Company Quick10K Filing
Quick10K
Citigroup
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$64.64 2,369 $153,100
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
8-K 2019-02-14 Officers, Other Events
8-K 2019-01-24 Exhibits
8-K 2019-01-24 Exhibits
8-K 2019-01-16 Amend Bylaw, Exhibits
8-K 2019-01-14 Earnings, Exhibits
8-K 2018-11-04 Officers, Other Events
8-K 2018-11-01 Other Events, Exhibits
8-K 2018-10-12 Earnings, Exhibits
8-K 2018-08-31 Officers, Other Events
8-K 2018-07-23 Exhibits
8-K 2018-07-13 Earnings, Exhibits
8-K 2018-06-28 Officers, Exhibits
8-K 2018-06-28 Other Events
8-K 2018-06-12 Exhibits
8-K 2018-05-22
8-K 2018-05-17 Exhibits
8-K 2018-04-24 Officers, Shareholder Vote, Exhibits
8-K 2018-04-23 Exhibits
8-K 2018-04-13 Earnings, Exhibits
8-K 2018-04-09 Earnings, Exhibits
8-K 2018-03-19 Exhibits
8-K 2018-02-15 Other Events
8-K 2018-01-24 Exhibits
8-K 2018-01-16 Earnings, Exhibits
WFC Wells Fargo & Company
KEY Keycorp
CMA Comerica
PB Prosperity Bancshares
BMRC Bank of Marin Bancorp
FISI Financial Institutions
SONA Southern National Bancorp of Virginia
LARK Landmark Bancorp
HMTA Hometown Bankshares
FBSS Fauquier Bankshares
C 2018-12-31
EX-3.01 citi-exhibit301x12312018.htm
EX-10.10.7 citi-exhibit10107x12312018.htm
EX-21 citi-exhibit2101x12312018.htm
EX-23 citi-exhibit2301x12312018.htm
EX-24.01 citi-exhibit2401x12312018.htm
EX-31.01 citi-exhibit3101x12312018.htm
EX-31.02 citi-exhibit3102x12312018.htm
EX-32.01 citi-exhibit3201x12312018.htm
EX-99.01 citi-exhibit9901x1231x2018.htm

Citigroup Earnings 2018-12-31

C 10K Annual Report

Balance SheetIncome StatementCash Flow

10-K 1 c-12312018x10k.htm 10-K Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
Commission file number 1-9924
Citigroup Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
 
52-1568099
(I.R.S. Employer Identification No.)
388 Greenwich Street, New York, NY
(Address of principal executive offices)
 
10013
(Zip code)
(212) 559-1000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: See Exhibit 99.01

Securities registered pursuant to Section 12(g) of the Act: none

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes x  No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
 
Accelerated filer o
 
Non-accelerated filer o
 
Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes o    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x
The aggregate market value of Citigroup Inc. common stock held by non-affiliates of Citigroup Inc. on June 30, 2018 was approximately $168.1 billion.
Number of shares of Citigroup Inc. common stock outstanding on January 31, 2019: 2,351,523,709
Documents Incorporated by Reference: Portions of the registrant’s proxy statement for the annual meeting of stockholders scheduled to be held on April 16, 2019 are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III.
Available on the web at www.citigroup.com
 




FORM 10-K CROSS-REFERENCE INDEX
 
 
 
 
Item Number
Page
 
 
 
 
Part I
 
 
 
 
 
1.
 
Business
4–28, 113–116,
 
 
 
120, 146,
 
 
 
294–295
 
 
 
 
1A.
 
Risk Factors
48–57
 
 
 
 
1B.
 
Unresolved Staff Comments
Not Applicable
 
 
 
 
2.
 
Properties
294–295
 
 
 
 
3.
 
Legal Proceedings—See Note 27 to the Consolidated Financial Statements
276–282
 
 
 
 
4.
 
Mine Safety Disclosures
Not Applicable
 
 
 
 
Part II
 
 
 
 
 
5.
 
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
128–129, 152–154, 296–297
 
 
 
 
6.
 
Selected Financial Data
9–10
 
 
 
 
7.
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
6–30, 59–112
 
 
 
 
7A.
 
Quantitative and Qualitative Disclosures About Market Risk
59–112, 147–151, 172–209, 216–268
 
 
 
 
8.
 
Financial Statements and Supplementary Data
124–293
 
 
 
 
9.
 
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not Applicable
 
 
 
 
9A.
 
Controls and Procedures
118–119
 
 
 
 
9B.
 
Other Information
Not Applicable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Part III
 
 
 
 
 
10.
 
Directors, Executive Officers and Corporate Governance
298–300*
 
 
 
 
11.
 
Executive Compensation
**
 
 
 
 
12.
 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
***
 
 
 
 
13.
 
Certain Relationships and Related Transactions and Director Independence
****
 
 
 
 
14.
 
Principal Accountant Fees and Services
*****
 
 
 
 
 
 
 
 
Part IV
 
 
 
 
 
15.
 
Exhibits and Financial Statement Schedules
 

*
For additional information regarding Citigroup’s Directors, see “Corporate Governance,” “Proposal 1: Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the definitive Proxy Statement for Citigroup’s Annual Meeting of Stockholders scheduled to be held on April 16, 2019, to be filed with the SEC (the Proxy Statement), incorporated herein by reference.
**
See “Compensation Discussion and Analysis,” “The Personnel and Compensation Committee Report,” “2018 Summary Compensation Table and Compensation Information” and “CEO Pay Ratio”
in the Proxy Statement, incorporated herein by reference.
***
See “About the Annual Meeting,” “Stock Ownership” and “Equity Compensation Plan Information” in the Proxy Statement, incorporated herein by reference.
****
See “Corporate Governance—Director Independence,” “—Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation” and “—Indebtedness” in the Proxy Statement, incorporated herein by reference.
*****
See “Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm” in the Proxy Statement, incorporated herein by reference.


2


CITIGROUP’S 2018 ANNUAL REPORT ON FORM 10-K
OVERVIEW
MANAGEMENT'S DISCUSSION AND
  ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONS
Executive Summary
Summary of Selected Financial Data
SEGMENT AND BUSINESS—INCOME (LOSS)
  AND REVENUES
SEGMENT BALANCE SHEET
Global Consumer Banking
North America GCB
Latin America GCB
Asia GCB
Institutional Clients Group
Corporate/Other
OFF-BALANCE SHEET
  ARRANGEMENTS
CONTRACTUAL OBLIGATIONS
CAPITAL RESOURCES
RISK FACTORS
Managing Global Risk Table of Contents
MANAGING GLOBAL RISK
SIGNIFICANT ACCOUNTING POLICIES AND
  SIGNIFICANT ESTIMATES
FUTURE APPLICATION OF ACCOUNTING
  STANDARDS
DISCLOSURE CONTROLS AND
  PROCEDURES
MANAGEMENT’S ANNUAL REPORT ON
  INTERNAL CONTROL OVER FINANCIAL
  REPORTING
FORWARD-LOOKING STATEMENTS
REPORT OF INDEPENDENT REGISTERED
  PUBLIC ACCOUNTING FIRM—INTERNAL
  CONTROL OVER FINANCIAL REPORTING
REPORT OF INDEPENDENT REGISTERED
  PUBLIC ACCOUNTING FIRM—
  CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS AND NOTES
  TABLE OF CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL
  STATEMENTS
FINANCIAL DATA SUPPLEMENT
SUPERVISION, REGULATION AND OTHER
CORPORATE INFORMATION
Citigroup Executive Officers
Citigroup Board of Directors


3


OVERVIEW

Citigroup’s history dates back to the founding of the City
Bank of New York in 1812.
Citigroup is a global diversified financial services holding company whose businesses provide consumers, corporations, governments and institutions with a broad, yet focused, range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services and wealth management. Citi has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions.
At December 31, 2018, Citi had approximately 204,000 full-time employees, compared to approximately 209,000 full-time employees at December 31, 2017.
Citigroup currently operates, for management reporting purposes, via two primary business segments: Global Consumer Banking and Institutional Clients Group, with the remaining operations in Corporate/Other. For a further description of the business segments and the products and services they provide, see “Citigroup Segments” below, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 to the Consolidated Financial Statements.
Throughout this report, “Citigroup,” “Citi” and “the Company” refer to Citigroup Inc. and its consolidated subsidiaries.
Additional information about Citigroup is available on Citi’s website at www.citigroup.com. Citigroup’s recent annual reports on Form 10-K, quarterly reports on Form 10-Q and proxy statements, as well as other filings with the U.S. Securities and Exchange Commission (SEC), are available free of charge through Citi’s website by clicking on the “Investors” page and selecting “All SEC Filings.” The SEC’s website also contains current reports on Form 8-K and other information regarding Citi at www.sec.gov.
Certain reclassifications, including a realignment of certain businesses, have been made to the prior periods’ financial statements to conform to the current period’s presentation. For information on certain recent such reclassifications, see Note 3 to the Consolidated Financial Statements.

