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Citigroup Reports Fourth Quarter 2012 Earnings Per Share Of $0.38; $0.69 Excluding CVA/DVA1 And Repositioning Charges2

Stocks in this article: C

Citigroup Inc. today reported net income for the fourth quarter 2012 of $1.2 billion, or $0.38 per diluted share, on revenues of $18.2 billion. This compared to net income of $956 million, or $0.31 per diluted share, on revenues of $17.2 billion for the fourth quarter 2011.

CVA/DVA was a negative $485 million in the fourth quarter, mainly resulting from the improvement in Citigroup’s credit spreads, compared to negative $40 million in the prior year period. Fourth quarter 2012 results also included the previously announced $1.0 billion of repositioning charges ($653 million after-tax), compared to $428 million of repositioning charges ($275 million after-tax) in the prior year period. Excluding CVA/DVA, fourth quarter revenues were $18.7 billion, up 8% from the prior year period. Excluding CVA/DVA and repositioning charges, earnings were $0.69 per diluted share, up 68% from the prior year period, as higher revenues, lower core operating expenses and lower net credit losses were partially offset by higher legal and related expenses and a lower net loan loss reserve release.

Michael Corbat, Citigroup’s Chief Executive Officer, said, “Our bottom line earnings reflect an environment that remains challenging- with businesses working through issues like spread compression and regulatory changes- as well as the costs of putting legacy issues behind us. However, we did make progress on several fronts. At 8.7%, we reached the target for our year-end Basel III Tier 1 Common ratio. We continue to have a very liquid balance sheet and a high-quality credit portfolio in our core businesses. It will take some time to work through the challenges of the current environment but realizing our core earnings potential, as well as improving our returns on assets and tangible equity, are critical goals going forward.”

Citigroup full year 2012 net income was $7.5 billion on revenues of $70.2 billion, compared to net income of $11.1 billion on revenues of $78.4 billion for the full year 2011. Full year 2012 results included negative $2.3 billion in CVA/DVA, compared to positive $1.8 billion in the prior year. Citigroup’s full year 2012 results also included a loss of $4.6 billion ($2.9 billion after-tax) related to the sale of minority investments 4, versus a gain of $199 million ($128 million after-tax) in the prior year. In addition to the fourth quarter 2012 repositioning charges of $1.0 billion, Citigroup recorded a $582 million tax benefit 5 related to the resolution of certain tax audit items in the third quarter 2012. Excluding CVA/DVA and the impact of minority investments, Citigroup revenues were $77.1 billion in 2012, up slightly compared to $76.3 billion in the prior year. Excluding these items as well as the repositioning charges in the fourth quarters of 2012 and 2011 and the tax item in the third quarter of 2012, net income was $11.9 billion in 2012, up 18% compared to 2011, as higher revenues, lower core operating expenses and lower net credit losses were partially offset by higher legal and related expenses and a lower net loan loss reserve release in 2012 compared to 2011.

Citigroup revenues of $18.7 billion in the fourth quarter 2012, excluding CVA/DVA, increased 8% from the prior year period, driven by 9% growth in Citicorp revenues and a 2% decline in Citi Holdings revenues primarily resulting from the ongoing wind down of Citi Holdings assets.

Citicorp revenues (6) of $17.1 billion in the fourth quarter 2012 included $(510) million of CVA/DVA reported within Securities and Banking. Excluding CVA/DVA, Citicorp revenues were $17.6 billion, an increase of 9% from the prior year period with growth reported in each of the three operating businesses within Citicorp. Securities and Banking revenues grew 47% (excluding CVA/DVA), Global Consumer Banking (GCB) revenues grew 4% and Transaction Services revenues grew 1% from the prior year period.

Citi Holdings revenues of $1.1 billion in the fourth quarter 2012 included positive $25 million of CVA/DVA. Excluding CVA/DVA, Citi Holdings revenues were $1.0 billion, down 2% versus the prior year period. Local Consumer Lending drove the decline in Citi Holdings revenues from the prior year period, due to the ongoing reduction in assets. Most of the decline in Local Consumer Lending revenues was offset by higher revenues in the Special Asset Pool reflecting an improvement in asset marks. Total Citi Holdings assets of $156 billion declined $69 billion, or 31%, from the fourth quarter 2011. Citi Holdings assets at the end of the fourth quarter 2012 represented approximately 8% of total Citigroup assets.

