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): January 20, 1998
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 net income was $1.061 billion in quarter, up 7%; Per share
earnings of $2.20 rose 12%; 1997 income excluding restructuring charge
increased 9% to $4.1 billion, Per share income of $8.51 was 15% higher
Earnings Analysis (A) Fourth Quarter % Full Year %
(In Millions of 1997 1996 Change 1997 1996 Change
Dollars)
Adjusted Revenue $6,006 $5,747 5 $23,324 $21,542 8
Adjusted Operating 3,417 3,288 4 13,170 12,241 8
Expense
Operating Margin 2,589 2,459 5 10,154 9,301 9
Consumer Credit Costs 866 844 3 3,538 3,115 14
Commercial Credit Costs 24 (15) NM (95) (87) (9)
(Benefits)
Operating Margin Less 1,699 1,630 4 6,711 6,273 7
Credit Costs
Additional Provision 25 50 (50) 100 200 (50)
Restructuring Charge - - - 889 - NM
Income Before Taxes $1,674 $1,580 6 $5,722 $6,073 (6)
Net Income $1,061 $987 7 $3,591 $3,788 (5)
Earnings Per Share $2.20 $1.97 12 $7.33 $7.43 (1)
(Diluted)
Return on Common Equity 21.5 20.6 - 18.1 20.4 -
(%)
Return on Assets (%) 1.39 1.42 - 1.22 1.40 -
Average Shares
Outstanding 466.6 480.7 (3) 471.1 489.3 (4)
(Diluted) (In
Millions)
Excluding Restructuring Charge:
Income $4,147 $3,788 9
Income Per Share (Diluted) $8.51 $7.43 15
Return on Common Equity (%) 20.9 20.4 -
Return on Assets (%) 1.41 1.40 -
(A) See the Margin Basis Reconciliation table on page 17, which
reconciles the Consolidated Statement of Income on page 13 to
the adjusted numbers reported above.
NM Not meaningful, as percentage equals or exceeds 100%.
On January 20, 1998, Citicorp reported net income for the 1997 fourth
quarter of $1.1 billion or $2.20 per diluted common share, up 7% and
12%, respectively. For the full year, income was $4.1 billion, up $359
million or 9% from 1996, excluding the $556 million after-tax effect
of the third quarter restructuring charge ($889 million pretax), or
$8.51 per diluted common share. Including the charge, 1997 net income
was $3.6 billion or $7.33 per diluted common share.
John S. Reed, Citicorp Chairman, said: "It was anything but a normal
quarter. The Asian turmoil reduced our pretax results by about $250
million -- $100 million related to translating normal earnings at
reduced exchange rates, $60 million related to spread compression in
our Asian and Brazilian consumer businesses, and the remainder related
to specific market movements that produced both exceptional foreign
exchange earnings and losses in other trading. Fortunately, strong
markets in the United States and Europe helped offset these
conditions."
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<PAGE>
Against Citicorp's Business Directions performance targets, and
excluding the restructuring charge, 1997 results achieved a 9% gain in
income (a 15% rise in diluted income per share), a return on common
equity of 20.9%, and a ratio of incremental revenue to expense of 1.9
to 1 (2.0 to 1 for the 1997 fourth quarter). For the full year,
Citicorp generated an estimated $2.1 billion of free capital and
repurchased 18.8 million shares of common stock for $2.3 billion. At
December 31, 1997, the Tier 1 capital ratio was estimated at 8.3%, at
the high end of the target range of 8.0%-8.3%, after the repurchase of
6.1 million shares of common stock for $0.8 billion during the
quarter.
Adjusted revenue grew 5% from the 1996 fourth quarter -- 9% adjusted
for the effect of foreign currency translation -- with growth in many
areas led by Global Relationship Banking, but was reduced by lower
revenue in Global Consumer in the emerging markets. Adjusted net
interest revenue (taxable equivalent basis) of $3.5 billion in the
quarter was essentially unchanged from 1996, as the effect of asset
growth was offset by spread compression. Adjusted fee and commission
revenue of $1.5 billion was up 6% or $91 million. Trading-related
revenue of $347 million in the quarter, down $196 million from a year
ago, reflected strong foreign exchange revenue partially offset by
trading account losses. Net asset gains and securities transactions of
$456 million grew $329 million from a year ago. Venture capital
revenue increased $72 million to $248 million. Adjusted operating
expense increased 4% -- 8% excluding the effects of foreign exchange
translation.