Please see “Risk Factors” below for a discussion of the most significant risks and uncertainties that could impact Citigroup’s businesses, financial condition and results of operations.
 
















































4


As described above, Citigroup is managed pursuant to two business segments: Global Consumer Banking and Institutional Clients Group, with the remaining operations in Corporate/Other.
acitisegmentsq418chart.jpg
The following are the four regions in which Citigroup operates. The regional results are fully reflected in the segment results above.
citiregionsq4.jpg

(1)
Latin America GCB consists of Citi’s consumer banking business in Mexico.
(2)
Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented.
(3)
North America includes the U.S., Canada and Puerto Rico, Latin America includes Mexico and Asia includes Japan.

5


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

EXECUTIVE SUMMARY
As described further throughout this Executive Summary, Citi made steady progress in 2018 toward improving its profitability and returns, despite a more challenging revenue environment, particularly in certain market-sensitive businesses and given macroeconomic uncertainties. During 2018, Citi reported 3% underlying revenue growth in Global Consumer Banking (GCB) and Institutional Clients Group (ICG), excluding the impact of gains on sale in 2018 and 2017 (see “Citigroup” below). Citi had solid revenue growth across treasury and trade solutions, private bank, securities services, equity markets and corporate lending in ICG, partially offset by weakness in fixed income as well as softness in equity and debt underwriting. Citi reported revenue growth in all regions in GCB, reflecting continued loan and overall deposit growth, partially offset by the near-term impact of weak market sentiment on Asia wealth management revenues, as well as the impact from partnership renewal terms that went into effect in 2018 in Citi-branded cards in North America GCB.
Citi demonstrated strong expense discipline, resulting in a 1% decrease in expenses, as well as positive operating leverage, even as Citi continued to make ongoing investments. Citi’s positive operating leverage, combined with continued credit discipline, resulted in an improvement in pretax earnings. Citi also generated continued loan and deposit growth during the year.
Moreover, Citi continued to return capital to its shareholders. In 2018, Citi returned $18.4 billion in the form of common stock repurchases and dividends. Citi repurchased over 200 million shares during the last year, resulting in an 8% reduction in outstanding common shares. While Citi made continued progress in returning capital to shareholders, each of Citi’s key regulatory capital metrics remained strong (see “Capital” below).
Going into 2019, while global economic growth has continued and the underlying macroeconomic environment remains largely positive, there continue to be various economic, political and other risks and uncertainties that could create a more volatile operating environment and impact Citi’s businesses and future results. For a more detailed discussion of the risks and uncertainties that could impact Citi’s businesses, results of operations and financial condition during 2019, see each respective business’s results of operations, “Risk Factors” and “Managing Global Risk” below. Despite these risks and uncertainties, Citi intends to continue to build on the progress made during 2018 with a focus on further optimizing its performance to benefit shareholders, while remaining flexible and adapting to market and economic conditions as they develop.

2018 Summary Results

Citigroup
Citigroup reported net income of $18.0 billion, or $6.68 per share, compared to a net loss of $6.8 billion, or $2.98 per share, in the prior year. Results in 2017 included a one-time,
 
non-cash charge of $22.6 billion, related to the enactment of the Tax Cuts and Jobs Act (Tax Reform), which impacted the tax line within Corporate/Other, as well as the tax lines in North America GCB and ICG. Results in 2018 included a one-time benefit of $94 million, due to the finalization of the provisional component of the impact based on Citi’s analysis as well as additional guidance received from the U.S. Treasury Department related to Tax Reform, which impacted the tax line within Corporate/Other (for additional information, see “Significant Accounting Policies and Estimates—Income Taxes” below).
Excluding the one-time impact of Tax Reform in both the current and prior year, Citigroup net income of $18.0 billion increased 14% compared to the prior year, reflecting a lower effective tax rate, higher revenues and lower expenses, partially offset by higher cost of credit. On this basis, earnings per share increased 25%, due to growth in net income and the 8% reduction in average shares outstanding, driven by the common stock repurchases. (Citi’s results of operations excluding the impact of Tax Reform are non-GAAP financial measures. Citi believes the presentation of its results of operations excluding the one-time impact of Tax Reform in both the current and prior year provides a meaningful depiction for investors of the underlying fundamentals of its businesses.)
Citigroup revenues of $72.9 billion in 2018 increased 1%, as 3% growth in GCB and 1% growth in ICG were largely offset by a 33% decrease in Corporate/Other, primarily due to the continued wind-down of legacy assets. Results in 2017 included a one-time gain (approximately $580 million) on the sale of a fixed income analytics business in ICG, and results in 2018 included a one-time gain (approximately $250 million) on the sale of an asset management business in Latin America GCB. Excluding the gains on sale in both periods, aggregate revenues in ICG and GCB grew 3% from the prior year.
Citigroup’s end-of-period loans increased 3% to $684 billion versus the prior year. Excluding the impact of foreign currency translation into U.S. dollars for reporting purposes (FX translation), Citigroup’s end-of-period loans grew 4%, as 8% growth in ICG and 3% growth in GCB were partially offset by the continued wind-down of legacy assets in Corporate/Other. (Citi’s results of operations excluding the impact of gains on sales and FX translation are non-GAAP financial measures. Citi believes the presentation of its results of operations excluding the impact of gains on sales and FX translation provides a meaningful depiction for investors of the underlying fundamentals of its businesses.)
Citigroup’s end-of-period deposits increased 6% to $1.0 trillion versus the prior year. Excluding the impact of FX translation, Citigroup’s deposits were up 7%, primarily reflecting a 10% increase in ICG and a 1% increase in GCB.

Expenses
Citigroup operating expenses of $41.8 billion decreased 1% versus the prior year, as efficiency savings and the wind-down of legacy assets more than offset the impact of higher volume-

6


related expenses and ongoing investments. Operating expenses in both ICG and GCB were up 3%, while Corporate/Other operating expenses declined 40%, all versus the prior year.

Cost of Credit
Citi’s total provisions for credit losses and for benefits and claims of $7.6 billion increased 2% from the prior year, driven by higher net loan loss reserve builds and higher net credit losses. The net loan loss reserve build of $354 million compared to a net loan loss reserve build of $266 million in the prior year. The increase largely reflected a modest net loan loss reserve build in ICG, compared to a net loan loss reserve release in the prior year, partially offset by lower net loan loss reserve builds in North America GCB.
Net credit losses of $7.1 billion increased 1% versus the prior year. Consumer net credit losses increased 4% to
$6.9 billion, largely reflecting volume growth and seasoning in the North America cards portfolios, partially offset by the continued wind-down of legacy assets in Corporate/Other. Corporate net credit losses decreased 55% to $169 million, primarily reflecting the impact of an episodic charge-off incurred in the prior year.
For additional information on Citi’s consumer and corporate credit costs and allowance for loan losses, see each respective business’s results of operations and “Credit Risk” below.

Capital
Citigroup’s Common Equity Tier 1 Capital and Tier 1 Capital ratios were 11.9% and 13.5% as of December 31, 2018, respectively, compared to 12.4% and 14.1% as of December 31, 2017, both based on the Basel III Standardized Approach for determining risk-weighted assets. The decline in regulatory capital largely reflected the return of capital to common shareholders, partially offset by earnings growth. Citigroup’s Supplementary Leverage ratio as of December 31, 2018 was 6.4%, compared to 6.7% as of December 31, 2017. For additional information on Citi’s capital ratios and related components, see “Capital Resources” below.