Citigroup’s net income rose to $1.2 billion in the fourth quarter 2012 from $956 million in the prior year period. Excluding the impact of CVA/DVA and repositioning charges, Citigroup net income was $2.2 billion, 72% higher than the fourth quarter 2011. Operating expenses of $13.8 billion were 5% higher than the prior year period reflecting the higher repositioning charges and higher legal and related costs, including the previously announced $305 million charge in the fourth quarter 2012 related to the agreement in principle reached with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board regarding the independent foreclosure review process. Citigroup’s cost of credit in the fourth quarter 2012 was $3.2 billion, an increase of 11% over the prior year period, reflecting a $1.4 billion decrease in net loan loss reserve releases offset by a $1.0 billion improvement in net credit losses. Citigroup’s provision for income taxes was a benefit of $206 million in the fourth quarter 2012, compared to an expense of $91 million in the prior year period.

Citigroup’s allowance for loan losses was $25.5 billion at year end, or 3.9% of total loans, compared to $30.1 billion, or 4.7% of total loans, in the prior year period. The $86 million net release of loan loss reserves in the quarter compared to a $1.5 billion release in the prior year period. Reserve releases in Citicorp of $137 million compared to $805 million in the fourth quarter 2011, predominantly reflecting lower releases in North America GCB, largely related to Citi-branded cards. Citi Holdings recorded a net loan loss reserve build of $51 million in the fourth quarter 2012, compared to a net reserve release of $663 million in the prior year period, as a significantly lower net reserve release of $49 million was more than offset by losses on loan sales of $100 million. Citigroup asset quality remained largely stable to improving in the fourth quarter 2012. Corporate non-accrual loans decreased 28% to $2.3 billion from the fourth quarter 2011, while consumer non-accrual loans grew 17% to $9.2 billion from the fourth quarter 2011, predominantly reflecting the third quarter 2012 OCC guidance regarding the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy which added $1.5 billion to consumer non-accrual loans. Consumer loans that were 90+ days delinquent, excluding the Special Asset Pool, decreased 17% versus the prior year period to $7.7 billion, or 1.9% of consumer loans.

Citigroup’s capital levels and book value per share increased during 2012. As of quarter end, book value per share was $61.57 and tangible book value per share 7 was $51.19, 1% and 3% increases respectively versus the prior year period. Citigroup’s book value and tangible book value per share each declined 3% in the fourth quarter 2012 as compared to the third quarter 2012 due to the dilutive impact of the issuance of approximately 96 million shares of common stock during the quarter upon the automatic settlement of the T-DECS issued in December 2009, as previously announced. At quarter end, Citigroup’s Tier 1 Capital Ratio was 14.1%, its Basel I Tier 1 Common Ratio was 12.7%, and its Basel III Tier 1 Common Ratio was estimated at 8.7%.

 
CITIGROUP
               
($ millions, except per share amounts) 4Q'12 3Q'12 4Q'11 QoQ% YoY% 2012 2011
 
Citicorp 17,115 17,641 16,086 -3% 6% 71,006 72,082
Citi Holdings 1,059 (3,690) 1,088 NM -3% (833) 6,271
Total Revenues $18,174 $13,951 $17,174 30% 6% $70,173 $78,353
Total Revenues (Ex-CVA/DVA & Gain (Loss)              
on Minority Investments) $18,659 $19,411 $17,214 -4% 8% $77,134 $76,348
             
Expenses $13,845 $12,220 $13,211 13% 5% $50,518 $50,933
 
Net Credit Losses 3,066 3,979 4,108 -23% -25% 14,576 20,038
Loan Loss Reserve Build/(Release) (a) (86) (1,509) (1,468) 94% 94% (3,744) (8,214)
Provision for Benefits and Claims 219 225 234 -3% -6% 887 972
Total Cost of Credit $3,199 $2,695 $2,874 19% 11% $11,719 $12,796
             
Income (Loss) from Cont. Ops. Before Taxes $1,130 $(964) $1,089 NM 4% $7,936 $14,624
Provision for Income Taxes (206) (1,488) 91 86% NM 27 3,521
 