Consumer credit costs of $866 million increased $22 million from a
year ago, reflecting increases in Cards and improvements in
Citibanking and the Private Bank. U.S. bankcards credit costs were
$655 million or 5.64% of average managed loans for the quarter, up $5
million from the 1997 third quarter (excluding an $11 million benefit
from the third quarter sale of certain charged-off accounts) and up
$47 million from a year ago. U.S. bankcards credit costs were 5.68% of
average managed loans in the 1997 third quarter (excluding the benefit
from the sale of certain charged-off accounts) and 5.45% a year ago.
Global Corporate Banking credit costs remained low at $24 million.
Of the $889 million restructuring charge recorded in the 1997 third
quarter, approximately $39 million of reserves were utilized during
the 1997 fourth quarter, primarily for severance and related costs,
and $245 million of premises and equipment writedowns were recognized
in the 1997 third quarter. The implementation of these restructuring
programs, which are expected to be substantially completed by the end
of 1998, is designed to ensure a positive effect on the quality of
customer service and minimal effect on staff dislocations.
The Consumer businesses -- Citibanking, Cards, and the Private Bank --
earned $456 million in the quarter on adjusted revenue of $3.5
billion. Net income from Global Corporate Banking was $556 million in
the quarter on adjusted revenue of $2.2 billion.
Citibank strengthened its position as the leading worldwide card
business with an agreement to acquire AT&T Universal Card Services,
which will add approximately $15 billion in managed customer
receivables and 13.6 million accounts. The transaction is expected to
close by the 1998 second quarter following regulatory reviews. The
agreement also established a co-branding and joint marketing
arrangement with AT&T. Citibank announced an agreement to acquire the
European Global Trust and Agency Services business of J. P. Morgan,
and concluded a custody joint venture with Bank of Montreal.
During the quarter, the company adopted Statement of Financial
Accounting Standards No. 128 -- Earnings per Share, and has restated
previously reported per share amounts. Under the new standard, basic
earnings per share excludes dilution and is computed by dividing
income applicable to common stock by the weighted-average number of
common shares outstanding for the period. Diluted earnings per share
reflects the additional dilution that could occur from employee stock
options and other items that could potentially result in the issuance
of common stock.
2
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Global Consumer earns $456 million in the fourth quarter;
Emerging markets net income down
Global Consumer Fourth Quarter % Full Year %
(In Millions of 1997 1996(A) Change 1997 1996(A) Change
Dollars)
Adjusted Revenue $3,531 $3,567 (1) $14,061 $13,495 4
Adjusted Operating 1,967 1,887 4 7,695 7,297 5
Expense
Operating Margin 1,564 1,680 (7) 6,366 6,198 3
Credit Costs (B) 866 844 3 3,538 3,115 14
Operating Margin Less 698 836 (17) 2,828 3,083 (8)
Credit Costs
Additional Provision 25 50 (50) 100 200 (50)
Restructuring Charge - - - 580 - NM
Income Before Taxes 673 786 (14) 2,148 2,883 (25)
Income Taxes 217 215 1 595 855 (30)
Net Income $ 456 $ 571 (20) $ 1,553 $ 2,028 (23)
Average Assets (In $133 $129 3 $132 $126 5
Billions of Dollars)
Return on Assets (%) 1.36 1.76 - 1.18 1.61 -
Excluding Restructuring Charge:
Income $1,904 $2,028 (6)
Return on Assets (%) 1.44 1.61 -
(A) Reclassified to conform to the latest quarter's presentation.
(B) Includes the effect of credit card securitization and, commencing
with the 1997 first quarter, the effect related to credit card
receivables held for sale.
