SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 15, 1997
CITICORP
(Exact name of registrant as specified in charter)
DELAWARE
(State or other jurisdiction of
incorporation)
1-5738
(Commission File Number)
13-2614988
(IRS Employer Identification
Number)
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
NOT APPLICABLE
(Former name or former address, if changed since last report)
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Item 5. Other Items
Citicorp second quarter net income exceeds $1.0 billion, up 8% on 8%
revenue gain, Earnings per common share rose 13% to $2.10, Return on
common equity was 21%
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Second Quarter (Dollars in Millions, 1997 1996 Change
except EPS)
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Adjusted Revenue ......................... $5,747 $5,316 8%
Net Income ............................... 1,024 952 8%
Earnings Per Share (Fully Diluted) ....... $2.10 $1.86 13%
Return on Common Equity (%) .............. 21.0 20.8 -
Return on Assets (%) ..................... 1.40 1.43 -
Average Shares Outstanding (Fully
Diluted) ............................... 471.8 492.1 -
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Six Months
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Adjusted Revenue ........................ $11,374 $10,433 9%
Net Income .............................. 2,019 1,866 8%
Earnings Per Share (Fully Diluted) ...... $4.11 $3.61 14%
Return on Common Equity (%) ............. 20.9 20.5 -
Return on Assets (%) .................... 1.41 1.40 -
Average Shares Outstanding (Fully
Diluted) .............................. 474.0 496.5 -
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On July 15, 1997, Citicorp reported net income in the 1997 second
quarter of $1,024 million, up $72 million or 8% over the same 1996
period, and in the 1997 six months of $2,019 million, up $153 million
or 8%. Earnings per fully diluted common share were $2.10, up 13%, and
$4.11, up 14%, over the 1996 periods.
"We continue to produce good results, although global spread
compression and our U.S. card business present challenges," said John
S. Reed, Citicorp Chairman. "Our assumption is that the highly
competitive marketplace is a permanent reality. We are responding
with quality initiatives designed to deliver customer service more
effectively worldwide and speed the global rollout of innovative
products. We will also respond with cost initiatives to accelerate
the integration and globalization of our operations and technology
base. As we've said before, by the end of 1998 we expect to be fully
engaged in our business directions, which we feel represent a
substantial opportunity for us."
Against Citicorp's business directions performance targets, the six
month results achieved an 8% gain in net income (a 14% rise in fully
diluted earnings per share), a return on common equity of 20.9%, a
ratio of incremental revenue to expense of 1.8 to 1 (2.0 to 1 for the
1997 second quarter), and the generation of an estimated $0.7 billion
of free capital. At June 30, 1997, the Tier 1 capital ratio was an
estimated 8.2%, within the target range of 8.0%-8.3%, after the
repurchase of 4.7 million shares of common stock for $524 million
during the quarter.
Citicorp's Global Consumer business -- Citibanking, Cards, and the
Private Bank -- earned $471 million in the quarter and $958 million
in the six months on adjusted revenue of $3.5 billion and $7.0
billion, up 6% and 7%, respectively. Net income from Global Corporate
Banking was $665 million in the quarter and $1.3 billion in the six
months on adjusted revenue of $2.0 billion and $3.9 billion, up 11%
and 15%.
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Global Consumer business earns $471 million in the quarter,
With high credit costs in Cards
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Second Quarter (Dollars in Millions) 1997 1996 Change
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Adjusted Revenue ........................ $3,525 $3,320 6%
Adjusted Operating Expense .............. 1,920 1,810 6%
Operating Margin ........................ 1,605 1,510 6%
Credit Costs ............................ 922 762 21%
Income before Taxes ..................... 658 698 (6%)
Net Income .............................. 471 486 (3%)
Return on Assets (%) .................... 1.42 1.56 -
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Six Months
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Adjusted Revenue ........................ $7,011 $6,573 7%
Adjusted Operating Expense .............. 3,791 3,568 6%
Operating Margin ........................ 3,220 3,005 7%
Credit Costs ............................ 1,816 1,468 24%
Income before Taxes ..................... 1,354 1,437 (6%)
Net Income .............................. 958 988 (3%)
Return on Assets (%) .................... 1.46 1.59 -
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The Global Consumer business had net income of $471 million and $958
million in the second quarter and six months of 1997, down $15 million
or 3% and $30 million or 3% from the respective 1996 periods,
primarily due to a decline in U.S. bankcards earnings, partially
offset by improved earnings in Citibanking, other Cards businesses,
and the Private Bank.
Adjusted revenue of $3.5 billion in the quarter rose $205 million or
6% from the 1996 second quarter. Expense of $1.9 billion increased
$110 million or 6%. Excluding the effect of foreign currency
translation resulting from a strengthened dollar, both revenue and
expense increased 8%.
Credit costs of $922 million were $28 million higher than the 1997
first quarter and $160 million higher than the 1996 second quarter.
The ratio of net credit losses to average managed loans was 2.73% in
the quarter, compared with 2.69% in the preceding quarter and 2.38% a
year-ago. Global Consumer continued to build the allowance for credit
losses, adding $25 million above net credit losses.
Net income in the emerging markets for the 1997 second quarter was
$249 million, up $26 million or 12% from the 1996 second quarter,
principally reflecting growth across Cards and the Private Bank.
Developed markets net income of $222 million declined by $41 million
or 16% from the year-ago quarter, primarily due to the lower earnings
in U.S. bankcards, partially offset by double-digit earnings growth in
Citibanking.
Citibank introduced Direct Access -- its PC banking offering -- in
Argentina and Chile, bringing the total number of countries offering
this product to eight. Worldwide Citibanking accounts totaled 20
million as of June 30, 1997, up 5% from a year ago. Citibank expanded
its investment offerings in Argentina, Brazil, and Chile, and
introduced its first investment offering in Mexico.
Cards in force worldwide, including those issued by affiliates, were
63 million at the end of the quarter, an increase of 4 million from a
year-ago. The number of cards in North America was 42 million; cards
in Latin America, Asia, and Europe totaled 9 million, 8 million, and 4
million, respectively. Cards, including Diners Club, operates in 42
countries and territories.
Citibank and American Airlines celebrated the tenth anniversary in the
United States of the Citibank AAdvantage Card, which now is offered in
16 countries, and in Singapore, Citibank completed the world's first
secure Visa card payment over the Internet.
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Citibanking
Citibanking activities -- which deliver products and services to
customers through branches and electronic delivery systems -- had net
income of $201 million and $384 million in the second quarter and six
months of 1997, up $27 million or 16% and $34 million or 10% from the
respective 1996 periods. Return on assets in the quarter was 0.95%, up
from 0.85% 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 -- from the 1996
second quarter, reflecting higher business volumes in both the
emerging and developed markets, including growth in average customer
deposits of 6% to $94 billion. Excluding the translation effect,
revenue increased 8% in the developed markets, and 5% in the emerging
markets. Emerging markets revenue reflected double-digit growth in
Latin America and a decline in certain countries in Asia Pacific due
to continued competitive pressures and economic conditions.
Expense of $1.1 billion in the quarter increased $34 million or 3%
from the 1996 second quarter. Excluding the effect of foreign currency
translation, expense was up 6%, including 4% in the developed markets
and 10% in the emerging markets. The expense growth in the emerging
markets principally reflected franchise expansion efforts in Latin
America, including higher business volumes.
Credit costs of $145 million in the quarter were down $3 million or 2%
from the 1997 first quarter and down $16 million or 10% from the year-
ago quarter, reflecting improvements in the developed markets,
including the effect of foreign currency translation. The ratio of net
credit losses to average managed loans was 0.87% in the quarter, down
from 0.91% in the preceding quarter and 0.99% in the 1996 second
quarter.
Cards
Net income in Cards worldwide -- bankcards, Diners Club, and private
label cards -- was $190 million in the second quarter, a decrease of
$49 million or 21% from a year ago, and was $414 million in the six
months of 1997, down $86 million or 17% from the comparable 1996
period. Cards worldwide return on managed assets in the second quarter
was 1.36% compared with 1.84% in the year-ago quarter. Cards earnings
in the developed markets declined from the 1996 second quarter as U.S.
bankcards continued to operate in a challenging environment
characterized by competitive pressures and a weak credit climate. Net
income for Cards in the emerging markets increased 28% in the quarter,
and represented approximately 46% of 1997 second quarter Cards
earnings.
