution of certain tax audit items. Excluding CVA/DVA, Citigroup revenues were $77.3 billion in 2014, up 1% compared to the prior year. Excluding CVA/DVA as well as the impact of the mortgage settlement in 2014, Credicard divestiture and net fraud loss in 2013, and the tax items in both years,7 net income was $11.5 billion in 2014, down 16% compared to 2013, as higher revenues and lower net credit losses were offset by higher operating expenses, a lower net loan loss reserve release and a higher effective tax rate.

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Citigroup
Citigroup revenues of $17.8 billion in the fourth quarter 2014 were unchanged from the prior year period. Excluding CVA/DVA, revenues of $17.8 billion decreased 1% from the prior year period, driven by a 1% decrease in Citicorp revenues, partially offset by a slight increase in Citi Holdings revenues.

Citigroup's net income declined to $350 million in the fourth quarter 2014 from $2.5 billion in the prior year period. Excluding CVA/DVA in both periods and the impact of the Credicard divestiture and the net fraud loss in the prior year period, Citigroup net income was $346 million versus $2.6 billion in the prior year period, primarily driven by higher operating expenses and a higher effective tax rate.

Citigroup's operating expenses were $14.4 billion in the fourth quarter 2014, 21% higher than the $11.9 billion in the prior year period (excluding the impact of the net fraud loss), driven by higher legal and related expenses and repositioning costs, as well as increased regulatory and compliance costs and higher volume-related expenses, partially offset by continued efficiency savings and the impact of foreign exchange translation. Operating expenses in the fourth quarter 2014 included legal and related expenses of $2.9 billion, compared to $809 million in the prior year period, and $655 million of repositioning charges, compared to $234 million in the prior year period.

Citigroup's cost of credit in the fourth quarter 2014 was $2.0 billion, a decrease of 3% from the prior year period, primarily reflecting a $299 million improvement in net credit losses, partially offset by a lower net release of loan loss reserves.

Citigroup's effective tax rate was 72% in the current quarter, an increase from 32% in the prior year period (excluding CVA/DVA), driven by a significantly higher portion of non-tax-deductible legal and related expenses in the current quarter.

Citigroup's allowance for loan losses was $16.0 billion at quarter end, or 2.50% of total loans, compared to $19.6 billion, or 2.97% of total loans, at the end of the prior year period. The $441 million net release of loan loss reserves in the current quarter compared to a $670 million release in the prior year period. Citigroup asset quality continued to improve as total non-accrual assets fell to $7.4 billion, a 22% reduction compared to the fourth quarter 2013. Corporate non-accrual loans declined 38% to $1.2 billion, while consumer non-accrual loans declined 17% to $5.9 billion.

Citigroup's loans were $645 billion as of quarter end, down 3% from the prior year period. On a constant dollar basis,8 Citigroup's loans declined by 1%, as continued declines in Citi Holdings, driven primarily by reductions in the North America mortgage portfolio, offset 3% growth in Citicorp.

Citigroup's deposits were $899 billion as of quarter end, down 7% from the prior year period. In constant dollars, Citigroup's deposits were down 4%, primarily driven by the reclassification of $21 billion of deposits in Asia to other liabilities reflecting held-for-sale treatment as a result of Citigroup entering into an agreement to sell its retail banking business in Japan, as well as the continued reduction in Citi Holdings deposits.

Citigroup's book value per share was $66.16 and its tangible book value per share was $56.83, each as of quarter end, representing 1% and 3% increases, respectively, versus the prior year period. At quarter end, Citigroup's Basel III Common Equity Tier 1 Capital ratio was 10.5%, up from 10.1%9 in the prior year period. Citigroup's estimated Basel III Supplementary Leverage ratio for the fourth quarter 2014 was 6.0%, up from 5.4% in the prior year period.

Citicorp
Citicorp revenues of $16.5 billion in the fourth quarter 2014 were unchanged from the prior year period. CVA/DVA, reported within Institutional Clients Group (ICG), was $12 million in the fourth quarter 2014 ($7 million after-tax), compared to negative $165 million (negative $100 million after-tax) in the prior year period. Excluding CVA/DVA, revenues were down 1% from the fourth quarter 2013, as ICG and Global Consumer Banking (GCB) revenues were largely unchanged, and Corporate/Other revenues decreased. Corporate/Other revenues were negative $137 million, versus negative $41 million in the prior year period, primarily due to lower revenues from sales of available-for-sale securities as well as hedging activities.

Citicorp net income was $192 million, versus $2.9 billion in the prior year period. Excluding CVA/DVA and the impact of the Credicard divestiture and the net fraud loss in the prior year period, Citicorp's net income was $185 million, versus $3.0 billion in the prior year period, primarily driven by higher operating expenses and a higher effective tax rate.

