-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P/HfYZJVKMFC09KTG37iZEpkBWQPWRVoytm8YAbvX0hfvtKCEgYkvNNd9oasKfNf nvfZx6C1U7i9uDCCaI9f2A== 0000020405-97-000107.txt : 19970718 0000020405-97-000107.hdr.sgml : 19970718 ACCESSION NUMBER: 0000020405-97-000107 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 ITEM INFORMATION: Other events FILED AS OF DATE: 19970717 SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITICORP CENTRAL INDEX KEY: 0000020405 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 132614988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05378 FILM NUMBER: 97641918 BUSINESS ADDRESS: STREET 1: 399 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10043 BUSINESS PHONE: 2125591000 MAIL ADDRESS: STREET 1: 425 PARK AVE- 2ND F STREET 2: ATTN: LEGAL AFFAIRS OFFICE CITY: NEW YORK STATE: NY ZIP: 10043 FORMER COMPANY: FORMER CONFORMED NAME: FIRST NATIONAL CITY CORP DATE OF NAME CHANGE: 19740414 FORMER COMPANY: FORMER CONFORMED NAME: CITY BANK OF NEW YORK NATIONAL ASSOCIATI DATE OF NAME CHANGE: 19680903 8-K 1 CITICORP 8-K, JULY 1997 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 15, 1997 CITICORP (Exact name of registrant as specified in charter) DELAWARE (State or other jurisdiction of incorporation) 1-5738 (Commission File Number) 13-2614988 (IRS Employer Identification Number) 399 PARK AVENUE, NEW YORK, NEW YORK 10043 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212)559-1000 NOT APPLICABLE (Former name or former address, if changed since last report) Item 5. Other Items Citicorp second quarter net income exceeds $1.0 billion, up 8% on 8% revenue gain, Earnings per common share rose 13% to $2.10, Return on common equity was 21% - ---------------------------------------------------------------------- Second Quarter (Dollars in Millions, 1997 1996 Change except EPS) - ---------------------------------------------------------------------- Adjusted Revenue ......................... $5,747 $5,316 8% Net Income ............................... 1,024 952 8% Earnings Per Share (Fully Diluted) ....... $2.10 $1.86 13% Return on Common Equity (%) .............. 21.0 20.8 - Return on Assets (%) ..................... 1.40 1.43 - Average Shares Outstanding (Fully Diluted) ............................... 471.8 492.1 - - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Six Months - ---------------------------------------------------------------------- Adjusted Revenue ........................ $11,374 $10,433 9% Net Income .............................. 2,019 1,866 8% Earnings Per Share (Fully Diluted) ...... $4.11 $3.61 14% Return on Common Equity (%) ............. 20.9 20.5 - Return on Assets (%) .................... 1.41 1.40 - Average Shares Outstanding (Fully Diluted) .............................. 474.0 496.5 - - ---------------------------------------------------------------------- On July 15, 1997, Citicorp reported net income in the 1997 second quarter of $1,024 million, up $72 million or 8% over the same 1996 period, and in the 1997 six months of $2,019 million, up $153 million or 8%. Earnings per fully diluted common share were $2.10, up 13%, and $4.11, up 14%, over the 1996 periods. "We continue to produce good results, although global spread compression and our U.S. card business present challenges," said John S. Reed, Citicorp Chairman. "Our assumption is that the highly competitive marketplace is a permanent reality. We are responding with quality initiatives designed to deliver customer service more effectively worldwide and speed the global rollout of innovative products. We will also respond with cost initiatives to accelerate the integration and globalization of our operations and technology base. As we've said before, by the end of 1998 we expect to be fully engaged in our business directions, which we feel represent a substantial opportunity for us." Against Citicorp's business directions performance targets, the six month results achieved an 8% gain in net income (a 14% rise in fully diluted earnings per share), a return on common equity of 20.9%, a ratio of incremental revenue to expense of 1.8 to 1 (2.0 to 1 for the 1997 second quarter), and the generation of an estimated $0.7 billion of free capital. At June 30, 1997, the Tier 1 capital ratio was an estimated 8.2%, within the target range of 8.0%-8.3%, after the repurchase of 4.7 million shares of common stock for $524 million during the quarter. Citicorp's Global Consumer business -- Citibanking, Cards, and the Private Bank -- earned $471 million in the quarter and $958 million in the six months on adjusted revenue of $3.5 billion and $7.0 billion, up 6% and 7%, respectively. Net income from Global Corporate Banking was $665 million in the quarter and $1.3 billion in the six months on adjusted revenue of $2.0 billion and $3.9 billion, up 11% and 15%. 1 Global Consumer business earns $471 million in the quarter, With high credit costs in Cards - ---------------------------------------------------------------------- Second Quarter (Dollars in Millions) 1997 1996 Change - ---------------------------------------------------------------------- Adjusted Revenue ........................ $3,525 $3,320 6% Adjusted Operating Expense .............. 1,920 1,810 6% Operating Margin ........................ 1,605 1,510 6% Credit Costs ............................ 922 762 21% Income before Taxes ..................... 658 698 (6%) Net Income .............................. 471 486 (3%) Return on Assets (%) .................... 1.42 1.56 - - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Six Months - ---------------------------------------------------------------------- Adjusted Revenue ........................ $7,011 $6,573 7% Adjusted Operating Expense .............. 3,791 3,568 6% Operating Margin ........................ 3,220 3,005 7% Credit Costs ............................ 1,816 1,468 24% Income before Taxes ..................... 1,354 1,437 (6%) Net Income .............................. 958 988 (3%) Return on Assets (%) .................... 1.46 1.59 - - ---------------------------------------------------------------------- The Global Consumer business had net income of $471 million and $958 million in the second quarter and six months of 1997, down $15 million or 3% and $30 million or 3% from the respective 1996 periods, primarily due to a decline in U.S. bankcards earnings, partially offset by improved earnings in Citibanking, other Cards businesses, and the Private Bank. Adjusted revenue of $3.5 billion in the quarter rose $205 million or 6% from the 1996 second quarter. Expense of $1.9 billion increased $110 million or 6%. Excluding the effect of foreign currency translation resulting from a strengthened dollar, both revenue and expense increased 8%. Credit costs of $922 million were $28 million higher than the 1997 first quarter and $160 million higher than the 1996 second quarter. The ratio of net credit losses to average managed loans was 2.73% in the quarter, compared with 2.69% in the preceding quarter and 2.38% a year-ago. Global Consumer continued to build the allowance for credit losses, adding $25 million above net credit losses. Net income in the emerging markets for the 1997 second quarter was $249 million, up $26 million or 12% from the 1996 second quarter, principally reflecting growth across Cards and the Private Bank. Developed markets net income of $222 million declined by $41 million or 16% from the year-ago quarter, primarily due to the lower earnings in U.S. bankcards, partially offset by double-digit earnings growth in Citibanking. Citibank introduced Direct Access -- its PC banking offering -- in Argentina and Chile, bringing the total number of countries offering this product to eight. Worldwide Citibanking accounts totaled 20 million as of June 30, 1997, up 5% from a year ago. Citibank expanded its investment offerings in Argentina, Brazil, and Chile, and introduced its first investment offering in Mexico. Cards in force worldwide, including those issued by affiliates, were 63 million at the end of the quarter, an increase of 4 million from a year-ago. The number of cards in North America was 42 million; cards in Latin America, Asia, and Europe totaled 9 million, 8 million, and 4 million, respectively. Cards, including Diners Club, operates in 42 countries and territories. Citibank and American Airlines celebrated the tenth anniversary in the United States of the Citibank AAdvantage Card, which now is offered in 16 countries, and in Singapore, Citibank completed the world's first secure Visa card payment over the Internet. 