The FINANCIAL — New York – Citigroup Inc. reported net income for the third quarter 2014 of $3.4 billion, or $1.07 per diluted share, on revenues of $19.6 billion. This compared to net income of $3.2 billion, or $1.00 per diluted share, on revenues of $17.9 billion for the third quarter 2013, according to Citigroup Inc.
CVA/DVA was negative $371 million (negative $228 million after-tax) in the third quarter 2014, including a $474 million pre-tax charge related to Citigroup’s implementation in the quarter of funding valuation adjustments (FVA)1, compared to negative $336 million (negative $208 million after-tax) in the prior year period. Third quarter 2013 results also included a $176 million tax benefit related to the resolution of certain tax audit items (recorded within Corporate/Other). Excluding CVA/DVA and the tax benefit in the third quarter 20135, earnings were $1.15 per diluted share, a 13% increase from prior year earnings of $1.02 per diluted share.
“Our consumer bank and institutional business each had solid performance during the quarter and generated stronger revenues both sequentially and year-on-year. The revenue improvement was evident across regions and products. With Citi Holdings again turning a profit and the utilization of additional deferred tax assets, we again demonstrated progress against two execution priorities and increased our capital base. We also continued our work to strengthen our capital planning process to meet the critical goal of returning capital to our shareholders,” Michael Corbat, Chief Executive Officer of Citi, said.
Strategic Actions: Global Consumer Banking
Citigroup announced strategic actions to accelerate the transformation of Global Consumer Banking (GCB) by focusing on those markets where it has the greatest scale and growth potential. As a result, Citigroup intends to exit its consumer businesses in 11 markets. The new consumer banking footprint will serve nearly 57 million clients in 24 markets that capture over 95% of GCB’s existing revenue base, while further simplifying its operations and improving its performance.
The affected businesses include the consumer franchises in Costa Rica, Czech Republic, Egypt, El Salvador, Guam, Guatemala, Hungary, Japan, Nicaragua, Panama and Peru, as well as the consumer finance business in Korea. Active sales processes are underway for the majority of the businesses, and subject to market conditions and regulatory and other approvals, the strategic actions are currently expected to be substantially completed by year-end 2015. The businesses will be reported as part of Citi Holdings as of the first quarter 2015 to provide greater transparency with respect to the performance of the ongoing operations reported in GCB. Citigroup’s Institutional Clients Group (ICG) will continue to serve clients in these markets, according to Citigroup Inc.
“I am committed to simplifying our company and allocating our finite resources to where we can generate the best returns for our shareholders. While we have made progress optimizing these 11 consumer markets, we believe our Global Consumer Bank will achieve stronger performance by focusing on the countries where our scale and network provide a competitive advantage,” Mr. Corbat concluded.
“Today’s actions are the next step in the execution of our strategy to build an urban-based, globally integrated consumer bank. Since 2009, the Global Consumer Bank has become more streamlined, efficient and profitable. Focusing our presence in 100 cities across both the U.S. and top emerging markets where we have the greatest scale and growth potential positions us to win,” Manuel Medina-Mora, Citi Co-President and CEO of GCB, said.
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