Global Consumer Banking
GCB net income of $5.8 billion increased 49%. Excluding the one-time impact of Tax Reform in the prior year, GCB net income increased 25%, driven primarily by a lower effective tax rate and higher revenues, partially offset by higher expenses. Operating expenses were $18.6 billion, up 3%, as higher volume-related expenses and continued investments were partially offset by efficiency savings.
GCB revenues of $33.8 billion increased 3% versus the prior year, driven by growth across all regions. North America GCB revenues increased 1% to $20.5 billion, driven by higher revenues across all businesses. Citi-branded cards revenues of $8.6 billion were up 1% versus the prior year, as growth in interest-earning balances was largely offset by the previously disclosed impact of partnership renewal terms. Citi retail services revenues of $6.6 billion increased 3% versus the prior year, primarily reflecting organic loan growth and the benefit of the L.L.Bean portfolio acquisition, partially offset by higher partner payments. Retail banking revenues increased 1% from
 
the prior year to $5.3 billion. Excluding mortgage revenues, retail banking revenues of $4.8 billion were up 6% from the prior year, driven by continued growth in deposit margins, partially offset by lower deposit volumes.
North America GCB average deposits of $180 billion decreased a net 2% year-over-year, primarily driven by a reduction in money market balances, as clients transferred money to investments. North America GCB average retail loans of $56 billion grew 1% from the prior year. Assets under management of $60 billion were largely unchanged from the prior year, as 5% underlying growth was offset by the impact of market movements, due to the equity market sell-off at the end of 2018. Average Citi-branded card loans of $88 billion increased 4%, while Citi-branded card purchase sales of $344 billion increased 8% versus the prior year. Average Citi retail services loans of $48 billion increased 6% versus the prior year, while Citi retail services purchase sales of $87 billion were up 7%. For additional information on the results of operations of North America GCB for 2018, see “Global Consumer BankingNorth America GCB” below.
International GCB revenues (consisting of Latin America GCB and Asia GCB (which includes the results of operations in certain EMEA countries)) increased 5% versus the prior year to $13.2 billion. Excluding the impact of FX translation, international GCB revenues increased 6% versus the prior year. Latin America GCB revenues increased 13% versus the prior year, including the gain on sale in 2018. Excluding the gain on sale, Latin America GCB revenues increased 8%, driven by growth in loans and deposits as well as improved deposit spreads. Asia GCB revenues increased 2% versus the prior year, as continued growth in deposit, cards and insurance revenues was largely offset by lower investment revenues due to weak market sentiment. For additional information on the results of operations of Latin America GCB and Asia GCB for 2018, including the impact of FX translation, see “Global Consumer BankingLatin America GCB” and “Global Consumer BankingAsia GCB” below.
Year-over-year, international GCB average deposits of $127 billion increased 4%, average retail loans of $90 billion increased 3%, assets under management of $98 billion decreased 1%, average card loans of $24 billion increased 2% and card purchase sales of $104 billion increased 7%, all excluding the impact of FX translation.

Institutional Clients Group
ICG net income of $12.2 billion increased 35%. Excluding the one-time impact of Tax Reform in the prior year, ICG net income increased 11%, driven by a lower effective tax rate and higher revenues, partially offset by higher operating expenses and higher cost of credit. ICG operating expenses increased 3% to $21.0 billion, as higher compensation costs, volume-related expenses and continued investments were partially offset by efficiency savings.
ICG revenues were $37.0 billion in 2018, up 1% from the prior year, as a 6% increase in Banking revenues was largely offset by a 3% decrease in Markets and securities services, including the impact of the gain on sale in the prior year. Excluding the gain on sale in the prior year, revenues increased 3%, primarily driven by a 6% increase in Banking

7


revenues, as Markets and securities services revenues were largely unchanged versus the prior year. The increase in Banking revenues included the impact of $45 million of gains on loan hedges within corporate lending, compared to losses of $133 million in the prior year.
Banking revenues of $19.9 billion (excluding the impact of gains (losses) on loan hedges within corporate lending) increased 5%, driven by solid growth in treasury and trade solutions, private bank and corporate lending, partially offset by lower revenues in investment banking. Investment banking revenues of $5.0 billion decreased 7% versus the prior year, as growth in advisory was more than offset by a decline in both debt and equity underwriting, largely reflecting lower market activity. Advisory revenues increased 16% to $1.3 billion, equity underwriting revenues decreased 12% to $991 million and debt underwriting revenues decreased 13% to $2.7 billion, all versus the prior year.
Treasury and trade solutions revenues of $9.3 billion increased 8% versus the prior year, reflecting volume growth and improved deposit spreads, with solid growth across net interest and fee income. Private bank revenues increased 9% to $3.4 billion from the prior year, driven by growth in investments, as well as improved deposit spreads. Corporate lending revenues increased 26% to $2.3 billion. Excluding the impact of gains (losses) on loan hedges, corporate lending revenues increased 15% versus the prior year, primarily driven by loan growth and lower hedging costs.
Markets and securities services revenues of $17.0 billion decreased 3% from the prior year. Excluding the gain on sale in the prior year, Markets and securities services revenues were largely unchanged from the prior year, as a decline in fixed income markets revenues was offset by an increase in both equity markets and securities services revenues. Fixed income markets revenues of $11.6 billion decreased 6% from the prior year, driven by lower revenues in both rates and currencies and spread products, reflecting the more challenging environment. Equity markets revenues of $3.4 billion increased 19% from the prior year (14% excluding an episodic loss in derivatives in the prior year), driven by growth in derivatives and prime finance as well as higher investor client revenue, partially offset by a modest decline in cash equities. Securities services revenues of $2.6 billion increased 11%, driven by growth in client volumes and higher interest revenue. For additional information on the results of operations of ICG for 2018, see “Institutional Clients Group” below.

 
Corporate/Other
Corporate/Other net income was $107 million in 2018, compared to a net loss of $19.7 billion in the prior year. Excluding the one-time impact of Tax Reform in both periods, Corporate/Other net income declined 92% to $13 million, largely reflecting lower revenues, partially offset by lower operating expenses and lower cost of credit. Operating expenses of $2.3 billion declined 40% from the prior year, largely reflecting the wind-down of legacy assets, lower infrastructure costs and lower legal expenses. Corporate/Other revenues were $2.1 billion, down 33% from the prior year, primarily reflecting the continued wind-down of legacy assets. For additional information on the results of operations of Corporate/Other for 2018, see “Corporate/Other” below.





8


RESULTS OF OPERATIONS
SUMMARY OF SELECTED FINANCIAL DATA—PAGE 1
Citigroup Inc. and Consolidated Subsidiaries
In millions of dollars, except per share amounts and ratios
2018
2017
2016
2015
2014
Net interest revenue
$
46,562

$
45,061

$
45,476

$
47,093

$
48,445

Non-interest revenue
26,292

27,383

25,321

30,184

29,731

Revenues, net of interest expense
$
72,854

$
72,444

$
70,797

$
77,277

$
78,176

Operating expenses
41,841

42,232

42,338

44,538

56,008

Provisions for credit losses and for benefits and claims
7,568

7,451

6,982

7,913

7,467

Income from continuing operations before income taxes
$
23,445

$
22,761

$
21,477

$
24,826

$
14,701

Income taxes(1)
5,357

29,388

6,444

7,440

7,197

Income (loss) from continuing operations
$
18,088

$
(6,627
)
$
15,033

$
17,386

$
7,504

Income (loss) from discontinued operations, net of taxes(2)
(8
)
(111
)
(58
)
(54
)
(2
)
Net income (loss) before attribution of noncontrolling interests
$
18,080

$
(6,738
)
$
14,975

$
17,332

$
7,502

Net income attributable to noncontrolling interests
35

60

63

90

192

Citigroup’s net income (loss)(1)
$
18,045

$
(6,798
)
$
14,912

$
17,242

$
7,310

Less:
 
 
 
 
 
Preferred dividends—Basic
$
1,173

$
1,213

$
1,077

$
769

$
511

Dividends and undistributed earnings allocated to employee restricted and deferred shares that contain nonforfeitable rights to dividends, applicable to basic EPS
200

37

195

224

110

Income (loss) allocated to unrestricted common shareholders for basic and diluted EPS
$
16,672

$
(8,048
)
$
13,640

$
16,249

$
6,689

Earnings per share
 
 
 
 
 
Basic
 
 
 
 
 
Income (loss) from continuing operations
$
6.69

$
(2.94
)
$
4.74

$
5.43

$
2.21

Net income (loss)
6.69

(2.98
)
4.72

5.41

2.21

Diluted
 
 
 
 
 
Income (loss) from continuing operations
$
6.69

$
(2.94
)
$
4.74

$
5.42

$
2.20

Net income (loss)
6.68

(2.98
)
4.72

5.40

2.20

Dividends declared per common share
1.54

0.96

0.42

0.16

0.04


Table continues on the next page, including footnotes.