Income from Continuing Operations $1,336 $524 $998 NM 34% $7,909 $11,103
Net income (loss) from Disc. Ops. (112) (31) 0 NM - (149) 112
Non-Controlling Interest 28 25 42 12% -33% 219 148
Citigroup Net Income $1,196 $468 $956 NM 25% $7,541 $11,067
 
Net Income (Ex-CVA/DVA, Gain (Loss) on              
Minority Investments & 4Q Repositioning) (b) $2,150 $3,268 $1,253 -34% 72% $11,921 $10,089
 
 
Tier 1 Common Ratio 12.7% 12.7% 11.8%
Tier 1 Capital Ratio 14.1% 13.9% 13.6%
Return on Common Equity 2.5% 1.0% 2.1%
Book Value per Share (c) $61.57 $63.59 $60.70
Tangible Book Value per Share (c) $51.19 $52.69 $49.74
 
Note: Please refer to the Appendices and Footnotes at the end of this press release for additional information.
(a) Includes provision for unfunded lending commitments.
(b) 3Q'12 also excludes a tax benefit related to the resolution of certain tax audit items.
(c) Book value and tangible book value per share each declined in the fourth quarter 2012 compared to the third quarter of 2012 due to the dilutive impact of the issuance of approximately 96 million shares of common stock during the quarter upon the automatic settlement of the T-DECS issued in December 2009, as previously announced.
               
 
CITICORP
 
(in millions of dollars) 4Q'12 3Q'12 4Q'11 QoQ% YoY% 2012 2011
 
Global Consumer Banking 10,249 10,180 9,885 1% 4% 40,214 39,195
Securities and Banking 4,293 4,770 3,194 -10% 34% 19,743 21,423
Transaction Services 2,649 2,658 2,624 - 1% 10,857 10,579
Corporate/Other (76) 33 383 NM NM 192 885
Total Revenues $17,115 $17,641 $16,086 -3% 6% $71,006 $72,082
 
Total Revenues (Ex-CVA/DVA and              
Gain (Loss) on Minority Investments) $17,625 $18,440 $16,160 -4% 9% $73,440 $70,151
             
Expenses $12,238 $11,030 $11,356 11% 8% $45,265 $44,469
 
Net Credit Losses 2,094 2,172 2,596 -4% -19% 8,734 11,462
Loan Loss Reserve Build/(Release) (a) (137) (696) (805) 80% 83% (2,137) (4,896)
Provision for Benefits and Claims 64 65 46 -2% 39% 236 193
Total Cost of Credit $2,021 $1,541 $1,837 31% 10% $6,833 $6,759
             
Net Income $2,251 $4,030 $2,271 -44% -1% $14,104 $15,289
 
 
Revenues
North America 7,372 7,464 6,432 -1% 15% 29,749 30,161
EMEA 2,619 2,759 2,425 -5% 8% 11,509 12,265
LATAM 3,669 3,668 3,342 - 10% 14,518 13,552
Asia 3,531 3,717 3,504 -5% 1% 15,038 15,219
Corporate/Other (76) 33 383 NM NM 192 885
 
Net Income
North America 1,256 1,659 568 -24% NM 6,252 5,583
EMEA 391 616 417 -37% -6% 2,491 3,143
LATAM 816 925 706 -12% 16% 3,478 3,192
Asia 736 924 635 -20% 16% 3,742 3,960
Corporate/Other (948) (94) (55) NM NM (1,859) (589)
 
 
EOP Assets ($B) 1,709 1,760 1,649 -3% 4%
EOP Loans ($B) 540 537 507 1% 7%
EOP Deposits ($B) 863 878 804 -2% 7%
 
Note: Please refer to the Appendices and Footnotes at the end of this press release for additional information.
(a) Includes provision for unfunded lending commitments.

Citicorp

Citicorp revenues of $17.1 billion in the fourth quarter 2012 increased by 6% from the prior year period. CVA/DVA, reported within Securities and Banking, was $(510) million in the fourth quarter 2012, compared to $(74) million in the prior year period. Excluding CVA/DVA, revenues were $17.6 billion, up 9% from the fourth quarter 2011 driven by 47% growth in Securities and Banking revenues to $4.8 billion, 4% growth in GCB revenues to $10.2 billion and 1% growth in Transaction Services revenues to $2.6 billion. Corporate/Other revenues declined $459 million from the prior year period to $(76) million, mainly driven by the absence of hedging gains in the prior year period and lower investment yields.

