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Citigroup Reports Third Quarter 2018 Financial Results

October 12, 2018

NEW YORK--(BUSINESS WIRE)--Oct 12, 2018--Citigroup Inc. (NYSE: C)

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EARNINGS PER SHARE OF $1.73

NET INCOME OF $4.6 BILLION

REVENUES OF $18.4 BILLION

RETURNED $6.4 BILLION OF CAPITAL TO COMMON SHAREHOLDERS

REPURCHASED 75 MILLION COMMON SHARES

BOOK VALUE PER SHARE OF $72.88 TANGIBLE BOOK VALUE PER SHARE OF $61.91 5

Citigroup Inc. today reported net income for the third quarter 2018 of $4.6 billion, or $1.73 per diluted share, on revenues of $18.4 billion. This compared to net income of $4.1 billion, or $1.42 per diluted share, on revenues of $18.4 billion for the third quarter 2017.

Revenues were largely unchanged from the prior-year period, primarily reflecting the net impact of a gain on sale (approximately $580 million) of a fixed income analytics business in the prior-year period and a gain on sale (approximately $250 million) of an asset management business in Mexico in Global Consumer Banking (GCB) in the current period, as well as the impact of foreign exchange translation 6. Excluding these items, revenues grew 4% driven by growth in the Institutional Clients Group (ICG). Net income of $4.6 billion increased 12%, primarily reflecting a lower effective tax rate as well as lower expenses and cost of credit, as the revenues remained largely unchanged. Earnings per share of $1.73 increased 22% from $1.42 per diluted share in the prior-year period, driven by the growth in net income and an 8% reduction in average diluted shares outstanding.

Citi CEO Michael Corbat said, “Our results this quarter showed solid year-over-year revenue growth across many of our businesses, including Fixed Income, Treasury and Trade Solutions, Securities Services, the Private Bank and our consumer franchise in Mexico. We also grew loans and deposits while continuing to prudently manage risk as demonstrated by the stability of our credit portfolio. We returned $6.4 billion of capital to common shareholders through buybacks and dividends during the quarter. And over the past twelve months, we’ve reduced our common shares outstanding by over 200 million or 8%. Through a combination of earnings growth and capital return, our earnings per share were 22% higher than one year ago.

“Through the first nine months of this year, we have grown our underlying Consumer and Institutional revenues by 4%, operated with an efficiency ratio of 57.3% and delivered a Return on Tangible Common Equity of 11.2%. We are firmly on track to deliver on our full year 2018 financial targets. At the same time, we continue to make targeted investments which will fund future growth and enhance our ability to serve clients,” Mr. Corbat concluded.

Percentage comparisons throughout this press release are calculated for the third quarter 2018 versus the third quarter 2017, unless otherwise specified.

Citigroup

Citigroup revenues of $18.4 billion in the third quarter 2018 were largely unchanged. Excluding the previously mentioned gains on sale as well as the impact of foreign exchange translation, revenues increased 4%, driven by growth in ICG.

Citigroup’s operating expenses of $10.3 billion in the third quarter 2018 decreased 1%, as higher volume-related expenses and investments were more than offset by efficiency savings and the wind-down of legacy assets.

Citigroup’s cost of credit in the third quarter 2018 was $2.0 billion, a 1% decrease, primarily driven by lower reserve builds in CitiRetail Services and Citi-Branded Cards in North America GCB, partially offset by a net reserve build in ICG.

Citigroup’s net income increased to $4.6 billion in the third quarter 2018, primarily driven by the lower effective tax rate as well as the lower expenses and cost of credit, as the revenues remained largely unchanged. Citigroup’s effective tax rate was 24% in the current quarter compared to 31% in the third quarter 2017.

Citigroup’s allowance for loan losses was $12.3 billion at quarter end, or 1.84% of total loans, compared to $12.4 billion, or 1.91% of total loans, at the end of the prior-year period. Total non-accrual assets declined 19% from the prior-year period to $4.0 billion. Consumer non-accrual loans declined 15% to $2.4 billion and corporate non-accrual loans decreased 25% to $1.5 billion .

Citigroup’s end-of-period loans were $675 billion as of quarter end, up 3% from the prior-year period. Excluding the impact of foreign exchange translation, Citigroup’s end-of-period loans grew 4%, as 6% aggregate growth in ICG and GCB was partially offset by the continued wind-down of legacy assets in Corporate / Other.

Citigroup’s end-of-period deposits were $1.0 trillion as of quarter end, an increase of 4% from the prior-year period. Excluding the impact of foreign exchange translation, Citigroup’s end-of-period deposits grew 5%, driven by 8% growth in ICG.

Citigroup’s book value per share of $72.88 and tangible book value per share of $61.91, both as of quarter end, increased 1% sequentially, as the benefit of a lower share count and higher net income more than offset common share repurchases and dividends. At quarter end, Citigroup’s CET1 Capital ratio was 11.8%, down from 12.1% in the prior quarter as net income was more than offset by common share repurchases and dividends, and risk-weighted assets increased due to client activity. Citigroup’s SLR for the third quarter 2018 was 6.5%, down from 6.6% in the prior quarter. During the third quarter 2018, Citigroup repurchased 75 million common shares and returned a total of $6.4 billion to common shareholders in the form of common share repurchases and dividends.

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