9


SUMMARY OF SELECTED FINANCIAL DATA—PAGE 2
 
 
In millions of dollars, except per share amounts, ratios and direct staff
2018
2017
2016
2015
2014
At December 31:
 
 
 
 
 
Total assets
$
1,917,383

$
1,842,465

$
1,792,077

$
1,731,210

$
1,842,181

Total deposits
1,013,170

959,822

929,406

907,887

899,332

Long-term debt
231,999

236,709

206,178

201,275

223,080

Citigroup common stockholders’ equity(1)
177,760

181,487

205,867

205,139

199,717

Total Citigroup stockholders’ equity(1)
196,220

200,740

225,120

221,857

210,185

Direct staff (in thousands)
204

209

219

231

241

Performance metrics
 
 
 
 
 
Return on average assets
0.94
%
(0.36
)%
0.82
%
0.95
%
0.39
%
Return on average common stockholders’ equity(1)(3)
9.4

(3.9
)
6.6

8.1

3.4

Return on average total stockholders’ equity(1)(3)
9.1

(3.0
)
6.5

7.9

3.5

Efficiency ratio (total operating expenses/total revenues)
57.4

58.3

59.8

57.6

71.6

Basel III ratios—full implementation(1)(4)
 
 
 
 
 
Common Equity Tier 1 Capital(5)
11.86
%
12.36
 %
12.57
%
12.07
%
10.57
%
Tier 1 Capital(5)
13.46

14.06

14.24

13.49

11.45

Total Capital(5)
16.18

16.30

16.24

15.30

12.80

Supplementary Leverage ratio
6.41

6.68

7.22

7.08

5.94

Citigroup common stockholders’ equity to assets(1)
9.27
%
9.85
 %
11.49
%
11.85
%
10.84
%
Total Citigroup stockholders’ equity to assets(1)
10.23

10.90

12.56

12.82

11.41

Dividend payout ratio(6)
23.1

         NM
8.9

3.0

1.8

Total payout ratio(7)
109.1

         NM
77.1

36.0

19.9

Book value per common share(1)
$
75.05

$
70.62

$
74.26

$
69.46

$
66.05

Tangible book value (TBV) per share(1)(8)
63.79

60.16

64.57

60.61

56.71

(1)
2017 includes the one-time impact related to the enactment of Tax Reform. 2018 reflects the tax rate structure under Tax Reform. For additional information, see “Significant Accounting Policies and Estimates—Income Taxes” below.
(2)
See Note 2 to the Consolidated Financial Statements for additional information on Citi’s discontinued operations.
(3)
The return on average common stockholders’ equity is calculated using net income less preferred stock dividends divided by average common stockholders’ equity. The return on average total Citigroup stockholders’ equity is calculated using net income divided by average Citigroup stockholders’ equity.
(4)
Citi’s risk-based capital and leverage ratios for 2017 and prior years are non-GAAP financial measures, which reflect full implementation of regulatory capital adjustments and deductions prior to the effective date of January 1, 2018.
(5)
As of December 31, 2018 and 2017, Citi’s reportable Common Equity Tier 1 Capital and Tier 1 Capital ratios were the lower derived under the Basel III Standardized Approach, whereas the reportable Total Capital ratio was the lower derived under the Basel III Advanced Approaches framework. For all prior periods presented, Citi’s Common Equity Tier 1 Capital, Tier 1 Capital and Total Capital ratios were the lower derived under the Basel III Advanced Approaches framework.
(6)
Dividends declared per common share as a percentage of net income per diluted share.
(7)
Total common dividends declared plus common stock repurchases as a percentage of net income available to common shareholders. See “Consolidated Statement of Changes in Stockholders’ Equity,” Note 10 to the Consolidated Financial Statements and “Equity Security Repurchases” below for the component details.
(8)
For information on TBV, see “Capital Resources—Tangible Common Equity, Book Value Per Share, Tangible Book Value Per Share and Returns on Equity” below.
NM Not meaningful



10


SEGMENT AND BUSINESS—INCOME (LOSS) AND REVENUES
CITIGROUP INCOME
In millions of dollars
2018
2017(1)
2016
% Change 
 2018 vs. 2017
% Change 
 2017 vs. 2016
Income (loss) from continuing operations
 
 
 
 
 
Global Consumer Banking
 
 
 
 
 
North America
$
3,340

$
1,990

$
3,239

68
 %
(39
)%
Latin America
928

610

633

52

(4
)
Asia(2)
1,494

1,278

1,059

17

21

Total
$
5,762

$
3,878

$
4,931

49
 %
(21
)%
Institutional Clients Group
 
 
 
 
 
North America
$
3,500

$
2,355

$
3,515

49
 %
(33
)%
EMEA
3,891

2,832

2,345

37

21

Latin America
1,889

1,544

1,454

22

6

Asia
2,920

2,335

2,211

25

6

Total
$
12,200

$
9,066

$
9,525

35
 %
(5
)%
Corporate/Other
$
126

$
(19,571
)
$
577

NM

NM

Income (loss) from continuing operations
$
18,088

$
(6,627
)
$
15,033

NM

NM

Discontinued operations
$
(8
)
$
(111
)
$
(58
)
93
 %
(91
)%
Net income attributable to noncontrolling interests
35

60

63

(42
)
(5
)
Citigroup’s net income (loss)
$
18,045

$
(6,798
)
$
14,912

NM

NM


(1)
2017 includes the one-time impact related to the enactment of Tax Reform. For additional information, see “Significant Accounting Policies and Estimates—Income Taxes” below.
(2)
Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented.
NM Not meaningful


11



CITIGROUP REVENUES
In millions of dollars
2018
2017
2016
% Change 
 2018 vs. 2017
% Change 
 2017 vs. 2016
Global Consumer Banking
 
 
 
 
 
North America
$
20,544

$
20,270

$
19,764

1
 %
3
 %
Latin America
5,760

5,222

4,971

10

5

Asia(1)
7,473

7,346

6,889

2

7

Total
$
33,777

$
32,838

$
31,624

3
 %
4
 %
Institutional Clients Group
 
 
 
 
 
North America
$
12,914

$
13,923

$
12,767

(7
)%
9
 %
EMEA
11,770

10,879

10,012

8

9

Latin America
4,504

4,385

4,125

3

6

Asia
7,806

7,287

7,036

7

4

Total
$
36,994

$
36,474

$
33,940

1
 %
7
 %
Corporate/Other
$
2,083

$
3,132

$
5,233

(33
)%
(40
)%
Total Citigroup net revenues
$
72,854

$
72,444

$
70,797

1
 %
2
 %
(1)
Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented.



12


SEGMENT BALANCE SHEET(1) 
In millions of dollars
Global
Consumer
Banking
Institutional
Clients
Group
Corporate/Other
and
consolidating
eliminations(2)
Citigroup
parent
company-
issued
long-term
debt and
stockholders’
equity(3)
Total
Citigroup
consolidated
Assets
 
 
 
 
 
Cash and deposits with banks
$
8,338

$
66,963

$
112,804

$

$
188,105

Federal funds sold and securities borrowed and purchased under agreements to resell
140

270,322

222


270,684

Trading account assets
949

245,521

9,647


256,117

Investments
1,152

116,006

241,449


358,607

Loans, net of unearned income and allowance for loan losses
305,631

351,333

14,917


671,881

Other assets
37,551

99,638

34,800


171,989

Net inter-segment liquid assets(4)
78,378

244,387

(322,765
)


Total assets
$
432,139

$
1,394,170

$
91,074

$

$
1,917,383

Liabilities and equity
 
 
 
 

Total deposits
$
308,106

$
689,983

$
15,081

$

$
1,013,170

Federal funds purchased and securities loaned and sold under agreements to repurchase
4,459

173,302

7


177,768

Trading account liabilities
140

143,751

414


144,305

Short-term borrowings
491

22,381

9,474


32,346

Long-term debt(3)
1,865

42,557

43,809

143,768

231,999

Other liabilities
18,854

88,036

13,831


120,721

Net inter-segment funding (lending)(3)
98,224

234,160

7,604

(339,988
)

Total liabilities
$
432,139

$
1,394,170

$
90,220

$
(196,220
)
$
1,720,309

Total stockholders’ equity(5)


854

196,220

197,074

Total liabilities and equity
$
432,139

$
1,394,170

$
91,074

$

$
1,917,383


(1)
The supplemental information presented in the table above reflects Citigroup’s consolidated GAAP balance sheet by reporting segment as of December 31, 2018. The respective segment information depicts the assets and liabilities managed by each segment as of such date.
(2)
Consolidating eliminations for total Citigroup and Citigroup parent company assets and liabilities are recorded within Corporate/Other.
(3)
The total stockholders’ equity and the majority of long-term debt of Citigroup reside in the Citigroup parent company Consolidated Balance Sheet. Citigroup allocates stockholders’ equity and long-term debt to its businesses through inter-segment allocations as shown above.
(4)
Represents the attribution of Citigroup’s liquidity assets (primarily consisting of cash, marketable equity securities and available-for-sale debt securities) to the various businesses based on Liquidity Coverage Ratio (LCR) assumptions.
(5)
Corporate/Other equity represents noncontrolling interests.