Cards revenue of $1.7 billion in the quarter increased by $121 million
or 8% from the 1996 second quarter. Revenue in the developed markets
was up 6%, including 6% growth in U.S. bankcards reflecting risk-and-
relationship-based pricing strategies. U.S. bankcards charge volumes
increased from the year-ago quarter by $1.9 billion or 8% to $25.3
billion and managed receivables were up $3.0 billion or 7% to $45.8
billion. Second quarter revenue in emerging markets Cards was 15%
higher than the year-ago quarter, reflecting double-digit growth in
both Asia Pacific and Latin America.
Expense in worldwide Cards of $666 million increased $60 million or
10% from the 1996 second quarter. Expense in the developed markets was
up 8%, primarily reflecting higher costs in U.S. bankcards associated
with enhanced target marketing and increased collection efforts.
Expense in the emerging markets Cards increased 15% 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 $683 million or 6.13% of average managed loans, compared
with $656 million or 5.91% in the 1997 first quarter, and $522 million
or 4.99% in the 1996 second quarter. The 12-month-lagged net credit
loss ratio was 6.51% in the 1997 second quarter, up from 6.21% in the
preceding quarter and 5.41% in the 1996 second quarter. The percent of
U.S. bankcards gross write-offs that resulted from bankruptcies in the
1997 second quarter was 40.2%, compared with a seasonally low 36.6% in
the preceding quarter and 38.5% in the 1996 second quarter. Citicorp
continues to write off accounts upon notice of bankruptcy filing.
Managed U.S. bankcards loans delinquent 90 days or more were $843
million or 1.86% of the portfolio at the end of the quarter, compared
with $884 million or 1.98% at the end of the preceding quarter and
$732 million or 1.73% a year-ago.
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Credit costs in Cards portfolios other than U.S. bankcards were $95
million or 4.14% of average loans in the quarter, compared with $91
million or 4.25% in the preceding quarter and $89 million or 4.65% in
the 1996 second quarter. Loans delinquent 90 days or more were $206
million or 2.18% of the portfolio, compared with $214 million or 2.42%
in the preceding quarter and $180 million or 2.25% in the year-ago
quarter.
Private Bank
Private Bank net income of $80 million in the quarter increased $7
million or 10% from the 1996 second quarter, and resulted in a return
on assets of 1.89% compared with 1.84% in the year-earlier quarter.
Net income benefited from a reduced tax rate of 19% compared with 25%
in the prior year as a result of changes in the geographic mix of
earnings. Income before taxes of $99 million grew $2 million or 2%
from the 1996 second quarter while the margin of $98 million increased
$11 million or 13%.
Revenue of $278 million in the quarter was up $27 million or 11%,
reflecting growth of 15% in the emerging markets and 7% in the
developed markets. Revenue was mostly composed of like amounts of net
interest revenue, up 4% on higher deposit volumes, and fees and
commissions, up 11% as a result of new investment products introduced
earlier this year, complemented by a 38% increase in client-related
foreign exchange revenue.
Expense of $180 million in the quarter increased $16 million or 10%
from the 1996 second quarter. Excluding the effect of foreign currency
translation, expense increased 13%, reflecting higher salary levels,
including a 6% increase in staff, as well as increased spending on
technology and marketing initiatives.
Credit costs were a net benefit of $1 million in the quarter, compared
with a net benefit of $10 million in the year-ago period, which
included significant recoveries. Overall credit trends continued to
improve, with loans delinquent 90 days or more down to $187 million or
1.19% of loans, from $198 million or 1.28% in the preceding quarter,
and $254 million or 1.66% in the second quarter of 1996, reflecting
continued active portfolio management.
Client business volumes under management at the end of the quarter
reached $100 billion, up 9% from $92 billion a year earlier. Growth in
all business lines was led by the discretionary and advisory
investments areas in which individually managed portfolios, mutual
funds, and custody grew 15% and contributed $5 billion of the
increase.
4
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Global Corporate Banking earns $665 million in second quarter
On 11% revenue growth
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Second Quarter (Dollars in Millions) 1997 1996 Change
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Adjusted Revenue ........................ $1,994 $1,795 11%
Adjusted Operating Expense .............. 1,206 1,092 10%
Operating Margin ........................ 788 703 12%
Credit (Benefits) ....................... (36) (27) 33%
Income before Taxes ..................... 824 730 13%
Net Income .............................. 665 636 5%
Return on Assets (%) .................... 1.75 1.84 -
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Six Months
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Adjusted Revenue ........................ $3,926 $3,411 15%
Adjusted Operating Expense .............. 2,359 2,104 12%
Operating Margin ........................ 1,567 1,307 20%
Credit (Benefits) ....................... (111) (12) NM
Income before Taxes ..................... 1,678 1,319 27%
Net Income .............................. 1,312 1,104 19%
Return on Assets (%) .................... 1.76 1.60 -
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Global Corporate Banking income before taxes of $824 million in the
1997 second quarter grew $94 million or 13% from the comparable 1996
quarter while net income of $665 million grew $29 million or 5% from
the 1996 second quarter due to higher effective income tax rates.
Global Corporate Banking's effective income tax rate in the quarter
rose to 19% from 13% in the 1996 second quarter. The increase was
attributable to changes in the geographic mix and nature of pretax
earnings coupled with certain second quarter 1996 local tax benefits
in the Emerging Markets business and a low effective income tax rate
in Global Relationship Banking associated with a second quarter 1996
gain on the sale of a business.
Revenue of $2.0 billion in the quarter increased $199 million or 11%
from the year-ago quarter, with $131 million of the increase
attributable to the Emerging Markets business and $68 million
attributable to Global Relationship Banking. Expense of $1.2 billion
in the quarter increased $114 million or 10% from the comparable 1996
quarter, with $64 million of the increase in the Emerging Markets
business and $50 million in Global Relationship Banking. Credit costs
were a net benefit of $36 million and compared with a net benefit of
$27 million in the year-ago quarter.
Global Corporate Banking continued to win recognition in various
polls. Citibank won 41 awards in "Euromoney" magazine's annual
rankings, among them best bank or best foreign bank in 31 countries,
best bank in Latin America, the Middle East, and Africa, and best in
securitization, foreign exchange, and transaction services. Citibank
also was named best bank in emerging markets by "Global Finance"
magazine, best bank in ten Asian countries by "Finance Asia" magazine,
and most admired financial institution in Asia by "Asian Business"
magazine.
On July 1, Citibank celebrated the 100th anniversary of its entry into
the foreign-exchange business; and for the 19th straight year,
Citibank was named best bank worldwide for foreign exchange in the
"Euromoney" customer survey.
As part of its embedded-bank strategy of expanding its customer base
of growth companies in emerging markets, Citibank in May acquired
Banco Hipotecario Nacional, a Bolivian bank with branches in La Paz,
Santa Cruz, and Cochabamba.
Emerging Markets
Emerging Markets 1997 second quarter net income of $423 million
declined $2 million from the 1996 second quarter. The decline is
attributable to an increase in the effective income tax rate to 12%
from 5% in the 1996 second quarter. Earnings
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before tax of $482 million grew $35 million or 8% from the 1996 second
quarter while margin of $506 million increased $67 million or 15%.
Revenue of $984 million in the quarter increased $131 million or 15%
from the year-ago second quarter. The increase reflected growth in
corporate finance revenue and moderately improved transaction banking
services revenue. Increased volumes mitigated net interest spread
compression. Aggregate securities transactions and asset gains were
$134 million, compared with $67 million in the 1996 quarter, and
included a $58 million gain related to an asset redeployment in
Brazil. Revenue growth also reflected a $31 million increase in
earnings from an affiliate primarily attributable to an investment
dividend. These increases were partially offset by a $10 million
decline in trading-related revenue. About 20% of the revenue in the
Emerging Markets business was attributable to business from
multinational companies managed jointly with Global Relationship
Banking, with that revenue having grown at a double digit rate from
the 1996 second quarter.
