COMMISSIONS AND FEES; ADMINISTRATION

AND OTHER FIDUCIARY FEES

The primary components of Commissions and fees revenue are investment banking fees, brokerage commissions, credit- and bank-card income and deposit-related fees.

Investment banking fees are substantially composed of underwriting and advisory revenues. Such fees are recognized at the point in time when Citigroup’s performance under the terms of a contractual arrangement is completed, which is typically at the closing of a transaction. Reimbursed expenses related to these transactions are recorded as revenue and are included within investment banking fees. In certain instances for advisory contracts, Citi will receive amounts in advance of the deal’s closing. In these instances, the amounts received will be recognized as a liability and not recognized in revenue until the transaction closes. The contract liability amount for the periods presented was negligible. Out-of-pocket expenses associated with underwriting activity are deferred and recognized at the time the related revenue is recognized, while out-of-pocket expenses associated with advisory arrangements are expensed as incurred. In general, expenses incurred related to investment banking transactions, whether consummated or not, are recorded in Other operating expenses. The Company has determined that it acts as principal in the majority of these transactions and therefore presents expenses gross within Other operating expenses.

Brokerage commissions primarily include commissions and fees from the following: executing transactions for clients on exchanges and over-the-counter markets; sales of mutual funds and other annuity products; and assisting clients in clearing transactions, providing brokerage services and other such activities. Brokerage commissions are recognized in Commissions and fees at the point in time the associated service is fulfilled, generally on trade-execution date. Gains or losses, if any, on these transactions are included in Principal transactions (see Note 6 to the Consolidated Financial Statements). Sales of certain investment products include a portion of variable consideration associated with the underlying product. In these instances, a portion of the revenue associated with the sale of the product is not recognized until the variable consideration becomes fixed. The Company recognized $130 million and $107 million of revenue related to such variable consideration for the three months ended September 30, 2018 and 2017, respectively, and $402 million and $302 million for the nine months ended September 30, 2018 and 2017, respectively. These amounts primarily relate to performance obligations satisfied in prior periods.

Credit- and bank-card income is primarily composed of interchange fees, which are earned by card issuers based on purchase sales, and certain card fees, including annual fees. Costs related to customer reward programs and certain payments to partners (primarily based on program sales, profitability and customer acquisitions) are recorded as a reduction of credit- and bank-card income. Interchange revenues are recognized as earned on a daily basis when Citi's performance obligation to transmit funds to the payment networks has been satisfied. Annual card fees, net of origination costs, are deferred and amortized on a straight-line basis over a 12-month period. Costs related to card reward programs are recognized when the rewards are earned by the cardholders. Payments to partners are recognized when incurred.

Deposit-related fees consist of service charges on deposit accounts and fees earned from performing cash management activities and other deposit account services. Such fees are recognized in the period in which the related service is provided.

Transactional service fees primarily consist of fees charged for processing services such as cash management, global payments, clearing, international funds transfer and other trade services. Such fees are recognized as/when the associated service is satisfied, which normally occurs at the point in time the service is requested by the customer and provided by Citi.

Insurance distribution revenue consists of commissions earned from third-party insurance companies for marketing and selling insurance policies on behalf of such entities. Such commissions are recognized in Commissions and fees at the point in time the associated service is fulfilled, generally when the insurance policy is sold to the policyholder. Sales of certain insurance products include a portion of variable consideration associated with the underlying product. In these instances, a portion of the revenue associated with the sale of the policy is not recognized until the variable consideration becomes determinable. The Company recognized $92 million and $115 million for the three months ended September 30, 2018 and 2017, respectively, and $296 million and $342 million for the nine months ended September 30, 2018 and 2017, respectively. These amounts primarily relate to performance obligations in prior periods.

Insurance premiums consist of premium income from insurance policies that Citi has underwritten and sold to policyholders.

The following tables present Commissions and fees revenue:



	Three Months Ended September 30,												Nine Months Ended September 30,
	2018												2018
In millions of dollars	ICG			GCB			Corporate/Other			Total			ICG			GCB			Corporate/Other			Total
Investment banking	$	856		$	—		$	—		$	856		$	2,695		$	—		$	—		$	2,695
Brokerage commissions	453			199			—			652			1,510			654			—			2,164
Credit- and bank-card income
Interchange fees	268			2,063			1			2,332			804			5,963			11			6,778
Card-related loan fees	16			172			—			188			47			474			12			533
Card rewards and partner payments	(125		)	(2,130		)	—			(2,255		)	(375		)	(6,070		)	(11		)	(6,456		)
Deposit-related fees⁽¹⁾	239			160			—			399			711			503			1			1,215
Transactional service fees	171			22			1			194			543			64			4			611
Corporate finance⁽²⁾	145			1			—			146			506			4			—			510
Insurance distribution revenue⁽³⁾	3			144			(4		)	143			13			429			6			448
Insurance premiums⁽³⁾	—			31			(2		)	29			—			96			(4		)	92
Loan servicing	42			27			8			77			118			89			31			238
Other	10			29			3			42			20			90			6			116
Total commissions and fees⁽⁴⁾	$	2,078		$	718		$	7		$	2,803		$	6,592		$	2,296		$	56		$	8,944