Citicorp net income decreased slightly from the prior year period to $2.3 billion, as revenue growth and lower net credit losses were offset by CVA/DVA, the higher repositioning costs and lower net loan loss reserve releases. Excluding CVA/DVA and the repositioning charges, Citicorp net income of $3.2 billion was up 24% versus the prior year period.

Citicorp operating expenses increased 8% from the prior year period to $12.2 billion, largely reflecting the repositioning charges ($951 million in the fourth quarter 2012 versus $368 million in the prior year period) and higher legal and related expenses.

Citicorp cost of credit of $2.0 billion in the fourth quarter 2012 increased 10% from the prior year period. The increase reflected lower loan loss reserve releases, which declined $668 million, partially offset by lower net credit losses, which declined 19% to $2.1 billion compared to the prior year period. The decline in reserve releases was largely in North America GCB and primarily related to Citi-branded cards. Citicorp’s consumer loans 90+ days delinquent declined 10% from the prior year period to $3.1 billion, and the 90+ days delinquency ratio decreased 14 basis points to 1.05% of loans.

Citicorp end of period loans grew 7% versus the prior year period to $540 billion, reflecting strong growth in corporate loans and Latin America consumer loans. Consumer loans grew 3% to $295 billion and corporate loans grew 11% to $244 billion, both versus the prior year period.

 
Global Consumer Banking
               
(in millions of dollars) 4Q'12 3Q'12 4Q'11 QoQ% YoY% 2012 2011
 
North America 5,346 5,402 5,167 -1% 3% 21,081 20,159
EMEA 391 381 348 3% 12% 1,516 1,558
LATAM 2,520 2,419 2,350 4% 7% 9,702 9,469
Asia 1,992 1,978 2,020 1% -1% 7,915 8,009
Total Revenues $10,249 $10,180 $9,885 1% 4% $40,214 $39,195
             
Expenses $5,907 $5,389 $5,578 10% 6% $21,819 $21,408
 
Net Credit Losses 2,020 2,030 2,423 - -17% 8,452 10,840
Loan Loss Reserve Build/(Release) (a) (147) (521) (713) 72% 79% (2,131) (4,426)
Provision for Benefits and Claims 64 65 45 -2% 42% 237 192
Total Cost of Credit $1,937 $1,574 $1,755 23% 10% $6,558 $6,606
             
Net Income $1,762 $2,161 $1,722 -18% 2% $8,101 $7,672
 
 
Net Income
North America 1,002 1,299 944 -23% 6% 4,814 4,095
EMEA (38) 8 (1) NM NM (22) 95
LATAM 401 405 369 -1% 9% 1,512 1,578
Asia 397 449 410 -12% -3% 1,797 1,904
 
 
(in billions of dollars)
Avg. Cards Loans 145 145 148 - -2%
Avg. Retail Banking Loans 145 141 131 2% 10%
Avg. Deposits 328 324 313 1% 5%
Investment Sales 23 24 16 -2% 41%
Cards Purchase Sales 97 90 95 8% 2%
 
Note: Please refer to the Appendices and Footnotes at the end of this press release for additional information.
(a) Includes provision for unfunded lending commitments.

Global Consumer Banking

GCB revenues of $10.2 billion grew 4% from the prior year period, reflecting volume growth across most businesses, partially offset by ongoing spread compression. Revenues also benefited from higher U.S. mortgage revenues. Revenues in international GCB grew 4% to $4.9 billion on a constant dollar basis (excluding the impact of foreign exchange translation into U.S. dollars; the impact of FX on international GCB results was not material in the fourth quarter 2012) 8 and grew 3% in North America GCB to $5.3 billion.

GCB net income rose 2% versus the prior year period (1% on a constant dollar basis) to $1.8 billion, reflecting growth in revenues and lower net credit losses, partially offset by lower loan loss reserve releases and higher operating expenses. Expenses of $5.9 billion rose 6% versus the prior year period driven by the higher repositioning charges ($366 million in the fourth quarter 2012 versus $65 million in the prior year period), as well as volume-related costs.