Expense of $478 million in the 1997 second quarter increased $64
million or 15% from the year-ago quarter, primarily reflecting
investment spending to build the franchise.
Credit costs of $24 million in the 1997 second quarter remained low
and compared with a net benefit of $8 million in the 1996 quarter.
Credit costs in the 1996 quarter included a $21 million recovery
related to the refinancing agreement concluded with Slovenia.
Global Relationship Banking
Net income from the Global Relationship Banking business in North
America, Europe, and Japan was $242 million, up $31 million or 15%
from the 1996 second quarter. Income before taxes totaled $342
million, up $59 million or 21% from the 1996 second quarter. The
effective income tax rate increased to 29% from 25% in the 1996 second
quarter.
Revenue of $1.0 billion grew $68 million or 7% from the 1996 second
quarter. Trading-related revenue of $243 million increased $68 million
from the 1996 second quarter, which included a $60 million charge
related to certain mortgage-backed securities activities. Venture
capital revenue of $173 million improved $66 million from the 1996
quarter, benefiting from realized gains and buoyant equity markets.
These improvements were complemented by moderate improvement in
transaction banking services revenue, but were partially offset by net
interest revenue spread compression. Second quarter 1997 and 1996
revenue also included gains of $23 million and $110 million,
respectively, related to the disposition of an automated trading
business.
Expense of $728 million increased $50 million or 7% compared with the
1996 second quarter, primarily reflecting increased spending on
technology and volume-related expense in transaction banking services,
partially offset by a reduction associated with the disposition of a
non-strategic business in the first quarter of 1997.
Credit costs in the quarter were a net benefit of $60 million,
compared with a net benefit of $19 million in the 1996 second quarter,
with the improvement primarily resulting from lower gross write-offs
while recoveries continued.
Other Items
Citicorp's effective tax rate was 37.0% in the 1997 second quarter and
37.5% in the 1997 six months, compared with 38.0% for both 1996
periods. Income taxes are attributed to core businesses on the basis
of local tax rates, which resulted in effective tax rates for the core
businesses of 23% in the 1997 quarter compared with 21% a year ago,
and 25% and 24% for the six months, primarily reflecting changes in
the nature and geographic mix of earnings. The difference between the
core businesses' tax rates and Citicorp's overall effective rate in
each period is included in Corporate Items. Other revenue in Corporate
Items included investment writedowns in Latin America of $29 million
in the quarter and $50 million a year ago.
Tier 1 capital was $20.6 billion, total capital was estimated at $30.1
billion, and the Tier 1 and total capital ratios were estimated at
8.2% and 12.0%, respectively, at June 30, 1997. During the quarter,
the company generated an estimated $0.8 billion of Tier 1 capital
(principally net income less dividends) which was used to fund the
growth in customer-driven risk-adjusted assets. The ratio of common
equity to total assets was 6.4%. The number of shares acquired since
June 20, 1995,
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when the Board of Directors authorized the stock repurchase program,
totaled 70.0 million for an outlay of $5.8 billion. As expanded in
January and November 1996, the program is authorized to make total
purchases for up to $8.5 billion.
Average common shares outstanding for the purpose of computing fully
diluted earnings per share were 471.8 million in the 1997 second
quarter, 476.0 million in the preceding quarter, and 492.1 million in
the 1996 second quarter, principally reflecting the net effect of the
share repurchase program and employee stock plans. The comparable
average common shares outstanding for the six months were 474.0
million in 1997 and 496.5 million in 1996.
At June 30, 1997, credit loss reserves (including reserves for off-
balance sheet credit exposures) totaled $6.0 billion.
Tables detailing key financial data, an analysis of earnings, business
results, and credit indicators follow, along with selected financial
statements and tables. Further details concerning the financial
results will be available in August in Citicorp's Form 10-Q.
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FINANCIAL SUMMARY
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Second Quarter % Six Months %
-------------- --------------
1997 1996 Change 1997 1996 Change
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Net Income (In Millions
of Dollars) $1,024 $952 8 $2,019 $1,866 8
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Net Income Per Share
Common & Common
Equivalent Shares .. $2.10 $1.86 13 $4.11 $3.68 12
Assuming Full
Dilution ........... $2.10 $1.86 13 $4.11 $3.61 14
Common Stockholders'
Equity Per Share . $42.58 $37.73 13
Closing Stock Price
At Quarter End $120.56 $82.75 46
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Financial Ratios
Return on Assets .... 1.40% 1.43% - 1.41% 1.40% -
Return on Common
Stockholders' Equity 21.0% 20.8% - 20.9% 20.5% -
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Capital (Dollars in Billions)
Tier 1 .............. $20.6 $19.1 8
Total (Tier 1 & 2)(A) $30.1 $28.2 7
Tier 1 Ratio (A) 8.2% 8.4% -
Total Ratio (Tier 1
& 2)(A) ........... 12.0% 12.4% -
Common Equity as a
Percentage of
Total Assets ...... 6.4% 6.7% -
Total Equity as a
Percentage of
Total Assets ..... 7.0% 7.5% -
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Dividends Declared
(In Millions of Dollars)
Common ............... $241 $216 12 $484 $426 14
Preferred ............ 34 38 (11) 72 85 (15)
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(A) 1997 estimated.
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Earnings Analysis (In Millions of Dollars)
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Second Quarter % Six Months %
-------------- ---------------
1997 1996 Change 1997 1996 Change
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Total Revenue .......... $5,311 $4,993 6 $10,507 $9,821 7
Effect of Credit Card
Securitization
Activity (A) ......... 437 349 25 871 643 35
Net Cost To Carry (B)... (1) (26) (96) (4) (31) (87)
-----------------------------------------------
Adjusted Revenue ....... 5,747 5,316 8 11,374 10,433 9
-----------------------------------------------
Total Operating
Expense ........ 3,173 2,978 7 6,342 5,838 9
Net OREO Benefits (C)... 37 17 NM 47 29 62
-----------------------------------------------
Adjusted
Operating Expense .... 3,210 2,995 7 6,389 5,867 9
-----------------------------------------------
Operating Margin ....... 2,537 2,321 9 4,985 4,566 9
Consumer Credit
Costs (D) ............ 922 762 21 1,816 1,468 24
Commercial Credit
(Benefits) (E) ....... (36) (27) 33 (111) (12) NM
-----------------------------------------------
Operating Margin
Less Credit Costs .... 1,651 1,586 4 3,280 3,110 5
Additional Provision (F) 25 50 (50) 50 100 (50)
Income Before Taxes .... 1,626 1,536 6 3,230 3,010 7
-----------------------------------------------
Income Taxes ........... 602 584 3 1,211 1,144 6
-----------------------------------------------
Net Income ............. $1,024 $ 952 8 $ 2,019 $ 1,866 8
-----------------------------------------------
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(A) Commencing with the 1997 first quarter, includes effect related
to credit card receivables held for sale. See page 17 for
details.
(B) Principally the net cost to carry commercial cash-basis loans and
other real estate owned ("OREO").
(C) Principally gains and losses on sales, direct revenue and
expense, and writedowns of commercial OREO.
(D) Principally consumer net credit write-offs adjusted for the
effect of credit card securitization activity.
(E) Includes commercial net credit (recoveries) write-offs, net cost
to carry, and net OREO benefits.
(F) Represents amounts in excess of net write-offs.
NM Not meaningful, as percentage equals or exceeds 100%.
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Earnings Summary
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Second Quarter % Six Months %
(In Millions of -------------- --------------
Dollars) 1997 1996(A) Change 1997 1996(A) Change
- ----------------------------------------------------------------------
Global Consumer ..... $ 471 $ 486 (3) $ 958 $ 988 (3)
Global Corporate
Banking ........... 665 636 5 1,312 1,104 19
------------------------------------------------
Core Businesses ..... 1,136 1,122 1 2,270 2,092 9
Corporate Items ..... (112) (170) 34 (251) (226) (11)
------------------------------------------------
Total Citicorp ...... $1,024 $ 952 8 $2,019 $1,866 8
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Global Consumer:
Citibanking ......... $201 $174 16 $384 $350 10
Cards ............... 190 239 (21) 414 500 (17)
Private Bank ........ 80 73 10 160 138 16
------------------------------------------------
Total ............... $471 $486 (3) $958 $988 (3)
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Global Consumer
business in:
Emerging Markets .... $249 $223 12 $497 $443 12
Developed Markets ... 222 263 (16) 461 545 (15)
------------------------------------------------
Total ............... $471 $486 (3) $958 $988 (3)
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Global Corporate
Banking:
Emerging Markets .... $423 $425 - $ 871 $ 813 7
Global Relationship
Banking ............. 242 211 15 441 291 52
------------------------------------------------
Total ............... $665 $636 5 $1,312 $1,104 19
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(A) Reclassified to conform to the latest quarter's presentation.