13


GLOBAL CONSUMER BANKING
Global Consumer Banking (GCB) consists of consumer banking businesses in North America, Latin America (consisting of Citi’s consumer banking business in Mexico) and Asia. GCB provides traditional banking services to retail customers through retail banking, including commercial banking, and Citi-branded cards and Citi retail services (for additional information on these businesses, see “Citigroup Segments” above and “Managing Global Risk—Consumer Credit” below). GCB is focused on its priority markets in the U.S., Mexico and Asia with 2,410 branches in 19 countries and jurisdictions as of December 31, 2018. Asia GCB also includes traditional retail banking and Citi-branded card products that are provided to retail customers in certain EMEA countries. At December 31, 2018, GCB had approximately $432 billion in assets and $308 billion in deposits.
GCB’s overall strategy is to leverage Citi’s global footprint and be the pre-eminent bank for the emerging affluent and affluent consumers in large urban centers. In credit cards and in certain retail markets (including commercial banking), Citi serves customers in a somewhat broader set of segments and geographies.

In millions of dollars, except as otherwise noted
2018
2017
2016
% Change 
 2018 vs. 2017
% Change 
 2017 vs. 2016
Net interest revenue
$
28,583

$
27,425

$
26,232

4
 %
5
 %
Non-interest revenue
5,194

5,413

5,392

(4
)

Total revenues, net of interest expense
$
33,777

$
32,838

$
31,624

3
 %
4
 %
Total operating expenses
$
18,590

$
18,003

$
17,627

3
 %
2
 %
Net credit losses
$
6,920

$
6,562

$
5,610

5
 %
17
 %
Credit reserve build (release)
563

965

708

(42
)
36

Provision (release) for unfunded lending commitments

(2
)
3

100

NM

Provision for benefits and claims
103

116

106

(11
)
9

Provisions for credit losses and for benefits and claims
  (LLR & PBC)
$
7,586

$
7,641

$
6,427

(1
)%
19
 %
Income from continuing operations before taxes
$
7,601

$
7,194

$
7,570

6
 %
(5
)%
Income taxes
1,839

3,316

2,639

(45
)
26

Income from continuing operations
$
5,762

$
3,878

$
4,931

49
 %
(21
)%
Noncontrolling interests
7

9

7

(22
)
29

Net income
$
5,755

$
3,869

$
4,924

49
 %
(21
)%
Balance Sheet data and ratios (in billions of dollars)
 
 
 
 
 
Total EOP assets
$
432

$
428

$
411

1
 %
4
 %
Average assets
423

417

395

1

6

Return on average assets
1.36
%
0.93
%
1.25
%
 
 
Efficiency ratio
55

55

56

 
 
Average deposits
$
307

$
306

$
298


3

Net credit losses as a percentage of average loans
2.26
%
2.21
%
2.01
%
 
 
Revenue by business
 
 
 
 
 
Retail banking
$
14,065

$
13,481

$
12,990

4
 %
4
 %
Cards(1)
19,712

19,357

18,634

2

4

Total
$
33,777

$
32,838

$
31,624

3
 %
4
 %
Income from continuing operations by business
 
 
 
 
 
Retail banking
$
2,304

$
1,656

$
1,538

39
 %
8
 %
Cards(1)
3,458

2,222

3,393

56

(35
)
Total
$
5,762

$
3,878

$
4,931

49
 %
(21
)%
Table continues on the next page, including footnotes.


14


Foreign currency (FX) translation impact
 
 
 
 
 
Total revenue—as reported
$
33,777

$
32,838

$
31,624

3
 %
4
 %
Impact of FX translation(2)

(132
)
(54
)
 
 
Total revenues—ex-FX(3)
$
33,777

$
32,706

$
31,570

3
 %
4
 %
Total operating expenses—as reported
$
18,590

$
18,003

$
17,627

3
 %
2
 %
Impact of FX translation(2)

(54
)
7

 
 
Total operating expenses—ex-FX(3)
$
18,590

$
17,949

$
17,634

4
 %
2
 %
Total provisions for LLR & PBC—as reported
$
7,586

$
7,641

$
6,427

(1
)%
19
 %
Impact of FX translation(2)

(32
)
(31
)
 
 
Total provisions for LLR & PBC—ex-FX(3)
$
7,586

$
7,609

$
6,396

 %
19
 %
Net income—as reported
$
5,755

$
3,869

$
4,924

49
 %
(21
)%
Impact of FX translation(2)

(28
)
(19
)
 
 
Net income—ex-FX(3)
$
5,755

$
3,841

$
4,905

50
 %
(22
)%
(1)
Includes both Citi-branded cards and Citi retail services.
(2)
Reflects the impact of FX translation into U.S. dollars at the 2018 average exchange rates for all periods presented.
(3)
Presentation of this metric excluding FX translation is a non-GAAP financial measure.



15


NORTH AMERICA GCB
North America GCB provides traditional retail banking, including commercial banking, Citi-branded cards products and Citi retail services card products to retail customers and small to mid-size businesses, as applicable, in the U.S. North America GCB’s U.S. cards product portfolio includes its proprietary portfolio (including the Citi Double Cash, Thank You and Value cards) and co-branded cards (including, among others, American Airlines and Costco) within Citi-branded cards, as well as its co-brand and private label relationships (including, among others, Sears, The Home Depot, Best Buy and Macy’s) within Citi retail services.
As of December 31, 2018, North America GCB’s 689 retail bank branches were concentrated in the six key metropolitan areas of New York, Chicago, Miami, Washington, D.C., Los Angeles and San Francisco. Also as of December 31, 2018, North America GCB had approximately 9.1 million retail banking customer accounts, $56.8 billion in retail banking loans and $181.2 billion in deposits. In addition, North America GCB had approximately 121 million Citi-branded and Citi retail services credit card accounts with $144.5 billion in outstanding card loan balances.
In millions of dollars, except as otherwise noted
2018
2017
2016
% Change 
 2018 vs. 2017
% Change 
 2017 vs. 2016
Net interest revenue
$
19,621

$
18,879

$
18,131

4
 %
4
 %
Non-interest revenue
923

1,391

1,633

(34
)
(15
)
Total revenues, net of interest expense
$
20,544

$
20,270

$
19,764

1
 %
3
 %
Total operating expenses
$
10,631

$
10,245

$
10,067

4
 %
2
 %
Net credit losses
$
5,097

$
4,796

$
3,919

6
 %
22
 %
Credit reserve build
438

869

653

(50
)
33

Provision for unfunded lending commitments

4

6

(100
)
(33
)
Provision for benefits and claims
22

33

34

(33
)
(3
)
Provisions for credit losses and for benefits and claims
$
5,557

$
5,702

$
4,612

(3
)%
24
 %
Income from continuing operations before taxes
$
4,356

$
4,323

$
5,085

1
 %
(15
)%
Income taxes
1,016

2,333

1,846

(56
)
26

Income from continuing operations
$
3,340

$
1,990

$
3,239

68
 %
(39
)%
Noncontrolling interests

(1
)
(2
)
100

50

Net income
$
3,340

$
1,991

$
3,241

68
 %
(39
)%
Balance Sheet data and ratios (in billions of dollars)
 
 

 

 
 
Average assets
$
249

$
248

$
229

 %
8
 %
Return on average assets
1.34
%
0.80
%
1.42
%
 
 
Efficiency ratio
52

51

51

 
 
