FINANCIAL REVIEW
AND FORM 10-Q
FIRST QUARTER
1997
<PAGE>
TABLE OF CONTENTS PAGE
----
FINANCIAL SUMMARY......................................................... 1
BUSINESS DISCUSSION ...................................................... 3
Earnings Summary .................................................... 3
Consumer ............................................................ 4
Citibanking .................................................... 5
Cards .......................................................... 6
Private Bank ................................................... 7
Consumer Business in Emerging Markets .......................... 8
Consumer Business in Developed Markets ......................... 8
Consumer Portfolio Review ...................................... 9
Corporate Banking ................................................... 12
Emerging Markets ............................................... 13
Global Relationship Banking .................................... 14
Corporate Items ..................................................... 15
MANAGING GLOBAL RISK ..................................................... 15
Liquidity ........................................................... 15
Price Risk .......................................................... 16
Price Risk in Non-Trading Portfolios ................................ 16
Price Risk in Trading Portfolios .................................... 17
Estimated Fair Value of Financial Instruments ....................... 18
Capital ............................................................. 19
STATEMENT OF INCOME ANALYSIS ............................................. 21
Net Interest Revenue (Taxable Equivalent Basis) ..................... 21
Fee and Commission Revenue .......................................... 22
Trading-Related Revenue ............................................. 23
Securities Transactions ............................................. 24
Other Revenue ....................................................... 24
Provision and Credit Loss Reserves .................................. 25
Operating Expense ................................................... 26
Income Taxes ........................................................ 27
Effect of Credit Card Securitization Activity ....................... 27
Accounting Items .................................................... 27
CONSOLIDATED FINANCIAL STATEMENTS ........................................ 28
Consolidated Statement of Income .................................... 28
Consolidated Balance Sheet .......................................... 29
Consolidated Statement of Changes in Stockholders' Equity ........... 30
Consolidated Statement of Cash Flows ................................ 31
Consolidated Balance Sheet -- CITIBANK, N.A. and Subsidiaries ..... 32
OTHER FINANCIAL INFORMATION .............................................. 33
Securities .......................................................... 33
Trading Account Assets and Liabilities .............................. 33
Trading and End-User Derivative and Foreign Exchange Contracts ...... 34
Cash-Basis, Renegotiated, and Past Due Loans ........................ 36
Other Real Estate Owned (OREO) and Assets Pending Disposition ....... 36
Details of Credit Loss Experience ................................... 37
Calculation of Earnings Per Share ................................... 38
Cross-Border Outstandings ........................................... 39
Average Balances and Interest Rates (Taxable Equivalent Basis) ...... 41
FORM 10-Q ................................................................ 42
Form 10-Q Cross-Reference Index ..................................... 43
SIGNATURES ............................................................... 45
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL SUMMARY
- -------------------------------------------------------------------------------
First Quarter
=====================================
1997 1996
===============================================================================
NET INCOME (In Millions of Dollars)...... $995 $914
===============================================================================
NET INCOME PER SHARE (A)
On Common and Common Equivalent Shares... $ 2.01 $ 1.82
Assuming Full Dilution................... $ 2.01 $ 1.75
COMMON STOCKHOLDERS' EQUITY PER SHARE.... $ 41.08 $36.79
CLOSING STOCK PRICE AT QUARTER END....... $ 108.25 $80.00
================================================================================
FINANCIAL RATIOS
Return on Assets......................... 1.41% 1.37%
Return on Common Stockholders' Equity.... 20.76% 20.18%
Return on Total Stockholders' Equity..... 19.44% 18.63%
================================================================================
<TABLE>
<CAPTION>
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
CAPITAL (Dollars in Billions)(see page 19) 1997 1996 1996 1996 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tier 1........................................... $20.3 $19.8 $19.3 $19.1 $19.0
Total (Tier 1 and 2)............................. 29.3 28.9 28.5 28.2 28.0
Tier 1 Ratio..................................... 8.39% 8.39% 8.36% 8.38% 8.42%
Total Ratio (Tier 1 and 2)....................... 12.11% 12.23% 12.40% 12.35% 12.37%
Leverage Ratio................................... 7.39% 7.42% 7.47% 7.49% 7.44%
Common Equity as a Percentage of Total Assets.... 6.50% 6.63% 6.74% 6.69% 6.71%
Total Equity as a Percentage of Total Assets..... 7.16% 7.37% 7.50% 7.47% 7.50%
====================================================================================================================================
<CAPTION>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
EARNINGS ANALYSIS (In Millions of Dollars) 1997 1996 1996 1996 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Revenue.................................... $5,196 $5,365 $5,010 $4,993 $4,828
Effect of Credit Card Securitization Activity(B). 434 389 360 349 294
Net Cost To Carry (C)............................ (3) (7) (8) (26) (5)
---------------------------------------------------------------------------------
ADJUSTED REVENUE................................. 5,627 5,747 5,362 5,316 5,117
---------------------------------------------------------------------------------
Total Operating Expense.......................... 3,169 3,281 3,078 2,978 2,860
Net OREO Benefits (D)............................ 10 7 8 17 12
---------------------------------------------------------------------------------
ADJUSTED OPERATING EXPENSE....................... 3,179 3,288 3,086 2,995 2,872
---------------------------------------------------------------------------------
OPERATING MARGIN................................. 2,448 2,459 2,276 2,321 2,245
Consumer Credit Costs (E)........................ 894 844 803 762 706
Commercial Credit (Benefits) Costs (F)........... (75) (15) (60) (27) 15
---------------------------------------------------------------------------------
OPERATING MARGIN LESS CREDIT COSTS............... 1,629 1,630 1,533 1,586 1,524
Additional Provision (G)......................... 25 50 50 50 50
---------------------------------------------------------------------------------
INCOME BEFORE TAXES.............................. 1,604 1,580 1,483 1,536 1,474
Income Taxes..................................... 609 593 548 584 560
---------------------------------------------------------------------------------
NET INCOME.......................................$ 995 $ 987 $ 935 $ 952 $ 914
===================================================================================================================================
</TABLE>
(A) Based on net income less preferred stock dividends, except when conversion
is assumed. See page 38 for details.
(B) Commencing with the 1997 first quarter, includes effect related to credit
card receivables held for sale. See page 27 for details.
(C) Principally the net cost to carry commercial cash-basis loans and other
real estate owned ("OREO").
(D) Principally gains and losses on sales, direct revenue and expense, and
writedowns of commercial OREO.
(E) Principally consumer net credit write-offs adjusted for the effect of
credit card securitization activity.
(F) Includes commercial net credit (recoveries) write-offs, net cost to carry,
and net OREO benefits.
(G) Represents amounts in excess of net write-offs. See page 25 for
discussion.
1
<PAGE>
- --------------------------------------------------------------------------------
Citicorp reported 1997 first quarter net income of $995 million or $2.01 per
fully diluted common share, up 9% and 15%, respectively, compared with $914
million or $1.75 a year ago. Earnings were led by strong results in Global
Relationship Banking, and by improvement in the emerging markets in both the
Corporate Banking and Consumer businesses, but were dampened by high U.S.
bankcards credit costs. Returns on common equity of 20.8% and average assets of
1.41% in the 1997 first quarter improved compared to the same 1996 period.
The Consumer business earned $490 million in the 1997 first quarter, down 3%
from the year-ago period, as revenue and operating margin growth were more than
offset by increased Cards credit costs. Earnings in Corporate Banking of $650
million in the quarter rose 39% from 1996, reflecting revenue and operating
margin growth, and net credit benefits.
Adjusted revenue of $5.6 billion in the 1997 first quarter was up $510 million
or 10% from the comparable 1996 period. Revenue in the Consumer business
increased 7% to $3.5 billion, led mostly by growth in Cards. In all Consumer
businesses, growth rates were higher in the emerging markets than in the
developed markets. Revenue of $1.9 billion in the Corporate Banking businesses
in the 1997 first quarter was up 20%, as Global Relationship Banking revenue
increased 34%.
Adjusted net interest revenue of $3.4 billion and adjusted fee and commission
revenue of $1.3 billion, excluding trading-related elements, increased by $182
million and $52 million, respectively, from the comparable 1996 quarter.
Trading-related revenue of $589 million increased $197 million and venture
capital revenue of $93 million increased $55 million from the unusually low 1996
levels. Aggregate securities transactions and net asset gains of $200 million
increased $15 million from a year ago.
Adjusted operating expense for the quarter of $3.2 billion increased $307
million or 11% from the comparable 1996 period, primarily reflecting business
expansion related to Consumer and Corporate Banking activities in the emerging
markets (a 14% increase in the quarter), while core business expense in the
developed markets was up 7% from the year-ago quarter. Also, included in
Corporate Items in the 1997 quarter was an incremental charge of $60 million
associated with the vesting of the remaining performance-based stock options.
Operating margin grew $203 million, or 9%, to $2.4 billion in the 1997 first
quarter from the comparable 1996 quarter. The incremental revenue to expense
ratio was 1.7:1 (2.1:1 excluding the options charge) and the efficiency ratio
(adjusted operating expense as a percentage of adjusted revenue) was 57% in the
1997 quarter.
Total credit costs, adjusted for the effect of credit card securitization
activity, were $819 million in the first quarter, down slightly from $829
million in the preceding quarter and up $98 million or 14% from $721 million in
the 1996 first quarter. Consumer credit costs of $894 million or 2.69% of
average managed loans in the 1997 first quarter increased $50 million from $844
million or 2.51% in the 1996 fourth quarter and by $188 million from $706
million or 2.19% in the 1996 first quarter. The increases in consumer credit
costs and the related loss ratios chiefly reflected a continued rise in U.S.
bankcards credit losses, partially offset by improvement in Citibanking and the
Private Bank. The managed consumer loan delinquency ratio (90 days or more past
due) decreased to 2.58%, from 2.62% and 3.03% at the end of the preceding and
year-ago quarters.
Commercial credit costs, which included a $50 million recovery from the
refinancing agreement concluded with Peru, remained low at a net benefit of $75
million in the quarter, compared to net charges of $15 million in the
year-earlier period. Commercial cash-basis loans and OREO of $1.5 billion at
March 31, 1997 were unchanged from year-end, but were down from $2.0 billion a
year ago principally reflecting continued reductions in commercial real estate
cash-basis loans.
At March 31, 1997, total credit loss reserves (including reserves for
off-balance sheet credit exposures) were $6.0 billion. Citicorp continued to
build its allowance for credit losses, adding $25 million above net credit
losses which was attributed to Cards.
Citicorp's effective tax rate was 38% in both the 1997 and 1996 periods.
2
<PAGE>
Total capital (Tier 1 and Tier 2) was $29.3 billion or 12.11% of net
risk-adjusted assets, and Tier 1 capital was $20.3 billion or 8.39% at March 31,
1997. During the first quarter, Citicorp generated $726 million of free capital.
With the repurchase of 6.1 million shares of common stock in the quarter for
$704 million, the number of shares acquired since June 20, 1995, when the Board
of Directors authorized the stock repurchase program, totaled 65.3 million for
an outlay of $5.3 billion. As expanded in 1996, the program is authorized to
make total purchases for up to $8.5 billion.
- --------------------------------------------------------------------------------
BUSINESS DISCUSSION
- --------------------------------------------------------------------------------
The table below and the discussions that follow analyze Citicorp's results by
global business areas including its global Consumer and Corporate Banking core
business franchises.
- --------------------------------------------------------------------------------
EARNINGS SUMMARY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
First Quarter %
------------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Consumer............................ $ 490 $505 (3)
Corporate Banking................... 650 469 39
---------------------------------------
CORE BUSINESSES..................... 1,140 974 17
Corporate Items..................... (145) (60) NM
---------------------------------------
TOTAL CITICORP...................... $ 995 $914 9
=======================================
- --------------------------------------------------------------------------------
CONSUMER:
Citibanking......................... $187 $179 4
Cards............................... 224 261 (14)
Private Bank........................ 79 65 22
---------------------------------------
TOTAL............................... $490 $505 (3)
=======================================
- --------------------------------------------------------------------------------
CONSUMER BUSINESS IN:
Emerging Markets.................... $247 $220 12
Developed Markets................... 243 285 (15)
---------------------------------------
TOTAL............................... $490 $505 (3)
=======================================
- --------------------------------------------------------------------------------
CORPORATE BANKING:
Emerging Markets.................... $450 $390 15
Global Relationship Banking......... 200 79 NM
---------------------------------------
TOTAL............................... $650 $469 39
=======================================
- --------------------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- -------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
CONSUMER
- --------------------------------------------------------------------------------
The Consumer franchise consists of three global businesses--Citibanking, Cards,
and the Private Bank--which deliver financial services to consumer customers
around the world. In April 1997, Citicorp announced the reorganization of its
three Consumer businesses under a single management to integrate resources for
the global offering of financial products and services under the Citibank brand.
This unification will facilitate quicker and more efficient development,
marketing, and distribution of new products and services.
- --------------------------------------------------------------------------------
First Quarter %
------------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Total Revenue......................... $ 3,053 $2,960 3
Effect of Credit Card Securitization
Activity (B).......................... 434 294 48
Net Cost to Carry Cash-Basis Loans
and OREO.............................. - (1) NM
---------------------------------------
ADJUSTED REVENUE...................... 3,487 3,253 7
---------------------------------------
Total Operating Expense............... 1,869 1,755 6
Net OREO Costs........................ (1) - NM
---------------------------------------
ADJUSTED OPERATING EXPENSE............ 1,868 1,755 6
---------------------------------------
OPERATING MARGIN...................... 1,619 1,498 8
---------------------------------------
Net Write-offs........................ 459 413 11
Effect of Credit Card Securitization
Activity (B).......................... 434 294 48
Net Cost to Carry and Net OREO Costs.. 1 (1) NM
---------------------------------------
CREDIT COSTS.......................... 894 706 27
---------------------------------------
OPERATING MARGIN LESS CREDIT COSTS.... 725 792 (8)
Additional Provision.................. 25 50 (50)
---------------------------------------
INCOME BEFORE TAXES................... 700 742 (6)
Income Taxes.......................... 210 237 (11)
----------------------------------------
NET INCOME............................ $ 490 $ 505 (3)
========================================
- --------------------------------------------------------------------------------
Average Assets (In Billions of
Dollars)............................. $131 $125 5
Return on Assets...................... 1.52% 1.62% -
========================================
- --------------------------------------------------------------------------------
(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 27 for details.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
Consumer business net income of $490 million in the 1997 first quarter declined
$15 million or 3% from the 1996 first quarter, primarily due to a 14% decline in
Cards earnings as credit cost increases outpaced revenue growth, partially
offset by improved earnings in the Private Bank and Citibanking. Operating
margin less credit costs in the consumer business declined by 8%. Earnings in
the quarter benefited from a lower additional provision and a lower effective
tax rate.
Revenue of $3.5 billion in the quarter rose $234 million or 7% from the 1996
first quarter, reflecting growth across the three Consumer businesses. Net
interest revenue and fee and commission revenue were up 7% and 9%, respectively,
primarily due to business volume growth. Excluding the foreign currency
translation effect of a strengthened U.S. dollar, revenue increased 9%.
Expense of $1.9 billion increased $113 million or 6% from the 1996 first
quarter. Excluding the effect of foreign currency translation, expense increased
9%, principally reflecting continued spending on Citibanking initiatives
worldwide and increases in Cards.
Consumer credit costs of $894 million were $50 million higher than the 1996
fourth quarter and $188 million higher than the 1996 first quarter. The ratio of
net credit losses to average managed loans was 2.69% in the quarter, compared
with 2.51% in the preceding quarter and 2.19% a year ago. The increase was in
Cards, while Citibanking and Private Bank
4
<PAGE>
credit costs improved modestly. The additional provision of $25 million, which
represents amounts in excess of net write-offs, was entirely attributable to
Cards.
Income taxes, which are attributable to businesses on the basis of local tax
rates, resulted in an effective rate of 30% in the first quarter of 1997,
compared with 32% in the year-ago quarter, reflecting changes in the nature and
geographic mix of earnings. The difference between the local tax rates
attributable to core businesses and Citicorp's overall effective tax rate in
each period is included in Corporate Items.
- --------------------------------------------------------------------------------
CITIBANKING
- --------------------------------------------------------------------------------
First Quarter %
----------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Revenue................................. $1,462 $1,405 4
Operating Expense....................... 1,042 975 7
-------------------------------------
OPERATING MARGIN........................ 420 430 (2)
Credit Costs............................ 148 158 (6)
-------------------------------------
OPERATING MARGIN LESS CREDIT COSTS...... 272 272 -
Additional Provision.................... - 1 NM
-------------------------------------
INCOME BEFORE TAXES..................... 272 271 -
Income Taxes............................ 85 92 (8)
-------------------------------------
NET INCOME.............................. $ 187 $ 179 4
========================================
- --------------------------------------------------------------------------------
Average Assets (In Billions of Dollars). $82 $81 1
Return on Assets........................ 0.92% 0.89% -
========================================
- --------------------------------------------------------------------------------
(A) Reclassified to conform to latest quarter's presentation.