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Global Consumer Second Quarter % Six Months %
(In Millions of -------------- --------------
Dollars) 1997 1996(A) Change 1997 1996(A) Change
- ----------------------------------------------------------------------
Total Revenue $3,088 $2,980 4 $6,140 $5,940 3
Effect of Credit Card
Securitization
Activity (B) ....... 437 349 25 871 643 35
Net Cost to Carry
Cash-Basis Loans
and OREO ........... - (9) NM - (10) NM
------------------------------------------------
Adjusted Revenue 3,525 3,320 6 7,011 6,573 7
------------------------------------------------
Total Operating
Expense ............ 1,917 1,812 6 3,789 3,570 6
Net OREO Benefits
(Costs) ............ 3 (2) NM 2 (2) NM
------------------------------------------------
Adjusted Operating
Expense ............ 1,920 1,810 6 3,791 3,568 6
------------------------------------------------
Operating Margin ..... 1,605 1,510 6 3,220 3,005 7
------------------------------------------------
Net Write-offs ....... 488 420 16 947 833 14
Effect of Credit Card
Securitization
Activity (B) ....... 437 349 25 871 643 35
------------------------------------------------
Net Cost to Carry
and Net OREO Costs . (3) (7) 57 (2) (8) 75
------------------------------------------------
Credit Costs ......... 922 762 21 1,816 1,468 24
------------------------------------------------
Operating Margin
Less Credit Costs .. 683 748 (9) 1,404 1,537 (9)
Additional Provision . 25 50 (50) 50 100 (50)
------------------------------------------------
Income Before Taxes .. 658 698 (6) 1,354 1,437 (6)
Income Taxes ......... 187 212 (12) 396 449 (12)
------------------------------------------------
Net Income ........... $ 471 $ 486 (3) $ 958 $ 988 (3)
------------------------------------------------
Average Assets (In
Billions of Dollars) $133 $125 6 $132 $125 6
Return on Assets (%).. 1.42 1.56 - 1.46 1.59 -
------------------------------------------------
- ----------------------------------------------------------------------
(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 17 for
details.
NM Not meaningful, as percentage equals or exceeds 100%.
- ----------------------------------------------------------------------
11
<PAGE>
- ----------------------------------------------------------------------
(In Millions of Second Quarter % Six Months %
Dollars) -------------- --------------
Citibanking 1997 1996(A) Change 1997 1996(A) Change
- ----------------------------------------------------------------------
Revenue .............. $1,514 $1,457 4 $2,979 $2,868 4
Operating Expense .... 1,074 1,040 3 2,123 2,025 5
------------------------------------------------
Operating Margin ..... 440 417 6 856 843 2
Credit Costs ......... 145 161 (10) 293 319 (8)
------------------------------------------------
Operating Margin
Less Credit Costs .. 295 256 15 563 524 7
Additional Provision . - 1 NM - 2 NM
------------------------------------------------
Income Before Taxes .. 295 255 16 563 522 8
Income Taxes ......... 94 81 16 179 172 4
------------------------------------------------
Net Income ........... $ 201 $ 174 16 $ 384 $ 350 10
- ----------------------------------------------------------------------
Average Assets (In
Billions of ........ $85 $82 4 $84 $82 2
Dollars)
Return on Assets (%) . 0.95 0.85 - 0.92 0.86 -
------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Cards
- ----------------------------------------------------------------------
Adjusted Revenue ..... $1,733 $1,612 8 $3,485 $3,209 9
Adjusted Operating
Expense ............ 666 606 10 1,323 1,218 9
------------------------------------------------
Operating Margin ..... 1,067 1,006 6 2,162 1,991 9
Credit Costs ......... 778 611 27 1,525 1,158 32
------------------------------------------------
Operating Margin
Less Credit Costs .. 289 395 (27) 637 833 (24)
Additional Provision . 25 49 (49) 50 98 (49)
------------------------------------------------
Income Before Taxes .. 264 346 (24) 587 735 (20)
Income Taxes ......... 74 107 (31) 173 235 (26)
------------------------------------------------
Net Income ........... $ 190 $ 239 (21) $ 414 $ 500 (17)
- ----------------------------------------------------------------------
Average Assets (In
Billions of Dollars) $31 $27 15 $31 $27 15
Return on Assets (B)(%) 2.46 3.56 - 2.69 3.72 -
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Private Bank
- ----------------------------------------------------------------------
Adjusted Revenue ..... $278 $251 11 $547 $496 10
Adjusted Operating
Expense ............ 180 164 10 345 325 6
------------------------------------------------
Operating Margin ..... 98 87 13 202 171 18
Credit (Benefits) .... (1) (10) (90) (2) (9) (78)
------------------------------------------------
Operating Margin Less
Credit Benefits) ... 99 97 2 204 180 13
Additional Provision . - - - - - -
------------------------------------------------
Income Before Taxes .. 99 97 2 204 180 13
Income Taxes ......... 19 24 (21) 44 42 5
------------------------------------------------
Net Income ........... $ 80 $ 73 10 $160 $138 16
------------------------------------------------
- ----------------------------------------------------------------------
Average Assets (In
Billions of Dollars) $17 $16 6 $17 $16 6
Return on Assets (%) 1.89 1.84 - 1.90 1.73 -
------------------------------------------------
- ----------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
(B) Adjusted for the off-balance sheet effect of credit card
securitization, the return for worldwide Cards was 1.36% in the
1997 quarter and 1.84% in the year-ago quarter. For the six
months of 1997 and 1996, the return on managed assets was 1.49%
and 1.92%.
NM Not meaningful, as percentage equals or exceeds 100%.