2 Citibanking Citibanking activities -- which deliver products and services to customers through branches and electronic delivery systems -- had net income of $201 million and $384 million in the second quarter and six months of 1997, up $27 million or 16% and $34 million or 10% from the respective 1996 periods. Return on assets in the quarter was 0.95%, up from 0.85% a year ago. Revenue of $1.5 billion in the quarter was up $57 million or 4% -- 7% excluding the effect of foreign currency translation -- from the 1996 second quarter, reflecting higher business volumes in both the emerging and developed markets, including growth in average customer deposits of 6% to $94 billion. Excluding the translation effect, revenue increased 8% in the developed markets, and 5% in the emerging markets. Emerging markets revenue reflected double-digit growth in Latin America and a decline in certain countries in Asia Pacific due to continued competitive pressures and economic conditions. Expense of $1.1 billion in the quarter increased $34 million or 3% from the 1996 second quarter. Excluding the effect of foreign currency translation, expense was up 6%, including 4% in the developed markets and 10% in the emerging markets. The expense growth in the emerging markets principally reflected franchise expansion efforts in Latin America, including higher business volumes. Credit costs of $145 million in the quarter were down $3 million or 2% from the 1997 first quarter and down $16 million or 10% from the year- ago quarter, reflecting improvements in the developed markets, including the effect of foreign currency translation. The ratio of net credit losses to average managed loans was 0.87% in the quarter, down from 0.91% in the preceding quarter and 0.99% in the 1996 second quarter. Cards Net income in Cards worldwide -- bankcards, Diners Club, and private label cards -- was $190 million in the second quarter, a decrease of $49 million or 21% from a year ago, and was $414 million in the six months of 1997, down $86 million or 17% from the comparable 1996 period. Cards worldwide return on managed assets in the second quarter was 1.36% compared with 1.84% in the year-ago quarter. Cards earnings in the developed markets declined from the 1996 second quarter as U.S. bankcards continued to operate in a challenging environment characterized by competitive pressures and a weak credit climate. Net income for Cards in the emerging markets increased 28% in the quarter, and represented approximately 46% of 1997 second quarter Cards earnings. Cards revenue of $1.7 billion in the quarter increased by $121 million or 8% from the 1996 second quarter. Revenue in the developed markets was up 6%, including 6% growth in U.S. bankcards reflecting risk-and- relationship-based pricing strategies. U.S. bankcards charge volumes increased from the year-ago quarter by $1.9 billion or 8% to $25.3 billion and managed receivables were up $3.0 billion or 7% to $45.8 billion. Second quarter revenue in emerging markets Cards was 15% higher than the year-ago quarter, reflecting double-digit growth in both Asia Pacific and Latin America. Expense in worldwide Cards of $666 million increased $60 million or 10% from the 1996 second quarter. Expense in the developed markets was up 8%, primarily reflecting higher costs in U.S. bankcards associated with enhanced target marketing and increased collection efforts. Expense in the emerging markets Cards increased 15% in support of higher loan volumes, as well as continued investment in the franchise. Credit costs in U.S. bankcards continued to increase, rising in the quarter to $683 million or 6.13% of average managed loans, compared with $656 million or 5.91% in the 1997 first quarter, and $522 million or 4.99% in the 1996 second quarter. The 12-month-lagged net credit loss ratio was 6.51% in the 1997 second quarter, up from 6.21% in the preceding quarter and 5.41% in the 1996 second quarter. The percent of U.S. bankcards gross write-offs that resulted from bankruptcies in the 1997 second quarter was 40.2%, compared with a seasonally low 36.6% in the preceding quarter and 38.5% in the 1996 second quarter. Citicorp continues to write off accounts upon notice of bankruptcy filing. Managed U.S. bankcards loans delinquent 90 days or more were $843 million or 1.86% of the portfolio at the end of the quarter, compared with $884 million or 1.98% at the end of the preceding quarter and $732 million or 1.73% a year-ago. 3 Credit costs in Cards portfolios other than U.S. bankcards were $95 million or 4.14% of average loans in the quarter, compared with $91 million or 4.25% in the preceding quarter and $89 million or 4.65% in the 1996 second quarter. Loans delinquent 90 days or more were $206 million or 2.18% of the portfolio, compared with $214 million or 2.42% in the preceding quarter and $180 million or 2.25% in the year-ago quarter. Private Bank Private Bank net income of $80 million in the quarter increased $7 million or 10% from the 1996 second quarter, and resulted in a return on assets of 1.89% compared with 1.84% in the year-earlier quarter. Net income benefited from a reduced tax rate of 19% compared with 25% in the prior year as a result of changes in the geographic mix of earnings. Income before taxes of $99 million grew $2 million or 2% from the 1996 second quarter while the margin of $98 million increased $11 million or 13%. Revenue of $278 million in the quarter was up $27 million or 11%, reflecting growth of 15% in the emerging markets and 7% in the developed markets. Revenue was mostly composed of like amounts of net interest revenue, up 4% on higher deposit volumes, and fees and commissions, up 11% as a result of new investment products introduced earlier this year, complemented by a 38% increase in client-related foreign exchange revenue. Expense of $180 million in the quarter increased $16 million or 10% from the 1996 second quarter. Excluding the effect of foreign currency translation, expense increased 13%, reflecting higher salary levels, including a 6% increase in staff, as well as increased spending on technology and marketing initiatives. Credit costs were a net benefit of $1 million in the quarter, compared with a net benefit of $10 million in the year-ago period, which included significant recoveries. Overall credit trends continued to improve, with loans delinquent 90 days or more down to $187 million or 1.19% of loans, from $198 million or 1.28% in the preceding quarter, and $254 million or 1.66% in the second quarter of 1996, reflecting continued active portfolio management. Client business volumes under management at the end of the quarter reached $100 billion, up 9% from $92 billion a year earlier. Growth in all business lines was led by the discretionary and advisory investments areas in which individually managed portfolios, mutual funds, and custody grew 15% and contributed $5 billion of the increase. 4 Global Corporate Banking earns $665 million in second quarter On 11% revenue growth - ---------------------------------------------------------------------- Second Quarter (Dollars in Millions) 1997 1996 Change - ---------------------------------------------------------------------- Adjusted Revenue ........................ $1,994 $1,795 11% Adjusted Operating Expense .............. 1,206 1,092 10% Operating Margin ........................ 788 703 12% Credit (Benefits) ....................... (36) (27) 33% Income before Taxes ..................... 824 730 13% Net Income .............................. 665 636 5% Return on Assets (%) .................... 1.75 1.84 - - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Six Months - ---------------------------------------------------------------------- Adjusted Revenue ........................ $3,926 $3,411 15% Adjusted Operating Expense .............. 2,359 2,104 12% Operating Margin ........................ 1,567 1,307 20% Credit (Benefits) ....................... (111) (12) NM Income before Taxes ..................... 1,678 1,319 27% Net Income .............................. 1,312 1,104 19% Return on Assets (%) .................... 1.76 1.60 - - ---------------------------------------------------------------------- Global Corporate Banking income before taxes of $824 million in the 1997 second quarter grew $94 million or 13% from the comparable 1996 quarter while net income of $665 million grew $29 million or 5% from the 1996 second quarter due to higher effective income tax rates. Global Corporate Banking's effective income tax rate in the quarter rose to 19% from 13% in the 1996 second quarter. The increase was attributable to changes in the geographic mix and nature of pretax earnings coupled with certain second quarter 1996 local tax benefits in the Emerging Markets business and a low effective income tax rate in Global Relationship Banking associated with a second quarter 1996 gain on the sale of a business. Revenue of $2.0 billion in the quarter increased $199 million or 11% from the year-ago quarter, with $131 million of the increase attributable to the Emerging Markets business and $68 million attributable to Global Relationship Banking. Expense of $1.2 billion in the quarter increased $114 million or 10% from the comparable 1996 quarter, with $64 million of the increase in the Emerging Markets business and $50 million in Global Relationship Banking. Credit costs were a net benefit of $36 million and compared with a net benefit of $27 million in the year-ago quarter. Global Corporate Banking continued to win recognition in various polls. Citibank won 41 awards in "Euromoney" magazine's annual rankings, among them best bank or best foreign bank in 31 countries, best bank in Latin America, the Middle East, and Africa, and best in securitization, foreign exchange, and transaction services. Citibank also was named best bank in emerging markets by "Global Finance" magazine, best bank in ten Asian countries by "Finance Asia" magazine, and most admired financial institution in Asia by "Asian Business" magazine. On July 1, Citibank celebrated the 100th anniversary of its entry into the foreign-exchange business; and for the 19th straight year, Citibank was named best bank worldwide for foreign exchange in the "Euromoney" customer survey. As part of its embedded-bank strategy of expanding its customer base of growth companies in emerging markets, Citibank in May acquired Banco Hipotecario Nacional, a Bolivian bank with branches in La Paz, Santa Cruz, and Cochabamba. Emerging Markets Emerging Markets 1997 second quarter net income of $423 million declined $2 million from the 1996 second quarter. The decline is attributable to an increase in the effective income tax rate to 12% from 5% in the 1996 second quarter. Earnings 5 before tax of $482 million grew $35 million or 8% from the 1996 second quarter while margin of $506 million increased $67 million or 15%. Revenue of $984 million in the quarter increased $131 million or 15% from the year-ago second quarter. The increase reflected growth in corporate finance revenue and moderately improved transaction banking services revenue. Increased volumes mitigated net interest spread compression. Aggregate securities transactions and asset gains were $134 million, compared with $67 million in the 1996 quarter, and included a $58 million gain related to an asset redeployment in Brazil. Revenue growth also reflected a $31 million increase in earnings from an affiliate primarily attributable to an investment dividend. These increases were partially offset by a $10 million decline in trading-related revenue. About 20% of the revenue in the Emerging Markets business was attributable to business from multinational companies managed jointly with Global Relationship Banking, with that revenue having grown at a double digit rate from the 1996 second quarter. Expense of $478 million in the 1997 second quarter increased $64 million or 15% from the year-ago quarter, primarily reflecting investment spending to build the franchise. Credit costs of $24 million in the 1997 second quarter remained low and compared with a net benefit of $8 million in the 1996 quarter. Credit costs in the 1996 quarter included a $21 million recovery related to the refinancing agreement concluded with Slovenia. Global Relationship Banking Net income from the Global Relationship Banking business in North America, Europe, and Japan was $242 million, up $31 million or 15% from the 1996 second quarter. Income before taxes totaled $342 million, up $59 million or 21% from the 1996 second quarter. The effective income tax rate increased to 29% from 25% in the 1996 second quarter. Revenue of $1.0 billion grew $68 million or 7% from the 1996 second quarter. Trading-related revenue of $243 million increased $68 million from the 1996 second quarter, which included a $60 million charge related to certain mortgage-backed securities activities. Venture capital revenue of $173 million improved $66 million from the 1996 quarter, benefiting from realized gains and buoyant equity markets. These improvements were complemented by moderate improvement in transaction banking services revenue, but were partially offset by net interest revenue spread compression. Second quarter 1997 and 1996 revenue also included gains of $23 million and $110 million, respectively, related to the disposition of an automated trading business. Expense of $728 million increased $50 million or 7% compared with the 1996 second quarter, primarily reflecting increased spending on technology and volume-related expense in transaction banking services, partially offset by a reduction associated with the disposition of a non-strategic business in the first quarter of 1997. Credit costs in the quarter were a net benefit of $60 million, compared with a net benefit of $19 million in the 1996 second quarter, with the improvement primarily resulting from lower gross write-offs while recoveries continued. Other Items Citicorp's effective tax rate was 37.0% in the 1997 second quarter and 37.5% in the 1997 six months, compared with 38.0% for both 1996 periods. Income taxes are attributed to core businesses on the basis of local tax rates, which resulted in effective tax rates for the core businesses of 23% in the 1997 quarter compared with 21% a year ago, and 25% and 24% for the six months, primarily reflecting changes in the nature and geographic mix of earnings. The difference between the core businesses' tax rates and Citicorp's overall effective rate in each period is included in Corporate Items. Other revenue in Corporate Items included investment writedowns in Latin America of $29 million in the quarter and $50 million a year ago. Tier 1 capital was $20.6 billion, total capital was estimated at $30.1 billion, and the Tier 1 and total capital ratios were estimated at 8.2% and 12.0%, respectively, at June 30, 1997. During the quarter, the company generated an estimated $0.8 billion of Tier 1 capital (principally net income less dividends) which was used to fund the growth in customer-driven risk-adjusted assets. The ratio of common equity to total assets was 6.4%. The number of shares acquired since June 20, 1995, 6 when the Board of Directors authorized the stock repurchase program, totaled 70.0 million for an outlay of $5.8 billion. As expanded in January and November 1996, the program is authorized to make total purchases for up to $8.5 billion. Average common shares outstanding for the purpose of computing fully diluted earnings per share were 471.8 million in the 1997 second quarter, 476.0 million in the preceding quarter, and 492.1 million in the 1996 second quarter, principally reflecting the net effect of the share repurchase program and employee stock plans. The comparable average common shares outstanding for the six months were 474.0 million in 1997 and 496.5 million in 1996. At June 30, 1997, credit loss reserves (including reserves for off- balance sheet credit exposures) totaled $6.0 billion. Tables detailing key financial data, an analysis of earnings, business results, and credit indicators follow, along with selected financial statements and tables. Further details concerning the financial results will be available in August in Citicorp's Form 10-Q. 7 - ---------------------------------------------------------------------- FINANCIAL SUMMARY - ---------------------------------------------------------------------- Second Quarter % Six Months % -------------- -------------- 1997 1996 Change 1997 1996 Change - ---------------------------------------------------------------------- Net Income (In Millions of Dollars) $1,024 $952 8 $2,019 $1,866 8 - ---------------------------------------------------------------------- Net Income Per Share Common & Common Equivalent Shares .. $2.10 $1.86 13 $4.11 $3.68 12 Assuming Full Dilution ........... $2.10 $1.86 13 $4.11 $3.61 14 Common Stockholders' Equity Per Share . $42.58 $37.73 13 Closing Stock Price At Quarter End $120.56 $82.75 46 - ---------------------------------------------------------------------- Financial Ratios Return on Assets .... 1.40% 1.43% - 1.41% 1.40% - Return on Common Stockholders' Equity 21.0% 20.8% - 20.9% 20.5% - - ---------------------------------------------------------------------- Capital (Dollars in Billions) Tier 1 .............. $20.6 $19.1 8 Total (Tier 1 & 2)(A) $30.1 $28.2 7 Tier 1 Ratio (A) 8.2% 8.4% - Total Ratio (Tier 1 & 2)(A) ........... 12.0% 12.4% - Common Equity as a Percentage of Total Assets ...... 6.4% 6.7% - Total Equity as a Percentage of Total Assets ..... 7.0% 7.5% - - ---------------------------------------------------------------------- Dividends Declared (In Millions of Dollars) Common ............... $241 $216 12 $484 $426 14 Preferred ............ 34 38 (11) 72 85 (15) - ---------------------------------------------------------------------- (A) 1997 estimated. - ---------------------------------------------------------------------- 8 - ------------------------------------------------------------------------ Earnings Analysis (In Millions of Dollars) - ------------------------------------------------------------------------ Second Quarter % Six Months % -------------- --------------- 1997 1996 Change 1997 1996 Change - ------------------------------------------------------------------------ Total Revenue .......... $5,311 $4,993 6 $10,507 $9,821 7 Effect of Credit Card Securitization Activity (A) ......... 437 349 25 871 643 35 Net Cost To Carry (B)... (1) (26) (96) (4) (31) (87) ----------------------------------------------- Adjusted Revenue ....... 5,747 5,316 8 11,374 10,433 9 ----------------------------------------------- Total Operating Expense ........ 3,173 2,978 7 6,342 5,838 9 Net OREO Benefits (C)... 37 17 NM 47 29 62 ----------------------------------------------- Adjusted Operating Expense .... 3,210 2,995 7 6,389 5,867 9 ----------------------------------------------- Operating Margin ....... 2,537 2,321 9 4,985 4,566 9 Consumer Credit Costs (D) ............ 922 762 21 1,816 1,468 24 Commercial Credit (Benefits) (E) ....... (36) (27) 33 (111) (12) NM ----------------------------------------------- Operating Margin Less Credit Costs .... 1,651 1,586 4 3,280 3,110 5 Additional Provision (F) 25 50 (50) 50 100 (50) Income Before Taxes .... 1,626 1,536 6 3,230 3,010 7 ----------------------------------------------- Income Taxes ........... 