Citi Releases Third Quarter 2013 Earnings
October 15, 2013 08:20 AM
Hello, I'm John Gerspach, Chief Financial Officer at Citigroup. This morning, we reported results for the third quarter of 2013, and I'd like to take a few minutes to discuss them with you.
After allowing for credit and debt valuation adjustments as well as a tax benefit, Citigroup earned $3.3 billion, or $1.02 per share in the third quarter. That's down slightly--owing primarily to somewhat lower revenues and higher taxes--from the $1.06 we earned on an adjusted basis in the third quarter of last year.
We made good progress on many of our most important execution priorities in the quarter. Expenses were down 4% quarter-to-quarter and year-over-year. We reduced the assets in Citi Holdings by $9 billion, and they now stand at only 6% of our balance sheet. Holdings' net loss was reduced for the third consecutive quarter. And we utilized $500 million of our deferred tax assets, bringing the total utilization year-to-date to $1.8 billion.
Yet overall, our results were impacted by the challenging environment. Concerns about the government shut-down and the possibility of default, uncertainty about actions by the Federal Reserve, and possible slowing in key emerging markets all contributed to a slowdown in client activity in the quarter. And, there remain areas for improvement in our businesses.
Let's take a quick look at each of those businesses in turn.
In our International Consumer Banking franchise, revenues were up slightly and expenses down. However, we saw revenue growth only in Latin America. Revenues were down in Europe following our exits from Turkey and Romania and down in Asia, primarily owing to the impact of regulatory changes in Korea and lower investment sales in the face of continued market uncertainty. Still, total average loans grew 5% from last year and card purchase sales were up 8%.
Our North America consumer franchise was particularly impacted by the slowing of U.S. mortgage refinancing, with revenues down 12% year-over-year and 6% for the quarter. But Cards revenues were up 4% from last quarter. Expenses for the entire segment declined 4% year-over-year. And, importantly, across both International and North America Consumer Banking, we're seeing favorable credit performance.
In Securities and Banking, revenues declined by almost $1.3 billion from the prior quarter. The typical seasonal decline was exacerbated by the considerable political and economic uncertainty and by under-performance in certain businesses. However, our franchise continued to show momentum year-to-date, with revenues up 6% year-over-year and wallet share gains in most major products.
Revenues increased in both our Transaction Services businesses on strong fee income growth. Key volume drivers showed sustained momentum. Trade loan originations grew 23% year-over-year, average deposits were up 4%, assets under custody grew by 9%, and settlement volumes grew 11%. While expense growth outpaced revenue growth in the third quarter, we continue to believe the business can achieve positive operating leverage in total for the second half of 2013.
Finally, our Tier 1 Common ratio rose to an estimated 10.4% on a Basel III basis. Citi remains one of the best capitalized banks in the industry.
These results demonstrate that Citi is capable of performing well in a tough environment. But they also show areas for improvement. Execution remains our top priority--we know our strategy is right for the times. To realize the potential of this franchise requires discipline and focused effort--both of which we endeavor to bring to our work every day.
To get more in-depth information on today's earnings report, visit Citi's investor relations webpage, linked in this video.
Thank you once again for your interest in Citi, and I look forward to reviewing our full year results with you in January.