- ----------------------------------------------------------------------
12
<PAGE>
- ----------------------------------------------------------------------
(In Millions of Dollars)
Second Quarter % Six Months %
Global Consumer -------------- --------------
in Emerging Markets 1997 1996(A) Change 1997 1996(A) Change
- ----------------------------------------------------------------------
Adjusted Revenue ....... $988 $904 9 $1,938 $1,767 10
Adjusted Operating
Expense .............. 572 515 11 1,104 997 11
--------------------------------------------
Operating Margin ....... 416 389 7 834 770 8
Credit Costs ........... 97 98 (1) 189 191 (1)
--------------------------------------------
Operating Margin
Less Credit Costs .... 319 291 10 645 579 11
Additional Provision ... 7 9 (22) 10 11 (9)
--------------------------------------------
Income Before Taxes .... 312 282 11 635 568 12
Income Taxes ........... 63 59 7 138 125 10
--------------------------------------------
Net Income ............. $249 $223 12 $ 497 $ 443 12
--------------------------------------------
- ----------------------------------------------------------------------
Average Assets (In
Billions of Dollars) . $43 $38 13 $42 $37 14
Return on Assets (%) ... 2.32 2.36 - 2.39 2.41 -
--------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Global Consumer in Developed Markets
- ----------------------------------------------------------------------
Adjusted Revenue ..... $2,537 $2,416 5 $5,073 $4,806 6
Adjusted Operating
Expense ............ 1,348 1,295 4 2,687 2,571 5
----------------------------------------------
Operating Margin ..... 1,189 1,121 6 2,386 2,235 7
Credit Costs ......... 825 664 24 1,627 1,277 27
----------------------------------------------
Operating Margin
Less Credit Costs .. 364 457 (20) 759 958 (21)
Additional Provision . 18 41 (56) 40 89 (55)
----------------------------------------------
Income Before Taxes .. 346 416 (17) 719 869 (17)
Income Taxes ......... 124 153 (19) 258 324 (20)
Net Income ........... $ 222 $ 263 (16) $ 461 $ 545 (15)
----------------------------------------------
- ----------------------------------------------------------------------
Average Assets (In
Billions of Dollars) $90 $87 3 $90 $88 2
Return on Assets (%) . 0.99 1.22 - 1.03 1.25 -
----------------------------------------------
- ----------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
- ----------------------------------------------------------------------
13
<PAGE>
- -----------------------------------------------------------------------
Global Corporate Second Quarter % Six Months %
Banking -------------- --------------
(In Millions of Dollars) 1997 1996(A) Change 1997 1996(A) Change
- -----------------------------------------------------------------------
Total Revenue .......... $1,995 $1,812 10 $3,930 $3,432 15
Net Cost to Carry
Cash-Basis Loans
and OREO ............. (1) (17) 94 (4) (21) 81
----------------------------------------------
Adjusted Revenue ....... 1,994 1,795 11 3,926 3,411 15
----------------------------------------------
Total Operating
Expense .............. 1,172 1,073 9 2,314 2,073 12
Net OREO Benefits ...... 34 19 79 45 31 45
----------------------------------------------
Adjusted Operating
Expense .............. 1,206 1,092 10 2,359 2,104 12
----------------------------------------------
Operating Margin ....... 788 703 12 1,567 1,307 20
----------------------------------------------
Net (Recoveries)
Write-offs ........... (1) 9 NM (62) 40 NM
Net Cost to Carry
and Net OREO Benefits (35) (36) 3 (49) (52) 6
----------------------------------------------
Credit (Benefits) ...... (36) (27) 33 (111) (12) NM
----------------------------------------------
Operating Margin Plus
Credit (Benefits) .... 824 730 13 1,678 1,319 27
Additional Provision ... - - - - - -
----------------------------------------------
Income Before Taxes .... 824 730 13 1,678 1,319 27
Income Taxes ........... 159 94 69 366 215 70
----------------------------------------------
Net Income ............. $ 665 $ 636 5 $1,312 $1,104 19
----------------------------------------------
- ----------------------------------------------------------------------
Average Assets (In
Billions of Dollars) . $152 $139 9 $150 $139 8
Return on Assets (%) ... 1.75 1.84 - 1.76 1.60 -
----------------------------------------------
- ----------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- ----------------------------------------------------------------------
14
<PAGE>
- ------------------------------------------------------------------------
(In Millions of Second Quarter % Six Months %
Dollars) -------------- --------------
Emerging Markets 1997 1996(A) Change 1997 1996(A) Change
- ------------------------------------------------------------------------
Adjusted Revenue ....... $984 $853 15 $1,914 $1,721 11
Adjusted Operating
Expense .............. 478 414 15 929 796 17
--------------------------------------------
Operating Margin ....... 506 439 15 985 925 6
Credit Costs (Benefits). 24 (8) NM (12) 2 NM
--------------------------------------------
Operating Margin
Less Credit Costs
(Benefits) ........... 482 447 8 997 923 8
Additional Provision ... - - - - - -
--------------------------------------------
Income Before Taxes .... 482 447 8 997 923 8
Income Taxes ........... 59 22 NM 126 110 15
--------------------------------------------
Net Income ............. $423 $425 - $ 871 $ 813 7
--------------------------------------------
- ------------------------------------------------------------------------
Average Assets (In
Billions of Dollars).. $70 $58 21 $68 $57 19
Return on Assets (%) ... 2.42 2.95 - 2.58 2.87 -
--------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Global Relationship Banking
- ------------------------------------------------------------------------
Adjusted Revenue ....... $1,010 $942 7 $2,012 $1,690 19
Adjusted Operating
Expense .............. 728 678 7 1,430 1,308 9
----------------------------------------------
Operating Margin ....... 282 264 7 582 382 52
Credit (Benefits) ...... (60) (19) NM (99) (14) NM
----------------------------------------------
Operating Margin
Less Credit (Benefits) 342 283 21 681 396 72
Additional Provision ... - - - - - -
----------------------------------------------
Income Before Taxes .... 342 283 21 681 396 72
Income Taxes ........... 100 72 39 240 105 NM
----------------------------------------------
Net Income ............. $ 242 $211 15 $ 441 $ 291 52
----------------------------------------------
- ------------------------------------------------------------------------
Average Assets (In
Billions of Dollars) . $82 $81 1 $82 $82 -
Return on Assets (%) ... 1.18 1.05 - 1.08 0.71 -
----------------------------------------------
- ------------------------------------------------------------------------
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- ------------------------------------------------------------------------
15
<PAGE>
- ----------------------------------------------------------------------
Corporate Items (A) Second Quarter % Six Months %
(In Millions of -------------- -------------
Dollars) 1997 1996(B) Change 1997 1996(B) Change
- ----------------------------------------------------------------------
Revenue $ 228 $ 201 13 $ 437 $ 449 (3)
Operating Expense 84 93 (10) 239 195 23
----------------------------------------------
Income Before Taxes 144 108 33 198 254 (22)
Income Taxes 256 278 (8) 449 480 (6)
----------------------------------------------
Net Loss ($112) ($170) (34) ($251) ($226) 11
----------------------------------------------
- ----------------------------------------------------------------------
Average Assets (In
Billions of Dollars) $8 $4 NM $7 $4 75
----------------------------------------------
- ----------------------------------------------------------------------
(A) 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.
(B) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
16
<PAGE>
- ------------------------------------------------------------------------
Consumer Loan Delinquency Amounts, Net Credit Losses, and Ratios
- ------------------------------------------------------------------------
(In Millions Total 90 Days or Average Net Credit
of Dollars, Loans More Past Due (A) Loans Losses (A)
except -------------------------------------------------------
Loan Amounts June June Mar. June 2nd 2nd 1st 2nd
in 30, 30, 31, 30, Qtr. Qtr. Qtr. Qtr.
Billions) 1997 1997 1997 1996 1997 1997 1997 1996
- ------------------------------------------------------------------------
Citibanking .. $66.9 $2,094 $2,193 $2,663 $66.3 $145 $148 $161
Ratio ........ 3.13% 3.30% 4.05% 0.87% 0.91% 0.99%
Cards
U.S. Bankcards 45.3 843 884 732 44.7 683 656 522
Ratio ........ 1.86% 1.98% 1.73% 6.13% 5.91% 4.99%
Other ........ 9.5 206 214 180 9.1 95 91 89
Ratio ........ 2.18% 2.42% 2.25% 4.14% 4.25% 4.65%
Private Bank . 15.6 187 198 254 15.4 2 (2) (3)
Ratio ........ 1.19% 1.28% 1.66% 0.04% NM NM
- ------------------------------------------------------------------------
Total Managed 137.3 3,330 3,489 3,829 135.5 925 893 769
Ratio ........ 2.43% 2.58% 2.91% 2.73% 2.69% 2.38%
- ------------------------------------------------------------------------
Securitized
Credit Card
Receivables (24.2) (453) (500) (452) (24.7) (404) (402) (349)
Loans Held
for Sale(B). (3.6) (37) (39) - (3.4) (33) (32) -
- ------------------------------------------------------------------------
Total Loan
Portfolio .. $109.5 $2,840 $2,950 $3,377 $107.4 $488 $459 $420
Ratio ........ 2.59% 2.76% 3.20% 1.82% 1.75% 1.62%
- ------------------------------------------------------------------------
Managed Portfolio:
Developed .... $102.4 $2,869 $3,075 $3,448 $101.4 $828 $801 $671
Ratio ........ 2.80% 3.03% 3.42% 3.26% 3.19% 2.70%
Emerging ..... 34.9 461 414 381 34.1 97 92 98
Ratio ........ 1.32% 1.23% 1.25% 1.15% 1.12% 1.30%
- ------------------------------------------------------------------------
(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) 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.
- ------------------------------------------------------------------------
- ----------------------------------------------------------------------
Consumer Loan Balances, Net of Unearned Income
- ----------------------------------------------------------------------
End of Period Average
------------------------------------------------
June Mar. June 2nd 1st 2nd
(In Billions of 30, 31, 30, Qtr. Qtr. Qtr.
