New York Citigroup today reported a full year 2009 net loss of $1.6 billion, or $0.80 per share. Managed revenues were $91.1 billion for the year. The fourth quarter 2009 net loss was $7.6 billion, or $0.33 per share. Excluding the $6.2 billion after-tax loss associated with TARP repayment and exiting the loss-sharing agreement, the fourth quarter net loss was $1.4 billion or $0.06 per share.
The provision for loan losses3 in the fourth quarter was $8.2 billion, down 36% from the prior year and 10% from the prior quarter.
"We have made enormous progress in 2009," said Vikram Pandit, Chief Executive Officer of Citigroup. "It was our responsibility to get our own house in order. We greatly improved Citi's capital strength, reduced the size and scope of the company, and refocused our business strategy to take advantage of our unmatched global network. We created Citi Holdings to rationalize non-strategic businesses, totally overhauled risk management, cut costs by over $13 billion annually, reduced headcount by 100,000, and reduced assets by $500 billion from peak levels. And to take advantage of all these changes, we assembled a talented new management team focused on the new Citicorp franchise to move us forward.
"We also completed the repayment of $20 billion invested in the company by the U.S. government through the Troubled Asset Relief Program (TARP) and exited the loss-sharing agreement with the government," said Mr. Pandit. "As we enter 2010, we are strongly capitalized, significantly more efficient, and are executing on a clear strategy that is focused on clients. With the commitment and dedication of our people, we have created a strong foundation for the future."
Mr. Pandit concluded: "In the near term, we will continue to focus on sustainable profitability and growth, and supporting the global economic recovery. I believe we are positioned for long-term success, and have a strategy that combines our international footprint, global talent and unique capabilities to serve our clients and customers here and around the world. We serve nearly every Fortune 500 company and 85% of the top global companies, enabling liquidity and capital flows by providing the financial infrastructure that facilitates these companies' international operations. Citi is one of the great franchises in financial services, and with our renewed financial strength and strategy, we can now completely focus on executing this strategy."
Commenting on Citi's financial results, John Gerspach, Chief Financial Officer of Citigroup, said: "We have made significant progress in 2009. While the environment continues to be challenging, we have a strong capital base and client franchise. Although we remain cautious and continue to monitor the future impacts of our current loss mitigation efforts, we continue to see indications that credit may be stabilizing or improving, particularly in Asia and Latin America."
"I would like to thank all my colleagues for their efforts during 2009," said CEO Vikram Pandit. "It was their hard work and relentless dedication to Citi that delivered so much progress during the year. I would also like to thank our clients around the world who continued to strongly support us during a difficult period in the company's history. Citi has an incredibly strong franchise with world class talent dedicated to meeting our clients' needs. I am confident of our future success."
Citigroup fourth quarter revenues were $5.4 billion, or $15.5 billion excluding the loss on the repayment of TARP and exiting the loss-sharing agreement, down from $20.4 billion in the prior quarter which included a $1.4 billion gain from the extinguishment of debt associated with the exchange offers.
Citicorp fourth quarter revenues were $11.7 billion, down from $13.0 billion in the prior quarter. Managed revenues were $13.4 billion, down from $14.8 billion in the prior quarter. Excluding the impact of CVA in each quarter, managed revenues were down approximately 7% sequentially, due primarily to declines in S&B revenues.
Citi Holdings fourth quarter revenues were $4.7 billion versus $6.7 billion in the prior quarter. Managed revenues were $5.5 billion during the quarter, down from $7.6 billion in the prior quarter. Key drivers of the decline included lower positive net revenue marks within the Special Asset Pool (SAP) of $0.2 billion versus $1.5 billion in the prior quarter (see Appendix A), as well as the prior quarter's $0.3 billion pre-tax gain on the sale of Citigroup's Managed Futures business, and lower net interest revenue within Local Consumer Lending. SAP asset sales of approximately $10 billion resulted in $0.8 billion of pre-tax gains during the quarter.
Corporate/Other fourth quarter revenues were negative $11.0 billion down from positive $0.7 billion in the prior quarter, due to the $10.1 billion pre-tax loss on the TARP repayment and exiting the loss-sharing agreement, and the prior quarter's $1.4 billion pre-tax gain from the extinguishment of debt associated with the exchange offers.