NM Not Meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
Citibanking activities -- which deliver products and services to customers
through branches and electronic delivery systems -- had net income in the 1997
first quarter of $187 million, up $8 million or 4% from the 1996 quarter. Net
income in the quarter benefited from a lower effective tax rate of 31% compared
with 34% in the year-ago quarter. Return on assets in the quarter was 0.92%,
slightly higher than 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 resulting from a strengthened U.S.
dollar -- from the 1996 first quarter, reflecting higher business volumes
worldwide and an increase in higher-yielding assets in Latin America, partially
offset by spread tightening in Asia Pacific. Excluding the translation effect,
revenue increased 8% in the developed markets and 5% in the emerging markets.
Expense of $1.0 billion in the quarter increased $67 million or 7% from the 1996
first quarter. Excluding the effect of foreign currency translation, expenses
were up 10%, including 9% in the developed markets and 11% in the emerging
markets, in support of higher business volumes, new product development,
franchise expansion, and technology initiatives.
Credit costs of $148 million in the quarter decreased $7 million or 5% from the
1996 fourth quarter and $10 million or 6% from the year-ago quarter, reflecting
a net credit loss ratio of 0.91%, down from 0.94% in the previous quarter and
0.97% in the 1996 first quarter.
5
<PAGE>
- --------------------------------------------------------------------------------
CARDS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
First Quarter %
-----------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Adjusted Revenue......................... $1,755 $1,602 10
Adjusted Operating Expense............... 660 618 7
--------------------------------------
OPERATING MARGIN......................... 1,095 984 11
Credit Costs............................. 747 547 37
--------------------------------------
OPERATING MARGIN LESS CREDIT COSTS....... 348 437 (20)
Additional Provision..................... 25 49 (49)
--------------------------------------
INCOME BEFORE TAXES...................... 323 388 (17)
Income Taxes............................. 99 127 (22)
--------------------------------------
NET INCOME............................... $ 224 $ 261 (14)
======================================
- --------------------------------------------------------------------------------
Average Assets (In Billions of Dollars).. $32 $28 14
Return on Assets......................... 2.84% 3.75% -
======================================
- --------------------------------------------------------------------------------
(A) Reclassified to conform to latest quarter's presentation.
- --------------------------------------------------------------------------------
Net income in Cards worldwide -- bankcards, Diners Club, and private label cards
- -- was $224 million in the 1997 first quarter, a decrease of $37 million or 14%
from a year ago. The emerging markets Cards business, which increased net income
by 20% from the year-ago quarter, represented approximately 41% of 1997 first
quarter Cards earnings. Earnings in the developed markets Cards businesses
declined from the 1996 first quarter, primarily in the U.S. bankcard business,
where credit cost increases outpaced revenue growth as the business continued to
operate in a challenging environment, characterized by competitive pressures and
a weaker credit climate. Cards worldwide return on managed assets in the first
quarter was 1.59%, compared with 1.96% in the year-ago quarter.
Cards revenue of $1.8 billion in the quarter increased by $153 million or 10%
from the 1996 first quarter. Revenue in the developed markets was up 8%,
including 11% growth in U.S. bankcards which reflected the benefit of new risk-
and relationship-based pricing strategies, and an increase in managed
receivables of $2.5 billion or 6% to $45.1 billion. Charge volumes in the U.S.
bankcards business increased from the year-ago quarter by $1.6 billion or 8% to
$23.0 billion.
First quarter revenue in the emerging markets Cards businesses was 16% higher
than the year-ago quarter, reflecting growth in the Asia Pacific business, and
strong results in Latin America.
Cards in force worldwide, including those issued by affiliates, were 61 million
at the end of the quarter, an increase of two million from a year ago. The
number of cards in North America was 41 million; cards in Latin America, Asia,
and Europe totaled nine million, eight million, and three million, respectively.
Cards, including Diners Club, operates in 43 countries.
Expense in worldwide Cards of $660 million increased $42 million or 7% from the
1996 first quarter. Expense in the developed markets was up 6%, primarily
reflecting investment spending in the U.S. for the enhanced cardmember database
and analytical tools, as well as increased collection efforts. Expense in the
emerging markets Cards businesses increased 11% 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
$656 million or 5.91% of average managed loans, compared with $608 million or
5.45% in the 1996 fourth quarter, and $467 million or 4.38% in the 1996 first
quarter. The 12-month-lagged net credit loss ratio, which adjusts the loss ratio
for portfolio growth by calculating the ratio using the current quarter's net
credit losses as a percentage of average loans in the year-ago quarter, was
6.21% in the 1997 first quarter, up from 5.73 % in the 1996 fourth quarter and
4.99% in the 1996 first quarter. The bankruptcy rate in the 1997 first quarter
was a seasonally low 36.6% of gross U.S. bankcard write-offs, compared with
38.0% in the preceding quarter and 34.3% in the 1996 first quarter. Citicorp
continues to write off accounts upon notice of bankruptcy filing. Managed U.S.
bankcard loans delinquent 90 days or more were $884 million or 1.98% of the
portfolio at the end of
6
<PAGE>
the quarter, compared with $886 million or 1.90% at the end of the preceding
quarter and $759 million or 1.80% a year ago.
Credit costs in Cards portfolios other than U.S. bankcards were $91 million or
4.25% of average loans in the quarter, compared with $77 million or 3.58% in the
preceding quarter and $80 million or 4.40% in the 1996 first quarter. Loans
delinquent 90 days or more were $214 million or 2.42% of the portfolio, compared
with $189 million or 2.13% in the preceding quarter and $176 million or 2.31% in
the year-ago quarter.
Cards continued to build the allowance for credit losses, with charges in excess
of net write-offs of $25 million in the first quarter of 1997, compared with $49
million in the year-ago quarter.
Net credit losses and the related loss ratios, which are influenced by credit
performance of the portfolio (including bankruptcies), seasonal factors,
economic conditions, and other changes in portfolio levels, are expected to
increase further from the first quarter of 1997. See "Consumer Portfolio Review"
on page 9 and "Provision and Credit Loss Reserves" on page 25 for additional
discussion of the Cards portfolio.
- --------------------------------------------------------------------------------
PRIVATE BANK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
First Quarter %
---------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Adjusted Revenue ............................. $ 270 $ 246 10
Adjusted Operating Expense ................... 166 162 2
-------------------------------
OPERATING MARGIN ............................. 104 84 24
Credit (Benefits) Costs ...................... (1) 1 NM
-------------------------------
OPERATING MARGIN LESS CREDIT COSTS ........... 105 83 27
Additional Provision ......................... -- -- --
-------------------------------
INCOME BEFORE TAXES .......................... 105 83 27
Income Taxes ................................. 26 18 44
-------------------------------
NET INCOME ................................... $ 79 $ 65 22
===============================
Average Assets (In Billions of Dollars). $17 $16 6
Return on Assets........................ 1.88% 1.63% -
===============================
- --------------------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
Private Bank net income of $79 million in the quarter increased $14 million or
22% from the 1996 first quarter, and resulted in a return on assets of 1.88% for
the quarter, compared with 1.63% in the year-earlier quarter. Revenue of $270
million in the quarter was up $24 million or 10%, reflecting growth of 15% in
the emerging markets and 8% in the developed markets. Revenue growth was led by
fees and commissions, up 15%, compared with the 1996 quarter, and by improved
trading-related results.
Expense of $166 million in the quarter increased $4 million or 2% from 1996.
Excluding the effect of foreign currency translation, expense increased 6%,
primarily due to higher salary levels, including a 4% increase in staff. Other
expense growth was muted during the 1997 first quarter as cost savings from
various strategic cost management initiatives funded base expense growth as well
as new marketing, technology, and structural programs.
Credit recoveries of $1 million in the quarter compared with a charge of $1
million in the year-ago period. Overall credit trends improved, with loans
delinquent 90 days or more down to $198 million or 1.28% of loans from $260
million or 1.76% a year-earlier, reflecting continued active portfolio
management and the effect of improving economic conditions on the customer base.
7
<PAGE>
Client business volumes under management at the end of the quarter totaled $98
billion, up $8 billion from a year earlier. Growth was in both the advisory and
discretionary investments areas.
- --------------------------------------------------------------------------------
CONSUMER BUSINESS IN EMERGING MARKETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
First Quarter %
------------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Adjusted Revenue .......................... $948 $861 10
Adjusted Operating Expense ................ 532 482 10
------------------------------------
OPERATING MARGIN .......................... 416 379 10
Credit Costs .............................. 92 93 (1)
------------------------------------
OPERATING MARGIN LESS CREDIT COSTS ........ 324 286 13
Additional Provision ...................... 3 2 50
------------------------------------
INCOME BEFORE TAXES ....................... 321 284 13
Income Taxes .............................. 74 64 16
------------------------------------
NET INCOME ................................ $247 $220 12
====================================
- --------------------------------------------------------------------------------
Average Assets (In Billions of Dollars) ... $ 42 $ 37 14
Return on Assets .......................... 2.39% 2.39% --
====================================
- --------------------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSUMER BUSINESS IN DEVELOPED MARKETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
First Quarter %
------------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Adjusted Revenue .......................... $2,539 $2,392 6
Adjusted Operating Expense ................ 1,336 1,273 5
------------------------------------
OPERATING MARGIN .......................... 1,203 1,119 8
Credit Costs .............................. 802 613 31
------------------------------------
OPERATING MARGIN LESS CREDIT COSTS ........ 401 506 (21)
Additional Provision ...................... 22 48 (54)
------------------------------------
INCOME BEFORE TAXES ....................... 379 458 (17)
Income Taxes .............................. 136 173 (21)
------------------------------------
NET INCOME ................................ $ 243 $ 285 (15)
====================================
Average Assets (In Billions of Dollars) ... $ 89 $ 88 1
Return on Assets .......................... 1.11% 1.30% --
====================================
- --------------------------------------------------------------------------------
(A) Reclassified to conform to latest quarter's presentation.
- --------------------------------------------------------------------------------
The Consumer businesses of Citibanking, Cards, and the Private Bank in the
emerging markets earned $247 million in the 1997 first quarter, up $27 million
or 12% from the 1996 first quarter, reflecting improvements across all three
businesses. The results for the quarter reflected revenue growth of 10% from
higher business volumes and an increase in higher-yielding assets in Latin
America Citibanking, partially offset by continued spread tightening in Asia
Pacific and increased expense levels due to expansion efforts and technology
upgrades. Credit costs were essentially unchanged from the year-ago quarter, but
increased $15 million or 19% from the fourth quarter of 1996, primarily
reflecting higher credit costs in the Asia Pacific Cards business and in the
Latin America Citibanking business.
Net income in the developed markets was $243 million in the 1997 first quarter,
down by $42 million or 15% from the year-ago quarter, primarily due to the lower
earnings in Cards. Revenue of $2.5 billion in the quarter rose 6% from the 1996
first quarter, while operating expense increased by 5%. Excluding the effect of
foreign currency translation, both
8
<PAGE>
revenue and expense in the developed markets increased 8%. Revenue in the
quarter reflected 11% growth in U.S. bankcards, as well as higher business
volumes in Citibanking. The increase in expense was primarily the result of
spending on Citibanking initiatives in support of higher business volumes, new
product development, and technology initiatives, as well as investment spending
and increased collection efforts in the U.S. bankcards business. Credit costs
were up $189 million or 31%, primarily in U.S. bankcards.
- --------------------------------------------------------------------------------
CONSUMER PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
In the consumer portfolio, credit loss experience is often expressed in terms of
annualized net credit losses as a percentage of average loans. Pricing and
credit policies reflect the loss experience of each particular product. Consumer
loans are generally written off no later than a predetermined number of days
past due on a contractual basis, or earlier in the event of bankruptcy. The
number of days is set at an appropriate level according to loan product and
country.
The following table summarizes delinquency and net credit loss experience in
both the managed and on-balance sheet loan portfolio in terms of loans 90 days
or more past due, net credit losses, and as a percentage of related loans.
- --------------------------------------------------------------------------------
CONSUMER LOAN DELINQUENCY AMOUNTS, NET CREDIT LOSSES, AND RATIOS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL AVERAGE
LOANS 90 DAYS OR MORE PAST DUE (A) LOANS NET CREDIT LOSSES (A)
-------------------------------------------------------------------------------------------
(In Millions of Dollars, MAR. 31, MAR. 31, Dec. 31, Mar. 31, 1ST QTR. 1ST QTR. 4th Qtr. 1st Qtr.
except Loan Amounts in Billions) 1997 1997 1996 1996 1997 1997 1996 1996
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CITIBANKING........................ $ 66.4 $2,193 $2,320 $2,755 $ 65.8 $ 148 $ 155 $ 158
Ratio ............................. 3.30% 3.50% 4.18% 0.91% 0.94% 0.97%
CARDS
U.S. Bankcards .................... 44.6 884 886 759 45.0 656 608 467
Ratio ............................. 1.98% 1.90% 1.80% 5.91% 5.45% 4.38%
Other ............................. 8.8 214 189 176 8.7 91 77 80
Ratio ............................. 2.42% 2.13% 2.31% 4.25% 3.58% 4.40%
PRIVATE BANK ...................... 15.4 198 193 260 15.1 (2) 4 2
Ratio ............................. 1.28% 1.26% 1.76% NM 0.07% 0.06%
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL MANAGED ..................... 135.2 3,489 3,588 3,950 134.6 893 844 707
RATIO ............................. 2.58% 2.62% 3.03% 2.69% 2.51% 2.19%
- -------------------------------------------------------------------------------------------------------------------------------
Securitized Credit
Card Receivables (B) ............ (25.4) (500) (501) (479) (25.1) (402) (389) (294)
Loans Held for Sale (C) ........... (3.1) (39) -- -- (3.1) (32) -- --
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL LOAN PORTFOLIO .............. $ 106.7 $ 2,950 $ 3,087 $ 3,471 $ 106.4 $ 459 $ 455 $ 413
Ratio ............................. 2.76% 2.76% 3.33% 1.75% 1.68% 1.60%
===========================================================================================
- -------------------------------------------------------------------------------------------------------------------------------
MANAGED PORTFOLIO:
DEVELOPED ......................... $ 101.5 $ 3,075 $ 3,218 $ 3,603 $ 101.5 $ 801 $ 767 $ 614
Ratio ............................. 3.03% 3.10% 3.58% 3.19% 3.01% 2.45%
EMERGING .......................... 33.7 414 370 347 33.1 92 77 93
Ratio ............................. 1.23% 1.12% 1.17% 1.12% 0.94% 1.29%
===========================================================================================
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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) See page 27 for a description of the effect of credit card securitization
activity.
(C) 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.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
CONSUMER LOAN BALANCES, NET OF UNEARNED INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
END OF PERIOD AVERAGE
-------------------------------------------------------------------------------
MAR. 31, Dec. 31, Mar. 31, 1ST QTR. 4th Qtr. 1st Qtr.
(In Billions of Dollars) . 1997 1996 1996 1997 1996 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MANAGED .............................. $135.2 $137.0 $130.3 $134.6 $133.7 $129.8
Securitized Credit Card Receivables .. (25.4) (25.2) (26.2) (25.1) (25.9) (25.9)
Loans Held for Sale (A) .............. (3.1) -- -- (3.1) -- --
-------------------------------------------------------------------------------
LOAN PORTFOLIO ....................... $106.7 $111.8 $104.1 $106.4 $107.8 $103.9
===============================================================================
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 with net credit losses
charged to other revenue.
- --------------------------------------------------------------------------------
Total delinquencies in the managed portfolio of $3.5 billion and the related
delinquency ratio of 2.58% at March 31, 1997, were down from $3.6 billion or
2.62% at December 31, 1996 and $4.0 billion or 3.03% at March 31, 1996. Total
managed net credit losses in the 1997 first quarter of $893 million and the
related loss ratio of 2.69% increased from $844 million or 2.51% in the 1996
fourth quarter and $707 million or 2.19% in the year-ago quarter.
In Citibanking, delinquencies of $2.2 billion and the related ratio of 3.30% at
March 31, 1997 improved from $2.3 billion or 3.50% at December 31, 1996 and $2.8
billion or 4.18% at March 31, 1996. The decrease from both periods primarily
reflects improvements in U.S. mortgages and the effect of foreign currency
translation, partially offset by increases in the emerging markets.
Additionally, the improvement from a year ago reflects the impact of the U.K.
mortgage portfolio sale in the third quarter of 1996. Net credit losses in the
1997 first quarter of $148 million and the related loss ratio of 0.91% declined
from $155 million or 0.94% in the 1996 fourth quarter and $158 million or 0.97%
in the 1996 first quarter. The decrease in losses primarily reflected the effect
of foreign currency translation.
U.S. bankcards managed loans that were delinquent 90 days or more totaled $884
million as of March 31, 1997 or 1.98% of the portfolio, compared with $886
million or 1.90%, and $759 million or 1.80%, at December 31, 1996 and March 31,
1996, respectively. The net credit loss ratio was 5.91% in the 1997 first
quarter, up from 5.45% in the 1996 fourth quarter and 4.38% in the 1996 first
quarter. The 12-month-lagged net credit loss ratio, which adjusts the loss ratio
for portfolio growth by calculating the ratio using the current quarter's net
credit losses as a percentage of average loans in the year-ago quarter, was
6.21% in the 1997 first quarter, up from 5.73 % in the 1996 fourth quarter and
4.99% in the 1996 first quarter. The bankruptcy rate in the 1997 first quarter
was a seasonally low 36.6% of gross write-offs, compared with 38.0% in the
preceding quarter and 34.3% in the 1996 first quarter. Citicorp continues to
write off accounts upon notice of filing of bankruptcy. The increases in
delinquencies and net credit loss rates are broadly consistent with industry
trends.