Citicorp operating expenses were $13.7 billion, a 31% increase from the prior year period (excluding the impact of the net fraud loss), primarily reflecting higher legal and related expenses (primarily recorded in Corporate/Other), higher repositioning charges, increased regulatory and compliance costs, as well as volume-related expenses, partially offset by ongoing efficiency savings and the impact of foreign exchange translation. Operating expenses in the fourth quarter 2014 included legal and related expenses of $2.8 billion, compared to $159 million in the prior year period, and $637 million of repositioning charges, compared to $204 million in the prior year period.

Citicorp cost of credit of $1.7 billion in the fourth quarter 2014 declined 2% from the prior year period. A higher net loan loss reserve release and lower net credit losses in North America GCB were partially offset by higher net credit losses in ICG and international GCB. Citicorp's consumer loans 90+ days delinquent decreased 10% from the prior year period to $2.7 billion, and the 90+ days delinquency ratio improved to 0.90% of loans.

Citicorp end of period loans were unchanged versus the prior year period at $572 billion, with 1% growth in corporate loans to $274 billion and a 2% decrease in consumer loans to $297 billion. On a constant dollar basis, Citicorp end of period loans grew 3% versus the prior year period, with 4% growth in corporate loans and 2% growth in consumer loans.

Global Consumer Banking
GCB revenues of $9.4 billion were unchanged from the prior year period, as growth in North America was offset by a decline in international revenues on a reported basis. On a constant dollar basis, revenues increased 3%, due to the growth in North America and 1% growth in international revenues.

GCB net income rose 8% versus the prior year period to $1.7 billion, reflecting a lower cost of credit. Operating expenses were unchanged at $5.3 billion, but increased 3% in constant dollars, mostly reflecting higher repositioning charges, partially offset by ongoing cost reduction initiatives.

North America GCB revenues rose 4% to $5.1 billion versus the prior year period, reflecting higher revenues in retail banking, partially offset by lower revenues in Citi retail services. Retail banking revenues rose 25% to $1.4 billion from the fourth quarter 2013, reflecting 10% growth in average loans and 1% growth in average deposits, as well as a gain of approximately $130 million related to the sale of certain on-balance sheet mortgage loans in the current quarter. Citi-branded cards revenues of $2.1 billion were unchanged versus the prior year period, as purchase sales grew 4% and an improvement in spreads mostly offset the impact of lower average loans. Citi retail services revenues decreased 3% to $1.6 billion, primarily reflecting higher contractual partner payments driven by higher yields and improved credit.

North America GCB net income was $1.1 billion, up 33% versus the fourth quarter 2013, driven by the increase in revenues and reduced credit costs, partially offset by higher operating expenses. Operating expenses were up 1% versus the prior year period to $2.5 billion, as higher repositioning charges and increased marketing costs were partially offset by ongoing efficiency savings.

North America GCB credit quality continued to improve as net credit losses of $1.0 billion decreased 8% versus the prior year period. Net credit losses improved versus the prior year period in Citi-branded cards (down 13% to $514 million) and in Citi retail services (down 2% to $463 million). The reserve release in the fourth quarter 2014 was $244 million, $160 million higher than in the fourth quarter 2013, due to continued improvement in each of the cards portfolios. Delinquency rates improved from the prior year period in both Citi-branded cards and Citi retail services.

International GCB revenues decreased 5% versus the fourth quarter 2013 to $4.4 billion. In constant dollars, revenues increased 1% versus the fourth quarter 2013. Revenues in Latin America increased 1% to $2.3 billion, primarily driven by volume growth in Mexico. In Asia, revenues rose by 1% to $1.8 billion, primarily driven by volume growth, partially offset by spread compression and the impact of regulatory changes in certain markets. In EMEA, revenues declined 2% to $305 million as spread compression offset higher volumes.

International GCB net income decreased 23% from the prior year period to $527 million, and decreased 18% in constant dollars. On a constant dollar basis, the slightly higher revenues were offset by higher operating expenses. Operating expenses in the fourth quarter 2014 increased 5% in constant dollars (decreased 1% on a reported basis) as higher repositioning charges as well as the impact of business growth and higher non-income tax expenses were partially offset by ongoing efficiency savings. In constant dollars, credit costs increased 1% versus the prior year period, as reserve releases in Asia were offset by higher credit costs in Latin America and EMEA.

International GCB credit quality remained stable. Net credit losses rose 8% to $733 million, including a charge-off of approximately $70 million related to Citi's homebuilder exposure in Mexico, which was offset by a related release of previously established loan loss reserves, and therefore neutral to the cost of credit in the current period. The international net credit loss rate was 2.09% of average loans in the fourth quarter 2014, compared to 1.93% in the prior year period. Excluding the charge-off associated with homebuilder exposure in Mexico, the international net credit loss rate would have improved to 1.88%.