Dollars) 1997 1997 1996 1997 1997 1996
- ----------------------------------------------------------------------
Managed ............. $137.3 $135.2 $131.4 $135.5 $134.6 $130.3
Securitized Credit
Card Receivables .. (24.2) (25.4) (26.0) (24.7) (25.1) (26.2)
Loans Held for
Sale (A) .......... (3.6) (3.1) - (3.4) (3.1) -
- ----------------------------------------------------------------------
Loan Portfolio ...... $109.5 $106.7 $105.4 $107.4 $106.4 $104.1
- ----------------------------------------------------------------------
(A) 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.
- ----------------------------------------------------------------------
17
<PAGE>
- ----------------------------------------------------------------------
Cash-Basis and Renegotiated Loans
- ----------------------------------------------------------------------
June 30, Dec. 31, June 30,
(In Millions of Dollars) 1997 1996 1996
- ----------------------------------------------------------------------
Commercial Cash-Basis Loans
Collateral-Dependent (at Lower
of Cost or Collateral Value)(A) ...... $274 $263 $ 677
Other ................................... 643 642 677
Total Commercial Cash-Basis Loans ....... $917 $905 $1,354
- ----------------------------------------------------------------------
Commercial Renegotiated Loans ........... $295 $321 $335
Consumer Loans on which Accrual
of Interest has been Suspended ........ $2,036 $2,187 $2,545
- ----------------------------------------------------------------------
(A) 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.
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Other Real Estate Owned (OREO) and Assets Pending Disposition (A)
- ----------------------------------------------------------------------
June 30, Dec. 31, June 30,
(In Millions of Dollars) 1997 1996 1996
- ----------------------------------------------------------------------
Consumer OREO $362 $ 452 $ 497
Commercial OREO 482 614 528
----------------------------
Total $844 $1,066 $1,025
----------------------------
- ----------------------------------------------------------------------
Assets Pending Disposition (B) $72 $160 $180
----------------------------
- ----------------------------------------------------------------------
(A) Carried at lower of cost or collateral value.
(B) Represents consumer residential mortgage loans that have a high
probability of foreclosure.
- ----------------------------------------------------------------------
18
<PAGE>
- ----------------------------------------------------------------------
Credit Loss Reserves (A)
- ----------------------------------------------------------------------
June 30, Dec. 31, June 30,
(Dollars In Millions) 1997 1996 1996
- ----------------------------------------------------------------------
Allowance for Credit Losses:
Consumer ................................ $2,453 $2,079 $2,000
Commercial .............................. 3,329 3,424 3,424
---------------------------
Total Allowance for Credit Losses ....... 5,782 5,503 5,424
Reserves for Off-Balance Sheet
Credit Exposures ...................... 191 473 466
---------------------------
Total Credit Loss Reserves .............. $5,973 $5,976 $5,890
- ----------------------------------------------------------------------
Allowance As a Percent of Total Loans:
Consumer ................................ 2.24% 1.86% 1.90%
Commercial .............................. 4.80% 5.46% 5.48%
Total ................................... 3.23% 3.15% 3.23%
- ----------------------------------------------------------------------
(A) In the first quarter of 1997, to be consistent with industry
practice, Citicorp 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 June 30, 1997
consist of $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.
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Net Write-offs, Additional Provision, and Provision for Credit Losses
- ----------------------------------------------------------------------
Second Quarter Six Months
(In Millions of Dollars) 1997 1996 1997 1996
- ----------------------------------------------------------------------
Net Write-offs (Recoveries):
Consumer (A) .................. $ 925 $ 769 $1,818 $1,476
Commercial .................... (1) 9 (62) 40
Total Adjusted Net Write-offs . 924 778 1,756 1,516
Effect of Credit Card
Securitization Activity ..... (437) (349) (871) (643)
Total ......................... $ 487 $ 429 $ 885 $ 873
- ----------------------------------------------------------------------
Additional Provision:
Consumer ...................... $25 $50 $50 $100
Commercial .................... - - - -
Total ......................... $25 $50 $50 $100
- ----------------------------------------------------------------------
Provision for Credit Losses:
Consumer ...................... $513 $470 $997 $933
Commercial .................... (1) 9 (62) 40
Total ......................... $512 $479 $935 $973
- ----------------------------------------------------------------------
(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 17).
- ----------------------------------------------------------------------
19
<PAGE>
- ----------------------------------------------------------------------
Consolidated Statement of Income CITICORP and Subsidiaries
- ----------------------------------------------------------------------
(In Millions of Second Quarter % Six Months %
Dollars, Except -------------- ---------------
Per Share Amounts) 1997 1996 Change 1997 1996 Change
- ----------------------------------------------------------------------
Interest Revenue ..... $6,141 $5,751 7 $11,998 $11,527 4
Interest Expense ..... 3,278 3,023 8 6,331 6,114 4
----------------------------------------------
Net Interest Revenue . 2,863 2,728 5 5,667 5,413 5
----------------------------------------------
Provision for Credit
Losses ............. 512 479 7 935 973 (4)
----------------------------------------------
Net Interest Revenue
after Provision
for Credit Losses .. 2,351 2,249 5 4,732 4,440 7
----------------------------------------------
Fees, Commissions,
and Other Revenue
Fees and Commissions . 1,441 1,349 7 2,793 2,661 5
Foreign Exchange ..... 311 214 45 608 419 45
Trading Account ...... 97 106 (8) 295 196 51
Securities Transactions 124 39 NM 232 141 65
Other Revenue ........ 475 557 (15) 912 991 (8)
----------------------------------------------
Total Fees, Commissions,
and Other Revenue .. 2,448 2,265 8 4,840 4,408 10
----------------------------------------------
Operating Expense
Salaries ............. 1,286 1,212 6 2,550 2,344 9
Employee Benefits .... 321 331 (3) 722 668 8
Total Employee Expense 1,607 1,543 4 3,272 3,012 9
Net Premises and
Equipment Expense .. 479 439 9 969 896 8
Other Expense ........ 1,087 996 9 2,101 1,930 9
----------------------------------------------
Total Operating
Expense ............ 3,173 2,978 7 6,342 5,838 9
----------------------------------------------
Income Before Taxes .. 1,626 1,536 6 3,230 3,010 7
Income Taxes ......... 602 584 3 1,211 1,144 6
----------------------------------------------
Net Income ........... $1,024 $ 952 8 $2,019 $1,866 8
----------------------------------------------
- ----------------------------------------------------------------------
Income Applicable
to Common Stock .... $990 $914 8 $1,947 $1,785 9
----------------------------------------------
Earnings Per Share:
On Common and Common
Equivalent Shares .. $2.10 $1.86 13 $4.11 $3.68 12
Assuming Full
Dilution ........... $2.10 $1.86 13 $4.11 $3.61 14
----------------------------------------------
- ----------------------------------------------------------------------
NM Not meaningful, as percentage equals or exceeds 100%.
- ----------------------------------------------------------------------
20
<PAGE>
- ----------------------------------------------------------------------
Consolidated Balance Sheet CITICORP and Subsidiaries
- ----------------------------------------------------------------------
June 30, Dec. 31, %
(In Millions of Dollars) 1997 1996 Change
- ----------------------------------------------------------------------
Assets
Cash and Due from Banks ................ $ 7,638 $ 6,905 11
Deposits at Interest with Banks ........ 12,802 11,648 10
Securities, at Fair Value
Available for Sale .................... 34,704 26,062 33
Venture Capital ....................... 2,153 2,124 1
Trading Account Assets ................. 32,475 30,785 5
Loans Held for Sale (A) ................ 3,612 - NM
Federal Funds Sold and Securities
Purchased Under Resale Agreements .... 13,651 11,133 23
Loans, Net
Consumer ............................... 109,506 111,847 (2)
Commercial ............................. 69,408 62,765 11
----------------------------
Loans, Net of Unearned Income .......... 178,914 174,612 2
Allowance for Credit Losses ............ (5,782) (5,503) 5
----------------------------
Total Loans, Net ....................... 173,132 169,109 2
Customers' Acceptance Liability ........ 2,145 2,077 3
Premises and Equipment, Net ............ 4,745 4,667 2
Interest and Fees Receivable ........... 3,221 3,068 5
Other Assets ........................... 14,015 13,440 4
----------------------------
Total .................................. $304,293 $281,018 8
----------------------------
- ----------------------------------------------------------------------
Liabilities
Non-Interest-Bearing Deposits in U.S.
