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19th July 2011

Citi gains as loan losses fall

Citigroup reported net attributable of $3,431m (€2,425m £2,128m ¥271.6bn Y22,175m) for Q2 and $6,340m (€4,482m £3,933m ¥501.8bn Y40,976m) UP 27% and DOWN 11% respectively.

Loan losses provide the gain at a time when other trends are moving in the wrong direction. The Q2 gain pre-tax gain is of $772m and the reduction in loan losses and provisions is $3.28bn. Revenues are down $1.4bn for the quarter, arising from NII with non-interest income marginally up. Meanwhile expenses are up almost $1.1bn. A factor on expense is the foreclosure problems and other regulatory and legal issues.


Overall there are few surprises within the results. The bank is on track certainly to meet general Basel III capital requirements next year, before any addition due to the finalisation of the additional capital surcharge required for Systemically Important (TBTF) banks the US authorities may apply.


2Q 2Q 6 mths 6 mths
2011 2010 2011 2010
$m $m $m $m
Revenues
Interest revenue 18,586 20,356 36,741 41,139
Interest expense 6,438 6,429 12,491 12,771
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Net interest revenue 12,148 13,927 24,250 28,368

Commissions and fees 3,557 3,229 6,925 6,874
Principal transactions 2,616 2,362 5,783 6,478
Administrative and other fiduciary fees 1,068 910 2,165 1,932
Realized gains (losses) on investments 412 69 (715) 100
Insurance premiums 684 636 1,356 1,384
Other revenue 137 938 584 2,356
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Total non-interest revenues 8,474 8,144 16,098 19,124

Total revenues, net of interest expense 20,622 22,071 40,348 47,492

Provisions for Credit Losses and
for Benefits and Claims
Net credit losses 5,147 7,962 11,416 16,346
Credit reserve build / (release) (1,966) (1,439) (5,336) (1,457)
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Provision for loan losses 3,181 6,523 6,080 14,889
Policyholder benefits and claims 219 213 479 500
Provision for unfunded lending commitments (13) (71) 12 (106)
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Total provisions for credit losses etc. 3,387 6,665 6,571 15,283

Operating Expenses
Compensation and benefits 6,669 5,961 13,078 12,123
Premises and Equipment 832 824 1,657 1,654
Technology / communication expense 1,275 1,195 2,489 2,394
Advertising and marketing expense 627 367 1,024 669
Other operating 3,533 3,519 7,014 6,544
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Total operating expenses 12,936 11,866 25,262 23,384

Pre-tax Income from Continuing Operations 4,299 3,540 8,515 8,825
Provision (benefits) for income taxes 967 812 2,152 1,848
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Income from Continuing Operations 3,332 2,728 6,363 6,977

Income (Loss) from Discontinued Operations (17) (3) 43 (8)
Gain (Loss) on Sale 126 - 130 94
Provision (benefits) for income taxes 38 - 62 (122)
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Net Income (Loss) from Discontinued Operations 71 (3) 111 208

Net Income 3,403 2,725 6,474 7,185
Attributable to noncontrolling interests 62 28 134 60
________________________________________
Citigroup's Net Income 3,341 2,697 6,340 7,125