The other Cards businesses primarily include bankcards throughout the emerging
markets and in the developed markets of Europe and Japan, as well as worldwide
Diners Club. Compared with the 1996 fourth quarter, the $25 million rise in
delinquencies and the $14 million increase in net credit losses and related
ratios were primarily due to increases in the emerging markets. Delinquencies
and net credit losses were up by $38 million and $11 million, respectively, from
the 1996 first quarter primarily due to increases in Asia Pacific, as a result
of portfolio expansion, moderating economic conditions, and the political
environment in certain countries.
Private Bank delinquencies declined to 1.28% of loans from 1.76% a year earlier,
consistent with the overall decrease in the level of nonperforming assets in the
business.
Total consumer loans on the balance sheet delinquent 90 days or more on which
interest continued to be accrued were $983 million at March 31, 1997, compared
with $1.0 billion and $915 million at December 31, 1996 and March 31, 1996,
respectively. Included in these amounts are U.S. government-guaranteed student
loans of $227 million, $239 million, and $218 million, respectively. Other
consumer loans delinquent 90 days or more on which interest continued to be
accrued (which primarily include worldwide bankcard receivables and certain
portfolios in Germany) were $756 million, $770 million, and $697 million,
respectively. The decline from December 31, 1996 is principally due to the
effect of foreign currency translation. The increase from a year ago was
primarily in U.S. bankcards, partially offset by the effect of
10
<PAGE>
foreign currency translation. The majority of these other loans are written off
upon reaching a stipulated number of days past due. See the table entitled
"Cash-Basis, Renegotiated, and Past Due Loans" on page 36.
Citicorp's policy for suspending the accrual of interest on consumer loans
varies depending on the terms, security, and credit loss experience
characteristics of each product, as well as write-off criteria in place. At
March 31, 1997, interest accrual had been suspended on $2.1 billion of consumer
loans, primarily consisting of Citibanking and Private Banking loans. Interest
accrual had been suspended on $2.2 billion of loans at December 31, 1996 and
$2.7 billion of loans at March 31, 1996. The decline from March 31, 1996
reflects improvements in U.S. mortgages and the Private Bank, the impact of the
U.K. mortgage portfolio sale, and the effect of foreign currency translation,
partially offset by increases in Asia Pacific. U.S. mortgages on which the
accrual of interest had been suspended were $671 million at March 31, 1997, down
from $734 million and $1.0 billion at December 31, 1996 and March 31, 1996,
respectively, due to stable housing markets, improved collection results, and
delinquency management initiatives.
The portion of Citicorp's allowance for credit losses allocated to the consumer
portfolio was $2.4 billion as of March 31, 1997, up from $2.1 billion and $2.0
billion as of December 31, 1996 and March 31, 1996, respectively. In the 1997
first quarter, the allowance for credit losses reflected the transfer of a $373
million other liability reserve that had previously been attributable to credit
card securitizations and an additional provision in excess of net write-offs of
$25 million, partially offset by the effect of foreign currency translation. The
additional provision in both the fourth and first quarters of 1996 was $50
million. The allowance as a percentage of loans on the balance sheet was 2.29%
as of March 31, 1997, compared with 1.86% and 1.89% at December 31, 1996 and
March 31, 1996, respectively. See "Provision and Credit Loss Reserves" on page
25 for further discussion.
Consumer credit costs, particularly in U.S. bankcards, and the related net
credit loss ratios are expected to increase from 1997 first quarter levels as a
result of credit performance of the portfolios (including bankruptcies),
seasonal factors, economic conditions, and other changes in portfolio levels.
Additionally, delinquencies and loans on which the accrual of interest is
suspended could remain at relatively high levels.
11
<PAGE>
- --------------------------------------------------------------------------------
CORPORATE BANKING
- --------------------------------------------------------------------------------
The Corporate Banking business serves corporations, financial institutions,
governments, investors and other participants in capital markets throughout the
world. In April 1997, Citicorp announced the formation of a single Global
Markets organization incorporating capital markets and corporate finance
activities to serve targeted issuers and investors across the developed and
emerging markets. Another product area in Corporate Banking organized to deliver
products and services around the world is Global Transaction Services, which
provides cash, securities, and trade finance services.
- --------------------------------------------------------------------------------
First Quarter %
-------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Total Revenue.................................. $1,937 $1,621 19
Net Cost to Carry Cash-Basis Loans and OREO.... (3) (4) (25)
================================
ADJUSTED REVENUE............................... 1,934 1,617 20
--------------------------------
Total Operating Expense........................ 1,140 999 14
Net OREO Benefits.............................. 11 12 (8)
--------------------------------
ADJUSTED OPERATING EXPENSE..................... 1,151 1,011 14
--------------------------------
OPERATING MARGIN............................... 783 606 29
--------------------------------
Net (Recoveries) Write-offs.................... (61) 31 NM
Net Cost to Carry and Net OREO Benefits........ (14) (16) (13)
--------------------------------
CREDIT (BENEFITS) COSTS........................ (75) 15 NM
--------------------------------
OPERATING MARGIN LESS CREDIT (BENEFITS) COSTS.. 858 591 45
Additional Provision........................... - - -
--------------------------------
INCOME BEFORE TAXES............................ 858 591 45
Income Taxes................................... 208 122 70
--------------------------------
NET INCOME..................................... $ 650 $ 469 39
================================
- --------------------------------------------------------------------------------
Average Assets (In Billions of Dollars)........ $149 $139 7
Return on Assets............................... 1.77% 1.36% -
- --------------------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
Corporate Banking net income of $650 million in the 1997 first quarter increased
$181 million or 39% from the 1996 first quarter while average assets grew $10
billion or 7% to $149 billion. These results produced a return on assets during
the quarter of 1.77%, a 41 basis point improvement from the year-ago quarter.
Net income from Emerging Markets was $450 million or 69% of total Corporate
Banking net income, and Global Relationship Banking's net income was $200
million or 31% of total Corporate Banking net income.
The results reflect improved contributions from both Global Relationship Banking
and the Emerging Markets business. Revenue of $1.9 billion in the quarter
increased $317 million or 20% from the year-ago quarter while expense of $1.2
billion in the quarter increased $140 million or 14% from the comparable 1996
quarter, producing a $177 million or 29% increase in margin. Credit (benefits)
costs were a net benefit of $75 million, an improvement of $90 million from the
year-ago quarter. The effective income tax rate in the quarter rose to 24% from
21% in the 1996 first quarter, due primarily to changes in the geographic mix
and nature of pretax earnings. Citicorp attributes income taxes to core
businesses on the basis of local tax rates. The difference between the local tax
rates attributed to core businesses and Citicorp's overall effective tax rate in
each period is included in Corporate Items.
Commercial cash-basis loans at March 31, 1997 were $929 million, down $600
million or 39% from March 31, 1996. The reduction is primarily attributable to
payoffs and transfers to OREO or accrual status in the real estate portfolio.
The OREO portfolio of $593 million increased $75 million or 14% from March 31,
1996, primarily reflecting a transfer from cash-basis loans to OREO in the 1996
fourth quarter. See the tables entitled "Cash-Basis, Renegotiated, and Past Due
Loans" and "Other Real Estate Owned and Assets Pending Disposition" on page 36.
12
<PAGE>
Average assets of $149 billion in the 1997 first quarter increased $10 billion
or 7% from the 1996 first quarter. Average assets of $83 billion in Global
Relationship Banking declined $1 billion or 1% from 1996. The business continued
to focus on asset utilization. Average assets of $66 billion in the Emerging
Markets business grew $11 billion or 20% reflecting continued business
expansion.
- --------------------------------------------------------------------------------
EMERGING MARKETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
First Quarter %
------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Adjusted Revenue................................ $933 $868 7
Adjusted Operating Expense...................... 451 379 19
-------------------------------
OPERATING MARGIN................................ 482 489 (1)
Credit (Benefits) Costs......................... (36) 10 NM
-------------------------------
OPERATING MARGIN LESS CREDIT (BENEFITS) COSTS... 518 479 8
Additional Provision............................ - - -
-------------------------------
INCOME BEFORE TAXES............................. 518 479 8
Income Taxes.................................... 68 89 (24)
-------------------------------
NET INCOME...................................... $450 $390 15
===============================
- --------------------------------------------------------------------------------
Average Assets (In Billions of Dollars)......... $66 $55 20
Return on Assets................................ 2.77% 2.85% -
- --------------------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
Emerging Markets net income of $450 million grew $60 million or 15% from the
1996 first quarter, benefiting from net credit recoveries and a decline in the
effective income tax rate to 13% from 19% a year ago. Income before taxes
totaled $518 million, up $39 million or 8% from the 1996 quarter. Average assets
grew $11 billion or 20%, resulting in a return on assets of 2.77% in the 1997
first quarter compared with 2.85% in the 1996 first quarter.
Revenue of $933 million in the quarter increased $65 million or 7% from the
year-ago first quarter. Trading-related revenue was $218 million, up 23% from
$177 million. Aggregate securities transactions and asset gains were $154
million, compared with $109 million in the 1996 quarter, and included $46
million related to the refinancing agreement concluded with Peru. These
increases, together with growth in transaction banking services, were partially
offset by lower net interest revenue attributable to less favorable market
conditions than in the 1996 quarter, principally in Latin America. About 20% of
the revenue in the Emerging Markets business was attributable to business from
multinational companies managed jointly with Global Relationship Banking.
Expense of $451 million in the 1997 first quarter increased $72 million or 19%
from the year-ago quarter primarily reflecting investment spending to build the
franchise and costs associated with implementing Citicorp's embedded bank plan
to gain market share in selected emerging market countries.
Credit (benefits) costs were a net benefit of $36 million in the 1997 first
quarter and compared with a net charge of $10 million in the 1996 quarter.
Credit benefits in the 1997 quarter included a $50 million recovery from the
refinancing agreement concluded with Peru.
13
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL RELATIONSHIP BANKING
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
First Quarter %
------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Adjusted Revenue.............................. $1,001 $ 749 34
Adjusted Operating Expense.................... 700 632 11
----------------------------------
OPERATING MARGIN.............................. 301 117 NM
Credit (Benefits) Costs....................... (39) 5 NM
----------------------------------
OPERATING MARGIN LESS CREDIT (BENEFITS) COSTS. 340 112 NM
Additional Provision.......................... - - -
----------------------------------
INCOME BEFORE TAXES........................... 340 112 NM
Income Taxes.................................. 140 33 NM
----------------------------------
NET INCOME.................................... $ 200 $ 79 NM
==================================
- --------------------------------------------------------------------------------
Average Assets (In Billions of Dollars)....... $ 83 $ 84 (1)
Return on Assets.............................. 0.98% 0.38% -
- --------------------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
Net income from the Global Relationship Banking business in North America,
Europe, and Japan was $200 million, up $121 million from the 1996 first quarter,
despite an increase in the effective income tax rate to 41% from 29% in the 1996
first quarter. Income before taxes totaled $340 million, up $228 million from
the 1996 first quarter. Return on assets of 0.98% improved from 0.38% in the
1996 first quarter.
Revenue of $1.0 billion grew $252 million or 34% from the 1996 first quarter.
Trading-related revenue of $319 million increased $154 million or 93% and
venture capital revenue of $93 million improved $55 million from the unusually
low 1996 levels. These improvements were complemented by a $32 million gain on
the sale of an investment from the acquisition finance portfolio, growth in
transaction banking services revenue, and improved treasury results, partially
offset by net interest revenue spread compression.
Expense of $700 million increased $68 million or 11% compared with the 1996
first quarter, primarily reflecting increased spending on technology,
volume-related expense in transaction banking services, and higher incentive
compensation associated with revenue growth, partially offset by reductions
associated with the disposition of non-strategic businesses.
Credit (benefits) costs in the quarter were a net benefit of $39 million,
compared with a net charge of $5 million in the 1996 first quarter and primarily
reflected both lower gross write-offs and higher recoveries.
14
<PAGE>
- --------------------------------------------------------------------------------
CORPORATE ITEMS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
First Quarter %
-----------------------
(In Millions of Dollars) 1997 1996 (A) Change
- --------------------------------------------------------------------------------
Revenue................................ $ 206 $247 (17)
Operating Expense...................... 160 106 51
-----------------------------------------
Income Before Taxes.................... 46 141 (67)
Income Taxes........................... 191 201 (5)
-----------------------------------------
NET LOSS............................... $(145) $(60) NM
- --------------------------------------------------------------------------------
Average Assets (In Billions of Dollars) $ 5 $ 4 25
- --------------------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
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. Expense in the 1997 first quarter included
a $72 million charge, compared to $14 million in the 1996 first quarter,
associated with performance-based stock options. These noncash charges were
offset by increases to common stockholders' equity. All of these options are now
vested.
- --------------------------------------------------------------------------------
MANAGING GLOBAL RISK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LIQUIDITY
- --------------------------------------------------------------------------------
Citicorp manages liquidity through a well-defined process described in the 1996
Annual Report and Form 10-K.
A diversity of funding sources, currencies, and maturities is used to gain the
broadest practical access to the investor base. Citicorp deposits of $188.8
billion represent 65% of total funding at March 31, 1997, compared with $185.0
billion (66% of total funding) at December 31, 1996, and are broadly diversified
by geography and customer segments. Stockholders' equity, which was $20.8
billion at March 31, 1997 compared with $20.7 billion at December 31, 1996, is
also an important component of the overall funding structure. In addition,
long-term debt is issued by Citicorp (the "Parent Company") and its
subsidiaries. Total long-term debt outstanding at March 31, 1997, was $18.8
billion, compared with $18.9 billion at year-end 1996.
Securitization of assets remains an important source of liquidity. Total assets
securitized during the quarter were $3.0 billion, including $2.6 billion of U.S.
credit cards and $0.4 billion of U.S. consumer mortgages. As securitized credit
card receivables transactions amortize, newly originated receivables are
recorded on Citicorp's balance sheet and become available for asset
securitization. During the three months ended March 31, 1997, the scheduled
amortization of certain securitized credit card receivables made available $2.3
billion of new receivables, and an additional $3.6 billion are scheduled to
amortize during the remainder of 1997.
The Parent Company is a legal entity separate and distinct from Citibank, N.A.
and its other subsidiaries and affiliates. As discussed in the 1996 Annual
Report and Form 10-K, there are various legal limitations on the extent to which
Citicorp's subsidiaries may extend credit, pay dividends, or otherwise supply
funds to Citicorp. As of March 31, 1997, under their applicable dividend
limitations, Citicorp's national and state-chartered bank subsidiaries could
have declared dividends to their respective parent companies without regulatory
approval of approximately $2.7 billion. In determining whether and to what
extent to pay dividends, each bank subsidiary must also consider the effect of
dividend payments on applicable risk-based capital and leverage ratio
requirements, as well as policy statements of the federal regulatory agencies
that indicate that banking organizations should generally pay dividends out of
current operating earnings. Consistent with these considerations, Citicorp
estimates that as of March 31, 1997, its bank subsidiaries could have
distributed dividends to Citicorp, directly or through their parent holding
company, of approximately $2.2 billion of the available $2.7 billion.
15
<PAGE>
- --------------------------------------------------------------------------------
PRICE RISK
- --------------------------------------------------------------------------------
Citicorp manages the sensitivity of earnings to changes in interest rates,
market prices, foreign exchange rates, and market volatilities through
established procedures described in the 1996 Annual Report and Form 10-K. These
procedures include limits set annually for each major category of risk; these
limits are monitored and managed by the businesses, and reviewed monthly at the
corporate level. Citicorp uses a risk management system based on market factors
that accommodates the diversity of balance sheet and derivative product
exposures and exposure management systems of its various businesses.
The market factor approach identifies the variables that cause a change in the
value of a financial instrument, including the term structure of interest rates,
foreign exchange rates, equity securities and commodities prices and their
volatilities. Price risk is then measured using various tools, including the
earnings at risk method, which is applied to interest rate risk of the
non-trading portfolios, and the potential loss amount method, which is applied
to the trading portfolios. These methods are comparable with value at risk
measurements employed throughout the industry, and are used as indicators to
monitor sensitivity of earnings to market risk rather than as a quantification
of aggregate risk amounts.
In June 1996, the Financial Accounting Standards Board ("FASB") issued an
exposure draft of a proposed new accounting standard which could significantly
affect the accounting treatment of end-user derivative and foreign exchange
contracts by Citicorp and its customers. The FASB has been redeliberating the
proposal and various alternative approaches which could have a range of
potential effects on earnings and stockholders' equity. As the FASB finalizes
its conclusions, Citicorp and the customers to which it provides derivatives and
foreign exchange products will have to reconsider their risk management
strategies, since the final rules may not reflect the results of many of those
strategies in the same manner as current accounting practice.