Offices .............................. $ 15,904 $ 14,867 7
Interest-Bearing Deposits in U.S.
Offices .............................. 39,739 40,254 (1)
Non-Interest-Bearing Deposits in
Offices Outside the U.S. ............. 11,525 9,891 17
Interest-Bearing Deposits in Offices
Outside the U.S. ..................... 131,522 119,943 10
----------------------------
Total Deposits ......................... 198,690 184,955 7
Trading Account Liabilities ............ 23,460 22,003 7
Purchased Funds and Other Borrowings ... 24,138 18,191 33
Acceptances Outstanding ................ 2,183 2,104 4
Accrued Taxes and Other Expense ........ 5,817 5,992 (3)
Other Liabilities ...................... 8,943 8,201 9
Long-Term Debt ......................... 19,653 18,850 4
Stockholders' Equity
Preferred Stock (Without par value) .... 1,903 2,078 (8)
Common Stock ($1.00 par value) ......... 506 506 -
Issued Shares: 506,298,235 in each
period
Surplus ................................ 6,557 6,595 (1)
Retained Earnings ...................... 15,766 14,303 10
Net Unrealized Gains - Securities ...... 952 676 41
Available for Sale
Foreign Currency Translation ........... (547) (486) 13
Common Stock in Treasury, at Cost ...... (3,728) (2,950) 26
Shares: 48,206,545 and 43,081,217,
respectively
----------------------------
Total Stockholders' Equity ............. 21,409 20,722 3
----------------------------
Total .................................. $304,293 $281,018 8
----------------------------
- ----------------------------------------------------------------------
(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.
NM Not meaningful, as percentage equals or exceeds 100%.
- ----------------------------------------------------------------------
21
<PAGE>
- ---------------------------------------------------------------------------
Net Interest Revenue 2nd 1st 4th 3rd 2nd
Statistics Qtr. Qtr. Qtr. Qtr. Qtr.
(Taxable Equivalent Basis)(A) 1997 1997 1996 1996 1996
- ---------------------------------------------------------------------------
(In Millions of Dollars)
- ----------------------------------
Adjusted Net Interest Revenue (B): $3,454 $3,449 $3,484 $3,330 $3,351
Effect of Credit Card
Securitization Activity (578) (630) (650) (613) (615)
--------------------------------------
Total $2,876 $2,819 $2,834 $2,717 $2,736
--------------------------------------
- --------------------------------------------------------------------------
(In Billions of Dollars)
- ----------------------------------
Adjusted Average Interest-
Earning Assets (B): $277.3 $267.3 $262.2 $258.8 $256.8
Securitized Credit Card
Receivables (24.7) (25.1) (25.9) (26.2) (26.2)
--------------------------------------
Total $252.6 $242.2 $236.3 $232.6 $230.6
--------------------------------------
- ---------------------------------------------------------------------------
Adjusted Net Interest Margin (B): 5.00% 5.23% 5.28% 5.12% 5.25%
Effect of Credit Card
Securitization Activity (.43)% (.51)% (.51)% (.47)% (.48)%
--------------------------------------
Total 4.57% 4.72% 4.77% 4.65% 4.77%
--------------------------------------
- ---------------------------------------------------------------------------
(A) The taxable equivalent adjustment is based on the U.S. federal
statutory tax rate of 35%.
(B) Adjusted for the effect of credit card securitization.
- ---------------------------------------------------------------------------
- ----------------------------------------------------------------------
Consolidated Average Balances
- ----------------------------------------------------------------------
2nd 1st 4th 3rd 2nd
(In Billions of Dollars) Qtr. Qtr. Qtr. Qtr. Qtr.
1997 1997 1996 1996 1996
- ----------------------------------------------------------------------
Loans:
Consumer $107 $106 $108 $106 $104
Commercial 67 62 61 61 60
------------------------------------
Total Average Loans $174 $168 $169 $167 $164
------------------------------------
- ----------------------------------------------------------------------
Total Average Assets $293 $285 $276 $268 $268
- ----------------------------------------------------------------------
(In Millions of Dollars)
- -----------------------------
Common Stockholders' Equity $18,933 $18,698 $18,321 $17,950 $17,713
Preferred Equity 1,903 2,049 2,078 2,078 2,078
---------------------------------------
Total Average Stockholders'
Equity $20,836 $20,747 $20,399 $20,028 $19,791
---------------------------------------
- ----------------------------------------------------------------------
22
<PAGE>
- ----------------------------------------------------------------------
Calculation of Earnings Per Share
- ----------------------------------------------------------------------
On Common and Common Assuming Full
Equivalent Shares Dilution
----------------------------------------
(In Millions, except Per Second Quarter Second Quarter
Share Amounts) 1997 1996 1997 1996
- ----------------------------------------------------------------------
Income Applicable to Common
Stock ........................ $990 $914 $990 $914
- ----------------------------------------------------------------------
Shares
Weighted-Average Common
Shares Outstanding ........... 458.5 476.9 458.5 476.9
Common Equivalent Shares (A) ... 12.6 14.9 13.3 15.2
Total .......................... 471.1 491.8 471.8 492.1
- ----------------------------------------------------------------------
Earnings Per Share ............. $2.10 $1.86 $2.10 $1.86
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Calculation of Earnings Per Share
- ----------------------------------------------------------------------
On Common and Common Assuming Full
Equivalent Shares Dilution
----------------------------------------
(In Millions, except Per Six Months Six Months
Share Amounts) 1997 1996 1997 1996
- ----------------------------------------------------------------------
Earnings
Income Applicable to Common
Stock ........................ $1,947 $1,785 $1,947 $1,785
Dividends on Convertible
Preferred Stock, Series 12
and Series 13 (B) ............ - - - 5
Income Applicable to
Common Stock, Adjusted ....... $1,947 $1,785 $1,947 $1,790
- ----------------------------------------------------------------------
Shares
Weighted-Average Common
Shares Outstanding (B) ....... 460.0 470.2 460.0 470.2
Convertible Preferred Stock,
Series 12 and Series 13 (B) .. - - - 10.5
Common Equivalent Shares (A) ... 13.6 15.0 14.0 15.8
Total .......................... 473.6 485.2 474.0 496.5
- ----------------------------------------------------------------------
Earnings Per Share
Net Income ..................... $4.11 $3.68 $4.11 $3.61
- ----------------------------------------------------------------------
(A) Includes the dilutive effect of stock options and stock purchase
agreements computed using the treasury stock method and shares
issuable under deferred stock awards.
(B) 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.
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
June 30, June 30,
(In Thousands) 1997 1996
- ----------------------------------------------------------------------
Common Shares Outstanding ....................... 458,092 473,164
- ----------------------------------------------------------------------
23
<PAGE>
- ----------------------------------------------------------------------
Other Revenue Second Quarter % Six Months %
(In Millions of -------------- ------------
Dollars) 1997 1996 Change 1997 1996 Change
- ----------------------------------------------------------------------
Credit Card
Securitization
Activity (A) ........ $118 $215 (45) $283 $448 (37)
Venture Capital ....... 173 107 62 266 145 83
Affiliate Earnings .... 112 83 35 171 145 18
Net Asset Gains and
Other Items ......... 72 152 (53) 192 253 (24)
Total ................. $475 $557 (15) $912 $991 (8)
- ----------------------------------------------------------------------
(A) Includes net credit losses on credit card receivables held for
sale commencing with the 1997 first quarter (see page 17).