North America GCB revenues grew 3% to $5.3 billion driven by higher retail banking revenues that were partially offset by lower revenues from the cards businesses (Citi-branded cards and Citi retail services). Retail banking revenues grew 20% to $1.7 billion from the fourth quarter 2011, primarily reflecting higher mortgage revenues due to increased retail originations and wider margins. Citi-branded cards revenues declined 1% to $2.1 billion, and Citi retail services revenues declined 4% to $1.5 billion reflecting lower average loan balances as Citi-branded cards loans declined 4% and Citi retail services loans declined 3% versus the prior year period. The decline in Citi retail services revenues also reflected improving credit trends and the related impact on contractual partner payments.

North America GCB net income was $1.0 billion, 6% higher than the fourth quarter 2011. The growth in net income was largely driven by higher revenues and a $474 million decrease in net credit losses that were partially offset by a $569 million reduction in loan loss reserve releases versus the prior year period. Operating expenses in the fourth quarter were flat versus the prior year period at $2.7 billion as efficiency savings broadly offset higher repositioning charges ($100 in the fourth quarter 2012 versus $18 in the prior year period).

North America GCB credit quality continued to improve as net credit losses decreased $474 million, or 27%, to $1.3 billion compared to the prior year period. Net credit losses improved in Citi-branded cards (down 29% to $700 million), Citi retail services (down 25% to $514 million) and in retail banking (down 27% to $51 million) versus the prior year period. Delinquency rates improved in Citi-branded cards and Citi retail services versus the prior year period and ended 2012 at historically low levels. The reserve release in the fourth quarter 2012 was $215 million, $569 million lower than in the fourth quarter 2011.

International GCB revenues grew 4% to $4.9 billion on a constant dollar basis versus the fourth quarter 2011, with 7% growth in Latin America to $2.5 billion, an 11% increase in EMEA to $391 million and a 2% decline in Asia to $2.0 billion, which reflected the continued low interest rate environment and regulatory changes in the region.

International GCB net income decreased 2% from the prior year period to $760 million, and declined by 4% on a constant dollar basis. Operating expenses in the fourth quarter 2012 increased 11% to $3.2 billion predominantly reflecting the increase in repositioning charges ($266 million in fourth quarter 2012 versus $47 million in the prior year period), as well as volume-related costs.

International GCB credit quality remained fairly stable even as loan portfolios continued to grow. Net credit losses rose 10% to $755 million, primarily reflecting portfolio growth as well as certain specific commercial loan charge-offs in Latin America. Net credit losses increased 6 basis points versus the prior year period to 2.15% of average loans.

 
Securities and Banking
               
(in millions of dollars) 4Q'12 3Q'12 4Q'11 QoQ% YoY% 2012 2011
 
Investment Banking 996 926 638 8% 56% 3,641 3,310
Equity Markets 455 510 233 -11% 95% 2,418 2,402
Fixed Income Markets 2,710 3,697 1,716 -27% 58% 13,961 10,891
Lending 139 194 165 -28% -16% 997 1,809
Private Bank 578 590 517 -2% 12% 2,314 2,138
Other Securities and Banking (75) (348) (1) 78% NM (1,101) (859)
Total Revenues (Ex-CVA / DVA) $4,803 $5,569 $3,268 -14% 47% $22,230 $19,691
 
CVA/DVA (510) (799) (74) 36% NM (2,487) 1,732
Total Revenues $4,293 $4,770 $3,194 -10% 34% $19,743 $21,423
             
Expenses $3,676 $3,486 $3,736 5% -2% $14,444 $15,013
 
Net Credit Losses 75 56 178 34% -58% 168 602
Credit Reserve Build/(Release) (a) 3 (129) (109) NM NM (46) (486)
Total Cost of Credit $78 $(73) $69 NM 13% $122 $116
             
Net Income $629 $1,120 $(158) -44% NM $4,384 $4,876
 
 
Revenues
North America 1,391 1,439 660 -3% NM 6,104 7,558
EMEA 1,343 1,511 1,219 -11% 10% 6,417 7,221
LATAM 705 802 579 -12% 22% 3,019 2,370
Asia 854 1,018 736 -16% 16% 4,203 4,274
 
Income from Continuing Ops.
North America 163 232 (441) -30% NM 1,011 1,044
EMEA 131 346 160 -62% -18% 1,354 2,000
LATAM 278 363 198 -23% 40% 1,308 974
Asia 75 190 (51) -61% NM 822 895
 
Note: Please refer to the Appendices and Footnotes at the end of this press release for additional information.
(a) Includes provision for unfunded lending commitments.