- --------------------------------------------------------------------------------
PRICE RISK IN NON-TRADING PORTFOLIOS
- --------------------------------------------------------------------------------
Earnings at risk measures the potential pretax earnings impact on the
non-trading activities of a specified movement in interest rates for an assumed
defeasance period, which depends upon the depth of liquidity in the market and
the instrument involved. The predominant assumed defeasance period used in
Citicorp's earnings at risk calculations is currently four weeks. The earnings
at risk is calculated separately for each currency by multiplying the repricing
gap between interest sensitive items by the specified interest rate movement,
and then taking into account the impact of options, both explicit and embedded.
The specific rate movements are statistically derived from a two standard
deviation movement, which results in a confidence level of 97.7%. As of March
31, 1997, the derived two standard deviation rate movement used in determining
the U.S. dollar earnings at risk using a four week defeasance period was 63
basis points.
Business units manage the potential earnings effect of interest rate movements
by modifying the asset and liability mix, either directly or through the use of
derivatives. These include interest rate swaps and other derivative instruments
which are either designated and effective as hedges or designated and effective
in modifying the interest rate characteristics of specified assets or
liabilities. The utilization of derivatives is modified from time to time in
response to changing market conditions as well as changes in the characteristics
and mix of the related assets and liabilities.
Citicorp's primary non-trading price risk exposure is to worldwide movements in
U.S. dollar interest rates. The table on page 17 illustrates that as of March
31, 1997 a two standard deviation increase in U.S. dollar interest rates had a
potential negative impact on Citicorp's pretax earnings of approximately $174
million for the following twelve months and approximately $171 million on a
discounted full life basis.
16
<PAGE>
- --------------------------------------------------------------------------------
U.S. DOLLAR EARNINGS AT RISK
- --------------------------------------------------------------------------------
Assuming a Rate Movement of
--------------------------------
Two Standard Two Standard
IMPACT ON PRETAX EARNINGS Deviation Deviation
(In Millions of Dollars at March 31, 1997) Increase Decrease
- --------------------------------------------------------------------------------
Overnight to Three Months................. $ (67) $ 70
Four to Six Months........................ (41) 58
Seven to Twelve Months.................... (66) 76
-------------------------------
TOTAL OVERNIGHT TO TWELVE MONTHS.......... (174) 204
Year Two.................................. (99) 95
Year Three................................ (20) 7
Year Four................................. 47 (63)
Year Five and Beyond...................... 92 (118)
Effect of Discounting..................... (17) 28
-------------------------------
TOTAL .................................... $(171) $ 153
- --------------------------------------------------------------------------------
The following table illustrates how derivatives affect Citicorp's worldwide
earnings at risk over the next 12 months from changes in U.S. dollar interest
rates.
- --------------------------------------------------------------------------------
TWELVE MONTH U.S. DOLLAR EARNINGS AT RISK
- --------------------------------------------------------------------------------
Assuming a Rate Movement of
--------------------------------
Two Standard Two Standard
IMPACT ON PRETAX EARNINGS Deviation Deviation
(In Millions of Dollars at March 31, 1997) Increase Decrease
- --------------------------------------------------------------------------------
Excluding Derivatives........................ $ 115 $(105)
Including Derivatives........................ (174) 204
- --------------------------------------------------------------------------------
The tables above illustrate that Citicorp's pretax earnings over the next 12
months in its non-trading activities would be reduced from an increase in
interest rates and benefit from a decrease in interest rates. This primarily
reflects the utilization of receive-fixed interest rate swaps and similar
instruments to effectively modify the repricing characteristics of certain
consumer and commercial loan portfolios, funding, and long-term debt. During the
first quarter of 1997, the U.S. dollar earnings at risk for the following 12
months to a two standard deviation increase in rates had a potential negative
impact which ranged from approximately $143 million to $174 million in the
aggregate at each month end, compared with a range from $116 million to $204
million during the full year 1996.
The first table above also illustrates that the risk profile in the two-to-three
year time horizon was directionally similar, but reverses in subsequent periods.
This is affected by the fact that the majority of the derivative instruments
utilized to modify repricing characteristics as described above will mature
within three years. Additional detail regarding these derivative instruments may
be found on page 34.
Earnings at risk in other currencies also existed at significantly lower levels
than U.S. dollar earnings at risk. The level of exposure taken is based on the
market environment and will vary from period to period based on rate and other
economic expectations.
- --------------------------------------------------------------------------------
PRICE RISK IN TRADING PORTFOLIOS
- --------------------------------------------------------------------------------
The price risk of the trading activities is measured using the potential loss
amount method, which estimates the sensitivity of the value of the trading
activities to changes in the various market factors, such as interest and
foreign exchange rates, over the period necessary to close the position
(generally one day). This measurement includes the foreign exchange risks
17
<PAGE>
that arise in traditional banking businesses as well as explicit trading
positions. The method considers the probability of movements of these market
factors (as derived from a two standard deviation movement), adjusted for
correlation among them within each trading center.
During the first quarter of 1997 the potential loss amount in the trading
portfolios averaged $50 million pretax in the aggregate for Citicorp's major
trading centers and the monthly averages of daily exposures ranged from
approximately $42 million to $56 million, which is similar to the range in 1996.
The level of exposure taken is a function of the market environment, and
expectations of future price and market movements; and will vary from period to
period. The trading-related revenue for the first quarter of 1997 was $589
million compared with $543 million in the fourth quarter of 1996 (see
"Trading-Related Revenue" on page 23).
- --------------------------------------------------------------------------------
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
- --------------------------------------------------------------------------------
The following table presents the estimated fair value in excess of (less
than) carrying value of Citicorp's financial instruments as defined in
accordance with applicable requirements, including financial assets and
liabilities recorded on the balance sheet as well as off-balance sheet
instruments such as derivative and foreign exchange contracts and credit card
securitizations. To better reflect Citicorp's values subject to market risk and
to illustrate the interrelationships that characterize risk management
strategies, the table below also provides estimated fair value data for the
expected time period until runoff of existing deposits with no fixed maturity.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ESTIMATED FAIR VALUE IN EXCESS OF (LESS THAN) CARRYING VALUE
- --------------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(In Billions of Dollars) 1997 1996 1996 1996 1996
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets and Liabilities (A)........................... $6.2 $5.5 $5.5 $5.6 $5.4
End-User Derivative and Foreign Exchange Contracts... (0.7) 0.3 (0.2) (0.3) 0.2
Credit Card Securitizations (A) (B).................. 0.3 0.4 0.5 0.5 0.3
-------------------------------------------------------
5.8 6.2 5.8 5.8 5.9
Deposits with No Fixed Maturity (C).................. 3.1 2.7 3.0 3.3 2.7
-------------------------------------------------------
TOTAL................................................ $8.9 $8.9 $8.8 $9.1 $8.6
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Amounts as of March 31, 1997 include the effect of restoring to the
allowance for credit losses a $373 million reserve that had previously
been attributed to securitized credit card receivables, as described on
page 26.
(B) Represents the estimated excess in fair value of the underlying
receivables and investor certificates, which is derived by Citicorp in the
form of excess servicing, and principally arises from fixed rates payable
to certificate holders.
(C) Represents the estimated excess fair value related to the expected time
period until runoff of existing deposits with no fixed maturity on the
balance sheet, without assuming any regeneration of balances, based on the
estimated difference between the cost of funds on these deposits and the
cost of funds from alternative sources.
- --------------------------------------------------------------------------------
The quarterly fluctuations among financial instruments are primarily due to
changes in the interest rate environment in the U.S. and other countries.
Generally in rising interest rate environments, as experienced in the 1997 first
quarter and the 1996 second quarter, the fair value of assets and liabilities,
deposits with no fixed maturity and credit card securitizations (primarily fixed
rate investor certificates) tend to increase, which are partially offset by
declines in the value of derivative contracts. Correspondingly, in declining
interest rate environments as experienced in the second half of 1996, generally,
the fair value of assets and liabilities, deposits with no fixed maturity and
credit card securitizations tend to decline, which are partially offset by
increases in the value of derivative contracts. In addition, fair values may
vary from period to period based on changes in a variety of other factors
including credit quality, market perceptions of value, and the changing
composition of assets and liabilities.
18
<PAGE>
- --------------------------------------------------------------------------------
CAPITAL
- --------------------------------------------------------------------------------
Citicorp is subject to risk-based capital guidelines issued by the Federal
Reserve Board ("FRB"). These guidelines are supplemented by a leverage ratio
requirement. The risk-based capital guidelines and the leverage ratio
requirement are detailed in the 1996 Annual Report and Form 10-K.
- --------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
CITICORP RATIOS 1997 1996 1996
- --------------------------------------------------------------------------------
Tier 1 Capital............................. 8.39% 8.39% 8.42%
Total Capital (Tier 1 and Tier 2).......... 12.11 12.23 12.37
Leverage (A) .............................. 7.39 7.42 7.44
Common Stockholders' Equity................ 6.50 6.63 6.71
- --------------------------------------------------------------------------------
(A) Tier 1 capital divided by adjusted average assets.
- --------------------------------------------------------------------------------
Citicorp continued to maintain a strong capital position during the 1997 first
quarter. Total capital (Tier 1 and Tier 2) amounted to $29.3 billion at March
31, 1997 representing 12.11% of net risk-adjusted assets. This compares with
$28.9 billion and 12.23% at December 31, 1996 and $28.0 billion and 12.37% at
March 31, 1996. Tier 1 capital of $20.3 billion at March 31, 1997 represented
8.39% of net risk-adjusted assets, compared with $19.8 billion and 8.39% at
December 31, 1996 and $19.0 billion and 8.42% at March 31, 1996. The Tier 1
capital ratio at March 31, 1997 exceeded Citicorp's target range of 8.00% to
8.30%.
The excess of Tier 1 capital generated during a period reduced by capital
utilized for business expansion is referred to as "free capital." As shown in
the following table, Citicorp generated $726 million of free capital during the
1997 first quarter compared with $750 million in the 1996 first quarter.
- -------------------------------------------------------------------------------
FREE CAPITAL
- -------------------------------------------------------------------------------
First Quarter
-----------------------
(In Millions of Dollars) 1997 1996
- -------------------------------------------------------------------------------
Tier 1 Capital Generated:
Net Income............................................. $ 995 $ 914
Issuances/Other (A).................................... 495 185
Cash Dividends Declared................................ (281) (257)
-----------------------
Total Tier 1 Capital Generated......................... 1,209 842
Capital Utilized for Growth in Net Risk-Adjusted Assets (483) (92)
-----------------------
FREE CAPITAL GENERATED................................. $ 726 $ 750
- -------------------------------------------------------------------------------
(A) Includes issuance of common stock under various employee benefit plans and
the dividend reinvestment plan. 1997 also reflects issuance of guaranteed
preferred beneficial interests in subordinated debt and the redemption of
Series 14 Preferred Stock.
- --------------------------------------------------------------------------------
In order to return this free capital to its shareholders, Citicorp initiated a
common stock repurchase program in June 1995. During 1996, the program was
expanded to a total authorization of $8.5 billion through December 31, 1998.
Citicorp repurchased 6.1 million and 9.6 million shares of common stock under
the repurchase program using free capital of $704 million ($114.85 average cost
per share) and $721 million ($75.42 average cost per share) in the first
quarters of 1997 and 1996, respectively. Since the program was initiated,
Citicorp has repurchased 65.3 million shares of common stock through March 31,
1997, using free capital of $5.3 billion.
Common stockholders' equity increased a net $233 million during the first
quarter of 1997 to $18.9 billion at March 31, 1997, representing 6.50% of
assets, compared with 6.63% at December 31, 1996 and 6.71% at March 31, 1996.
19
<PAGE>
The increase in common stockholders' equity during the quarter principally
reflected net income and the issuance of stock under various employee benefit
plans, partially offset by shares repurchased under the common stock repurchase
program and dividends declared on common and preferred stock. The decline in the
common stockholders' equity ratio at March 31, 1997 reflected the above items as
well as the growth in total assets.
During the first quarter of 1997, Citicorp redeemed the $175 million Series 14
Preferred Stock and issued an additional $450 million of guaranteed preferred
beneficial interests in Citicorp subordinated debt. The guaranteed preferred
beneficial interests outstanding at March 31, 1997 of $750 million, including
$300 million issued in 1996, qualify as Tier 1 capital and are included in
long-term debt on the balance sheet.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
COMPONENTS OF RISK-BASED CAPITAL UNDER REGULATORY GUIDELINES
- ------------------------------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
(In Millions of Dollars) 1997 1996 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TIER 1 CAPITAL
Common Stockholders' Equity............................................... $18,877 $18,644 $17,684
Perpetual Preferred Stock................................................. 1,903 2,078 2,078
Guaranteed Preferred Beneficial Interests in Subordinated Debt............ 750 300 -
Minority Interest......................................................... 97 91 81
Less: Net Unrealized Gains-- Securities Available for Sale (A) ........... (687) (676) (174)
Intangible Assets (B) .............................................. (314) (328) (314)
50% Investment in Certain Subsidiaries (C) ......................... (325) (313) (319)
----------------------------------------
TOTAL TIER 1 CAPITAL...................................................... 20,301 19,796 19,036
----------------------------------------
TIER 2 CAPITAL
Allowance for Credit Losses (D) .......................................... 3,060 2,982 2,857
Qualifying Debt (E)....................................................... 6,263 6,405 6,386
Less: 50% Investment in Certain Subsidiaries (C) ......................... (324) (313) (319)
----------------------------------------
TOTAL TIER 2 CAPITAL...................................................... 8,999 9,074 8,924
----------------------------------------
TOTAL CAPITAL (TIER 1 AND TIER 2)......................................... $29,300 $28,870 $27,960
- ------------------------------------------------------------------------------------------------------------------------
NET RISK-ADJUSTED ASSETS (F).............................................. $241,887 $236,073 $226,020
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Tier 1 capital excludes unrealized gains and losses on securities available
for sale in accordance with regulatory risk-based capital guidelines.
(B) Includes goodwill and certain other identifiable intangible assets.
(C) Primarily Citicorp Securities, Inc.
(D) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is
deducted from risk-adjusted assets.
(E) Includes qualifying senior and subordinated debt, in an amount not
exceeding 50% of Tier 1 capital, subordinated capital notes, and limited
life preferred stock, subject to certain limitations.
(F) Includes risk-weighted credit equivalent amounts net of applicable
bilateral netting agreements of $10.0 billion for interest rate, commodity
and equity derivative contracts, and foreign exchange contracts, as of
March 31, 1997, compared with $9.8 billion as of December 31, 1996 and
$8.8 billion as of March 31, 1996. Net risk-adjusted assets also includes
the effect of other off-balance sheet exposures such as unused loan
commitments and letters of credit and reflects deductions for intangible
assets and any excess allowance for credit losses.
- --------------------------------------------------------------------------------
As discussed in the 1996 Annual Report and Form 10-K, Citicorp has entered into
forward purchase agreements on its common stock, to be settled on a net basis,
in order to partially offset the dilutive effects of various employee benefit
plans. At Citicorp's option, such settlements may be made in shares of
Citicorp's common stock or in cash. As of March 31, 1997, agreements were in
place covering approximately $900 million of Citicorp common stock (7.8 million
shares) with forward prices averaging $115.57 per share. Both the number of
shares covered and the forward prices of the contracts are adjusted on a
quarterly basis and reflect the stock price at the time of adjustment. During
the first quarter of 1997, settlements resulted in Citicorp receiving
approximately 0.8 million shares of its common stock. If the currently
outstanding agreements were settled based on the March 31, 1997 market price of
Citicorp common stock ($108.25 per share), Citicorp would be required to deliver
approximately 0.5 million shares.
20
<PAGE>
Citicorp's subsidiary depository institutions are subject to the
risk-based capital guidelines issued by their respective primary federal bank
regulatory agencies, which are generally similar to the FRB's guidelines. At
March 31, 1997 all of Citicorp's subsidiary depository institutions were "well
capitalized" under the federal bank regulatory agencies' definitions.
- -----------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
CITIBANK, N.A. RATIOS 1997 1996 1996
- --------------------------------------- ------------ ------------ -----------
Tier 1 Capital....................... 8.29% 8.32% 8.42%
Total Capital (Tier 1 and Tier 2) ... 12.00 12.11 12.30
Leverage............................. 6.61 6.63 6.75
Common Stockholder's Equity.......... 6.86 6.99 7.18
- --------------------------------------- ------------ ------------ -----------
During 1996, the U.S. bank regulatory agencies issued an amendment to their
risk-based capital guidelines to incorporate a measure for market risk in
foreign exchange and commodity activities and in the trading of debt and equity
instruments. The final rules, which must be implemented by January 1, 1998, are
not expected to have a significant impact on Citicorp.
From time to time, the FRB and the Federal Financial Institutions Examination
Council propose amendments to, and issue interpretations of, risk-based capital
guidelines and reporting instructions. Such proposals or interpretations could,
if implemented in the future, affect reported capital ratios and net
risk-adjusted assets.