- ----------------------------------------------------------------------
- --------------------------------------------------------------------------
Trading-Related Second Quarter % Six Months %
Revenue -------------- ------------
(In Millions of Dollars) 1997 1996(A) Change 1997 1996(A) Change
- --------------------------------------------------------------------------
By Business Sector:
Global Corporate Banking:
Emerging Markets ......... $182 $192 (5) $ 400 $369 8
Global Relationship
Banking ................. 243 175 39 562 340 65
--------------------------------------------
Total Global
Corporate Banking ....... 425 367 16 962 709 36
Global Consumer and Other . 86 60 43 138 110 25
--------------------------------------------
Total $511 $427 20 $1,100 $819 34
--------------------------------------------
- --------------------------------------------------------------------------
By Trading Activity:
Foreign Exchange (B) ...... $290 $225 29 $ 552 $437 26
Derivative (C) ............ 94 139 (32) 276 284 (3)
Fixed Income (D) .......... 81 (23) NM 144 (18) NM
Other ..................... 46 86 (47) 128 116 10
--------------------------------------------
Total ..................... $511 $427 20 $1,100 $819 34
--------------------------------------------
- --------------------------------------------------------------------------
By Income Statement Line:
Foreign Exchange .......... $311 $214 45 $ 608 $419 45
Trading Account ........... 97 106 (8) 295 196 51
Other (E) ................. 103 107 (4) 197 204 (3)
--------------------------------------------
Total ..................... $511 $427 20 $1,100 $819 34
--------------------------------------------
- --------------------------------------------------------------------------
(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.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------
24
<PAGE>
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
- Exhibit No. 12(a) Calculation of Ratio of Income to
Fixed Charges
- Exhibit No. 12(b) Calculation of Ratio of Income to
Fixed Charges Including Preferred Stock Dividends of
Income to Fixed Charges
24
<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
(Registrant)
By: /s/ Thomas E. Jones
-------------------------------
Thomas E. Jones
Executive Vice President
A Principal Financial Officer
Dated: July 15, 1997
25
CITICORP AND SUBSIDIARIES
CALCULATION OF RATIO OF INCOME TO FIXED CHARGES
(In Millions)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- -----------------
EXCLUDING INTEREST ON DEPOSITS: 1996 1995 1994 1993 1992 1997 1996
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
FIXED CHARGES:
INTEREST EXPENSE (OTHER THAN
INTEREST ON DEPOSITS) 3,435 4,110 5,906 6,324 5,826 1,681 1,760
INTEREST FACTOR IN RENT EXPENSE 150 140 143 147 162 78 73
------ ------ ------ ------ ------ ----- -----
TOTAL FIXED CHARGES 3,585 4,250 6,049 6,471 5,988 1,759 1,833
------ ------ ------ ------ ------ ----- -----
INCOME:
NET INCOME 3,788 3,464 3,422 (A) 1,919 (B) 722 2,019 1,866
INCOME TAXES 2,285 2,121 1,189 941 696 1,211 1,144
FIXED CHARGES 3,585 4,250 6,049 6,471 5,988 1,759 1,833
------ ------ ------ ------ ------ ----- -----
TOTAL INCOME 9,658 9,835 10,660 9,331 7,406 4,989 4,843
====== ====== ====== ====== ====== ===== =====
RATIO OF INCOME TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS 2.69 2.31 1.76 1.44 1.24 2.84 2.64
====== ====== ====== ====== ====== ===== =====
INCLUDING INTEREST ON DEPOSITS:
FIXED CHARGES:
INTEREST EXPENSE 12,409 13,012 14,902 16,121 16,327 6,331 6,114
INTEREST FACTOR IN RENT EXPENSE 150 140 143 147 162 78 73
------ ------ ------ ------ ------ ----- -----
TOTAL FIXED CHARGES 12,559 13,152 15,045 16,268 16,489 6,409 6,187
------ ------ ------ ------ ------ ----- -----
INCOME:
NET INCOME 3,788 3,464 3,422 (A) 1,919 (B) 722 2,019 1,866
INCOME TAXES 2,285 2,121 1,189 941 696 1,211 1,144
FIXED CHARGES 12,559 13,152 15,045 16,268 16,489 6,409 6,187
------ ------ ------ ------ ------ ----- -----
TOTAL INCOME 18,632 18,737 19,656 19,128 17,907 9,639 9,197
====== ====== ====== ====== ====== ===== =====
RATIO OF INCOME TO FIXED CHARGES
INCLUDING INTEREST ON DEPOSITS 1.48 1.42 1.31 1.18 1.09 1.50 1.49
====== ====== ====== ====== ====== ===== =====
</TABLE>
(A) NET INCOME FOR THE YEAR ENDED DECEMBER 31, 1994 EXCLUDES THE
CUMULATIVE EFFECT OF ADOPTING " STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS No. 112, ""EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT "
BENEFITS", OF $(56) MILLION.
(B) NET INCOME FOR THE YEAR ENDED DECEMBER 31, 1993 EXCLUDES THE
CUMULATIVE EFFECT OF ADOPTING STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 109, ""ACCOUNTING FOR INCOME TAXES"", OF $300
MILLION.
<TABLE>
<CAPTION>
CITICORP AND SUBSIDIARIES
CALCULATION OF RATIO OF INCOME TO FIXED CHARGES
INCLUDING PREFERRED STOCK DIVIDENDS
(In Millions)
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------- -----------------
EXCLUDING INTEREST ON DEPOSITS: 1996 1995 1994 1993 1992 1997 1996
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
FIXED CHARGES:
INTEREST EXPENSE (OTHER THAN
INTEREST ON DEPOSITS) 3,435 4,110 5,906 6,324 5,826 1,681 1,760
INTEREST FACTOR IN RENT EXPENSE 150 140 143 147 162 78 73
DIVIDENDS--PREFERRED STOCK 261 553 505 (A) 465 416 114 137
------ ------ ------ ------ ------ ----- -----
TOTAL FIXED CHARGES 3,846 4,803 6,554 6,936 6,404 1,873 1,970
------ ------ ------ ------ ------ ----- -----
INCOME:
NET INCOME 3,788 3,464 3,422 (B) 1,919 (C) 722 2,019 1,866
INCOME TAXES 2,285 2,121 1,189 941 696 1,211 1,144
FIXED CHARGES (EXCLUDING PREFERRED
STOCK DIVIDENDS) 3,585 4,250 6,049 6,471 5,988 1,759 1,833
------ ------ ------ ------ ------ ----- -----
TOTAL INCOME 9,658 9,835 10,660 9,331 7,406 4,989 4,843
====== ====== ====== ====== ====== ===== =====
RATIO OF INCOME TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS 2.51 2.05 1.63 1.35 1.16 2.66 2.46
====== ====== ====== ====== ====== ===== =====
INCLUDING INTEREST ON DEPOSITS:
FIXED CHARGES:
INTEREST EXPENSE 12,409 13,012 14,902 16,121 16,327 6,331 6,114
INTEREST FACTOR IN RENT EXPENSE 150 140 143 147 162 78 73
DIVIDENDS--PREFERRED STOCK 261 553 505 (A) 465 416 114 137
------ ------ ------ ------ ------ ----- -----
TOTAL FIXED CHARGES 12,820 13,705 15,550 16,733 16,905 6,523 6,324
------ ------ ------ ------ ------ ----- -----
INCOME:
NET INCOME 3,788 3,464 3,422 (B) 1,919 (C) 722 2,019 1,866
INCOME TAXES 2,285 2,121 1,189 941 696 1,211 1,144
FIXED CHARGES (EXCLUDING PREFERRED
STOCK DIVIDENDS) 12,559 13,152 15,045 16,268 16,489 6,409 6,187
------ ------ ------ ------ ------ ----- -----
TOTAL INCOME 18,632 18,737 19,656 19,128 17,907 9,639 9,197
====== ====== ====== ====== ====== ===== =====
RATIO OF INCOME TO FIXED CHARGES
INCLUDING INTEREST ON DEPOSITS 1.45 1.37 1.26 1.14 1.06 1.48 1.45
====== ====== ====== ====== ====== ===== =====
</TABLE>
(A) CALCULATED ON A BASIS OF AN ASSUMED TAX RATE OF 29% FOR 1994.
(B) NET INCOME FOR THE YEAR ENDED DECEMBER 31, 1994 EXCLUDES THE
CUMULATIVE EFFECT OF ADOPTING STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS No. 112, "EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT
BENEFITS", OF $(56) MILLION.
(C) NET INCOME FOR THE YEAR ENDED DECEMBER 31, 1993 EXCLUDES THE
CUMULATIVE EFFECT OF ADOPTING STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 109, "ACCOUNTING FOR INCOME TAXES", OF $300
MILLION.
