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Fitch: Citi Reports Solid Earnings in 1Q'13, Exceeds Expectations



  Fitch: Citi Reports Solid Earnings in 1Q'13, Exceeds Expectations

Business Wire

NEW YORK -- April 15, 2013

Citigroup's (Citi) 1Q'13 results were very solid for the quarter, according to
Fitch Ratings.

Adjusting for a few non-core items, Citi's first-quarter return on assets
(ROA) improved to 86 bps in 1Q'13, up significantly from 45 bps last quarter.
Earnings increased sequentially mainly due to seasonally strong results in
fixed income and a healthy loan loss reserve release. Citi also reported lower
legal costs and repositioning charges on a linked-quarter basis.

The excluded one-time items from ROA include DVA/CVA charges reflecting
improvement in Citi's own credit spreads in both 1Q'13 and 4Q'12, while the
last quarter included the large repositioning charge related to the workforce
reductions ($1 billion).

Citi reported both NIM expansion and higher revenues. Excluding CVA/DVA,
revenues increased a strong 12% sequentially mainly due to a significant
increase in fixed income markets following a seasonally weak 4Q'12. Expenses,
excluding the $1 billion repositioning charge last quarter, fell 3% on a
linked-quarter basis.

By business line, Global Consumer Banking net income advanced 12% supported by
lower operating and provision expenses, partially offset by slowing mortgage
refinancing activity in North America. Loan loss releases in North America
were offset by some modest reserve builds in International Consumer Banking
reflecting portfolio growth.

Citi's capital markets revenues were up 55% on a sequential basis following
the typical seasonal slowdown in 4Q'12 and were roughly flat from the prior
year period. Most of Citi's Securities & Banking revenues remains comprised
from its solid fixed income markets businesses, which reported better results
in all products.

Transaction Services net income declined 10% on a sequential basis reflecting
revenue declines in Trade and Treasury Services (TTS) as loan and deposit
growth was more than offset by the impact of spread compression globally.

Counter to the last several quarters, Citi released a considerable amount of
loan loss reserves in North America mortgages, supported by home price
appreciation and improving early stage delinquency trends. Citi disclosed that
60% of the NCOs were offset with related reserve releases. Despite the reserve
release, which Fitch expects will continue and likely increase in size, Citi
still holds $7.5 billion of loan loss reserves for North America mortgages or
approximately 8.7% coverage.

Legal and related costs fell approximately 45% on a sequential basis, though
they remain elevated for Citi, with most of the charges within Citi Holdings.
Citi continues to wind down its assets housed in Citi Holdings, though at a
reduced rate. The earnings drag from Citi Holdings fell to approximately $790
million in 1Q'13, down from roughly $1 billion in the prior period and a year
ago.

Citi's capital ratios continued to strengthen with further progress on the
Basel III front. Under Basel III, Citi's estimated Tier I common ratio
improved to 9.3%. Fitch notes that Citi performed very well under the
regulatory stress tests, and its capital request was considered both modest
and appropriate. Basel I Tier 1 common declined to an estimated 11.8% (roughly
90bps from the YE12 unadjusted Tier 1 common ratio) following the adoption of
the Federal Reserve's Market Risk Rule.

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS
OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH WEBSITE.

Contact:

Fitch Ratings
Julie Solar, +1-312-368-5472
Senior Director
Financial Institutions
Fitch Ratings, Inc.
70 West Madison
Chicago, IL 60602
or
Christopher Wolfe, +1-212-908-0771
Managing Director
Financial Institutions
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
brian.bertsch@fitchratings.com
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