- --------------------------------------------------------------------------------
STATEMENT OF INCOME ANALYSIS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET INTEREST REVENUE (TAXABLE EQUIVALENT BASIS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
NET INTEREST REVENUE STATISTICS ............................ 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(TAXABLE EQUIVALENT BASIS) (A) (B) ....................... 1997 1996 1996 1996 1996
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET INTEREST REVENUE: (In Millions of Dollars)
U.S. ....................................................... $ 1,862 $ 1,785 $ 1,714 $ 1,750 $ 1,716
Outside the U.S. ........................................... 1,587 1,699 1,616 1,601 1,547
--------- --------- --------- --------- ---------
TOTAL ADJUSTED ............................................. 3,449 3,484 3,330 3,351 3,263
Effect of Credit Card Securitization Activity (C) .......... (630) (650) (613) (615) (570)
--------- --------- --------- --------- ---------
TOTAL ...................................................... $ 2,819 $ 2,834 $ 2,717 $ 2,736 $ 2,693
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
AVERAGE INTEREST-EARNING ASSETS: (In Billions of Dollars)
U.S. ....................................................... $ 123.2 $ 120.2 $ 118.7 $ 121.1 $ 122.4
Outside the U.S. ........................................... 144.1 142.0 140.1 135.7 132.2
--------- --------- --------- --------- ---------
TOTAL ADJUSTED ............................................. 267.3 262.2 258.8 256.8 254.6
Securitized Credit Card Receivables (C) ................... (25.1) (25.9) (26.2) (26.2) (25.9)
--------- --------- --------- --------- ---------
TOTAL ...................................................... $ 242.2 $ 236.3 $ 232.6 $ 230.6 $ 228.7
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
ADJUSTED NET INTEREST MARGIN:
U.S. ....................................................... 6.13% 5.90% 5.75% 5.81% 5.64%
Outside the U.S. ........................................... 4.47% 4.76% 4.59% 4.75% 4.71%
TOTAL ADJUSTED ............................................. 5.23% 5.28% 5.12% 5.25% 5.15%
Effect of Credit Card Securitization Activity (C) .......... (.51)% (.51)% (.47)% (.48)% (.41)%
--------- --------- --------- --------- ---------
TOTAL ...................................................... 4.72% 4.77% 4.65% 4.77% 4.74%
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
</TABLE>
(A) Includes allocations for capital and funding costs based on the location
of the asset.
(B) The taxable equivalent adjustment is based on the U.S. federal statutory
tax rate of 35%.
(C) See page 27 for discussion of the effect of credit card securitization
activity.
21
<PAGE>
Net interest revenue of $2.8 billion in the 1997 first quarter increased $126
million or 5% from the year-ago period reflecting an increase in
interest-earning assets. Net interest revenue and net interest margin are
reduced by the effect of credit card securitization activity. Adjusted for the
effect of credit card securitization activity, net interest revenue for the 1997
first quarter of $3.4 billion decreased $35 million or 1% from the 1996 fourth
quarter and increased $186 million or 6% from the 1996 first quarter. The
adjusted net interest margin decreased to 5.23% in the 1997 first quarter from
5.28% in the fourth quarter of 1996 and increased from 5.15% in the 1996 first
quarter.
The adjusted net interest margin in the U.S. of 6.13% in the 1997 quarter was up
from 5.90% in the 1996 fourth quarter and 5.64% in the 1996 first quarter. The
net interest margin in the 1997 first quarter compared to the 1996 fourth
quarter benefited from new risk- and relationship-based pricing strategies in
the U.S. bankcards business, partially offset by spread compression in the
Global Relationship Banking business ("GRB"). The increase in the adjusted net
interest margin in the U.S. from the 1996 first quarter resulted from the new
risk- and relationship-based pricing strategies and higher volumes in the U.S.
bankcards business, a decrease in the level of lower-yielding trading assets in
GRB, and a lower net cost to carry cash-basis loans and OREO.
Net interest revenue from activities outside the U.S. represented 46% of total
adjusted net interest revenue in the 1997 first quarter. The net interest margin
outside the U.S. of 4.47% in the 1997 quarter decreased from 4.76% in the 1996
fourth quarter and 4.71% in the 1996 first quarter. The decrease in the net
interest margin from the 1996 fourth quarter reflected spread compression in GRB
and the Asia Pacific Citibanking business and less favorable market conditions
in Corporate Banking Emerging Markets, principally in Latin America. The
decrease in the net interest margin from the 1996 first quarter reflected less
favorable market conditions in Corporate Banking Emerging Markets, principally
in Latin America, an increase in the level of lower-yielding securities in GRB,
and spread compression in the Asia Pacific Citibanking business, partially
offset by an increase in higher-yielding assets in the Citibanking business in
Latin America.
The $12.7 billion increase in adjusted average interest-earning assets in the
1997 first quarter from the year-ago period was mainly attributable to higher
levels of securities, consumer loans in the U.S. and commercial loans outside
the U.S., partially offset by a reduction in trading account assets in the GRB.
- --------------------------------------------------------------------------------
FEE AND COMMISSION REVENUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
First Quarter
----------------------------
(In Millions of Dollars) 1997 1996 (A)
- --------------------------------------------------- --------------- ------------
CONSUMER:
Developed Markets................................. $ 568 $ 534
Emerging Markets.................................. 288 253
--------------- ------------
TOTAL CONSUMER.................................... 856 787
CORPORATE BANKING AND OTHER....................... 465 482
--------------- ------------
TOTAL ADJUSTED.................................... 1,321 1,269
Effect of Credit Card Securitization Activity (B). 31 43
--------------- ------------
TOTAL............................................. $1,352 $1,312
- --------------------------------------------------- --------------- ------------
(A) Reclassified to conform to the latest quarter's presentation.
(B) See page 27 for discussion of the effect of credit card securitization
activity.
- --------------------------------------------------------------------------------
Total fee and commission revenue of $1.4 billion in the first quarter of 1997
increased $40 million or 3% from a year ago. Fee and commission revenue was
increased in both periods by the effect of credit card securitization activity.
Adjusted for the effect of credit card securitization activity, fee and
commission revenue in the 1997 first quarter was up 4% from a year ago.
Fee and commission revenue in the Consumer businesses in the 1997 first
quarter was up 9% from the 1996 first quarter (14% in the emerging markets and
6% in the developed markets). The double-digit growth in the emerging markets
primarily reflected increases in credit card related fees and trust and
investment fees in Asia Pacific and Latin America. In
22
<PAGE>
the developed markets, the revenue increase also reflected higher credit
card related and trust and investment fees. Fee and commission revenue in the
Private Bank increased by double-digits in both the emerging and developed
markets.
In the Corporate Banking businesses, fee and commission revenue for the
1997 first quarter decreased 4% compared with the 1996 quarter primarily due to
the 1996 disposition of a non-strategic business.
- --------------------------------------------------------------------------------
TRADING-RELATED REVENUE
- --------------------------------------------------------------------------------
Trading-related revenue is composed of the "Foreign Exchange" and "Trading
Account" lines in the Statement of Income and also includes other amounts,
principally reflected in Net Interest Revenue. The table below presents
trading-related revenue by business sector, by trading activity, and by income
statement line.
- --------------------------------------------------------------------------------
First Quarter
-----------------------------
(In Millions of Dollars) 1997 1996 (A)
- ------------------------------------------------ ----------- -----------------
BY BUSINESS SECTOR:
Corporate Banking:
Emerging Markets.......................... $218 $177
Global Relationship Banking............... 319 165
----------- -----------------
Total Corporate Banking................... 537 342
Consumer and Other........................ 52 50
----------- -----------------
TOTAL..................................... $589 $392
- ------------------------------------------------ ----------- -----------------
BY TRADING ACTIVITY:
Foreign Exchange (B)...................... $260 $217
Derivative (C)............................ 182 142
Fixed Income (D).......................... 62 4
Other..................................... 85 29
----------- -----------------
TOTAL..................................... $589 $392
- ------------------------------------------------ ----------- -----------------
BY INCOME STATEMENT LINE:
Foreign Exchange.......................... $297 $205
Trading Account........................... 198 90
Other (E)................................. 94 97
----------- -----------------
TOTAL..................................... $589 $392
- ------------------------------------------------ ----------- -----------------
(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.
Trading-related revenue of $589 million increased $197 million or 50% in the
1997 first quarter compared with the low 1996 first quarter and increased $46
million or 8% from the 1996 fourth quarter. The increase from the 1996 first
quarter is primarily attributable to significantly improved results in all
trading activities in Global Relationship Banking, complemented by growth in
derivative and foreign exchange trading in the Emerging Markets business,
primarily in Asia Pacific.
Foreign exchange revenue of $260 million in the 1997 first quarter
increased $43 million or 20% from the unusually low 1996 first quarter, when
directionless foreign exchange markets in the major currencies adversely
affected revenue opportunities.
23
<PAGE>
Derivative revenue of $182 million in the 1997 first quarter rose $40
million or 28% from the 1996 first quarter, reflecting growth in both Global
Relationship Banking and the Asia Pacific Emerging Markets business.
Fixed income revenue in the 1997 first quarter increased $58 million from the
unusually low 1996 first quarter, when results in North America were adversely
affected by volatile interest rates.
Levels of trading-related revenue may fluctuate in the future as a result of
market conditions and other factors.
- --------------------------------------------------------------------------------
SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
Net gains from the sale of securities were $108 million in the first quarter of
1997 compared with $102 million in the comparable 1996 period. The net gains
reflected gross realized gains of $126 million and $111 million, and gross
realized losses of $18 million and $9 million in the first quarters of 1997 and
1996, respectively.
The fair value of securities available for sale and the related adjustment to
stockholders' equity may fluctuate over time based on market conditions and
changes in market interest rates, as well as events and trends affecting
specific securities.
- -----------------------------------------------------------------------------
OTHER REVENUE
- -----------------------------------------------------------------------------
- ----------------------------------------- -----------------------------------
First Quarter
-----------------------------------
(In Millions of Dollars) 1997 1996 (A)
- ----------------------------------------- ----------------- -----------------
Credit Card Securitization Activity..... $165 $233
Venture Capital......................... 93 38
Affiliate Earnings...................... 59 62
Net Asset Gains and Other Items......... 120 101
----------------- ------------------
TOTAL................................... $437 $434
- ----------------------------------------- ----------------- ------------------
(A) Reclassified to conform to the latest quarter's presentation.
- ------------------------------------------------------------------------------
The decrease in revenue related to credit card securitization activity in the
1997 first quarter principally reflected higher net credit loss rates, partially
offset by an improved net interest margin. Additionally, commencing with the
1997 first quarter, revenue from credit card securitization activity includes
net credit losses on loans held for sale, which totaled $32 million. The effect
of credit card securitization activity is discussed in more detail on page 27.
Venture capital revenue in the 1997 first quarter of $93 million improved $55
million from the unusually low 1996 first quarter level. Investments of venture
capital subsidiaries are carried at fair value and revenue volatility can occur
in the future, based on general market conditions as well as events and trends
affecting specific venture capital investments.
Net asset gains and other items in the 1997 first quarter included gains
related to the refinancing agreement concluded with Peru and the sale of an
investment from the acquisition finance portfolio by Global Relationship
Banking. Revenue in the first quarter of 1996 reflected the disposition of a
portion of Citicorp's holding in an Asian affiliate.
24
<PAGE>
- -------------------------------------------------------------------------------
PROVISION AND CREDIT LOSS RESERVES
The provision for credit losses of $423 million in the 1997 first quarter
declined $71 million or 14% from the 1996 first quarter, reflecting commercial
net recoveries together with a decline in the consumer additional provision,
partially offset by higher net write-offs in the Consumer business.
Details of net write-offs, additional provision, and the provision for credit
losses are included in the following table:
- -------------------------------------------------------------------------------
NET WRITE-OFFS, ADDITIONAL PROVISION, AND PROVISION FOR CREDIT LOSSES
- --------------------------------------------------------------------------------
First Quarter
---------------------------------
(In Millions of Dollars) 1997 1996
- --------------------------------------------------------------------------------
NET WRITE-OFFS (RECOVERIES):
Consumer (A)................................... $893 $707
Commercial..................................... (61) 31
--------------- -----------
TOTAL ADJUSTED NET WRITE-OFFS.................. 832 738
Effect of Credit Card Securitization Activity.. (434) (294)
--------------- -----------
TOTAL.......................................... $398 $444
- -------------------------------------------------------------------- -----------
ADDITIONAL PROVISION:
Consumer....................................... $25 $50
--------------- -----------
TOTAL.......................................... $25 $50
- -------------------------------------------------------------------- -----------
PROVISION FOR CREDIT LOSSES:
Consumer....................................... $484 $463
Commercial..................................... (61) 31
--------------- -----------
TOTAL.......................................... $423 $494
- -------------------------------------------------------------------- -----------
(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 27).
- -------------------------------------------------------------------------------
Consumer net write-offs, adjusted for the effect of credit card securitization
activity, were $893 million in the 1997 first quarter, up from $707 million in
the 1996 first quarter, primarily due to higher losses in U.S. bankcards, which
continues to operate in a weak credit environment. Net write-offs also increased
in the Asia Pacific Cards business as a result of portfolio expansion,
moderating economic conditions, and the political environment in certain
countries. Net write-offs in Latin America in both the Citibanking and Cards
businesses as well as the Private Bank were reduced from year-ago levels. The
consumer provision for credit losses included an additional provision in excess
of net write-offs of $25 million in the 1997 first quarter and $50 million in
the 1996 first quarter. Net write-offs and the total provision, particularly in
Cards, are expected to increase from 1997 first quarter levels as a result of
credit performance of the portfolios (including bankruptcies), seasonal factors,
economic conditions, and other changes in portfolio levels. See "Consumer
Portfolio Review" on page 9 for an additional discussion.
Commercial net recoveries in the 1997 first quarter of $61 million improved $92
million from the 1996 first quarter due to higher recoveries, primarily
attributable to a $50 million recovery from the refinancing agreement concluded
with Peru, coupled with lower gross write-offs. There were no material credit
losses related to derivative and foreign exchange contracts or standby letters
of credit and guarantees in either quarter. Citicorp does not expect to continue
to experience net recoveries in the commercial portfolio; however, net
write-offs are expected to be moderate.
All identified losses are immediately written off and the entire allowance is
available to absorb all probable credit losses inherent in the portfolio. For
analytical purposes only, Citicorp attributes the reserve to the credit
exposures as detailed in the table on page 26.
25
<PAGE>
- --------------------------------------------------------------------------------
CREDIT LOSS RESERVES (A)
- --------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
(In Millions of Dollars) 1997 1996 1996
- ------------------------------------------------- --------- --------- ---------
ALLOWANCE FOR CREDIT LOSSES:
Consumer......................................... $2,442 $2,079 $1,966
Commercial....................................... 3,324 3,424 3,424
--------- --------- ---------
TOTAL ALLOWANCE FOR CREDIT LOSSES................ 5,766 5,503 5,390
Reserves for Off-Balance Sheet Credit Exposures.. 191 473 482
--------- --------- ---------
TOTAL CREDIT LOSS RESERVES....................... $5,957 $5,976 $5,872
- ------------------------------------------------- --------- --------- ---------
ALLOWANCE AS A PERCENT OF TOTAL LOANS:
Consumer......................................... 2.29% 1.86% 1.89%
Commercial....................................... 5.06% 5.46% 5.58%
TOTAL............................................ 3.34% 3.15% 3.26%
- ------------------------------------------------- --------- --------- ---------
(A) In the first quarter of 1997, to be consistent with industry practice,
Citicorp has 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 March 31, 1997 consist of the foregoing $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.
- --------------------------------------------------------------------------------
The allowance for credit losses and the reserves for off-balance sheet credit
exposures totaled $6.0 billion as of March 31, 1997 and December 31, 1996, up
from $5.9 billion at March 31, 1996. The net change in the reserves reflected
the continued reserve building previously discussed and the effect of foreign
currency translation.
Uncertainty related to the credit and economic environment, as well as higher
loan volumes in the worldwide Consumer portfolios, may result in further
increases in the allowance for credit losses attributable to the Consumer
businesses.
- --------------------------------------------------------------------------------
OPERATING EXPENSE
- --------------------------------------------------------------------------------
Total operating expense of $3.2 billion in the 1997 first quarter was up $309
million or 11% from the comparable 1996 period. Consumer and Corporate Banking
expense increased 14% in the emerging markets and 7% in the developed markets,
from the year-ago period. Excluding the effect of foreign currency translation
resulting from a strengthened U.S. dollar, operating expense increased 12%.
Employee expense of $1.7 billion in the first quarter rose $196 million or 13%
from the 1996 quarter. The increase primarily reflected salary and incentive
compensation increases, higher staff levels related to business expansion in the
emerging markets, and an incremental charge of $60 million associated with the
vesting of the remaining performance-based stock options. Staff levels of 90,200
at March 31, 1997 increased 3,500 (2,500 in the emerging markets) or 4% from a
year ago.
Net premises and equipment expense was $490 million in the quarter, up $33
million or 7% from 1996, while other expense of $1.0 billion increased $80
million or 9% from the year-ago period. These increases primarily reflected
investment spending and franchise development to support expansion in the
emerging markets, the furtherance of Citibanking initiatives, particularly on
upgrading systems and delivery of services worldwide through technology
convergence, the continued development of the Citibank branding strategy
worldwide, including the conversion and addition of 107 branches to the
Citibanking standard, and increased spending on technology and volume-related
expenses in transaction banking services.
26
<PAGE>
- --------------------------------------------------------------------------------
INCOME TAXES
- --------------------------------------------------------------------------------
Income taxes were $609 million and $560 million, in the first quarters of
1997 and 1996, representing effective tax rates of 38% for both periods. The
1996 full-year effective tax rate was 38%.