602 584 3 1,211 1,144 6 ----------------------------------------------- Net Income ............. $1,024 $ 952 8 $ 2,019 $ 1,866 8 ----------------------------------------------- - ------------------------------------------------------------------------ (A) Commencing with the 1997 first quarter, includes effect related to credit card receivables held for sale. See page 17 for details. (B) Principally the net cost to carry commercial cash-basis loans and other real estate owned ("OREO"). (C) Principally gains and losses on sales, direct revenue and expense, and writedowns of commercial OREO. (D) Principally consumer net credit write-offs adjusted for the effect of credit card securitization activity. (E) Includes commercial net credit (recoveries) write-offs, net cost to carry, and net OREO benefits. (F) Represents amounts in excess of net write-offs. NM Not meaningful, as percentage equals or exceeds 100%. - ----------------------------------------------------------------------- 9 - ---------------------------------------------------------------------- Earnings Summary - ---------------------------------------------------------------------- Second Quarter % Six Months % (In Millions of -------------- -------------- Dollars) 1997 1996(A) Change 1997 1996(A) Change - ---------------------------------------------------------------------- Global Consumer ..... $ 471 $ 486 (3) $ 958 $ 988 (3) Global Corporate Banking ........... 665 636 5 1,312 1,104 19 ------------------------------------------------ Core Businesses ..... 1,136 1,122 1 2,270 2,092 9 Corporate Items ..... (112) (170) 34 (251) (226) (11) ------------------------------------------------ Total Citicorp ...... $1,024 $ 952 8 $2,019 $1,866 8 - ---------------------------------------------------------------------- Global Consumer: Citibanking ......... $201 $174 16 $384 $350 10 Cards ............... 190 239 (21) 414 500 (17) Private Bank ........ 80 73 10 160 138 16 ------------------------------------------------ Total ............... $471 $486 (3) $958 $988 (3) - ---------------------------------------------------------------------- Global Consumer business in: Emerging Markets .... $249 $223 12 $497 $443 12 Developed Markets ... 222 263 (16) 461 545 (15) ------------------------------------------------ Total ............... $471 $486 (3) $958 $988 (3) - ---------------------------------------------------------------------- Global Corporate Banking: Emerging Markets .... $423 $425 - $ 871 $ 813 7 Global Relationship Banking ............. 242 211 15 441 291 52 ------------------------------------------------ Total ............... $665 $636 5 $1,312 $1,104 19 - ---------------------------------------------------------------------- (A) Reclassified to conform to the latest quarter's presentation. - ---------------------------------------------------------------------- 10 - ---------------------------------------------------------------------- Global Consumer Second Quarter % Six Months % (In Millions of -------------- -------------- Dollars) 1997 1996(A) Change 1997 1996(A) Change - ---------------------------------------------------------------------- Total Revenue $3,088 $2,980 4 $6,140 $5,940 3 Effect of Credit Card Securitization Activity (B) ....... 437 349 25 871 643 35 Net Cost to Carry Cash-Basis Loans and OREO ........... - (9) NM - (10) NM ------------------------------------------------ Adjusted Revenue 3,525 3,320 6 7,011 6,573 7 ------------------------------------------------ Total Operating Expense ............ 1,917 1,812 6 3,789 3,570 6 Net OREO Benefits (Costs) ............ 3 (2) NM 2 (2) NM ------------------------------------------------ Adjusted Operating Expense ............ 1,920 1,810 6 3,791 3,568 6 ------------------------------------------------ Operating Margin ..... 1,605 1,510 6 3,220 3,005 7 ------------------------------------------------ Net Write-offs ....... 488 420 16 947 833 14 Effect of Credit Card Securitization Activity (B) ....... 437 349 25 871 643 35 ------------------------------------------------ Net Cost to Carry and Net OREO Costs . (3) (7) 57 (2) (8) 75 ------------------------------------------------ Credit Costs ......... 922 762 21 1,816 1,468 24 ------------------------------------------------ Operating Margin Less Credit Costs .. 683 748 (9) 1,404 1,537 (9) Additional Provision . 25 50 (50) 50 100 (50) ------------------------------------------------ Income Before Taxes .. 658 698 (6) 1,354 1,437 (6) Income Taxes ......... 187 212 (12) 396 449 (12) ------------------------------------------------ Net Income ........... $ 471 $ 486 (3) $ 958 $ 988 (3) ------------------------------------------------ Average Assets (In Billions of Dollars) $133 $125 6 $132 $125 6 Return on Assets (%).. 1.42 1.56 - 1.46 1.59 - ------------------------------------------------ - ---------------------------------------------------------------------- (A) Reclassified to conform to the latest quarter's presentation. (B) Commencing with the 1997 first quarter, includes effect related to credit card receivables held for sale. See page 17 for details. NM Not meaningful, as percentage equals or exceeds 100%. - ---------------------------------------------------------------------- 11 - ---------------------------------------------------------------------- (In Millions of Second Quarter % Six Months % Dollars) -------------- -------------- Citibanking 1997 1996(A) Change 1997 1996(A) Change - ---------------------------------------------------------------------- Revenue .............. $1,514 $1,457 4 $2,979 $2,868 4 Operating Expense .... 1,074 1,040 3 2,123 2,025 5 ------------------------------------------------ Operating Margin ..... 440 417 6 856 843 2 Credit Costs ......... 145 161 (10) 293 319 (8) ------------------------------------------------ Operating Margin Less Credit Costs .. 295 256 15 563 524 7 Additional Provision . - 1 NM - 2 NM ------------------------------------------------ Income Before Taxes .. 295 255 16 563 522 8 Income Taxes ......... 94 81 16 179 172 4 ------------------------------------------------ Net Income ........... $ 201 $ 174 16 $ 384 $ 350 10 - ---------------------------------------------------------------------- Average Assets (In Billions of ........ $85 $82 4 $84 $82 2 Dollars) Return on Assets (%) . 0.95 0.85 - 0.92 0.86 - ------------------------------------------------ - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Cards - ---------------------------------------------------------------------- Adjusted Revenue ..... $1,733 $1,612 8 $3,485 $3,209 9 Adjusted Operating Expense ............ 666 606 10 1,323 1,218 9 ------------------------------------------------ Operating Margin ..... 1,067 1,006 6 2,162 1,991 9 Credit Costs ......... 778 611 27 1,525 1,158 32 ------------------------------------------------ Operating Margin Less Credit Costs .. 289 395 (27) 637 833 (24) Additional Provision . 25 49 (49) 50 98 (49) ------------------------------------------------ Income Before Taxes .. 264 346 (24) 587 735 (20) Income Taxes ......... 74 107 (31) 173 235 (26) ------------------------------------------------ Net Income ........... $ 190 $ 239 (21) $ 414 $ 500 (17) - ---------------------------------------------------------------------- Average Assets (In Billions of Dollars) $31 $27 15 $31 $27 15 Return on Assets (B)(%) 2.46 3.56 - 2.69 3.72 - - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Private Bank - ---------------------------------------------------------------------- Adjusted Revenue ..... $278 $251 11 $547 $496 10 Adjusted Operating Expense ............ 180 164 10 345 325 6 ------------------------------------------------ Operating Margin ..... 98 87 13 202 171 18 Credit (Benefits) .... (1) (10) (90) (2) (9) (78) ------------------------------------------------ Operating Margin Less Credit Benefits) ... 99 97 2 204 180 13 Additional Provision . - - - - - - ------------------------------------------------ Income Before Taxes .. 99 97 2 204 180 13 Income Taxes ......... 19 24 (21) 44 42 5 ------------------------------------------------ Net Income ........... $ 80 $ 73 10 $160 $138 16 ------------------------------------------------ - ---------------------------------------------------------------------- Average Assets (In Billions of Dollars) $17 $16 6 $17 $16 6 Return on Assets (%) 1.89 1.84 - 1.90 1.73 - ------------------------------------------------ - ---------------------------------------------------------------------- (A) Reclassified to conform to the latest quarter's presentation. (B) Adjusted for the off-balance sheet effect of credit card securitization, the return for worldwide Cards was 1.36% in the 1997 quarter and 1.84% in the year-ago quarter. For the six months of 1997 and 1996, the return on managed assets was 1.49% and 1.92%. NM Not meaningful, as percentage equals or exceeds 100%. - ---------------------------------------------------------------------- 12 - ---------------------------------------------------------------------- (In Millions of Dollars) Second Quarter % Six Months % Global Consumer -------------- -------------- in Emerging Markets 1997 1996(A) Change 1997 1996(A) Change - ---------------------------------------------------------------------- Adjusted Revenue ....... $988 $904 9 $1,938 $1,767 10 Adjusted Operating Expense .............. 572 515 11 1,104 997 11 -------------------------------------------- Operating Margin ....... 416 389 7 834 770 8 Credit Costs ........... 97 98 (1) 189 191 (1) -------------------------------------------- Operating Margin Less Credit Costs .... 319 291 10 645 579 11 Additional Provision ... 