Institutional Clients Group
ICG revenues rose 2% from the prior year period to $7.2 billion. Excluding the impact of CVA/DVA, revenues were unchanged from the prior year period, as higher revenues in Banking and increased gains on loan hedges were offset by lower revenues in Markets and Securities Services.

Banking revenues of $4.1 billion increased 1% from the prior year period (excluding gain / (loss) on loan hedges in each period), primarily reflecting growth in Private Bank and Corporate Lending revenues. Treasury and Trade Solutions revenues of $2.0 billion were up 1% versus the prior year period as growth in deposits and fees more than offset a decline in trade balances and spreads. Investment Banking revenues decreased 7% versus the prior year period, driven by a 19% decrease in equity underwriting revenues to $252 million, a 4% decrease in debt underwriting revenues to $550 million and a 1% decrease in advisory revenues to $263 million. Private Bank revenues increased 11% to $666 million from the prior year period (excluding negative $4 million of CVA/DVA) driven by increased client volumes and growth in investment and capital markets products. Corporate Lending revenues rose 9% versus the prior year period to $431 million (excluding gain / (loss) on loan hedges in each period) reflecting growth in average loans and lower funding costs.

Markets and Securities Services revenues of $3.0 billion (excluding $17 million of CVA/DVA, versus negative $165 million in the fourth quarter 2013) fell 9% from the prior year period. Fixed Income Markets revenues of $2.0 billion in the fourth quarter 2014 (excluding $9 million of CVA/DVA, compared to negative $153 million in the prior year period) decreased 16% from the prior year period, driven by difficult trading conditions in spread products as well as a challenging macroeconomic environment that impacted the rates business. Equity Markets revenues of $471 million (excluding $7 million of CVA/DVA) were down 3% versus the prior year period, driven by lower trading revenues in cash equities in EMEA. Securities Services revenues of $574 million grew 4% versus the prior year period, reflecting increased client balances and activity.

ICG net income was $1.6 billion in the fourth quarter 2014. Excluding CVA/DVA and the net fraud loss in the fourth quarter 2013, net income decreased 9% from the prior year period, driven by higher operating expenses and an increase in the cost of credit. Operating expenses (excluding the impact of the net fraud loss in the prior year period) grew 3% to $5.0 billion as lower compensation expenses and the impact of foreign exchange translation were more than offset by higher repositioning costs as well as higher external legal and consulting fees. Credit costs increased by $259 million over the prior year period related to an episodic charge-off as well as a loan loss reserve build driven by the overall economic environment.

ICG average loans grew 3% versus the prior year period to $277 billion while end of period deposits declined 3% to $559 billion. In constant dollars, average loans were up 5% versus the prior year period, while end of period deposits increased 1%.

Citi Holdings
Citi Holdings revenues of $1.3 billion in the fourth quarter 2014 included CVA/DVA of negative $5 million, compared to $1 million in the prior year period. Excluding CVA/DVA, Citi Holdings revenues increased slightly from the prior year period driven by higher gains on asset sales and lower cost of funds. As of the end of the quarter, Citi Holdings assets were $98 billion, 16% below the prior year period, and represented approximately 5% of total Citigroup assets.

Citi Holdings net income, excluding CVA/DVA, was $161 million, up from a loss of $432 million in the prior year period, reflecting lower operating expenses and lower net credit losses, partially offset by a lower net loan loss reserve release. Operating expenses in the fourth quarter 2014 declined 49% from the prior year period to $765 million, driven by the ongoing decline in Citi Holdings assets as well as lower legal and related expenses ($61 million in the fourth quarter 2014, compared to $650 million in the prior year period). Net credit losses decreased 48% from the prior year period to $381 million, primarily driven by continued credit improvements and reductions in the North America mortgage portfolio. The net loan loss reserve release decreased 60% from the prior year period to $215 million, primarily due to lower releases related to the North America mortgage portfolio.

Citi Holdings allowance for credit losses was $4.5 billion at the end of the fourth quarter 2014, or 6.20% of loans, compared to $6.5 billion, or 6.98% of loans, in the prior year period. 90+ days delinquent consumer loans in Citi Holdings decreased 28% to $2.0 billion, or 2.88% of loans.

Citigroup will host a conference call today at 11 a.m. (EST). A live webcast of the presentation, as well as financial results and presentation materials, will be available at http://www.citigroup.com/citi/investor. Dial-in numbers for the conference call are as follows: (866) 516-9582 in the U.S. and Canada; (973) 409-9210 outside of the U.S. and Canada. The conference code for both numbers is 40654645.