- --------------------------------------------------------------------------------
EFFECT OF CREDIT CARD SECURITIZATION ACTIVITY
- --------------------------------------------------------------------------------
During the first quarter of 1997, $2.6 billion of U.S. credit card receivables
were securitized. As of March 31, 1997, the total amount of securitized
receivables, net of amortization, was $25.4 billion compared with $25.2 billion
as of December 31, 1996 and $26.2 billion as of March 31, 1996.
The securitization of credit card receivables, which is described in the 1996
Annual Report and Form 10-K, does not affect the earnings reported in a period.
However, securitization affects the manner in which revenue and the provision
for credit losses are classified in the income statement. For securitized
receivables, amounts that would otherwise be reported as net interest revenue,
as fee and commission revenue, and as net credit losses on loans are instead
reported as fee and commission revenue (for servicing fees) and as other revenue
(for the remaining cash flows to which Citicorp is entitled, net of credit
losses). In addition, commencing with the first quarter of 1997, net credit
losses on credit card receivables held for sale are reported as a reduction of
other revenue rather than included in the provision for credit losses. The table
below shows the net effect of credit card securitization activity as an increase
or (decrease) to the amounts reported in the Consolidated Statement of Income
and Average Balance Sheet, and under the captions of Return on Assets, Net
Interest Margin, and Consumer Net Credit Loss Ratio. The adoption of Statement
of Financial Accounting Standards No. 125 in the 1997 first quarter (see
"Accounting Items" below) did not result in a change in the income recognition
policies for credit card securitization activity due to immateriality.
- --------------------------------------------------------------------------------
First Quarter
-----------------------------------
In Millions of Dollars 1997 1996
- -------------------------------------- ----------------- -----------------
Net Interest Revenue.................. $ (630) $ (570)
Fee and Commission Revenue............ 31 43
Other Revenue......................... 165 233
Provision for Credit Losses........... (434) (294)
- -------------------------------------- ----------------- -----------------
NET INCOME IMPACT OF SECURITIZATION... $ 0 $ 0
- -------------------------------------- ----------------- -----------------
Average Assets (In Billions) ......... $ (25) $ (26)
Return on Assets...................... 0.11% 0.12%
Net Interest Margin................... (0.51)% (0.41)%
Consumer Net Credit Loss Ratio ....... (0.94)% (0.59)%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ACCOUNTING ITEMS
- --------------------------------------------------------------------------------
Effective January 1, 1997, Citicorp adopted the applicable provisions of
Statement of Financial Accounting Standards No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS No.
125"), and will adopt the remaining provisions as required in the 1998 first
quarter. SFAS No. 125 provides standards for distinguishing transfers of
financial assets that are sales from those that are secured borrowings, and
provides guidance on the recognition and measurement of asset servicing
contracts and on debt extinguishments. The new standard does not have a material
impact on Citicorp.
Also commencing January 1, 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 with net credit losses charged to other
revenue.
As described on page 26, in the first quarter 1997 Citicorp changed the
apportionment and display of credit loss reserves to be consistent with industry
practice.
27
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME CITICORP AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Three Months
--------------
(In Millions of Dollars, Except Per Share Amounts) 1997 1996
- --------------------------------------------------------------------------------
INTEREST REVENUE
Loans, including Fees ...................................... $4,554 $4,558
Deposits with Banks ........................................ 224 196
Federal Funds Sold and Securities Purchased Under
Resale Agreements ........................................ 212 256
Securities
U.S. Treasury and Federal Agencies ................... 70 56
State and Municipal .................................. 32 21
Other, including dividends (Principally in offices
outside the U.S.) .................................. 417 304
Trading Account Assets ..................................... 243 385
Loans Held for Sale (A) .................................... 105 -
------ ------
Total Interest Revenue ..................................... 5,857 5,776
------ ------
INTEREST EXPENSE
Deposits ................................................... 2,229 2,186
Trading Account Liabilities ................................ 73 79
Purchased Funds and Other Borrowings ....................... 438 491
Long-Term Debt ............................................. 313 335
------ ------
Total Interest Expense ..................................... 3,053 3,091
------ ------
NET INTEREST REVENUE ....................................... 2,804 2,685
------ ------
PROVISION FOR CREDIT LOSSES ................................ 423 494
------ ------
NET INTEREST REVENUE AFTER PROVISION FOR CREDIT LOSSES ..... 2,381 2,191
------ ------
FEES, COMMISSIONS, AND OTHER REVENUE
Fees and Commissions ....................................... 1,352 1,312
Foreign Exchange ........................................... 297 205
Trading Account ............................................ 198 90
Securities Transactions .................................... 108 102
Other Revenue .............................................. 437 434
------ ------
Total Fees, Commissions, and Other Revenue ................. 2,392 2,143
------ ------
OPERATING EXPENSE
Salaries ................................................... 1,264 1,132
Employee Benefits .......................................... 401 337
------ ------
Total Employee Expense ..................................... 1,665 1,469
Net Premises and Equipment Expense ......................... 490 457
Other Expense .............................................. 1,014 934
------ ------
Total Operating Expense .................................... 3,169 2,860
------ ------
INCOME BEFORE TAXES ........................................ 1,604 1,474
INCOME TAXES ............................................... 609 560
------ ------
NET INCOME ................................................. $ 995 $ 914
====== ======
- ----------------------------------------------------------------------------
INCOME APPLICABLE TO COMMON STOCK .......................... $ 957 $ 871
------ ------
EARNINGS PER SHARE:
ON COMMON AND COMMON EQUIVALENT SHARES ..................... $ 2.01 $ 1.82
ASSUMING FULL DILUTION ..................................... $ 2.01 $ 1.75
- ----------------------------------------------------------------------------
(A) Commencing with the first quarter 1997, Citicorp classifies credit card
and mortgage loans intended for sale as loans held for sale.
- --------------------------------------------------------------------------------
28
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET CITICORP AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Mar. 31, Dec. 31,
(In Millions of Dollars) 1997 1996
- --------------------------------------------------------------------------------
ASSETS
Cash and Due from Banks .................................. $ 6,574 $ 6,905
Deposits at Interest with Banks .......................... 12,593 11,648
Securities, at Fair Value
Available for Sale ................................. 30,608 26,062
Venture Capital .................................... 2,266 2,124
Trading Account Assets ................................... 33,196 30,785
Loans Held for Sale (A) .................................. 3,133 -
Federal Funds Sold and Securities Purchased
Under Resale Agreements ................................ 11,844 11,133
Loans, Net
Consumer ........................................... 106,721 111,847
Commercial ......................................... 65,750 62,765
-------- --------
Loans, Net of Unearned Income ............................ 172,471 174,612
Allowance for Credit Losses .............................. (5,766) (5,503)
-------- --------
Total Loans, Net ......................................... 166,705 169,109
Customers' Acceptance Liability .......................... 2,188 2,077
Premises and Equipment, Net .............................. 4,655 4,667
Interest and Fees Receivable ............................. 3,131 3,068
Other Assets ............................................. 13,461 13,440
-------- --------
TOTAL .................................................... $290,354 $281,018
======== ========
- --------------------------------------------------------------------------------
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices ............ $ 14,569 $ 14,867
Interest-Bearing Deposits in U.S. Offices ................ 39,820 40,254
Non-Interest-Bearing Deposits in Offices Outside the U.S. 10,476 9,891
Interest-Bearing Deposits in Offices Outside the U.S. .... 123,983 119,943
-------- --------
Total Deposits ........................................... 188,848 184,955
Trading Account Liabilities .............................. 23,235 22,003
Purchased Funds and Other Borrowings ..................... 21,609 18,191
Acceptances Outstanding .................................. 2,235 2,104
Accrued Taxes and Other Expense .......................... 6,038 5,992
Other Liabilities ........................................ 8,785 8,201
Long-Term Debt ........................................... 18,824 18,850
STOCKHOLDERS' EQUITY
Preferred Stock (Without par value) ...................... 1,903 2,078
Common Stock ($1.00 par value) ........................... 506 506
Issued Shares: 506,298,235 in each period
Surplus .................................................. 6,612 6,595
Retained Earnings ........................................ 15,017 14,303
Net Unrealized Gains - Securities Available for Sale ..... 687 676
Foreign Currency Translation ............................. (517) (486)
Common Stock in Treasury, at Cost ........................ (3,428) (2,950)
Shares: 46,773,535 and 43,081,217, respectively
-------- --------
Total Stockholders' Equity ............................... 20,780 20,722
-------- --------
TOTAL .................................................... $290,354 $281,018
======== ========
- --------------------------------------------------------------------------------
(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.
- --------------------------------------------------------------------------------
29
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY CITICORP AND SUBSIDIARIES
- ------------------------------------------------------------------------------------------
Three Months
------------------------
(In Millions of Dollars) 1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at Beginning of Period ................................. $ 20,722 $ 19,581
Redemption of Perpetual Preferred Stock, Series 14 ............. (175) -
Convertible Preferred Stock, Series 12
Redemption of Series 12 .................................. - (590)
Issuance of Common Stock ................................. - 590
Convertible Preferred Stock, Series 13
Redemption of Series 13 .................................. - (403)
Issuance of Common Stock from Treasury Shares ............ - 1,066
Adjustment to Retained Earnings for Treasury Shares Issued - (663)
Net Income ..................................................... 995 914
Cash Dividends Declared
Common ................................................... (243) (210)
Preferred ................................................ (38) (47)
Change in Net Unrealized Gains on Securities Available for Sale 11 42
Foreign Currency Translation ................................... (31) (11)
Repurchased Common Shares ...................................... (704) (721)
Employee Benefit Plans and Other Activity (A) .................. 243 214
-------- --------
BALANCE AT END OF PERIOD ....................................... $ 20,780 $ 19,762
======== ========
- -----------------------------------------------------------------------------------------
</TABLE>
(A) Primarily issuance of common stock (including treasury shares) under
employee benefit plans and related amortization and tax benefits.
- --------------------------------------------------------------------------------
30
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS CITICORP AND SUBSIDIARIES
- -------------------------------------------------------------------------------------------
Three Months
--------------------------
(In Millions of Dollars) 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME ................................................. $ 995 $ 914
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Provision for Credit Losses ................................ 423 494
Depreciation and Amortization of Premises and Equipment .... 187 170
Amortization of Goodwill ................................... 11 11
Provision for Deferred Taxes ............................... (91) 27
Venture Capital Activity ................................... (142) (84)
Net Gain on Sale of Securities ............................. (108) (102)
Changes in Accruals and Other, Net ......................... 1,830 (729)
Net Increase in Loans Held for Sale (A) .................... (2,020) -
Net (Increase) Decrease in Trading Account Assets .......... (2,411) 1,115
Net Increase (Decrease) in Trading Account Liabilities ..... 1,232 (185)
--------------------------------
TOTAL ADJUSTMENTS .......................................... (1,089) 717
--------------------------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ........ (94) 1,631
--------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net Increase in Deposits at Interest with Banks ............ (945) (1,531)
Securities - Available for Sale
Purchases ............................................... (17,735) (9,166)
Proceeds from Sales ..................................... 8,308 3,347
Maturities .............................................. 4,654 3,721
Net Increase in Federal Funds Sold and Securities Purchased
Under Resale Agreements .................................. (711) (2,602)
Net Increase in Loans (A) .................................. (26,846) (30,982)
Proceeds from Sales of Loans and Credit Card Receivables (A) 26,755 30,745
Capital Expenditures on Premises and Equipment ............. (314) (298)
Proceeds from Sales of Premises and Equipment, Subsidiaries
and Affiliates, and OREO ................................. 228 249
--------------------------------
NET CASH USED IN INVESTING ACTIVITIES ...................... (6,606) (6,517)
--------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits ................................... 3,893 4,873
Net Increase in Federal Funds Purchased and Securities
Sold Under Repurchase Agreements ......................... 3,418 1,018
Proceeds from Issuance of Commercial Paper and Funds
Borrowed with Original Maturities of Less Than One Year .. 177,181 174,306
Repayment of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year ................ (177,118) (174,691)
Proceeds from Issuance of Long-Term Debt ................... 1,689 1,972
Repayment of Long-Term Debt ................................ (1,568) (1,248)
Redemption of Preferred Stock .............................. (175) -
Proceeds from Issuance of Common Stock ..................... 131 152
Treasury Stock Repurchases ................................. (704) (721)
Dividends Paid ............................................. (281) (257)
--------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES .................. 6,466 5,404
--------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS . (97) (38)
--------------------------------
NET (DECREASE) INCREASE IN CASH AND DUE FROM BANKS ......... (331) 480
Cash and Due from Banks at Beginning of Period ............. 6,905 5,723
--------------------------------
CASH AND DUE FROM BANKS AT END OF PERIOD ................... $ 6,574 $ 6,203
================================
- --------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD FOR:
Interest ................................................... $2,702 $3,112
Income Taxes ............................................... 222 217
NON-CASH INVESTING ACTIVITIES
Transfer from Loans to OREO ................................ 93 116
- --------------------------------------------------------------------------------------------
</TABLE>
(A) Commencing with the first quarter 1997, Citicorp classifies credit card
and mortgage loans intended for sale as loans held for sale.
- --------------------------------------------------------------------------------
31
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET CITIBANK, N.A. AND SUBSIDIARIES
- -------------------------------------------------------------------------------------
Mar. 31, Dec. 31,
(In Millions of Dollars) 1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and Due from Banks ..................................... $ 6,045 $ 5,947
Deposits at Interest with Banks ............................. 13,753 12,822
Securities, at Fair Value
Available for Sale .................................... 26,215 21,784
Venture Capital ....................................... 1,949 1,774
Trading Account Assets ...................................... 29,022 27,259
Federal Funds Sold and Securities Purchased
Under Resale Agreements ................................... 8,655 8,181
Loans, Net of Unearned Income ............................... 144,695 143,984
Allowance for Credit Losses ................................. (4,252) (4,382)
------------------------
Loans, Net .................................................. 140,443 139,602
Customers' Acceptance Liability ............................. 2,196 2,077
Premises and Equipment, Net ................................. 3,498 3,538
Interest and Fees Receivable ................................ 2,099 2,121
Other Assets ................................................ 8,092 8,134
------------------------
TOTAL ....................................................... $ 241,967 $ 233,239
========================
- -------------------------------------------------------------------------------------
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices ............... $ 11,955 $ 12,826
Interest-Bearing Deposits in U.S. Offices ................... 24,520 23,977
Non-Interest-Bearing Deposits in Offices Outside the U.S. ... 10,308 9,605
Interest-Bearing Deposits in Offices Outside the U.S. ....... 122,084 118,228
------------------------
Total Deposits .............................................. 168,867 164,636
Trading Account Liabilities ................................. 22,107 20,795
Purchased Funds and Other Borrowings ........................ 13,605 12,334
Acceptances Outstanding ..................................... 2,239 2,104
Accrued Taxes and Other Expense ............................. 3,710 3,588
Other Liabilities ........................................... 5,557 4,104
Long-Term Debt and Subordinated Notes ....................... 9,276 9,380
STOCKHOLDER'S EQUITY
Capital Stock ($20.00 par value) ............................ 751 751
Outstanding Shares: 37,534,553 in each period
Surplus ..................................................... 7,264 7,120
Retained Earnings ........................................... 8,619 8,426
Net Unrealized Gains - Securities Available for Sale ........ 582 588
Foreign Currency Translation ................................ (610) (587)
------------------------
Total Stockholder's Equity .................................. 16,606 16,298
------------------------
TOTAL ....................................................... $ 241,967 $ 233,239
========================
- -------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
- --------------------------------------------------------------------------------
OTHER FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
March 31, 1997 December 31, 1996(A)
------------------------------------------- ---------------------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair
(In Millions of Dollars) Cost Gains Losses Value Cost Value
- ------------------------------------------------------------------------------------ ---------------------
<S> <C> <C> <C> <C> <C> <C>
SECURITIES - AVAILABLE FOR SALE (B)
U.S. Treasury and Federal Agency ....... $ 7,275 $ 34 $ 37 $ 7,272 $ 4,048 $ 4,089
State and Municipal .................... 2,591 143 44 2,690 2,327 2,405
Foreign Government ..................... 14,982 1,180 193 15,969 14,056 14,938
U.S. Corporate ......................... 1,613 5 52 1,566 1,586 1,588
Other Debt Securities .................. 1,081 10 19 1,072 1,129 1,129
Equity Securities (C) .................. 1,996 111 68 2,039 1,870 1,913
-----------------------------------------------------------------
$29,538 $1,483 $413 $30,608 $25,016 $26,062
=================================================================
VENTURE CAPITAL (D) .................... - - - $ 2,266 - $ 2,124
- ------------------------------------------------------------------------------------------------------------
Securities Available for Sale Include:
Mortgage-Backed Securities .......... $1,040 $ 4 $ 7 $1,037 $1,064 $1,068
Government of Brazil Brady Bonds .... 1,463 1,021 - 2,484 1,463 2,335
Government of Venezuela Brady Bonds . 563 - 76 487 563 482
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(A) At December 31, 1996, gross unrealized gains and losses on securities
available for sale totaled $1,438 million and $392 million, respectively.