7 9 (22) 10 11 (9) -------------------------------------------- Income Before Taxes .... 312 282 11 635 568 12 Income Taxes ........... 63 59 7 138 125 10 -------------------------------------------- Net Income ............. $249 $223 12 $ 497 $ 443 12 -------------------------------------------- - ---------------------------------------------------------------------- Average Assets (In Billions of Dollars) . $43 $38 13 $42 $37 14 Return on Assets (%) ... 2.32 2.36 - 2.39 2.41 - -------------------------------------------- - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Global Consumer in Developed Markets - ---------------------------------------------------------------------- Adjusted Revenue ..... $2,537 $2,416 5 $5,073 $4,806 6 Adjusted Operating Expense ............ 1,348 1,295 4 2,687 2,571 5 ---------------------------------------------- Operating Margin ..... 1,189 1,121 6 2,386 2,235 7 Credit Costs ......... 825 664 24 1,627 1,277 27 ---------------------------------------------- Operating Margin Less Credit Costs .. 364 457 (20) 759 958 (21) Additional Provision . 18 41 (56) 40 89 (55) ---------------------------------------------- Income Before Taxes .. 346 416 (17) 719 869 (17) Income Taxes ......... 124 153 (19) 258 324 (20) Net Income ........... $ 222 $ 263 (16) $ 461 $ 545 (15) ---------------------------------------------- - ---------------------------------------------------------------------- Average Assets (In Billions of Dollars) $90 $87 3 $90 $88 2 Return on Assets (%) . 0.99 1.22 - 1.03 1.25 - ---------------------------------------------- - ---------------------------------------------------------------------- (A) Reclassified to conform to the latest quarter's presentation. - ---------------------------------------------------------------------- 13 - ----------------------------------------------------------------------- Global Corporate Second Quarter % Six Months % Banking -------------- -------------- (In Millions of Dollars) 1997 1996(A) Change 1997 1996(A) Change - ----------------------------------------------------------------------- Total Revenue .......... $1,995 $1,812 10 $3,930 $3,432 15 Net Cost to Carry Cash-Basis Loans and OREO ............. (1) (17) 94 (4) (21) 81 ---------------------------------------------- Adjusted Revenue ....... 1,994 1,795 11 3,926 3,411 15 ---------------------------------------------- Total Operating Expense .............. 1,172 1,073 9 2,314 2,073 12 Net OREO Benefits ...... 34 19 79 45 31 45 ---------------------------------------------- Adjusted Operating Expense .............. 1,206 1,092 10 2,359 2,104 12 ---------------------------------------------- Operating Margin ....... 788 703 12 1,567 1,307 20 ---------------------------------------------- Net (Recoveries) Write-offs ........... (1) 9 NM (62) 40 NM Net Cost to Carry and Net OREO Benefits (35) (36) 3 (49) (52) 6 ---------------------------------------------- Credit (Benefits) ...... (36) (27) 33 (111) (12) NM ---------------------------------------------- Operating Margin Plus Credit (Benefits) .... 824 730 13 1,678 1,319 27 Additional Provision ... - - - - - - ---------------------------------------------- Income Before Taxes .... 824 730 13 1,678 1,319 27 Income Taxes ........... 159 94 69 366 215 70 ---------------------------------------------- Net Income ............. $ 665 $ 636 5 $1,312 $1,104 19 ---------------------------------------------- - ---------------------------------------------------------------------- Average Assets (In Billions of Dollars) . $152 $139 9 $150 $139 8 Return on Assets (%) ... 1.75 1.84 - 1.76 1.60 - ---------------------------------------------- - ---------------------------------------------------------------------- (A) Reclassified to conform to the latest quarter's presentation. NM Not meaningful, as percentage equals or exceeds 100%. - ---------------------------------------------------------------------- 14 - ------------------------------------------------------------------------ (In Millions of Second Quarter % Six Months % Dollars) -------------- -------------- Emerging Markets 1997 1996(A) Change 1997 1996(A) Change - ------------------------------------------------------------------------ Adjusted Revenue ....... $984 $853 15 $1,914 $1,721 11 Adjusted Operating Expense .............. 478 414 15 929 796 17 -------------------------------------------- Operating Margin ....... 506 439 15 985 925 6 Credit Costs (Benefits). 24 (8) NM (12) 2 NM -------------------------------------------- Operating Margin Less Credit Costs (Benefits) ........... 482 447 8 997 923 8 Additional Provision ... - - - - - - -------------------------------------------- Income Before Taxes .... 482 447 8 997 923 8 Income Taxes ........... 59 22 NM 126 110 15 -------------------------------------------- Net Income ............. $423 $425 - $ 871 $ 813 7 -------------------------------------------- - ------------------------------------------------------------------------ Average Assets (In Billions of Dollars).. $70 $58 21 $68 $57 19 Return on Assets (%) ... 2.42 2.95 - 2.58 2.87 - -------------------------------------------- - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ Global Relationship Banking - ------------------------------------------------------------------------ Adjusted Revenue ....... $1,010 $942 7 $2,012 $1,690 19 Adjusted Operating Expense .............. 728 678 7 1,430 1,308 9 ---------------------------------------------- Operating Margin ....... 282 264 7 582 382 52 Credit (Benefits) ...... (60) (19) NM (99) (14) NM ---------------------------------------------- Operating Margin Less Credit (Benefits) 342 283 21 681 396 72 Additional Provision ... - - - - - - ---------------------------------------------- Income Before Taxes .... 342 283 21 681 396 72 Income Taxes ........... 100 72 39 240 105 NM ---------------------------------------------- Net Income ............. $ 242 $211 15 $ 441 $ 291 52 ---------------------------------------------- - ------------------------------------------------------------------------ Average Assets (In Billions of Dollars) . $82 $81 1 $82 $82 - Return on Assets (%) ... 1.18 1.05 - 1.08 0.71 - ---------------------------------------------- - ------------------------------------------------------------------------ (A) Reclassified to conform to the latest quarter's presentation. NM Not meaningful, as percentage equals or exceeds 100%. - ------------------------------------------------------------------------ 15 - ---------------------------------------------------------------------- Corporate Items (A) Second Quarter % Six Months % (In Millions of -------------- ------------- Dollars) 1997 1996(B) Change 1997 1996(B) Change - ---------------------------------------------------------------------- Revenue $ 228 $ 201 13 $ 437 $ 449 (3) Operating Expense 84 93 (10) 239 195 23 ---------------------------------------------- Income Before Taxes 144 108 33 198 254 (22) Income Taxes 256 278 (8) 449 480 (6) ---------------------------------------------- Net Loss ($112) ($170) (34) ($251) ($226) 11 ---------------------------------------------- - ---------------------------------------------------------------------- Average Assets (In Billions of Dollars) $8 $4 NM $7 $4 75 ---------------------------------------------- - ---------------------------------------------------------------------- (A) Corporate Items includes revenue derived from charging businesses for funds employed, based upon a marginal cost of funds concept, unallocated corporate costs, and the offset created by attributing income taxes to core business activities on a local tax-rate basis. (B) Reclassified to conform to the latest quarter's presentation. NM Not meaningful, as percentage equals or exceeds 100%. 16 - ------------------------------------------------------------------------ Consumer Loan Delinquency Amounts, Net Credit Losses, and Ratios - ------------------------------------------------------------------------ (In Millions Total 90 Days or Average Net Credit of Dollars, Loans More Past Due (A) Loans Losses (A) except ------------------------------------------------------- Loan Amounts June June Mar. June 2nd 2nd 1st 2nd in 30, 30, 31, 30, Qtr. Qtr. Qtr. Qtr. Billions) 1997 1997 1997 1996 1997 1997 1997 1996 - ------------------------------------------------------------------------ Citibanking .. $66.9 $2,094 $2,193 $2,663 $66.3 $145 $148 $161 Ratio ........ 3.13% 3.30% 4.05% 0.87% 0.91% 0.99% Cards U.S. Bankcards 45.3 843 884 732 44.7 683 656 522 Ratio ........ 1.86% 1.98% 1.73% 6.13% 5.91% 4.99% Other ........ 9.5 206 214 180 9.1 95 91 89 Ratio ........ 2.18% 2.42% 2.25% 4.14% 4.25% 4.65% Private Bank . 15.6 187 198 254 15.4 2 (2) (3) Ratio ........ 1.19% 1.28% 1.66% 0.04% NM NM - ------------------------------------------------------------------------ Total Managed 137.3 3,330 3,489 3,829 135.5 925 893 769 Ratio ........ 2.43% 2.58% 2.91% 2.73% 2.69% 2.38% - ------------------------------------------------------------------------ Securitized Credit Card Receivables (24.2) (453) (500) (452) (24.7) (404) (402) (349) Loans Held for Sale(B). (3.6) (37) (39) - (3.4) (33) (32) - - ------------------------------------------------------------------------ Total Loan Portfolio .. $109.5 $2,840 $2,950 $3,377 $107.4 $488 $459 $420 Ratio ........ 