Citi
Citi, the leading global bank, 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 | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi

Additional financial, statistical, and business-related information, as well as business and segment trends, is included in a Quarterly Financial Data Supplement. Both this earnings release and Citi's Third Quarter 2013 Quarterly Financial Data Supplement are available on Citigroup's website at www.citigroup.com.

Certain statements in this release are "forward-looking statements" within the meaning of the rules and regulations of the U.S. Securities and Exchange Commission. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results and capital and other financial condition may differ materially from those included in these statements due to a variety of factors, including the precautionary statements included in this document and those contained in Citigroup's filings with the U.S. Securities and Exchange Commission, including without limitation the "Risk Factors" section of Citigroup's 2011 Annual Report on Form 10-K.

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1 Preliminary. Citigroup's Basel III Common Equity Tier 1 Capital ratio is a non-GAAP financial measure. Citigroup believes this ratio and its related components provide useful information to investors and others by measuring Citigroup's progress against future regulatory capital standards. Citigroup's Basel III Common Equity Tier 1 Capital ratio and its related components are subject to, among other things, ongoing regulatory supervision, including review and approval of Citi's credit, market and operational risk models, additional refinements, modifications or enhancements (whether required or otherwise) to these models and any further implementation guidance in the U.S. For the composition of Citigroup's Basel III Common Equity Tier 1 Capital and ratio, see Appendix D.

2 Preliminary. Citigroup's estimated Basel III Supplementary Leverage ratio (SLR) and certain related components are non-GAAP financial measures. Citigroup believes this ratio and its components provide useful information to investors and others by measuring Citigroup's progress against future regulatory capital standards. Citigroup's estimated Basel III SLR is based on the revised final U.S. Basel III rules issued in September 2014 and represents the ratio of Tier 1 Capital to Total Leverage Exposure (TLE). TLE is the sum of the daily average of on-balance sheet assets for the quarter and the average of certain off-balance sheet exposures calculated as of the last day of each month in the quarter, less applicable Tier 1 Capital deductions. Citigroup's estimated Basel III SLR and related components are subject to, among other things, ongoing regulatory supervision and any further implementation guidance in the U.S.

3 Tangible book value per share is a non-GAAP financial measure. Citigroup believes this capital metric provides useful information, as it is used by investors and industry analysts. For a reconciliation of this measure to reported results, see Appendix E.

4 Credit valuation adjustments (CVA) on derivatives (counterparty and own-credit), net of hedges; funding valuation adjustments (FVA) on derivatives; and debt valuation adjustments (DVA) on Citigroup's fair value option liabilities (collectively referred to as CVA/DVA). See Appendix A. Citigroup's results of operations excluding the impact of CVA/DVA are non-GAAP financial measures. Citigroup believes the presentation of its results of operations excluding the impact of CVA/DVA provides a more meaningful depiction of the underlying fundamentals of its businesses impacted by CVA/DVA. For a reconciliation of these measures to reported results, see Appendix B.

5 In the second quarter 2013, Citi entered into an agreement to sell Credicard, its non-Citibank branded cards and consumer finance business in Brazil, which was completed in the fourth quarter 2013. For additional information on the net fraud loss in Mexico in the fourth quarter 2013, please see Citigroup's Form 8-K filed with the U.S. Securities and Exchange Commission (SEC) on February 28, 2014. Presentations of Citigroup's results of operations excluding these items are non-GAAP financial measures. Citigroup believes the presentation of its results of operations excluding these items provides a more meaningful depiction of the underlying fundamentals of its businesses. For a reconciliation of these measures to reported results, see Appendix B.

6 For additional information on the mortgage settlement to resolve claims related to legacy residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs) included in second quarter 2014 results, please see Citigroup's Form 8-K filed with the SEC on July 14, 2014.

7 Citigroup's results of operations excluding the mortgage settlement and tax items are non-GAAP financial measures. Citigroup believes the presentation of its results of operations excluding these items provides a more meaningful depiction of the underlying fundamentals of its businesses. For a reconciliation of these measures to reported results, see Appendix B.

8 Results of operations excluding the impact of FX translation (constant dollar basis) are non-GAAP financial measures. Citigroup believes the presentation of its results of operations excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of its businesses impacted by FX translation. For a reconciliation of these measures to reported results, see Appendix C.

9 See footnote 8 of Appendix D.

10 Hedges on accrual loans reflect the mark-to-market on credit derivatives used to hedge the corporate loan portfolio. The fixed premium cost of these hedges is included (netted against) the core lending revenues to reflect the cost of the credit protection. Results of operations excluding the impact of gain/(loss) on loan hedges are non-GAAP financial measures. Citigroup believes the presentation of its results of operations excluding the impact of gain/(loss) on loan hedges is a more meaningful depiction of the underlying fundamentals of its businesses.