Securities and Banking

Securities and Banking revenues rose 34% from the prior year period to $4.3 billion. Excluding the impact of the $(510) million of CVA/DVA in the fourth quarter 2012 (compared to $(74) million in the prior year period), Securities and Banking revenues were $4.8 billion, 47% higher than the prior year period.

Investment Banking revenues of $996 million increased 56% from the prior year period. Debt underwriting revenues increased 62% to $632 million and equity underwriting revenues increased 78% to $160 million. Advisory revenues of $204 million were 28% higher than the prior year period. Overall, Citi gained wallet share during 2012 in most products and regions.

Equity Markets revenues of $455 million in the fourth quarter 2012 (excluding $(74) million of CVA/DVA) were 95% above the prior year period, driven by improved derivatives performance as well as the absence of proprietary trading losses in the prior year period.

Fixed Income revenues of $2.7 billion in the fourth quarter 2012 (excluding $(434) million of CVA/DVA) increased 58% from the prior year driven by significant improvement in credit and securitized products, as well as higher revenues in rates and currencies.

Lending revenues decreased 16% to $139 million from the prior year period, reflecting $258 million of mark-to-market losses on hedges related to accrual loans as credit spreads tightened during the fourth quarter 2012 (compared to a $174 million loss in the prior year period). Excluding the mark-to-market impact on hedges related to accrual loans, lending revenues rose 17% to $397 million (9) versus the prior year period reflecting higher loan balances and improved spreads.

Private Bank revenues increased 12% to $578 million (excluding $(2) million of CVA/DVA) from the prior year period, with growth across all regions.

Securities and Banking net income was $629 million in the fourth quarter 2012. Excluding CVA/DVA, net income rose to $945 million from $(118) million in the prior year period, primarily reflecting the increase in revenues and a decline in operating expenses, driven by efficiency savings. Fourth quarter 2012 operating expenses included $237 million in repositioning charges, compared to $215 million in the prior year period. Excluding repositioning charges, operating expenses declined 2% from the prior year period.

 
Transaction Services
               
(in millions of dollars) 4Q'12 3Q'12 4Q'11 QoQ% YoY% 2012 2011
 
Treasury and Trade Solutions 1,993 1,991 1,965 - 1% 8,150 7,697
Securities and Fund Services 656 667 659 -2% - 2,707 2,882
Total Revenues $2,649 $2,658 $2,624 - 1% $10,857 $10,579
             
Expenses $1,597 $1,391 $1,530 15% 4% $5,788 $5,755
 
Net Credit Losses 0 87 (6) -100% 100% 114 17
Loan Loss Reserve Build/(Release) (a) 6 (46) 19 NM -68% 40 19
Total Cost of Credit $6 $41 $13 -85% -54% $154 $36
             
Net Income $808 $843 $762 -4% 6% $3,478 $3,330
 
 
Average Deposits ($ in billions) (b) $428 $415 $369 3% 16% $404 $364
EOP Assets Under Custody ($ in trillions) $13.2 $12.8 $12.0 3% 10%
 
 
Revenues
North America 635 623 605 2% 5% 2,564 2,444
EMEA 885 867 858 2% 3% 3,576 3,486
LATAM 444 447 413 -1% 8% 1,797 1,713
Asia 685 721 748 -5% -8% 2,920 2,936
 
Income from Continuing Ops.
North America 100 120 68 -17% 47% 470 415
EMEA 314 283 283 11% 11% 1,244 1,130
LATAM 134 157 139 -15% -4% 654 639
Asia 265 286 277 -7% -4% 1,127 1,165
 
(a) Includes provision for unfunded lending commitments.
(b) Average deposits and other customer liability balances.