2.59% 2.76% 3.20% 1.82% 1.75% 1.62% - ------------------------------------------------------------------------ Managed Portfolio: Developed .... $102.4 $2,869 $3,075 $3,448 $101.4 $828 $801 $671 Ratio ........ 2.80% 3.03% 3.42% 3.26% 3.19% 2.70% Emerging ..... 34.9 461 414 381 34.1 97 92 98 Ratio ........ 1.32% 1.23% 1.25% 1.15% 1.12% 1.30% - ------------------------------------------------------------------------ (A) The ratios of 90 days or more past due and net credit losses are calculated based on end-of-period and average loans, respectively, both net of unearned income. (B) Commencing with the 1997 first quarter, Citicorp classifies credit card and mortgage loans intended for sale as loans held for sale, which are accounted for at the lower of cost or market value with net credit losses charged to other revenue. NM Not meaningful, as net recoveries result in a negative percentage. - ------------------------------------------------------------------------ - ---------------------------------------------------------------------- Consumer Loan Balances, Net of Unearned Income - ---------------------------------------------------------------------- End of Period Average ------------------------------------------------ June Mar. June 2nd 1st 2nd (In Billions of 30, 31, 30, Qtr. Qtr. Qtr. Dollars) 1997 1997 1996 1997 1997 1996 - ---------------------------------------------------------------------- Managed ............. $137.3 $135.2 $131.4 $135.5 $134.6 $130.3 Securitized Credit Card Receivables .. (24.2) (25.4) (26.0) (24.7) (25.1) (26.2) Loans Held for Sale (A) .......... (3.6) (3.1) - (3.4) (3.1) - - ---------------------------------------------------------------------- Loan Portfolio ...... $109.5 $106.7 $105.4 $107.4 $106.4 $104.1 - ---------------------------------------------------------------------- (A) Commencing with the 1997 first quarter, Citicorp classifies credit card and mortgage loans intended for sale as loans held for sale, which are accounted for at the lower of cost or market value with net credit losses charged to other revenue. - ---------------------------------------------------------------------- 17 - ---------------------------------------------------------------------- Cash-Basis and Renegotiated Loans - ---------------------------------------------------------------------- June 30, Dec. 31, June 30, (In Millions of Dollars) 1997 1996 1996 - ---------------------------------------------------------------------- Commercial Cash-Basis Loans Collateral-Dependent (at Lower of Cost or Collateral Value)(A) ...... $274 $263 $ 677 Other ................................... 643 642 677 Total Commercial Cash-Basis Loans ....... $917 $905 $1,354 - ---------------------------------------------------------------------- Commercial Renegotiated Loans ........... $295 $321 $335 Consumer Loans on which Accrual of Interest has been Suspended ........ $2,036 $2,187 $2,545 - ---------------------------------------------------------------------- (A) A cash-basis loan is defined as collateral dependent when repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment, in which case the loans are written down to the lower of cost or collateral value. - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Other Real Estate Owned (OREO) and Assets Pending Disposition (A) - ---------------------------------------------------------------------- June 30, Dec. 31, June 30, (In Millions of Dollars) 1997 1996 1996 - ---------------------------------------------------------------------- Consumer OREO $362 $ 452 $ 497 Commercial OREO 482 614 528 ---------------------------- Total $844 $1,066 $1,025 ---------------------------- - ---------------------------------------------------------------------- Assets Pending Disposition (B) $72 $160 $180 ---------------------------- - ---------------------------------------------------------------------- (A) Carried at lower of cost or collateral value. (B) Represents consumer residential mortgage loans that have a high probability of foreclosure. - ---------------------------------------------------------------------- 18 - ---------------------------------------------------------------------- Credit Loss Reserves (A) - ---------------------------------------------------------------------- June 30, Dec. 31, June 30, (Dollars In Millions) 1997 1996 1996 - ---------------------------------------------------------------------- Allowance for Credit Losses: Consumer ................................ $2,453 $2,079 $2,000 Commercial .............................. 3,329 3,424 3,424 --------------------------- Total Allowance for Credit Losses ....... 5,782 5,503 5,424 Reserves for Off-Balance Sheet Credit Exposures ...................... 191 473 466 --------------------------- Total Credit Loss Reserves .............. $5,973 $5,976 $5,890 - ---------------------------------------------------------------------- Allowance As a Percent of Total Loans: Consumer ................................ 2.24% 1.86% 1.90% Commercial .............................. 4.80% 5.46% 5.48% Total ................................... 3.23% 3.15% 3.23% - ---------------------------------------------------------------------- (A) In the first quarter of 1997, to be consistent with industry practice, Citicorp changed the apportionment and display of credit loss reserves to report (1) $50 million in Other Liabilities attributable to standby letters of credit and guarantees, and (2) $50 million deducted from Trading Account Assets attributable to derivative and foreign exchange contracts, and (3) to restore to the Allowance for Credit Losses $373 million that had previously been attributed to securitization transactions where the exposure to credit losses is contractually limited to the cash flows from the securitized receivables. Reserves for off-balance sheet credit exposures at June 30, 1997 consist of $50 million included in Other Liabilities and $50 million deducted from Trading Account Assets and also include $91 million deducted from Other Assets attributable to mortgage loans sold with recourse. Prior period amounts have not been reclassified. - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Net Write-offs, Additional Provision, and Provision for Credit Losses - ---------------------------------------------------------------------- Second Quarter Six Months (In Millions of Dollars) 1997 1996 1997 1996 - ---------------------------------------------------------------------- Net Write-offs (Recoveries): Consumer (A) .................. $ 925 $ 769 $1,818 $1,476 Commercial .................... (1) 9 (62) 40 Total Adjusted Net Write-offs . 924 778 1,756 1,516 Effect of Credit Card Securitization Activity ..... (437) (349) (871) (643) Total ......................... $ 487 $ 429 $ 885 $ 873 - ---------------------------------------------------------------------- Additional Provision: Consumer ...................... $25 $50 $50 $100 Commercial .................... - - - - Total ......................... $25 $50 $50 $100 - ---------------------------------------------------------------------- Provision for Credit Losses: Consumer ...................... $513 $470 $997 $933 Commercial .................... (1) 9 (62) 40 Total ......................... $512 $479 $935 $973 - ---------------------------------------------------------------------- (A) Adjusted for the effect of credit card securitization activity, including the effect related to credit card receivables held for sale commencing with the 1997 first quarter (see page 17). - ---------------------------------------------------------------------- 19 - ---------------------------------------------------------------------- Consolidated Statement of Income CITICORP and Subsidiaries - ---------------------------------------------------------------------- (In Millions of Second Quarter % Six Months % Dollars, Except -------------- --------------- Per Share Amounts) 1997 1996 Change 1997 1996 Change - ---------------------------------------------------------------------- Interest Revenue ..... $6,141 $5,751 7 $11,998 $11,527 4 Interest Expense ..... 3,278 3,023 8 6,331 6,114 4 ---------------------------------------------- Net Interest Revenue . 2,863 2,728 5 5,667 5,413 5 ---------------------------------------------- Provision for Credit Losses ............. 512 479 7 935 973 (4) ---------------------------------------------- Net Interest Revenue after Provision for Credit Losses .. 2,351 2,249 5 4,732 4,440 7 ---------------------------------------------- Fees, Commissions, and Other Revenue Fees and Commissions . 1,441 1,349 7 2,793 2,661 5 Foreign Exchange ..... 311 214 45 608 419 45 Trading Account ...... 97 106 (8) 295 196 51 Securities Transactions 124 39 NM 232 141 65 Other Revenue ........ 475 557 (15) 912 991 (8) ---------------------------------------------- Total Fees, Commissions, and Other Revenue .. 2,448 2,265 8 4,840 4,408 10 ---------------------------------------------- Operating Expense Salaries ............. 1,286 1,212 6 2,550 2,344 9 Employee Benefits .... 321 331 (3) 722 668 8 Total Employee Expense 1,607 1,543 4 3,272 3,012 9 Net Premises and Equipment Expense .. 479 439 9 969 896 8 Other Expense ........ 1,087 996 9 2,101 1,930 9 ---------------------------------------------- Total Operating Expense ............ 3,173 2,978 7 6,342 5,838 9 ---------------------------------------------- Income Before Taxes .. 1,626 1,536 6 3,230 3,010 7 Income Taxes ......... 