NM Not meaningful, as percentage equals or exceeds 100%.
o Global Consumer reported net income of $456 million in the
quarter, down $115 million from 1996, principally due to a $107
million decrease in the emerging markets. Net income in the
emerging markets reflected declines in Citibanking and Cards,
primarily in Asia Pacific and Brazil. In the developed markets,
net income declind $8 million reflecting strong performance in
Citibanking in the U.S., offset by a higher effective tax rate
and lower U.S. bankcards earnings. Global Consumer income was
$1.9 billion (excluding the $351 million after-tax effect of the
1997 third quarter restructuring charge) in 1997 and $2.0 billion
in 1996.
o Total consumer accounts grew to 56 million in 57 countries and
territories. The U.S. bankcards business reported a 2% decline in
accounts, while accounts in other consumer businesses grew by 5%
from a year ago, including 12% account growth in the emerging
markets. The number of accounts in North America, Europe, Asia,
and Latin America at year-end totaled 36 million, 8 million, 7
million, and 5 million, respectively.
o Revenue was down slightly in the quarter -- up 3% adjusted for
the effect of foreign currency translation -- reflecting
worldwide business volume growth and spread improvements in
Citibanking in the U.S., lower spreads in the emerging markets,
and the U.S bankcard competitive operating environment. The 1996
fourth quarter included a $24 million pretax gain from the sale
of an interest in an Asian affiliate.
o Adjusted operating expense increased 4% -- 9% adjusted for the
effect of foreign currency translation -- reflecting continued
efforts to expand the account base, investment in product
development and testing, and expansion into new marketplaces.
o Credit costs in the quarter were $866 million, up $10 million
from the 1997 third quarter and up $22 million from the 1996
fourth quarter. The ratio of net credit losses to average managed
loans was stable at 2.50% in both 1997 fourth and
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<PAGE>
third quarters, and 2.51% a year ago. Global Consumer continued
to build the allowance for credit losses, adding $25 million
above net write-offs in the quarter.
o The credit card product line expanded with the introduction of
the Citibank Platinum Select AAdvantage card. Citibank also
released the next generation of Direct Access, its acclaimed
online banking service, and unveiled a new look and new features
for its Internet website.
o In Canada, Citibank was awarded a contract by the Federal
Government to provide a bankcard for government purchases; and in
India, Citibank opened its seventh branch, at Pune in Maharashtra
state.
o The recognition of Citibank as a brand was reflected in its being
ranked among the top five in the Far Eastern Economic Review's
listing of Asia's Top Ten Leading Companies.
Citibanking Fourth Quarter % Full Year %
(In Millions of 1997 1996(A) Change 1997 1996(A) Change
Dollars)
Revenue $1,528 $1,502 2 $6,030 $5,796 4
Operating Expense 1,120 1,070 5 4,333 4,129 5
Operating Margin 408 432 (6) 1,697 1,667 2
Credit Costs 139 155 (10) 567 634 (11)
Operating Margin Less 269 277 (3) 1,130 1,033 9
Credit Costs
Additional Provision - - - - 4 NM
Restructuring Charge - - - 457 - NM
Income Before Taxes 269 277 (3) 673 1,029 (35)
Income Taxes 101 68 49 195 306 (36)
Net Income $ 168 $ 209 (20) $ 478 $ 723 (34)
Average Assets (In $86 $83 4 $85 $83 2
Billions of Dollars)
Return on Assets (%) 0.78 1.00 - 0.56 0.87 -
Excluding Restructuring Charge:
Income $753 $723 4
Return on Assets (%) 0.89 0.87 -
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
o Income before taxes from Citibanking activities -- delivering
products and services to customers through branches and
electronic delivery systems -- was $269 million in the quarter,
down $8 million or 3% from 1996, reflecting an $83 million
decline in the emerging markets and an increase of $75 million in
the developed markets. Net income was further reduced by a higher
effective tax rate. For the 1997 full year, income before taxes
(excluding the $457 million effect of the 1997 third quarter
restructuring charge) was $1.1 billion, up $101 million or 10%
from 1996.
o Worldwide Citibanking accounts totaled 20 million as of December
31, 1997, up 4% from a year ago, including 10% growth in the
emerging markets. Average customer deposits of $95 billion were
up 4% -- 11% adjusted for the effect of foreign currency
translation -- from a year-ago, reflecting increased account
openings and deposit levels primarily due to a "flight to
quality" in Asia, and growth in the United States.
o Revenue increased 2% in the quarter -- up 6% in the developed
markets and down 6% in the emerging markets. Excluding the effect
of foreign currency translation and the 1996 gain on the sale of
an interest in an Asian affiliate, revenue increased 9% -- 11% in
the developed markets and 6% in the emerging markets. Developed
markets revenue reflected growth in all regions, including spread
improvements in the United States. Emerging markets revenue
reflected business volume increases in Asia Pacific and Latin
America, which were more than offset by lower spreads and the
effect of foreign currency translation.