Citigroup fourth quarter operating expenses were $12.3 billion, up from $11.8 billion in the prior quarter.
Citicorp fourth quarter operating expenses were $8.5 billion, up from $8.2 billion in the prior quarter driven primarily by higher marketing and investment spending in Latin America and Asia RCB, increases in repositioning expenses, and the impact of foreign exchange.
Citi Holdings fourth quarter operating expenses were $3.3 billion, up 2% from the prior quarter, driven by higher repositioning costs and increased collections expense, primarily in U.S. mortgages.
Citigroup fourth quarter credit costs of $8.2 billion included net credit losses of $7.1 billion, a $0.7 billion net loan loss reserve build and a $0.3 billion provision for policyholder benefits and claims. Net credit losses were down 10% from the prior quarter. Total credit costs declined 10% sequentially, to the lowest level since the second quarter of 2008.
Citicorp fourth quarter credit costs were $1.6 billion, consisting essentially of net credit losses. Citicorp managed net credit losses were $3.3 billion, down 8% sequentially.
Citi Holdings fourth quarter credit costs were $6.6 billion, and included $5.6 billion of net credit losses, a $0.7 billion reserve build and a $0.3 billion provision for policyholder benefits and claims. Managed net credit losses were $6.7 billion, down 9% from the prior quarter.
Citigroup's tax provision for the quarter was a $7.4 billion benefit reflecting a higher proportion of income being earned and indefinitely reinvested in countries with relatively lower tax rates as well as a higher proportion of income from tax advantaged sources.
Discontinued operations net income in the fourth quarter was $232 million versus a net loss of $418 million in the prior quarter, due to the sale of Nikko Cordial Securities completed during the quarter.
Citigroup's net loss was $7.6 billion in the fourth quarter versus $0.1 billion of net income in the third quarter. Excluding the impact of the TARP repayment and exiting the loss-sharing agreement in the fourth quarter and the gain on debt extinguishment associated with the exchange offers in the third quarter, net income was lower by $0.6 billion sequentially. The impact of the TARP repayment, exiting of the loss-sharing agreement and the gain on debt extinguishment were recorded in the Corporate/Other segment.
Citicorp fourth quarter net income was $1.7 billion, down from $2.3 billion from the prior quarter, as declines in S&B revenues and higher operating expenses were partially offset by sequential declines in credit costs across businesses. Income growth in Asia and Latin America was offset by declines in North America and EMEA.
Citi Holdings fourth quarter net loss was $2.5 billion versus a loss of $1.9 billion in the prior quarter as a sequential decline in credit costs was more than offset by a reduction in positive revenue marks, lower net interest revenue and the absence of the $0.2 billion after-tax gain on the sale of Citigroup's Managed Futures business in the quarter.
Total assets were $1.9 trillion, down 2% from the third quarter reflecting business dispositions and asset sales within Citi Holdings. During the quarter approximately $46 billion of cash and deposits with banks were redeployed into liquid securities held in the available-for-sale portfolio.
Vikram Pandit, Chief Executive Officer, and John Gerspach, Chief Financial Officer, will host a conference call today at 11:00 AM (EST). A live webcast of the presentation, as well as financial results and presentation materials, will be available at http://www.citigroup.com/citi/fin. A replay of the webcast will be available at http://www.citigroup.com/citi/fin/pres.htm. Dial-in numbers for the conference call are as follows: (877) 700-4194 in the U.S.; (706) 679-8401 outside of the U.S. The passcode for all numbers is 45893765.
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 140 countries. 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, and wealth management. Additional information may be found at www.citigroup.com or www.citi.com.
Additional financial, statistical, and business-related information, as well as business and segment trends, is included in a Financial Supplement. Both the earnings release and the Financial Supplement are available on Citigroup's website at www.citigroup.com or www.citi.com.
Certain statements in this document are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in Citigroup's filings with the Securities and Exchange Commission.
1 Managed metrics, used throughout this release, are non-GAAP financial measures. See Appendix C for additional information on these metrics.
2 Tier 1 Common and related ratios, used throughout this release, are non-GAAP financial measures. See Appendix C for additional information on these metrics.
3 Provision for credit losses and policyholder benefits and claims.
4 See appendix A for quarterly and annual CVA amounts.
5 Structural liquidity equals deposits, long-term debt and equity, as a percentage of total assets.