602 584 3 1,211 1,144 6 ---------------------------------------------- Net Income ........... $1,024 $ 952 8 $2,019 $1,866 8 ---------------------------------------------- - ---------------------------------------------------------------------- Income Applicable to Common Stock .... $990 $914 8 $1,947 $1,785 9 ---------------------------------------------- Earnings Per Share: On Common and Common Equivalent Shares .. $2.10 $1.86 13 $4.11 $3.68 12 Assuming Full Dilution ........... $2.10 $1.86 13 $4.11 $3.61 14 ---------------------------------------------- - ---------------------------------------------------------------------- NM Not meaningful, as percentage equals or exceeds 100%. - ---------------------------------------------------------------------- 20 - ---------------------------------------------------------------------- Consolidated Balance Sheet CITICORP and Subsidiaries - ---------------------------------------------------------------------- June 30, Dec. 31, % (In Millions of Dollars) 1997 1996 Change - ---------------------------------------------------------------------- Assets Cash and Due from Banks ................ $ 7,638 $ 6,905 11 Deposits at Interest with Banks ........ 12,802 11,648 10 Securities, at Fair Value Available for Sale .................... 34,704 26,062 33 Venture Capital ....................... 2,153 2,124 1 Trading Account Assets ................. 32,475 30,785 5 Loans Held for Sale (A) ................ 3,612 - NM Federal Funds Sold and Securities Purchased Under Resale Agreements .... 13,651 11,133 23 Loans, Net Consumer ............................... 109,506 111,847 (2) Commercial ............................. 69,408 62,765 11 ---------------------------- Loans, Net of Unearned Income .......... 178,914 174,612 2 Allowance for Credit Losses ............ (5,782) (5,503) 5 ---------------------------- Total Loans, Net ....................... 173,132 169,109 2 Customers' Acceptance Liability ........ 2,145 2,077 3 Premises and Equipment, Net ............ 4,745 4,667 2 Interest and Fees Receivable ........... 3,221 3,068 5 Other Assets ........................... 14,015 13,440 4 ---------------------------- Total .................................. $304,293 $281,018 8 ---------------------------- - ---------------------------------------------------------------------- Liabilities Non-Interest-Bearing Deposits in U.S. Offices .............................. $ 15,904 $ 14,867 7 Interest-Bearing Deposits in U.S. Offices .............................. 39,739 40,254 (1) Non-Interest-Bearing Deposits in Offices Outside the U.S. ............. 11,525 9,891 17 Interest-Bearing Deposits in Offices Outside the U.S. ..................... 131,522 119,943 10 ---------------------------- Total Deposits ......................... 198,690 184,955 7 Trading Account Liabilities ............ 23,460 22,003 7 Purchased Funds and Other Borrowings ... 24,138 18,191 33 Acceptances Outstanding ................ 2,183 2,104 4 Accrued Taxes and Other Expense ........ 5,817 5,992 (3) Other Liabilities ...................... 8,943 8,201 9 Long-Term Debt ......................... 19,653 18,850 4 Stockholders' Equity Preferred Stock (Without par value) .... 1,903 2,078 (8) Common Stock ($1.00 par value) ......... 506 506 - Issued Shares: 506,298,235 in each period Surplus ................................ 6,557 6,595 (1) Retained Earnings ...................... 15,766 14,303 10 Net Unrealized Gains - Securities ...... 952 676 41 Available for Sale Foreign Currency Translation ........... (547) (486) 13 Common Stock in Treasury, at Cost ...... (3,728) (2,950) 26 Shares: 48,206,545 and 43,081,217, respectively ---------------------------- Total Stockholders' Equity ............. 21,409 20,722 3 ---------------------------- Total .................................. $304,293 $281,018 8 ---------------------------- - ---------------------------------------------------------------------- (A) Commencing with the first quarter 1997, Citicorp classifies credit card and mortgage loans intended for sale as loans held for sale, which are accounted for at the lower of cost or market value. NM Not meaningful, as percentage equals or exceeds 100%. - ---------------------------------------------------------------------- 21 - --------------------------------------------------------------------------- Net Interest Revenue 2nd 1st 4th 3rd 2nd Statistics Qtr. Qtr. Qtr. Qtr. Qtr. (Taxable Equivalent Basis)(A) 1997 1997 1996 1996 1996 - --------------------------------------------------------------------------- (In Millions of Dollars) - ---------------------------------- Adjusted Net Interest Revenue (B): $3,454 $3,449 $3,484 $3,330 $3,351 Effect of Credit Card Securitization Activity (578) (630) (650) (613) (615) -------------------------------------- Total $2,876 $2,819 $2,834 $2,717 $2,736 -------------------------------------- - -------------------------------------------------------------------------- (In Billions of Dollars) - ---------------------------------- Adjusted Average Interest- Earning Assets (B): $277.3 $267.3 $262.2 $258.8 $256.8 Securitized Credit Card Receivables (24.7) (25.1) (25.9) (26.2) (26.2) -------------------------------------- Total $252.6 $242.2 $236.3 $232.6 $230.6 -------------------------------------- - --------------------------------------------------------------------------- Adjusted Net Interest Margin (B): 5.00% 5.23% 5.28% 5.12% 5.25% Effect of Credit Card Securitization Activity (.43)% (.51)% (.51)% (.47)% (.48)% -------------------------------------- Total 4.57% 4.72% 4.77% 4.65% 4.77% -------------------------------------- - --------------------------------------------------------------------------- (A) The taxable equivalent adjustment is based on the U.S. federal statutory tax rate of 35%. (B) Adjusted for the effect of credit card securitization. - --------------------------------------------------------------------------- - ---------------------------------------------------------------------- Consolidated Average Balances - ---------------------------------------------------------------------- 2nd 1st 4th 3rd 2nd (In Billions of Dollars) Qtr. Qtr. Qtr. Qtr. Qtr. 1997 1997 1996 1996 1996 - ---------------------------------------------------------------------- Loans: Consumer $107 $106 $108 $106 $104 Commercial 67 62 61 61 60 ------------------------------------ Total Average Loans $174 $168 $169 $167 $164 ------------------------------------ - ---------------------------------------------------------------------- Total Average Assets $293 $285 $276 $268 $268 - ---------------------------------------------------------------------- (In Millions of Dollars) - ----------------------------- Common Stockholders' Equity $18,933 $18,698 $18,321 $17,950 $17,713 Preferred Equity 1,903 2,049 2,078 2,078 2,078 --------------------------------------- Total Average Stockholders' Equity $20,836 $20,747 $20,399 $20,028 $19,791 --------------------------------------- - ---------------------------------------------------------------------- 22 - ---------------------------------------------------------------------- Calculation of Earnings Per Share - ---------------------------------------------------------------------- On Common and Common Assuming Full Equivalent Shares Dilution ---------------------------------------- (In Millions, except Per Second Quarter Second Quarter Share Amounts) 1997 1996 1997 1996 - ---------------------------------------------------------------------- Income Applicable to Common Stock ........................ $990 $914 $990 $914 - ---------------------------------------------------------------------- Shares Weighted-Average Common Shares Outstanding ........... 458.5 476.9 458.5 476.9 Common Equivalent Shares (A) ... 12.6 14.9 13.3 15.2 Total .......................... 471.1 491.8 471.8 492.1 - ---------------------------------------------------------------------- Earnings Per Share ............. $2.10 $1.86 $2.10 $1.86 - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Calculation of Earnings Per Share - ---------------------------------------------------------------------- On Common and Common Assuming Full Equivalent Shares Dilution ---------------------------------------- (In Millions, except Per Six Months Six Months Share Amounts) 1997 1996 1997 1996 - ---------------------------------------------------------------------- Earnings Income Applicable to Common Stock ........................ $1,947 $1,785 $1,947 $1,785 Dividends on Convertible Preferred Stock, Series 12 and Series 13 (B) ............ - - - 5 Income Applicable to Common Stock, Adjusted ....... $1,947 $1,785 $1,947 $1,790 - ---------------------------------------------------------------------- Shares Weighted-Average Common Shares Outstanding (B) ....... 460.0 470.2 460.0 470.2 Convertible Preferred Stock, Series 12 and Series 13 (B) .. - - - 10.5 Common Equivalent Shares (A) ... 13.6 15.0 14.0 15.8 Total .......................... 