(B) Securities available for sale held by equity method affiliates are not
included in the table. Citicorp's share of gross unrealized gains and
losses related to those securities at March 31, 1997 was $2 million and
$14 million, respectively, and is included in the net unrealized
gains-securities available for sale component of stockholders' equity, net
of applicable taxes. At December 31, 1996, Citicorp's share of gross
unrealized gains and losses related to securities available for sale held
by equity method affiliates was $9 million and $4 million, respectively.
(C) Equity securities available for sale include certain nonmarketable equity
securities which are carried at cost. At March 31, 1997, the carrying
amount of those securities was $930 million (reported in both the
amortized cost and fair value columns) and the fair value was $959
million.
(D) For the three months ended March 31, 1997, net gains on investments held
by venture capital subsidiaries totaled $93 million, of which $72 million
and $12 million represented gross unrealized gains and losses,
respectively. For the three months ended March 31, 1996, net gains on
investments held by venture capital subsidiaries totaled $38 million, of
which $44 million and $22 million represented gross unrealized gains and
losses, respectively.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRADING ACCOUNT ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
Mar. 31, Dec. 31,
(In Millions of Dollars) 1997 1996
- --------------------------------------------------------------------------------
TRADING ACCOUNT ASSETS
Trading Account Securities ...................... $15,263 $13,290
Derivative and Foreign Exchange Contracts (A) (B) 17,933 17,495
-------------------------------
$33,196 $30,785
===============================
- --------------------------------------------------------------------------------
TRADING ACCOUNT LIABILITIES
Securities Sold, Not Yet Purchased .............. $ 4,311 $ 4,036
Derivative and Foreign Exchange Contracts (A) (B) 18,924 17,967
-------------------------------
$23,235 $22,003
===============================
- --------------------------------------------------------------------------------
(A) Net of master netting agreements. In addition, the asset balance at March
31, 1997 is reduced by $50 million of credit loss reserves. See page 26
for additional explanation.
(B) Deferred revenue on derivative and foreign exchange contracts, which is
reported in Other Liabilities and attributable to ongoing costs such as
servicing and credit considerations, totaled $333 million and $310 million
at March 31, 1997 and December 31, 1996, respectively.
- --------------------------------------------------------------------------------
33
<PAGE>
- --------------------------------------------------------------------------------
TRADING AND END-USER DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
- --------------------------------------------------------------------------------
The table below presents the aggregate notional principal amounts of Citicorp's
outstanding derivative and foreign exchange contracts at March 31, 1997 and
December 31, 1996, along with the related balance sheet credit exposure.
Additional information concerning Citicorp's derivative and foreign exchange
products and activities, including a description of accounting policies, and
credit and market risk management process is provided in the 1996 Annual Report
and Form 10-K.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
NOTIONAL BALANCE SHEET
PRINCIPAL AMOUNTS CREDIT EXPOSURE (A)
- -------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31, Dec. 31,
(In Billions of Dollars) 1997 1996 1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Rate Products.................. $1,088.0 $1,088.5 $ 8.7 $ 10.7
Foreign Exchange Products.............. 1,568.0 1,397.0 26.8 21.1
Equity Products......................... 29.9 22.2 1.0 0.7
Commodity Products...................... 14.0 12.5 0.5 0.5
Credit Derivative Products.............. 2.2 1.9 - -
----------------------
37.0 33.0
Effects of Master Netting Agreements(B). (19.0) (15.5)
----------------------
$ 18.0 $ 17.5
======================
- -------------------------------------------------------------------------------------
</TABLE>
(A) Amounts do not reflect credit loss reserves attributable to derivative and
foreign exchange contracts.
(B) Master netting agreements mitigate credit risk by permitting the offset of
amounts due from and to individual counterparties in the event of
counterparty default.
- --------------------------------------------------------------------------------
The tables below provide data on the notional principal amounts and maturities
of end-user (non-trading) derivatives, along with additional data on end-user
interest rate swaps and net purchased option positions at the end of the first
quarter of 1997.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
END-USER INTEREST RATE AND FOREIGN EXCHANGE CONTRACTS
- -------------------------------------------------------------------------------------------------------------------------
NOTIONAL PRINCIPAL AMOUNTS (A) PERCENTAGE OF MARCH 31, 1997 AMOUNT MATURING
- -------------------------------------------------------------------------------------------------------------------------
March 31, Dec. 31, Within 1 to 2 to 3 to 4 to After
(In Billions of Dollars) 1997 1996 1 Year 2 Years 3 Years 4 Years 5 Years 5 Years
- ----------------------------------------- ---------- ---------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts $ 35.4 $ 23.4 62% 25% 12% 1% -% -%
Forward Contracts 5.1 3.6 64 36 - - - -
Swap Agreements 115.4 111.9 28 25 14 10 8 15
Option Contracts 53.5 71.4 87 5 4 2 1 1
FOREIGN EXCHANGE PRODUCTS
Futures and Forward Contracts 69.9 60.9 97 2 - - 1 -
Cross-Currency Swaps 2.4 2.9 10 14 27 19 1 29
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Includes third-party and intercompany contracts.
- --------------------------------------------------------------------------------
34
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
END-USER INTEREST RATE SWAPS AND NET PURCHASED OPTIONS AS OF MARCH 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
REMAINING CONTRACTS OUTSTANDING AT MARCH 31, -- NOTIONAL PRINCIPAL AMOUNTS
- ------------------------------------------------------------------------------------------------------------------------------------
(In Billions of Dollars) 1997 1998 1999 2000 2001 2002
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RECEIVE FIXED SWAPS $86.7 $68.3 $47.9 $32.8 $22.4 $13.7
Weighted-Average Fixed Rate 6.4% 6.5% 6.7% 6.5% 6.7% 6.8%
PAY FIXED SWAPS $13.2 $ 8.6 $ 6.3 $ 5.2 $ 4.6 $ 3.7
Weighted-Average Fixed Rate 6.8% 7.0% 7.0% 7.0% 6.9% 7.1%
BASIS SWAPS $15.5 $ 6.7 $ 0.4 $ 0.1 $ 0.1 $ 0.1
PURCHASED CAPS (INCLUDING COLLARS) $26.8 $ 4.4 $ 2.7 $ 0.6 - -
Weighted-Average Cap Rate Purchased 6.1% 6.8% 7.3% 6.9% - -
PURCHASED FLOORS $ 1.4 $ 0.5 $ 0.1 $ 0.1 $ 0.1 $ 0.1
Weighted-Average Floor Rate Purchased 5.6% 5.6% 5.8% 5.8% 5.8% 5.8%
WRITTEN FLOORS RELATED TO PURCHASED CAPS (COLLARS) $ 0.2 $ 0.2 $ 0.2 $ 0.1 - -
Weighted-Average Floor Rate Written 8.2% 8.2% 8.2% 8.4% - -
WRITTEN CAPS RELATED TO OTHER PURCHASED CAPS (A) $25.1 $ 1.8 $ 1.2 $ 1.0 $ 0.8 $ 0.4
Weighted-Average Cap Rate Written 6.3% 7.6% 8.6% 8.4% 8.3% 9.8%
- ------------------------------------------------------------------------------------------------------------------------------------
THREE-MONTH FORWARD LIBOR RATES (B) 5.8% 6.7% 7.0% 7.2% 7.3% 7.5%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Includes written options related to purchased options embedded in other
financial instruments.
(B) Represents the implied forward yield curve for three-month LIBOR as of
March 31, 1997, provided for reference.
- --------------------------------------------------------------------------------
35
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS (A)
- --------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
(In Millions of Dollars) 1997 1996 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL CASH-BASIS LOANS
Collateral-Dependent (at Lower of Cost or Collateral Value) (B) $ 288 $ 263 $ 763
Other ......................................................... 641 642 766
-------------------------------
TOTAL ......................................................... $ 929 $ 905 $1,529
===============================
- --------------------------------------------------------------------------------------------------
COMMERCIAL CASH-BASIS LOANS
In U.S. Offices ............................................... $ 316 $ 292 $ 943
In Offices Outside the U.S. ................................... 613 613 586
-------------------------------
TOTAL ......................................................... $ 929 $ 905 $1,529
===============================
- --------------------------------------------------------------------------------------------------
COMMERCIAL RENEGOTIATED LOANS
In U.S. Offices ............................................... $ 242 $ 264 $ 267
In Offices Outside the U.S. ................................... 54 57 71
-------------------------------
TOTAL ......................................................... $ 296 $ 321 $ 338
===============================
- --------------------------------------------------------------------------------------------------
CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST HAD BEEN SUSPENDED
In U.S. Offices ............................................... $1,053 $1,116 $1,464
In Offices Outside the U.S. ................................... 1,066 1,071 1,255
-------------------------------
TOTAL ......................................................... $2,119 $2,187 $2,719
===============================
- --------------------------------------------------------------------------------------------------
ACCRUING LOANS 90 OR MORE DAYS DELINQUENT (C)
In U.S. Offices ............................................... $ 677 $ 696 $ 474
In Offices Outside the U.S. ................................... 417 422 479
-------------------------------
TOTAL ......................................................... $1,094 $1,118 $ 953
===============================
- --------------------------------------------------------------------------------------------------
</TABLE>
(A) For a discussion of risks in the consumer loan portfolio and of commercial
cash-basis loans, see pages 9 and 12, respectively.
(B) 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.
(C) Includes Consumer loans of $983 million, $1.0 billion and $915 million at
March 31, 1997, December 31, 1996, and March 31, 1996, respectively, of
which $227 million, $239 million, and $218 million, respectively, are
government-guaranteed student loans.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER REAL ESTATE OWNED (OREO) AND ASSETS PENDING DISPOSITION (A)
- --------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
(In Millions of Dollars) 1997 1996 1996
- --------------------------------------------------------------------------------
Consumer OREO.................................... $ 408 $ 452 $ 530
Commercial OREO.................................. 593 614 518
--------- --------- ---------
TOTAL............................................ $1,001 $1,066 $1,048
========= ========= =========
- --------------------------------------------------------------------------------
ASSETS PENDING DISPOSITION (B)................... $174 $160 $192
========= ========= =========
- --------------------------------------------------------------------------------
(A) Carried at lower of cost or collateral value.
(B) Represents Consumer residential mortgage loans that have a high
probability of foreclosure.
- --------------------------------------------------------------------------------
36
<PAGE>
- --------------------------------------------------------------------------------
DETAILS OF CREDIT LOSS EXPERIENCE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1997 1996 1996 1996 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES AT BEGINNING OF PERIOD $ 5,503 $ 5,460 $ 5,424 $ 5,390 $ 5,368
----------------------------------------------------------
Provision for Credit Losses ...................... 423 504 449 479 494
----------------------------------------------------------
GROSS CREDIT LOSSES
CONSUMER
In U.S. Offices .................................. 344 356 328 311 301
In Offices Outside the U.S. ...................... 219 216 222 222 216
COMMERCIAL
In U.S. Offices .................................. 3 14 15 14 20
In Offices Outside the U.S. ...................... 36 71 38 62 32
----------------------------------------------------------
602 657 603 609 569
----------------------------------------------------------
CREDIT RECOVERIES
CONSUMER
In U.S. Offices .................................. 48 55 54 61 58
In Offices Outside the U.S. ...................... 56 62 56 52 46
COMMERCIAL
In U.S. Offices .................................. 29 69 16 36 13
In Offices Outside the U.S. ...................... 71 17 78 31 8
----------------------------------------------------------
204 203 204 180 125
----------------------------------------------------------
NET CREDIT LOSSES
In U.S. Offices .................................. 270 246 273 228 250
In Offices Outside the U.S. ...................... 128 208 126 201 194
----------------------------------------------------------
398 454 399 429 444
----------------------------------------------------------
OTHER (A) ........................................ 238 (7) (14) (16) (28)
----------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES AT END OF PERIOD ..... $ 5,766 $ 5,503 $ 5,460 $ 5,424 $ 5,390
==========================================================
- --------------------------------------------------------------------------------------------------------------
Net Consumer Credit Losses (B) ................... $ 459 $ 455 $ 440 $ 420 $ 413
As a Percentage of Average Consumer Loans (B) .... 1.75% 1.68% 1.64% 1.62% 1.60%
Net Commercial Credit (Recoveries) Losses ........ $ (61) $ (1) $ (41) $ 9 $ 31
As a Percentage of Average Commercial Loans ...... NM NM NM 0.06% 0.21%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Includes net transfers from (to) the Reserves for Off-Balance Sheet Credit
Exposures and foreign currency translation effects. See footnote (A) on
page 26 for a discussion of the change in the apportionment and display of
credit loss reserves in the first quarter of 1997.
(B) Commencing with the 1997 first quarter, reflects the reclassification of
credit card and mortgage loans intended for sale as loans held for sale
with net credit losses charged to other revenue. See page 27 for details.
NM Not meaningful, as net recoveries result in a negative percentage.
- --------------------------------------------------------------------------------
37
<PAGE>
- --------------------------------------------------------------------------------
CALCULATION OF EARNINGS PER SHARE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
On Common and
Common Equivalent Shares Assuming Full Dilution
------------------------ ----------------------
First Quarter First Quarter
- -----------------------------------------------------------------------------------------------
(In Millions, except Per Share Amounts) 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EARNINGS
Income Applicable to Common Stock ............ $ 957 $ 871 $ 957 $ 871
Dividends on Convertible Preferred
Stock, Series 12 and Series 13 (A) ......... - - - 5
------------------------------------------------
INCOME APPLICABLE TO COMMON STOCK, ADJUSTED .. $ 957 $ 871 $ 957 $ 876
================================================
- ----------------------------------------------------------------------------------------------
SHARES
Weighted-Average Common Shares Outstanding (A) 461.4 463.4 461.4 463.4
Other Common Equivalent Shares (B) ........... 14.6 15.2 14.6 16.4
Convertible Preferred Stock, Series 12
and Series 13 (A) .......................... - - - 21.0
------------------------------------------------
TOTAL ........................................ 476.0 478.6 476.0 500.8
================================================
- ----------------------------------------------------------------------------------------------
EARNINGS PER SHARE (C) ....................... $ 2.01 $ 1.82 $ 2.01 $ 1.75
- ----------------------------------------------------------------------------------------------
</TABLE>
(A) 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.
(B) Includes the dilutive effect of stock options and stock purchase
agreements computed using the treasury stock method and shares issuable
under deferred stock awards.
(C) In February 1997, the FASB issued SFAS No. 128, "Earnings per Share." The
statement establishes new standards for computing and presenting earnings
per share ("EPS"). It replaces the presentation of primary EPS with basic
EPS and the presentation of fully diluted EPS with diluted EPS. SFAS No.
128 will be effective for year-end 1997. Under the new standard, basic EPS
would have been $2.07 and $1.88 and diluted EPS would have been $2.01 and
$1.75 for the first quarters of 1997 and 1996, respectively.
- --------------------------------------------------------------------------------
38
<PAGE>
- --------------------------------------------------------------------------------
CROSS-BORDER OUTSTANDINGS
- --------------------------------------------------------------------------------
Total cross-border outstandings are presented on a regulatory basis and comprise
cross-border claims on third parties as well as investments in and funding of
local Citicorp franchises.
Effective for the 1997 first quarter, the Federal Financial Institutions
Examination Council ("FFIEC") revised their cross-border reporting guidelines to
more appropriately measure total cross-border outstandings. The effect of
applying the FFIEC's revised guidelines to previously reported December 31, 1996
balances is a reduction of cross-border claims on third parties of $7.1 billion,
and a reduction of investments in and funding of local Citicorp franchises.
The reduction of cross-border claims on third parties reflects the
reclassification of certain claims as investments in and funding of local
Citicorp franchises (where they are reduced by qualifying local country
liabilities), partially offset by the inclusion of revaluation gains on foreign
exchange and derivative products.
Cross-border claims on third parties (trade, short-term, and medium- and
long-term claims) include cross-border loans, securities, deposits at interest
with banks, investments in affiliates, and other monetary assets, as well as net
revaluation gains as discussed above. Adjustments have been made to assign
externally guaranteed outstandings to the country of the guarantor and
outstandings for which tangible, liquid collateral is held outside of the
obligor's country to the country in which the collateral is held. For securities
received as collateral, outstandings are assigned to the domicile of the issuer
of the securities.
- --------------------------------------------------------------------------------
COUNTRIES WITH CROSS-BORDER OUTSTANDINGS EXCEEDING 1% OF TOTAL ASSETS (A) (B)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cross-Border Claims on Third Parties Investments in and Total Outstandings
------------------------------------ Funding of Local -------------------------
Public Private Citicorp Mar. 31, Dec. 31,
(In Billions of Dollars) Banks Sector Sector Total (C) Franchises 1997 1996 (C)(D)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
United Kingdom............ $1.0 $1.1 $2.3 $4.4 $ - $4.4 $4.0
Brazil.................... 0.3 1.5 0.9 2.7 1.4 4.1 4.9
Mexico.................... 0.3 2.0 0.6 2.9 0.2 3.1 2.9
Germany................... 0.8 0.4 0.4 1.6 1.4 3.0 2.3
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Legally binding cross-border commitments (not included in the table
above), including irrevocable letters of credit and commitments to extend
credit, after adjustments to assign externally guaranteed commitments to
the country of the guarantor, amounted to $7.4 billion in the United
Kingdom, $1.5 billion in Germany, and $0.1 billion in each of Brazil and
Mexico at March 31, 1997.