	Three Months Ended September 30,												Nine Months Ended September 30,
	2017												2017
In millions of dollars	ICG			GCB			Corporate/Other			Total			ICG			GCB			Corporate/Other			Total
Investment banking	$	961		$	—		$	—		$	961		$	2,840		$	—		$	—		$	2,840
Brokerage commissions	459			222			1			682			1,431			615			3			2,049
Credit- and bank-card income
Interchange fees	242			1,912			24			2,178			705			5,507			87			6,299
Card-related loan fees	13			172			13			198			39			526			41			606
Card rewards and partner payments	(105		)	(1,822		)	(8		)	(1,935		)	(316		)	(5,352		)	(49		)	(5,717		)
Deposit-related fees⁽¹⁾	249			188			4			441			696			554			12			1,262
Transactional service fees	185			21			11			217			556			74			44			674
Corporate finance⁽²⁾	183			2			—			185			616			4			—			620
Insurance distribution revenue⁽³⁾	5			142			17			164			10			425			58			493
Insurance premiums⁽³⁾	—			32			(1		)	31			—			97			(4		)	93
Loan servicing	38			25			25			88			109			79			89			277
Other	2			25			4			31			(36		)	64			28			56
Total commissions and fees⁽⁴⁾	$	2,232		$	919		$	90		$	3,241		$	6,650		$	2,593		$	309		$	9,552


(1)	Includes overdraft fees of $33 million and $35 million for the three months ended September 30, 2018 and 2017, respectively, and $95 million and $101 million for the nine months ended September 30, 2018 and 2017, respectively. Overdraft fees are accounted for under ASC 310.


(2)	Consists primarily of fees earned from structuring and underwriting loan syndications or related financing activity. This activity is accounted for under ASC 310.


(3)	Previously reported as insurance premiums on the Consolidated Statement of Income.

(4)

Commissions and fees includes $(1,774) million and $(1,398) million not accounted for under ASC 606, Revenue from Contracts with Customers, for the three months ended September 30, 2018 and 2017, respectively, and $(4,967) million and $(4,023) million for the nine months ended September 30, 2018 and 2017, respectively. Amounts reported in Commissions and fees accounted for under other guidance primarily include card-related loan fees, card reward programs and certain partner payments, corporate finance fees, insurance premiums and loan servicing fees.

Administration and Other Fiduciary Fees

Administration and other fiduciary fees are primarily composed of custody fees and fiduciary fees.

The custody product is composed of numerous services related to the administration, safekeeping and reporting for both U.S. and non-U.S. denominated securities. The services offered to clients include trade settlement, safekeeping, income collection, corporate action notification, record-keeping and reporting, tax reporting and cash management. These services are provided for a wide range of securities, including but not limited to equities, municipal and corporate bonds, mortgage-backed and asset-backed securities, money market instruments, U.S. Treasuries and agencies, derivative instruments, mutual funds, alternative investments and precious metals. Custody fees are recognized as/when the associated promised service is satisfied, which normally occurs at the point in time the service is requested by the customer and provided by Citi.

Fiduciary fees consist of trust services and investment management services. As an escrow agent, Citi receives, safe-keeps, services and manages clients’ escrowed assets such as cash, securities, property (including intellectual property), contracts or other collateral. Citi performs its escrow agent duties by safekeeping the funds during the specified time period agreed upon by all parties and therefore earns its revenue evenly during the contract duration.

Investment management services consist of managing assets on behalf of Citi’s retail and institutional clients. Revenue from these services primarily consists of asset-based fees for advisory accounts, which are based on the market value of the client’s assets and recognized monthly, when the market value is fixed. In some instances, the Company contracts with third-party advisors and with third-party custodians. The Company has determined that it acts as principal in the majority of these transactions and therefore presents the amounts paid to third parties gross within Other operating expenses.

The following table presents Administration and other fiduciary fees:



	Three Months Ended September 30,								Nine Months Ended September 30,
	2018								2018
In millions of dollars	ICG		GCB		Corporate/Other		Total		ICG		GCB		Corporate/Other		Total
Custody fees	$	371	$	41	$	18	$	430	$	1,138	$	133	$	50	$	1,321
Fiduciary fees	160		158		12		330		492		455		31		978
Guarantee fees	136		14		1		151		403		43		5		451
Total administration and other fiduciary fees⁽¹⁾	$	667	$	213	$	31	$	911	$	2,033	$	631	$	86	$	2,750



	Three Months Ended September 30,								Nine Months Ended September 30,
	2017								2017
In millions of dollars	ICG		GCB		Corporate/Other		Total		ICG		GCB		Corporate/Other		Total
Custody fees	$	397	$	44	$	14	$	455	$	1,135	$	123	$	41	$	1,299
Fiduciary fees	149		157		18		324		437		431		59		927
Guarantee fees	134		13		3		150		400		39		7		446
Total administration and other fiduciary fees⁽¹⁾	$	680	$	214	$	35	$	929	$	1,972	$	593	$	107	$	2,672


(1)	Administration and other fiduciary fees includes $151 million and $150 million for the three months ended September 30, 2018 and 2017, respectively, and $451 million and $446 million for the nine months ended September 30, 2018 and 2017, respectively, that are not accounted for under ASC 606, Revenue from Contracts with Customers. These amounts include guarantee fees.