Average deposits
$
180.4

$
184.1

$
183.2

(2
)

Net credit losses as a percentage of average loans
2.66
%
2.58
%
2.29
%
 
 
Revenue by business
 
 

 

 
 
Retail banking
$
5,315

$
5,264

$
5,227

1
 %
1
 %
Citi-branded cards
8,628

8,579

8,150

1

5

Citi retail services
6,601

6,427

6,387

3

1

Total
$
20,544

$
20,270

$
19,764

1
 %
3
 %
Income from continuing operations by business
 
 

 

 
 
Retail banking
$
565

$
412

$
534

37
 %
(23
)%
Citi-branded cards
1,581

1,009

1,441

57

(30
)
Citi retail services
1,194

569

1,264

NM

(55
)
Total
$
3,340

$
1,990

$
3,239

68
 %
(39
)%

NM Not meaningful


16


2018 vs. 2017
Net income increased 68%, largely reflecting the impact of the $750 million one-time, non-cash charge recorded in the tax line due to the impact of Tax Reform in 2017 (for additional information, see “Significant Accounting Policies and Significant Estimates—Income Taxes” below). Excluding the one-time impact of Tax Reform, net income increased 22%, driven primarily by a lower effective tax rate due to Tax Reform, higher revenues and lower cost of credit, partially offset by higher expenses.
Revenues increased 1%, driven by higher revenues across all businesses.
Retail banking revenues increased 1%. Excluding mortgage revenues (decline of 27%), retail banking revenues were up 6%, driven by continued growth in deposit margins, partially offset by lower deposit volumes. Average deposits decreased 2% year-over-year, primarily driven by a reduction in money market balances, as clients transferred money to investments. Assets under management were largely unchanged from the prior year as 5% underlying growth was offset by the impact of market movements, due to the equity market sell-off at the end of 2018. The decline in mortgage revenues was driven by lower origination activity and higher cost of funds, reflecting the higher interest rate environment.
Cards revenues increased 1%. In Citi-branded cards, revenues increased 1%, as growth in interest-earning balances, driven by maturity of recent vintages and strength in loan balance retention, was largely offset by the impact of previously disclosed partnership terms that went into effect in 2018. Citi sold its Hilton portfolio in the first quarter of 2018, which resulted in a gain of approximately $150 million. This gain was offset by the loss of operating revenue in the portfolio in 2018. Average loans increased 4% and purchase sales increased 8%.
Citi retail services revenues increased 3%, primarily reflecting organic loan growth and the benefit of the L.L.Bean portfolio acquisition in June 2018, partially offset by higher partner payments. Average loans increased 6% and purchase sales increased 7%.
Expenses increased 4%, as volume growth and ongoing investments were partially offset by efficiency savings.
Provisions decreased 3% from the prior year, driven by a lower net loan loss reserve build, partially offset by higher net credit losses. The net loan loss reserve build was $438 million in 2018, primarily reflecting volume growth and seasoning in both cards portfolios. This compares to a build of $873 million in the prior year, which included $300 million related to an increase in net flow rates in later delinquency buckets in Citi retail services and a slight increase in delinquencies for the Citi-branded cards portfolio.
Net credit losses increased 6% to $5.1 billion, driven by higher net credit losses in both Citi-branded cards (up 6% to $2.6 billion) and Citi retail services (up 9% to $2.4 billion). The increase in the cards net credit losses primarily reflected volume growth and seasoning in both portfolios.
For additional information on North America GCB’s retail banking, including commercial banking, and its Citi-branded cards and Citi retail services portfolios, see “Credit Risk—Consumer Credit” below.
 
As part of its Citi retail services business, Citi issues co-brand and private label credit card products with Sears. As previously disclosed, in October 2018, Sears filed for Chapter 11 bankruptcy protection and in connection with the filing Sears has closed, or announced plans to close, additional stores. On February 11, 2019, after bankruptcy court approval, ESL Investments, Inc. purchased substantially all of Sears’ assets on a going concern basis, including its credit card program agreement with Citi. The impact to Citi retail services, from reduced new account acquisitions or lower purchase sales, will depend in part on the magnitude and timing of additional Sears store closures and continued customer attrition. Citi does not currently expect that the sale of Sears to ESL will have an immediate or ongoing material impact on Citi’s consolidated results. For additional information on the potential impact from a deterioration in or failure to maintain Citi’s co-branding and private label credit card relationships, see “Risk Factors—Strategic Risks” below.
2017 vs. 2016
Net income decreased 39% largely due to the one-time impact of Tax Reform. Excluding the one-time impact of Tax Reform, net income decreased 15%, due to higher cost of credit and higher expenses, partially offset by higher revenues.
Revenues increased 3%, driven by higher revenues across all businesses.
Retail banking revenues increased 1%. Excluding mortgage revenues (down 32%), retail banking revenues were up 9%, driven by growth in checking deposits, loans (average loans up 3%) and assets under management (up 14%) and increased commercial banking activity, as well as a benefit from higher interest rates.
Cards revenues increased 3%. In Citi-branded cards, revenues increased 5%, primarily reflecting the acquisition of the Costco portfolio, as well as modest growth in interest-earning balances, partially offset by the continued run-off of non-core portfolios and the higher cost to fund growth in transactor and promotional balances.
Citi retail services revenues increased 1%, as loan growth was partially offset by the impact of the renewal and extension of certain partnerships within the portfolio, as well as the absence of gains on sales of two cards portfolios in 2016.
Expenses increased 2%, driven by the addition of the Costco portfolio, higher volume-related expenses and investments as well as remediation costs related to a CARD Act matter, partially offset by efficiency savings.
Provisions increased 24%, driven by higher net credit losses and a higher net loan loss reserve build.
Net credit losses increased 22%, largely driven by higher net credit losses in both cards portfolios, primarily reflecting volume growth and seasoning, as well as the impact of acquiring the Costco portfolio.
The net loan loss reserve build was $873 million, compared to a build of $659 million in the prior year, driven by volume growth and seasoning in both cards portfolios, as well as the increase in net flow rates in later delinquency buckets, primarily in Citi retail services.


17


LATIN AMERICA GCB
Latin America GCB provides traditional retail banking, including commercial banking, and its Citi-branded card products to retail customers and small to mid-size businesses in Mexico through Citibanamex, one of Mexico’s largest banks.
At December 31, 2018, Latin America GCB had 1,463 retail branches in Mexico, with approximately 29.4 million retail banking customer accounts, $19.7 billion in retail banking loans and $27.7 billion in deposits. In addition, the business had approximately 5.6 million Citi-branded card accounts with $5.7 billion in outstanding loan balances.
In millions of dollars, except as otherwise noted
2018
2017
2016
% Change 
 2018 vs. 2017
% Change 
 2017 vs. 2016
Net interest revenue
$
4,058

$
3,844

$
3,606

6
 %
7
 %
Non-interest revenue(1)
1,702

1,378

1,365

24

1

Total revenues, net of interest expense
$
5,760

$
5,222

$
4,971

10
 %
5
 %
Total operating expenses
$
3,156

$
2,959

$
2,885

7
 %
3
 %
Net credit losses
$
1,153

$
1,117

$
1,040

3
 %
7
 %
Credit reserve build
83

125

83

(34
)
51

Provision (release) for unfunded lending commitments

(1
)
1

100

NM

Provision for benefits and claims
81

83

72

(2
)
15

Provisions for credit losses and for benefits and claims (LLR & PBC)
$
1,317

$
1,324

$
1,196

(1
)%
11
 %
Income from continuing operations before taxes
$
1,287

$
939

$
890

37
 %
6
 %
Income taxes
359

329

257

9

28

Income from continuing operations
$
928

$
610

$
633

52
 %
(4
)%
Noncontrolling interests

5

5

(100
)

Net income
$
928

$
605

$
628

53
 %
(4
)%
Balance Sheet data and ratios (in billions of dollars)
 
 

 

 
 
Average assets
$
44

$
45

$
47

(2
)%
(4
)%
Return on average assets
2.11
%
1.34
%
1.34
%
 
 
Efficiency ratio
55

57

58

 
 
Average deposits
$
28.7

$
27.4

$
25.7

5

7

Net credit losses as a percentage of average loans
4.47
%
4.42
%
4.32
%
 
 
Revenue by business
 
 
 