Transaction Services

Transaction Services revenues were $2.6 billion, up 1% from the prior year period which reflected 1% growth in Treasury and Trade Solutions (TTS) revenues to $2.0 billion, with Securities and Fund Services (SFS) revenues broadly flat at $656 million. TTS revenues increased as the growth in average assets, particularly trade loans, and deposits continued to be partially offset by ongoing spread compression. SFS revenues remained flat as spread compression was offset by fee revenue growth driven by higher volumes.

Transaction Services net income of $808 million increased 6% from the fourth quarter 2011, reflecting the 1% revenue increase and a lower tax rate, partially offset by a 4% increase in operating expenses. Fourth quarter 2012 operating expenses included $95 million in repositioning charges, compared to $54 million in the prior year period. Excluding repositioning charges, operating expenses grew 2% from the prior year period due to higher legal and related costs and episodic items.

Transaction Services average deposits and other customer liability balances grew 16% versus the prior year period to $428 billion. Assets under custody increased 10% from the fourth quarter 2011 to $13.2 trillion.

 
CITI HOLDINGS
               
(in millions of dollars) 4Q'12 3Q'12 4Q'11 QoQ% YoY% 2012 2011
 
Brokerage and Asset Management 64 (4,804) 43 NM 49% (4,699) 282
Local Consumer Lending 1,005 1,104 1,279 -9% -21% 4,366 5,442
Special Asset Pool (10) 10 (234) NM 96% (500) 547
Total Revenues $1,059 $(3,690) $1,088 NM -3% $(833) $6,271
 
Total Revenues (Ex-CVA / DVA & Gain (Loss)              
on Minority Investments) $1,034 $971 $1,054 6% -2% $3,694 $6,197
             
Expenses $1,607 $1,190 $1,855 35% -13% $5,253 $6,464
 
Net Credit Losses 972 1,807 1,512 -46% -36% 5,842 8,576
Loan Loss Reserve Build/(Release) (a) 51 (813) (663) NM NM (1,607) (3,318)
Provision for Benefits and Claims 155 160 188 -3% -18% 651 779
Total Cost of Credit $1,178 $1,154 $1,037 2% 14% $4,886 $6,037
             
Net Income (Loss) $(1,055) $(3,562) $(1,315) 70% 20% $(6,563) $(4,222)
 
 
Net Income (Loss)
Brokerage and Asset Management (12) (3,019) (92) 100% 87% (3,193) (295)
Local Consumer Lending (1,045) (693) (1,206) -51% 13% (3,193) (4,415)
Special Asset Pool 2 150 (17) -99% NM (177) 488
 
 
EOP Assets ($ in billions)
Brokerage and Asset Management 9 9 27 - -67%
Local Consumer Lending 126 134 157 -6% -20%
Special Asset Pool 21 28 41 -25% -49%
 
 
EOP Loans ($B) 116 122 141 -5% -18%
EOP Deposits ($B) 68 67 62 2% 10%
 
Note: Please refer to the Appendices and Footnotes at the end of this press release for additional information.
(a) Includes provision for unfunded lending commitments.

Citi Holdings

Citi Holdings revenues in the fourth quarter 2012 decreased 3% versus the prior year period to $1.1 billion. Revenues in the fourth quarter 2012 included CVA/DVA of $25 million ($34 million in the prior year period). Excluding CVA/DVA, Citi Holdings revenues declined 2% to $1.0 billion. Local Consumer Lending revenues of $1.0 billion declined 21% from the prior year period primarily due to the 21% decline in average assets. Special Asset Pool revenues were $(35) million (excluding CVA/DVA of $25 million) in the fourth quarter 2012, compared to $(268) million (excluding CVA/DVA of $34 million) in the prior year period, largely due to an improvement in asset marks. Brokerage and Asset Management revenues were $64 million, compared to $43 million in the prior year period reflecting improved private equity marks. As of the end of the fourth quarter 2012, total Citi Holdings assets were $156 billion, 31% below the prior year period, and represented approximately 8% of total Citigroup assets.