473.6 485.2 474.0 496.5 - ---------------------------------------------------------------------- Earnings Per Share Net Income ..................... $4.11 $3.68 $4.11 $3.61 - ---------------------------------------------------------------------- (A) Includes the dilutive effect of stock options and stock purchase agreements computed using the treasury stock method and shares issuable under deferred stock awards. (B) During the first quarter of 1996, the remaining Convertible Preferred Stock, Series 12 and 13 were converted to 59.0 million shares of common stock. The shares are included in the fully diluted computation on an if-converted basis up to conversion dates, and from conversion dates forward these shares are included in weighted-average common shares outstanding. - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- June 30, June 30, (In Thousands) 1997 1996 - ---------------------------------------------------------------------- Common Shares Outstanding ....................... 458,092 473,164 - ---------------------------------------------------------------------- 23 - ---------------------------------------------------------------------- Other Revenue Second Quarter % Six Months % (In Millions of -------------- ------------ Dollars) 1997 1996 Change 1997 1996 Change - ---------------------------------------------------------------------- Credit Card Securitization Activity (A) ........ $118 $215 (45) $283 $448 (37) Venture Capital ....... 173 107 62 266 145 83 Affiliate Earnings .... 112 83 35 171 145 18 Net Asset Gains and Other Items ......... 72 152 (53) 192 253 (24) Total ................. $475 $557 (15) $912 $991 (8) - ---------------------------------------------------------------------- (A) Includes net credit losses on credit card receivables held for sale commencing with the 1997 first quarter (see page 17). - ---------------------------------------------------------------------- - -------------------------------------------------------------------------- Trading-Related Second Quarter % Six Months % Revenue -------------- ------------ (In Millions of Dollars) 1997 1996(A) Change 1997 1996(A) Change - -------------------------------------------------------------------------- By Business Sector: Global Corporate Banking: Emerging Markets ......... $182 $192 (5) $ 400 $369 8 Global Relationship Banking ................. 243 175 39 562 340 65 -------------------------------------------- Total Global Corporate Banking ....... 425 367 16 962 709 36 Global Consumer and Other . 86 60 43 138 110 25 -------------------------------------------- Total $511 $427 20 $1,100 $819 34 -------------------------------------------- - -------------------------------------------------------------------------- By Trading Activity: Foreign Exchange (B) ...... $290 $225 29 $ 552 $437 26 Derivative (C) ............ 94 139 (32) 276 284 (3) Fixed Income (D) .......... 81 (23) NM 144 (18) NM Other ..................... 46 86 (47) 128 116 10 -------------------------------------------- Total ..................... $511 $427 20 $1,100 $819 34 -------------------------------------------- - -------------------------------------------------------------------------- By Income Statement Line: Foreign Exchange .......... $311 $214 45 $ 608 $419 45 Trading Account ........... 97 106 (8) 295 196 51 Other (E) ................. 103 107 (4) 197 204 (3) -------------------------------------------- Total ..................... $511 $427 20 $1,100 $819 34 -------------------------------------------- - -------------------------------------------------------------------------- (A) Reclassified to conform to the latest quarter's presentation. (B) Foreign exchange activity includes foreign exchange spot, forward, and option contracts. (C) Derivative activity primarily includes interest rate and currency swaps, options, financial futures, and equity and commodity contracts. (D) Fixed income activity principally includes debt instruments including government and corporate debt as well as mortgage assets. (E) Primarily net interest revenue. NM Not meaningful, as percentage equals or exceeds 100%. - -------------------------------------------------------------------------- 24 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits - Exhibit No. 12(a) Calculation of Ratio of Income to Fixed Charges - Exhibit No. 12(b) Calculation of Ratio of Income to Fixed Charges Including Preferred Stock Dividends of Income to Fixed Charges 24 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CITICORP (Registrant) By: /s/ Thomas E. Jones ------------------------------- Thomas E. Jones Executive Vice President A Principal Financial Officer Dated: July 15, 1997 25 EX-12.(A) 2 CALCULATION OF RATIO OF INCOME TO FIXED CHARGES CITICORP AND SUBSIDIARIES CALCULATION OF RATIO OF INCOME TO FIXED CHARGES (In Millions)
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ----------------------------------------------------- ----------------- EXCLUDING INTEREST ON DEPOSITS: 1996 1995 1994 1993 1992 1997 1996 ------ ------ ------ ------ ------ ------ ------ FIXED CHARGES: INTEREST EXPENSE (OTHER THAN INTEREST ON DEPOSITS) 3,435 4,110 5,906 6,324 5,826 1,681 1,760 INTEREST FACTOR IN RENT EXPENSE 150 140 143 147 162 78 73 ------ ------ ------ ------ ------ ----- ----- TOTAL FIXED CHARGES 3,585 4,250 6,049 6,471 5,988 1,759 1,833 ------ ------ ------ ------ ------ ----- ----- INCOME: NET INCOME 3,788 3,464 3,422 (A) 1,919 (B) 722 2,019 1,866 INCOME TAXES 2,285 2,121 1,189 941 696 1,211 1,144 FIXED CHARGES 3,585 4,250 6,049 6,471 5,988 1,759 1,833 ------ ------ ------ ------ ------ ----- ----- TOTAL INCOME 9,658 9,835 10,660 9,331 7,406 4,989 4,843 ====== ====== ====== ====== ====== ===== ===== RATIO OF INCOME TO FIXED CHARGES EXCLUDING INTEREST ON DEPOSITS 2.69 2.31 1.76 1.44 1.24 2.84 2.64 ====== ====== ====== ====== ====== ===== ===== INCLUDING INTEREST ON DEPOSITS: FIXED CHARGES: INTEREST EXPENSE 12,409 13,012 14,902 16,121 16,327 6,331 6,114 INTEREST FACTOR IN RENT EXPENSE 150 140 143 147 162 78 73 ------ ------ ------ ------ ------ ----- ----- TOTAL FIXED CHARGES 12,559 13,152 15,045 16,268 16,489 6,409 6,187 ------ ------ ------ ------ ------ ----- ----- INCOME: NET INCOME 3,788 3,464 3,422 (A) 1,919 (B) 722 2,019 1,866 INCOME TAXES 2,285 2,121 1,189 941 696 1,211 1,144 FIXED CHARGES 12,559 13,152 15,045 16,268 16,489 6,409 6,187 ------ ------ ------ ------ ------ ----- ----- TOTAL INCOME 18,632 18,737 19,656 19,128 17,907 9,639 9,197 ====== ====== ====== ====== ====== ===== ===== RATIO OF INCOME TO FIXED CHARGES INCLUDING INTEREST ON DEPOSITS 1.48 1.42 1.31 1.18 1.09 1.50 1.49 ====== ====== ====== ====== ====== ===== =====
(A) NET INCOME FOR THE YEAR ENDED DECEMBER 31, 1994 EXCLUDES THE CUMULATIVE EFFECT OF ADOPTING " STATEMENT OF FINANCIAL ACCOUNTING STANDARDS No. 112, ""EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT " BENEFITS", OF $(56) MILLION. (B) NET INCOME FOR THE YEAR ENDED DECEMBER 31, 1993 EXCLUDES THE CUMULATIVE EFFECT OF ADOPTING STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 109, ""ACCOUNTING FOR INCOME TAXES"", OF $300 MILLION. EX-12.(B) 3 CALCULATION OF RATIO INCLUDING PREFERRED STOCK
CITICORP AND SUBSIDIARIES CALCULATION OF RATIO OF INCOME TO FIXED CHARGES INCLUDING PREFERRED STOCK DIVIDENDS (In Millions) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, -------------------------------------------------- ----------------- EXCLUDING INTEREST ON DEPOSITS: 1996 1995 1994 1993 1992 1997 1996 ------ ------ ------ ------ ------ ------ ------ FIXED CHARGES: INTEREST EXPENSE (OTHER THAN INTEREST ON DEPOSITS) 3,435 4,110 5,906 6,324 5,826 1,681 1,760 INTEREST FACTOR IN RENT EXPENSE 150 140 143 147 162 78 73 DIVIDENDS--PREFERRED STOCK 261 553 505 (A) 465 416 114 137 ------ ------ ------ ------ ------ ----- ----- TOTAL FIXED CHARGES 3,846 4,803 6,554 6,936 6,404 1,873 1,970 ------ ------ ------ ------ ------ ----- ----- INCOME: NET INCOME 3,788 3,464 3,422 (B) 1,919 (C) 722 2,019 1,866 INCOME TAXES 2,285 2,121 1,189 941 696 1,211 1,144 FIXED CHARGES (EXCLUDING PREFERRED STOCK DIVIDENDS) 3,585 4,250 6,049 6,471 5,988 1,759 1,833 ------ ------ ------ ------ ------ ----- ----- TOTAL INCOME 9,658 9,835 10,660 9,331 7,406 4,989 4,843 ====== ====== ====== ====== ====== ===== ===== RATIO OF INCOME TO FIXED CHARGES EXCLUDING INTEREST ON DEPOSITS 2.51 2.05 1.63 1.35 1.16 2.66 2.46 ====== ====== ====== ====== ====== ===== ===== INCLUDING INTEREST ON DEPOSITS: FIXED CHARGES: INTEREST EXPENSE 12,409 13,012 14,902 16,121 16,327 6,331 6,114 INTEREST FACTOR IN RENT EXPENSE 150 140 143 147 162 78 73 DIVIDENDS--PREFERRED STOCK 261 553 505 (A) 465 416 114 137 ------ ------ ------ ------ ------ ----- ----- TOTAL FIXED CHARGES 12,820 13,705 15,550 16,733 16,905 6,523 6,324 ------ ------ ------ ------ ------ ----- ----- INCOME: NET INCOME 3,788 3,464 3,422 (B) 1,919 (C) 722 2,019 1,866 INCOME TAXES 2,285 2,121 1,189 941 696 1,211 1,144 FIXED CHARGES (EXCLUDING PREFERRED STOCK DIVIDENDS) 12,559 13,152 15,045 16,268 16,489 6,409 6,187 ------ ------ ------ ------ ------ ----- ----- TOTAL INCOME 18,632 18,737 19,656 19,128 17,907 9,639 9,197 ====== ====== ====== ====== ====== ===== ===== RATIO OF INCOME TO FIXED CHARGES INCLUDING INTEREST ON DEPOSITS 1.45 1.37 1.26 1.14 1.06 1.48 1.45 ====== ====== ====== ====== ====== ===== =====
(A) CALCULATED ON A BASIS OF AN ASSUMED TAX RATE OF 29% FOR 1994. (B) NET INCOME FOR THE YEAR ENDED DECEMBER 31, 1994 EXCLUDES THE CUMULATIVE EFFECT OF ADOPTING STATEMENT OF FINANCIAL ACCOUNTING STANDARDS No. 112, "EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT BENEFITS", OF $(56) MILLION. (C) NET INCOME FOR THE YEAR ENDED DECEMBER 31, 1993 EXCLUDES THE CUMULATIVE EFFECT OF ADOPTING STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 109, "ACCOUNTING FOR INCOME TAXES", OF $300 MILLION. -----END PRIVACY-ENHANCED MESSAGE-----