 
 
Retail banking(1)
$
4,195

$
3,752

$
3,493

12
 %
7
 %
Citi-branded cards
1,565

1,470

1,478

6

(1
)
Total
$
5,760

$
5,222

$
4,971

10
 %
5
 %
Income from continuing operations by business
 
 

 

 
 
Retail banking(1)
$
722

$
426

$
352

69
 %
21
 %
Citi-branded cards
206

184

281

12

(35
)
Total
$
928

$
610

$
633

52
 %
(4
)%
FX translation impact
 
 

 

 
 
Total revenues—as reported
$
5,760

$
5,222

$
4,971

10
 %
5
 %
Impact of FX translation(2)

(105
)
(145
)
 
 
Total revenues—ex-FX(3)
$
5,760

$
5,117

$
4,826

13
 %
6
 %
Total operating expenses—as reported
$
3,156

$
2,959

$
2,885

7
 %
3
 %
Impact of FX translation(2)

(50
)
(66
)
 
 
Total operating expenses—ex-FX(3)
$
3,156

$
2,909

$
2,819

8
 %
3
 %
Provisions for LLR & PBC—as reported
$
1,317

$
1,324

$
1,196

(1
)%
11
 %
Impact of FX translation(2)

(27
)
(34
)
 
 
Provisions for LLR & PBC—ex-FX(3)
$
1,317

$
1,297

$
1,162

2
 %
12
 %
Net income—as reported
$
928

$
605

$
628

53
 %
(4
)%
Impact of FX translation(2)

(19
)
(30
)
 
 
Net income—ex-FX(3)
$
928

$
586

$
598

58
 %
(2
)%
(1)
2018 includes an approximate $250 million gain on the sale of an asset management business. See Note 2 to the Consolidated Financial Statements.
(2)
Reflects the impact of FX translation into U.S. dollars at the 2018 average exchange rates for all periods presented.
(3)
Presentation of this metric excluding FX translation is a non-GAAP financial measure.


18



The discussion of the results of operations for Latin America GCB below excludes the impact of FX translation for all periods presented. Presentations of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. For a reconciliation of certain of these metrics to the reported results, see the table above.

2018 vs. 2017
Net income increased 58% to $928 million, reflecting higher revenues and a lower effective tax rate as a result of Tax Reform, partially offset by higher expenses and cost of credit.
Revenues increased 13%, including the gain on sale of an asset management business (approximately $250 million). Excluding the gain on sale, revenues were up 8%, driven by increases in both retail banking and cards.
Retail banking revenues increased 14%. Excluding the gain on sale, retail banking revenues increased 7%, driven by continued growth across commercial loans and deposits, as well as improved deposit spreads due to higher interest rates. Average loans grew 3%, and average deposits grew 6%, while assets under management declined 5%, primarily driven by market performance during the second half of 2018. Cards revenues increased 9%, due to continued volume growth, reflecting higher purchase sales (up 11%) and full-rate revolving loans. Average cards loans grew 6%.
Expenses increased 8%, driven by volume growth, ongoing investment spending and higher repositioning charges, partially offset by efficiency savings. As previously disclosed, Citi continues to execute on its investment plans for Citibanamex (totaling more than $1 billion through 2020), including initiatives to modernize the branch network, enhance digital capabilities and upgrade core operating platforms.
Provisions increased 2%, as higher net credit losses were largely offset by a lower net loan loss reserve build. The increase in net credit losses was primarily due to volume growth and seasoning in cards.
For additional information on Latin America GCB’s retail banking, including commercial banking, and its Citi-branded cards portfolios, see “Credit Risk—Consumer Credit” below.
For additional information on potential macroeconomic
and geopolitical challenges and other risks facing Latin
America GCB, see “Risk Factors—Strategic Risks” below.



 

2017 vs. 2016
Net income decreased 2%, primarily driven by higher credit costs and expenses, partially offset by higher revenues.
Revenues increased 6%, driven by higher revenues in
retail banking.
Retail banking revenues increased 8%, reflecting continued growth in volumes, including increases in average deposits (8%), average loans (6%) and assets under management (4%), as well as improved deposit spreads, driven by higher interest rates. Cards revenues were largely unchanged, as continued improvement in full-rate revolving loans was offset by a higher cost to fund non-revolving loans.
Expenses increased 3%, as ongoing investment spending and business growth were partially offset by efficiency savings.
Provisions increased 12%, primarily driven by higher net credit losses and an increase in the net loan loss reserve build, largely reflecting volume growth and seasoning, as well as a Mexico earthquake-related loan loss reserve build.









19


ASIA GCB
Asia GCB provides traditional retail banking, including commercial banking, and its Citi-branded card products to retail customers and small to mid-size businesses, as applicable. During 2018, Asia GCB’s most significant revenues were from Singapore, Hong Kong, Korea, India, Australia, Taiwan, Thailand, Philippines, Indonesia and Malaysia. Asia GCB also includes traditional retail banking and Citi-branded card products that are provided to retail customers in certain EMEA countries, primarily in Poland, Russia and the United Arab Emirates.
At December 31, 2018, on a combined basis, the businesses had 258 retail branches, approximately 16.0 million retail banking customer accounts, $69.2 billion in retail banking loans and $99.2 billion in deposits. In addition, the businesses had approximately 15.3 million Citi-branded card accounts with $19.3 billion in outstanding loan balances.

In millions of dollars, except as otherwise noted(1)
2018
2017
2016
% Change 
 2018 vs. 2017
% Change 
 2017 vs. 2016
Net interest revenue
$
4,904

$
4,702

$
4,495

4
 %
5
 %
Non-interest revenue
2,569

2,644

2,394

(3
)
10

Total revenues, net of interest expense
$
7,473

$
7,346

$
6,889

2
 %
7
 %
Total operating expenses
$
4,803

$
4,799

$
4,675

 %
3
 %
Net credit losses
$
670

$
649

$
651

3
 %
 %
Credit reserve build (release)
42

(29
)
(28
)
NM

(4
)
Provision (release) for unfunded lending commitments

(5
)
(4
)
100

(25
)
Provisions for credit losses
$
712

$
615

$
619

16
 %
(1
)%
Income from continuing operations before taxes
$
1,958

$
1,932

$
1,595

1
 %
21
 %
Income taxes
464

654

536

(29
)
22

Income from continuing operations
$
1,494

$
1,278

$
1,059

17
 %
21
 %
Noncontrolling interests
7

5

4

40

25

Net income
$
1,487

$
1,273

$
1,055

17
 %
21
 %
Balance Sheet data and ratios (in billions of dollars)
 
 

 

 
 
Average assets
$
131

$
124

$
119

6
 %
4
 %
Return on average assets
1.14
%
1.03
%
0.89
%
 
 
Efficiency ratio
64

65

68

 
 
Average deposits
$
98.0

$
94.6

$
89.5

4

6

Net credit losses as a percentage of average loans
0.76
%
0.76
%
0.77
%
 
 
Revenue by business
 
 
 
 
 
Retail banking
$
4,555

$
4,465

$
4,270

2
 %
5
 %
Citi-branded cards
2,918

2,881

2,619

1

10

Total
$
7,473

$
7,346

$
6,889

2
 %
7
 %
Income from continuing operations by business
 
 
 
 
 
Retail banking
$
1,017

$
818

$
652

24
 %
25
 %
Citi-branded cards
477

460

407

4

13

Total
$
1,494

$
1,278

$
1,059

17
 %
21
 %

20


FX translation impact
 
 
 
 
 
Total revenues—as reported
$
7,473

$
7,346

$
6,889

2
 %
7
 %
Impact of FX translation(2)

(27
)
91

 
 
Total revenues—ex-FX(3)
$
7,473

$
7,319

$
6,980

2
 %
5
 %
Total operating expenses—as reported
$
4,803

$
4,799

$
4,675

 %
3
 %
Impact of FX translation(2)

(4
)
73

 
 
Total operating expenses—ex-FX(3)
$
4,803

$
4,795

$
4,748

 %
1
 %
Provisions for credit losses—as reported
$
712

$
615

$
619

16
 %
(1
)%
Impact of FX translation(2)

(5
)
3

 
 
Provisions for credit losses—ex-FX(3)
$
712

$
610

$
622

17
 %
(2
)%
Net income—as reported
$
1,487

$
1,273

$
1,055

17
 %
21
 %
Impact of FX translation(2)

(9
)
11

 
 
Net income—ex-FX(3)
$
1,487

$
1,264

$
1,066

18
 %
19
 %

(1)
Asia GCB includes the results of operations of GCB activities in certain EMEA countries for all periods presented.
(2)
Reflects the impact of FX translation into U.S. dollars at the 2018 average exchange rates for all periods presented.
(3)
Presentation of this metric excluding FX translation is a non-GAAP financial measure.