Citi Holdings net loss was $1.1 billion in the fourth quarter 2012 compared to a loss of $1.3 billion in the prior year period. Operating expenses decreased 13% to $1.6 billion reflecting the overall decline in assets. Operating expenses in the fourth quarter 2012 included the previously mentioned $305 million charge related to the independent foreclosure review process, as well as $77 million in repositioning charges, compared to $60 million in the prior year period.

Citi Holdings cost of credit increased 14% to $1.2 billion versus the prior year period driven by a net loan loss reserve build of $51 million in the fourth quarter 2012, compared to a net reserve release of $663 million in the prior year period, as a significantly lower net reserve release of $49 million was more than offset by losses on loan sales of $100 million. Net credit losses in Citi Holdings decreased by $540 million or 36% from the prior year period.

Citi Holdings allowance for credit losses was $10.8 billion at the end of the fourth quarter 2012, or 9.35% of loans, compared to $13.4 billion, or 9.54% of loans, in the prior year period. 90+ days delinquent loans in Local Consumer Lending decreased 21% to $4.6 billion, or 4.4% of loans.

 
RESULTS BY REGION AND SEGMENT
             
Revenues Income from Continuing Ops.
(in millions of dollars) 4Q'12 3Q'12 4Q'11 4Q'12 3Q'12 4Q'11
 
North America
Global Consumer Banking 5,346 5,402 5,167 1,002 1,300 944
Securities and Banking 1,391 1,439 660 163 232 (441)
Transaction Services 635 623 605 100 120 68
Total North America $7,372 $7,464 $6,432 $1,265 $1,652 $571
 
EMEA
Global Consumer Banking 391 381 348 (38) 10 (4)
Securities and Banking 1,343 1,511 1,219 131 346 160
Transaction Services 885 867 858 314 283 283
Total EMEA $2,619 $2,759 $2,425 $407 $639 $439
 
Latin America
Global Consumer Banking 2,520 2,419 2,350 401 405 370
Securities and Banking 705 802 579 278 363 198
Transaction Services 444 447 413 134 157 139
Total Latin America $3,669 $3,668 $3,342 $813 $925 $707
 
Asia
Global Consumer Banking 1,992 1,978 2,020 397 449 410
Securities and Banking 854 1,018 736 75 190 (51)
Transaction Services 685 721 748 265 286 277
Total Asia $3,531 $3,717 $3,504 $737 $925 $636
 
Corporate/Other ($76) $33 $383 ($831) ($55) ($41)
 
Citicorp   $17,115   $17,641   $16,086     $2,391   $4,086   $2,312
 
Citi Holdings   $1,059   $(3,690)   $1,088     $(1,055)   $(3,562)   $(1,314)
 
Citigroup   $18,174   $13,951   $17,174     $1,336   $524   $998
 
 
 
FULL YEAR RESULTS BY REGION AND SEGMENT
                         
Revenues Income from Cont. Ops.
(in millions of dollars) 2012 2011 2012 2011
 
North America
Global Consumer Banking 21,081 20,159 4,815 4,095
Securities and Banking 6,104 7,558 1,011 1,044
Transaction Services 2,564 2,444 470 415
Total North America $29,749 $30,161 $6,296 $5,554
 
EMEA
Global Consumer Banking 1,516 1,558 (18) 95
Securities and Banking 6,417 7,221 1,354 2,000
Transaction Services 3,576 3,486 1,244 1,130
Total EMEA $11,509 $12,265 $2,580 $3,225
 
Latin America
Global Consumer Banking 9,702 9,469 1,510 1,578
Securities and Banking 3,019 2,370 1,308 974
Transaction Services 1,797 1,713 654 639
Total Latin America $14,518 $13,552 $3,472 $3,191
 
Asia
Global Consumer Banking 7,915 8,009 1,797 1,904
Securities and Banking 4,203 4,274 822 895
Transaction Services 2,920 2,936 1,127 1,165
Total Asia $15,038 $15,219 $3,746 $3,964
 
Corporate/Other $192 $885 ($1,625) ($728)
 
Citicorp     $71,006         $72,082           $14,469     $15,206
 
Citi Holdings     $(833)         $6,271           $(6,560)     $(4,103)
 
Citigroup     $70,173         $78,353           $7,909     $11,103
 
 

Citigroup will host a conference call today at 11:00 AM (EDT). 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 76758827.

Citigroup, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citigroup 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.

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