(B) At March 31, 1997, there were no countries where total cross-border
outstandings were between 0.75% and 1.0% of total assets. At December 31,
1996, under the FFIEC's revised cross-border reporting guidelines, such
countries were Switzerland ($2.5 billion), Germany ($2.3 billion), and
Japan ($2.1 billion).
(C) At March 31, 1997 and December 31, 1996, cross-border claims on third
parties included revaluation gains on foreign exchange and derivative
products net of the effects of master netting agreements of $0.8 billion
and $0.6 billion in Germany, $0.7 billion and $1.0 billion in the United
Kingdom, respectively, and less than $0.1 billion for each period in each
of Mexico and Brazil.
(D) Restated to conform to the FFIEC's revised cross-border reporting
guidelines.
- --------------------------------------------------------------------------------
39
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
CROSS-BORDER CLAIMS ON THIRD PARTIES
- --------------------------------------------------------------------------------------
Public Private Mar. 31, Dec. 31,
(In Billions of Dollars) Banks Sector Sector 1997 1996 (A)
- ------------------------------------------------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Western/Eastern Europe, Japan, and Canada.$ 8.1 $ 4.0 $ 8.2 $20.3 $20.6
Latin America............................. 1.0 5.1 3.8 9.9 9.7
Asia/Middle East.......................... 1.7 0.2 3.2 5.1 4.9
Other..................................... 0.4 0.8 0.7 1.9 1.3
------- ------- -------- --------- ---------
TOTAL (B)................................. $11.2 $10.1 $15.9 $37.2 $36.5
======= ======= ======== ========= =========
- --------------------------------------------------------------------------------------
</TABLE>
(A) Restated to conform to the FFIEC's revised cross-border reporting
guidelines.
(B) Includes investments in affiliates of $1.4 billion at March 31, 1997 and
December 31, 1996.
- --------------------------------------------------------------------------------
40
<PAGE>
- --------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES (TAXABLE EQUIVALENT BASIS) (A) (B)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
AVERAGE VOLUME
---------------------------------------
1ST QTR. 4th Qtr. 1st Qtr.
(In Millions of Dollars) 1997 1996 1996
- ------------------------------------------------------------- ------------- ------------ ------------
<S> <C> <C> <C>
LOANS (NET OF UNEARNED INCOME) (C)
Consumer Loans
In U.S. Offices....................................... $ 55,229 $ 56,480 $ 53,378
In Offices Outside the U.S. (D)....................... 51,208 51,290 50,509
------------- ------------ ------------
Total Consumer Loans.................................... 106,437 107,770 103,887
------------- ------------ ------------
Commercial Loans
In U.S. Offices
Commercial and Industrial........................... 9,258 8,785 9,419
Mortgage and Real Estate............................ 2,973 3,747 4,589
Loans to Financial Institutions..................... 609 497 450
Lease Financing..................................... 2,963 3,219 3,219
In Offices Outside the U.S. (D)....................... 46,134 45,139 41,402
------------- ------------ ------------
Total Commercial Loans.................................. 61,937 61,387 59,079
------------- ------------ ------------
Total Loans............................................. 168,374 169,157 162,966
------------- ------------ ------------
FEDERAL FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices......................................... 7,827 7,654 9,940
In Offices Outside the U.S. (D)......................... 5,412 4,538 3,390
------------- ------------ ------------
Total................................................... 13,239 12,192 13,330
------------- ------------ ------------
SECURITIES, At Fair Value
In U.S. Offices
Taxable................................................. 8,555 7,406 6,911
Exempt from U.S. Income Tax............................. 2,512 1,976 1,595
In Offices Outside the U.S. (D)......................... 18,665 17,670 12,228
------------- ------------ ------------
Total................................................... 29,732 27,052 20,734
------------- ------------ ------------
TRADING ACCOUNT ASSETS (E)
In U.S. Offices......................................... 4,936 4,500 6,868
In Offices Outside the U.S. (D)......................... 9,411 9,931 13,136
------------- ------------ ------------
Total................................................... 14,347 14,431 20,004
------------- ------------ ------------
LOANS HELD FOR SALE, In U.S. Offices.................... 3,123 - -
DEPOSITS AT INTEREST WITH BANKS (D)..................... 13,366 13,495 11,619
------------- ------------ ------------
Interest-Earning Assets................................. 242,181 236,327 228,653
Non-Interest-Earning Assets............................. 42,837 39,825 39,678
------------- ------------ ------------
TOTAL ASSETS............................................ $285,018 $276,152 $268,331
============= ============ ============
- ------------------------------------------------------------------------------------------------------
DEPOSITS
In U.S. Offices
Savings Deposits...................................... $ 26,801 $ 26,279 $ 25,348
Other Time Deposits................................... 12,501 12,515 12,661
In Offices Outside the U.S. (D)......................... 122,337 121,314 113,636
------------- ------------ ------------
Total................................................... 161,639 160,108 151,645
============= ============ ============
TRADING ACCOUNT LIABILITIES (E)
In U.S. Offices......................................... 2,030 2,233 2,894
In Offices Outside the U.S. (D)......................... 2,448 1,963 1,886
------------- ------------ ------------
Total................................................... 4,478 4,196 4,780
============= ============ ============
PURCHASED FUNDS AND OTHER BORROWINGS
In U.S. Offices......................................... 14,113 12,066 16,310
In Offices Outside the U.S. (D)......................... 7,047 6,559 5,913
------------- ------------ ------------
Total................................................... 21,160 18,625 22,223
============= ============ ============
LONG-TERM DEBT
In U.S. Offices......................................... 14,839 14,441 14,535
In Offices Outside the U.S. (D)......................... 4,346 4,552 4,006
------------- ------------ ------------
Total................................................... 19,185 18,993 18,541
============= ============ ============
Total Interest-Bearing Liabilities...................... 206,462 201,922 197,189
Demand Deposits in U.S. Offices......................... 10,801 12,409 12,464
Other Non-Interest-Bearing Liabilities.................. 47,008 41,422 38,949
Total Stockholders' Equity.............................. 20,747 20,399 19,729
------------- ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.............. $285,018 $276,152 $268,331
============= ============ ============
- ------------------------------------------------------------------------------------------------------
NET INTEREST REVENUE AS A PERCENTAGE OF AVERAGE
INTEREST-EARNING ASSETS
In U.S. Offices (F)..................................... $ 98,047 $ 94,320 $ 96,438
In Offices Outside the U.S. (F)......................... 144,134 142,007 132,215
------------- ------------ ------------
TOTAL................................................... $242,181 $236,327 $228,653
======================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------ --------------------------------------
INTEREST REVENUE/EXPENSE % AVERAGE RATE
-------------------------------------- -------------------------------------
1ST QTR. 4th Qtr. 1st Qtr. 1ST QTR. 4th Qtr. 1st Qtr.
(In Millions of Dollars) 1997 1996 1996 1997 1996 1996
- --------------------------------------------------------------- ------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
LOANS (NET OF UNEARNED INCOME) (C)
Consumer Loans
In U.S. Offices.................................. $1,407 $1,460 $1,469 10.33 10.28 11.07
In Offices Outside the U.S. (D).................. 1,577 1,641 1,603 12.49 12.73 12.76
------------ ------------ -------------
Total Consumer Loans............................... 2,984 3,101 3,072 11.37 11.45 11.89
============ ============ =============
Commercial Loans
In U.S. Offices
Commercial and Industrial...................... 202 207 212 8.85 9.37 9.05
Mortgage and Real Estate....................... 59 88 82 8.05 9.34 7.19
Loans to Financial Institutions................ 14 13 5 9.32 10.41 4.47
Lease Financing................................ 44 49 52 6.02 6.06 6.50
In Offices Outside the U.S. (D).................. 1,252 1,351 1,136 11.01 11.91 11.04
------------ ------------ -------------
Total Commercial Loans............................. 1,571 1,708 1,487 10.29 11.07 10.12
------------ ------------ -------------
Total Loans........................................ 4,555 4,809 4,559 10.97 11.31 11.25
============ ============ =============
FEDERAL FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices.................................... 100 103 127 5.18 5.35 5.14
In Offices Outside the U.S. (D).................... 112 104 129 8.39 9.12 15.30
------------ ------------ -------------
Total.............................................. 212 207 256 6.49 6.75 7.72
============ ============ =============
SECURITIES, At Fair Value
In U.S. Offices
Taxable.......................................... 102 99 78 4.84 5.32 4.54
Exempt from U.S. Income Tax...................... 41 32 26 6.62 6.44 6.56
In Offices Outside the U.S. (D).................... 389 381 283 8.45 8.58 9.31
------------ ------------ -------------
Total.............................................. 532 512 387 7.26 7.53 7.51
============ ============ =============
TRADING ACCOUNT ASSETS (E)
In U.S. Offices.................................... 70 67 95 5.75 5.92 5.56
In Offices Outside the U.S. (D).................... 174 191 291 7.50 7.65 8.91
------------ ------------ -------------
Total.............................................. 244 258 386 6.90 7.11 7.76
------------ ------------ -------------
LOANS HELD FOR SALE, In U.S. Offices............... 105 - - 13.64 - -
DEPOSITS AT INTEREST WITH BANKS (D)................ 224 237 196 6.80 6.99 6.78
------------ ------------ -------------
Interest-Earning Assets............................ $5,872 $6,023 $5,784 9.83 10.14 10.17
============ ============ ============= ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------------
DEPOSITS
In U.S. Offices
Savings Deposits................................. $ 191 $ 190 $ 191 2.89 2.88 3.03
Other Time Deposits.............................. 139 241 154 4.51 7.66 4.89
In Offices Outside the U.S. (D).................... 1,899 1,933 1,841 6.30 6.34 6.52
------------ ------------ -------------
Total.............................................. 2,229 2,364 2,186 5.59 5.87 5.80
============ ============ =============
TRADING ACCOUNT LIABILITIES (E)
In U.S. Offices.................................... 27 31 41 5.39 5.52 5.70
In Offices Outside the U.S. (D).................... 46 39 38 7.62 7.90 8.10
------------ ------------ -------------
Total.............................................. 73 70 79 6.61 6.64 6.65
------------ ------------ -------------
PURCHASED FUNDS AND OTHER BORROWINGS
In U.S. Offices.................................... 210 185 260 6.03 6.10 6.41
In Offices Outside the U.S. (D).................... 228 241 231 13.12 14.62 15.71
------------ ------------ -------------
Total.............................................. 438 426 491 8.39 9.10 8.89
============ ============ =============
LONG-TERM DEBT
In U.S. Offices.................................... 215 222 234 5.88 6.12 6.48
In Offices Outside the U.S. (D).................... 98 107 101 9.15 9.35 10.14
------------ ------------ -------------
Total.............................................. 313 329 335 6.62 6.89 7.27
------------ ------------ -------------
Total Interest-Bearing Liabilities................. $3,053 $3,189 $3,091 6.00 6.28 6.30
============ ============ ============= ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------------
NET INTEREST REVENUE AS A PERCENTAGE OF AVERAGE
INTEREST-EARNING ASSETS
In U.S. Offices (F)................................ $1,232 $1,135 $1,146 5.10 4.79 4.78
In Offices Outside the U.S. (F).................... 1,587 1,699 1,547 4.47 4.76 4.71
------------ ------------ -------------
TOTAL.............................................. $2,819 $2,834 $2,693 4.72 4.77 4.74
============ ============ =============
=================================================================================================================================
</TABLE>
(A) The taxable equivalent adjustment is based on the U.S. federal statutory
tax rate of 35%.
(B) Interest rates and amounts include the effects of risk management
activities associated with the respective asset and liability categories.
(C) Includes cash-basis loans.
(D) Average rates reflect prevailing local interest rates including
inflationary effects and monetary correction in certain Latin American
countries.
(E) The fair value carrying amounts of derivative and foreign exchange
contracts are reported in non-interest-earning assets and other
non-interest-bearing liabilities.
(F) Includes allocations for capital and funding costs based on the location
of the asset.
- --------------------------------------------------------------------------------
41
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997 COMMISSION FILE NUMBER 1-5738
CITICORP
(Exact name of registrant as specified in its charter)
DELAWARE 13-2614988
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Citicorp Common Stock.................. 459,524,700
($1.00 Par Value) (Shares Outstanding on March 31, 1997)
42
<PAGE>
- --------------------------------------------------------------------------------
FORM 10-Q CROSS-REFERENCE INDEX
- --------------------------------------------------------------------------------
This document serves both as an analytical review for analysts, stockholders and
other interested persons and as the quarterly report filed on Form 10-Q with the
Securities and Exchange Commission.
PART I FINANCIAL INFORMATION PAGE
----
Item 1 - Consolidated Financial Statements
Consolidated Financial Statements, Schedules, and Statistics
Statement of Income for the Three Months Ended
MARCH 31, 1997 AND 1996................................28
Balance Sheet as of
MARCH 31, 1997 AND DECEMBER 31, 1996...................29
Statement of Cash Flows for the Three Months Ended
MARCH 31, 1997 AND 1996................................31
Calculation of Earnings Per Share......................38
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations...................1-27
PART II OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K.......................44
Signatures .....................................................45
In the opinion of the management of Citicorp, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of the results
of operations for the three months ended MARCH 31, 1997 AND 1996 have been
included.
43
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
a) Exhibit 27. Financial Data Schedule.
b) Reports on Form 8-K:
i) Citicorp filed a Form 8-K Current Report dated January 21, 1997
(Item 5) which report included a summary of the consolidated
operations of Citicorp for the year ended December 31, 1996 and
(Item 7) the calculation of the ratio of income to fixed charges
(Exhibit 12(a) thereto) and the calculation of the ratio of income
to fixed charges including preferred stock dividends (Exhibit 12(b)
thereto).
ii) Citicorp filed a Form 8-K Current Report dated April 15, 1997
(Item 5) which report included a summary of the consolidated
operations of Citicorp for the three month period ended March 31,
1997 and (Item 7) the calculation of the ratio of income to fixed
charges (Exhibit 12(a) thereto) and the calculation of the ratio of
income to fixed charges including preferred stock dividends (Exhibit
12(b) thereto).
44
<PAGE>
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 By: /S/ Thomas E. Jones
Registrant
-------------------------
Thomas E. Jones
Executive Vice President
Principal Financial Officer
By: /S/ George E. Seegers
-------------------------
George E. Seegers
Assistant Secretary
Date: May 14, 1997
45
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CURRENT REPORT ON FORM 10-Q FOR THE THREE MONTH PERIOD ENDED MARCH 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS AND ACCOMPANYING DISCLOSURES.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,574
<INT-BEARING-DEPOSITS> 12,593
<FED-FUNDS-SOLD> 11,844<F1>
<TRADING-ASSETS> 33,196
<INVESTMENTS-HELD-FOR-SALE> 30,608
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 172,471
<ALLOWANCE> 5,766
<TOTAL-ASSETS> 290,354
<DEPOSITS> 188,848
<SHORT-TERM> 21,609<F2>
<LIABILITIES-OTHER> 8,785
<LONG-TERM> 18,824
<COMMON> 506
0
1,903
<OTHER-SE> 18,371
<TOTAL-LIABILITIES-AND-EQUITY> 290,354
<INTEREST-LOAN> 4,554
<INTEREST-INVEST> 519
<INTEREST-OTHER> 784
<INTEREST-TOTAL> 5,857
<INTEREST-DEPOSIT> 2,229
<INTEREST-EXPENSE> 3,053
<INTEREST-INCOME-NET> 2,804
<LOAN-LOSSES> 423
<SECURITIES-GAINS> 108
<EXPENSE-OTHER> 1,014
<INCOME-PRETAX> 1,604
<INCOME-PRE-EXTRAORDINARY> 995
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 995
<EPS-PRIMARY> 2.01
<EPS-DILUTED> 2.01
<YIELD-ACTUAL> 4.72<F3>
<LOANS-NON> 3,048<F4>
<LOANS-PAST> 1,094<F5>
<LOANS-TROUBLED> 296
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,503
<CHARGE-OFFS> 602
<RECOVERIES> 204
<ALLOWANCE-CLOSE> 5,766<F6>
<ALLOWANCE-DOMESTIC> 0<F7>
<ALLOWANCE-FOREIGN> 0<F8>
<ALLOWANCE-UNALLOCATED> 0<F9>
<FN>
<F1> Includes Securities Purchased Under Resale Agreements.
<F2> Purchased Funds and Other Borrowings.
<F3> Taxable Equivalent Basis.
<F4> Includes $929MM of cash-basis commercial loans and $2,119MM of consumer
loans on which accrual of interest has been suspended.
<F5> Accruing loans 90 or more days delinquent.
<F6> Allowance activity for the First Quarter of 1997 includes $238MM of net
transfers from the reserves to off-balance sheet credit exposures and
foreign currency translation effects.
<F7> No portion of Citicorp's credit loss allowance is specifically allocated
to any individual loan or group of loans.
<F8> See Footnote F7 above.
<F9> See Footnote F7 above.
</FN>
</TABLE>
