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| Citi chief Chuck Prince was interviewed in September.by the US banking editor and New York bureau chief of the Financial Times, before an audience of students and alumni of the Stern School of Business of the University of New York, at the CEO Series event. Interview |
Citigroup Inc. today reported net income for the 2007 third quarter of $2.38 billion, or $0.47 per share, a decline of 57% from the prior-year quarter. Results include a $729 million pre-tax gain on the sale of Redecard shares. Return on equity was 7.4%. On October 1, 2007, Citi announced that it expected third quarter 2007 net income to decline in the range of 60%, subject to finalizing third quarter results.
The results included a $1.35 billion write-down on the value of loans that helped finance the leveraged-buyout boom and $1.56 billion of pre-tax losses tied to loans and subprime mortgages that were to be repackaged and sold to investors as collateralized loan obligations. Consumer credit costs increased by $2.98 billion.
Citigroup's revenue increased 6% to $22.66 billion while operating expenses rose 22%. The global consumer divisions posted a 44% profit drop to $1.78 billion as revenue increased 14% amid a 35% surge overseas, due in part to the Redecard gain. The U.S. consumer business, which includes retail banking, credit cards and consumer finance, posted flat revenue.
"This was a disappointing quarter, even in the context of the dislocations in the sub-prime mortgage and credit markets. A significant amount of our income decline was in our fixed income business, where we have a long track record of strong earnings, and this quarter's performance was well below our expectations. Although we generated strong momentum in many of our franchises, our fixed income results, along with higher credit costs in global consumer, led to significantly lower net income," said Chuck Prince, Chairman and CEO.
"Importantly, many of our businesses performed well this quarter. Our international franchise continued to expand rapidly, with revenues up 30%. Our global wealth management franchise generated record revenues and transaction services posted another record quarter on double-digit earnings growth. In securities and banking, equity markets and underwriting revenues were up a combined 33%, and our advisory revenues grew 29%. Volumes in our consumer franchise continued to grow strongly with deposits up 18%, managed loans up 13%, and we opened 96 new branches around the world," said Prince.
"As we move into the fourth quarter, we are focusing closely on improving those areas where we performed below expectation, while at the same time continuing to execute on our strategic priorities," said Prince.
Citi, a leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi's major brand names include Citibank, CitiFinancial, Primerica, Citi Smith Barney and Banamex.