The discussion of the results of operations for Asia GCB below excludes the impact of FX translation for all periods presented. Presentations of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. For a reconciliation of certain of these metrics to the reported results, see the table above.

2018 vs. 2017
Net income increased 18%, reflecting higher revenues and a lower effective tax rate as a result of Tax Reform, partially offset by higher cost of credit.
Revenues increased 2%, driven by higher retail banking and cards revenues.
Retail banking revenues increased 2%, as continued growth in deposit and insurance revenues was partially offset by lower investment revenues due to weak market sentiment. Average deposits increased 3% and assets under management grew 1%, while investment sales decreased 8%. Retail lending revenues increased 1%, as volume growth in personal and commercial loans was largely offset by lower mortgage revenues due to spread compression. Average retail banking loans grew 3%.
Cards revenues increased 2%. Excluding the benefit of modest one-time gains in the prior year, revenues increased 4%, driven by continued growth in purchase sales (up 6%) and average loans (up 2%).
Expenses were largely unchanged, as volume-driven growth and ongoing investment spending were offset by efficiency savings.
Provisions increased 17%, primarily driven by higher net credit losses and a modest net loan loss reserve build compared to a modest net loan loss reserve release in the prior year due to volume growth. Overall credit quality continued to remain stable in the region.
For additional information on Asia GCB’s retail banking portfolios, including commercial banking, and its Citi-branded cards portfolio, see “Credit Risk—Consumer Credit” below.




 
2017 vs. 2016
Net income increased 19%, reflecting higher revenues and lower cost of credit, partially offset by higher expenses.
Revenues increased 5%, driven by improvement in cards and wealth management revenues, partially offset by continued lower retail lending revenues.
Retail banking revenues increased 3%, primarily due to higher investment revenues, driven by improved investor sentiment, partially offset by the repositioning of the retail loan portfolio. The lower retail lending revenues (down 4%) reflected lower average loans (down 1%) due to the continued optimization of the portfolio away from lower yielding mortgage loans.
Cards revenues increased 8%, reflecting 5% growth in average loans and 6% growth in purchase sales, both of which benefited from the portfolio acquisition in Australia, as well as modest gains related to sales of merchant acquiring businesses in certain countries.
Expenses increased 1%, resulting from volume-driven growth and ongoing investment spending, partially offset by efficiency savings.
Provisions decreased 2%, primarily driven by a decrease in net credit losses.




21


INSTITUTIONAL CLIENTS GROUP
Institutional Clients Group (ICG) includes Banking and Markets and securities services (for additional information on these businesses, see “Citigroup Segments” above). ICG provides corporate, institutional, public sector and high-net-worth clients around the world with a full range of wholesale banking products and services, including fixed income and equity sales and trading, foreign exchange, prime brokerage, derivative services, equity and fixed income research, corporate lending, investment banking and advisory services, private banking, cash management, trade finance and securities services. ICG transacts with clients in both cash instruments and derivatives, including fixed income, foreign currency, equity and commodity products.
ICG revenue is generated primarily from fees and spreads associated with these activities. ICG earns fee income for assisting clients with transactional services and clearing and providing brokerage and investment banking services and other such activities. Such fees are recognized at the point in time when Citigroup’s performance under the terms of a contractual arrangement is completed, which is typically at the trade/execution date or closing of a transaction. Revenue generated from these activities is recorded in Commissions and fees and Investment banking. Revenue is also generated from assets under custody and administration, which is recognized as/when the associated promised service is satisfied, which normally occurs at the point in time the service is requested by the customer and provided by Citi. Revenue generated from these activities is primarily recorded in Administration and other fiduciary fees. For additional information on these various types of revenues, see Note 5 to the Consolidated Financial Statements.
In addition, as a market maker, ICG facilitates transactions, including holding product inventory to meet client demand, and earns the differential between the price at which it buys and sells the products. These price differentials and the unrealized gains and losses on the inventory are recorded in Principal transactions (for additional information on Principal transactions revenue, see Note 6 to the Consolidated Financial Statements). Other primarily includes mark-to-market gains and losses on certain credit derivatives, realized gains and losses on available-for-sale (AFS) debt securities, gains and losses on equity securities not held in trading accounts and other non-recurring gains and losses. Interest income earned on assets held, less interest paid on long- and short-term debt and to customers on deposits, is recorded as Net interest revenue.
The amount and types of Markets revenues are impacted by a variety of interrelated factors, including market liquidity; changes in market variables such as interest rates, foreign exchange rates, equity prices, commodity prices and credit spreads, as well as their implied volatilities; investor confidence and other macroeconomic conditions. Assuming all other market conditions do not change, increases in client activity levels or bid/offer spreads generally result in increases in revenues. However, changes in market conditions can significantly impact client activity levels, bid/offer spreads and the fair value of product inventory. For example, a decrease in
 
market liquidity may increase bid/offer spreads, decrease client activity levels and widen credit spreads on product inventory positions.
ICG’s management of the Markets businesses involves daily monitoring and evaluation of the above factors at the trading desk as well as the country level. ICG does not separately track the impact on total Markets revenues of the volume of transactions, bid/offer spreads, fair value changes of product inventory positions and economic hedges because, as noted above, these components are interrelated and are not deemed useful or necessary individually to manage the Markets businesses at an aggregate level.
In the Markets businesses, client revenues are those revenues directly attributable to client transactions at the time of inception, including commissions, interest or fees earned. Client revenues do not include the results of client facilitation activities (e.g., holding product inventory in anticipation of client demand) or the results of certain economic hedging activities.
ICG’s international presence is supported by trading floors in approximately 80 countries and a proprietary network in 98 countries and jurisdictions. At December 31, 2018, ICG had approximately $1.4 trillion of assets and $690 billion of deposits, while two of its businesses—securities services and issuer services—managed approximately $17.5 trillion of assets under custody as of December 31, 2018 and 2017.
 

22


In millions of dollars, except as otherwise noted
2018
2017
2016
% Change 
 2018 vs. 2017
% Change 
 2017 vs. 2016
Commissions and fees
$
4,516

$
4,318

$
3,998

5
 %
8
 %
Administration and other fiduciary fees
2,755

2,668

2,448

3

9

Investment banking
4,352

4,661

3,868

(7
)
21

Principal transactions
8,852

8,012

7,570

10

6

Other(1)
794

1,179

(143
)
(33
)
NM

Total non-interest revenue
$
21,269

$
20,838

$
17,741

2
 %
17
 %
Net interest revenue (including dividends)
15,725

15,636

16,199

1

(3
)
Total revenues, net of interest expense
$
36,994

$
36,474

$
33,940

1
 %
7
 %
Total operating expenses
$
20,979

$
20,415

$
19,669

3
 %
4
 %
Net credit losses
$
172

$
365

$
516

(53
)%
(29
)%
Credit reserve build (release)
(104
)
(221
)
(64
)
53

NM

Provision (release) for unfunded lending commitments
116

(159
)
34

NM

NM

Provisions for credit losses
$
184

$
(15
)
$
486

NM

NM

Income from continuing operations before taxes
$
15,831

$
16,074

$
13,785

(2
)%
17
 %
Income taxes
3,631

7,008

4,260

(48
)
65

Income from continuing operations
$
12,200

$
9,066

$
9,525

35
 %
(5
)%
Noncontrolling interests
17

57

58

(70
)
(2
)
Net income
$
12,183

$
9,009

$
9,467

35
 %
(5
)%
EOP assets (in billions of dollars)
$
1,394

$
1,336

$
1,277

4
 %
5
 %
Average assets (in billions of dollars)
1,404

1,358

1,298

3

5

Return on average assets
0.87
%
0.66
%
0.73
%
 
 
Efficiency ratio
57

56

58

 
 
Revenues by region
 
 
 
 
 
North America
$
12,914

$
13,923

$
12,767

(7
)%
9
 %
EMEA
11,770

10,879

10,012

8

9

Latin America
4,504

4,385

4,125

3

6