4
<PAGE>
o Operating expense in the quarter was up 5% -- 3% in the developed
markets and 9% in the emerging markets. Excluding the effect of
foreign currency translation, operating expense increased 10% --
6% in the developed markets and 17% in the emerging markets --
reflecting account growth, franchise expansion, and new product
development costs.
o Credit costs in the quarter declined by $16 million or 10% from a
year ago, reflecting the effect of foreign currency translation
and improvement in the U.S. and Europe, offset by higher net
credit losses in Asia Pacific and Latin America.
Cards Fourth Quarter % Full Year %
(In Millions of 1997 1996(A) Change 1997 1996(A) Change
Dollars)
Adjusted Revenue $1,715 $1,780 (4) $6,903 $6,666 4
Adjusted Operating 653 631 3 2,634 2,482 6
Expense
Operating Margin 1,062 1,149 (8) 4,269 4,184 2
Credit Costs 736 685 7 2,990 2,482 20
Operating Margin Less 326 464 (30) 1,279 1,702 (25)
Credit Costs
Additional Provision 25 50 (50) 100 196 (49)
Restructuring Charge - - - 95 - NM
Income Before Taxes 301 414 (27) 1,084 1,506 (28)
Income Taxes 92 130 (29) 320 482 (34)
Net Income $ 209 $ 284 (26) $ 764 $1,024 (25)
Average Assets (In $31 $30 3 $31 $27 15
Billions of Dollars)
Return on Assets (%) 2.67 3.77 - 2.46 3.79 -
Excluding Restructuring Charge:
Income $822 $1,024 (20)
Return on Assets (%) 2.65 3.79 -
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
o Net income from Cards worldwide -- bankcards, Diners Club, and
private label cards -- was $209 million in the quarter, down $75
million from the 1996 quarter, due to a $48 million decline in
the emerging markets, and a $27 million decline in the developed
markets, primarily in U.S. bankcards. However, U.S. bankcards
earnings were higher than in the 1997 second and third quarters.
Cards in the emerging markets represented 28% of Cards net income
in the quarter, compared with 37% in the 1996 quarter. For the
1997 full year, income was $822 million (excluding the $58
million after-tax effect of the 1997 third quarter restructuring
charge), down $202 million or 20% from 1996. Cards worldwide
return on managed assets (including securitized card receivables)
in the fourth quarter was 1.44%, compared with 2.03% in the
year-ago quarter.
o Card accounts worldwide totaled 36 million as of December 31,
1997. Excluding U.S. bankcards, accounts increased 8% from a year
ago including a 14% increase in the emerging markets. (The number
of cards in force, including affiliates, at year end was 65
million, up from 61 million in 1996). Cards, including Diners
Club, operated in 45 countries and territories, compared with 43
a year ago.
o U.S. bankcards charge volumes increased from the year-ago quarter
by $1.2 billion or 4% to $27.9 billion and managed receivables
were up $1.2 billion to $48.2 billion. Cards revenue in the
developed markets was down 2% in the quarter, however, reflecting
competitive pricing in the U.S. bankcards business. Fourth
quarter revenue in emerging markets Cards was down 12%, but up 2%
adjusted for the effect of foreign currency translation,
reflecting higher loan volumes offset by reduced earnings from a
Latin America affiliate and lower spreads.
o Adjusted operating expense increased 3% -- 8% in the emerging
markets and 2% in the developed markets. Operating expense
increased 8% adjusted for the effect of foreign currency
translation -- 23% in the emerging markets and 5% in
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the developed markets -- in support of higher loan volumes,
continued investment spending to expand the franchise, and risk
management programs in U.S. bankcards.
o Credit costs of $736 million decreased $4 million from the
preceding quarter (excluding an $11 million benefit from the
third quarter sale of certain charged-off accounts) and increased
$51 million from the 1996 quarter.
o Credit costs in U.S. bankcards were $655 million or 5.64% of
average managed loans, compared with $650 million or 5.68%
(excluding the $11 million and 10 basis point benefit from the
sale of certain charged-off accounts) in the prior quarter and
$608 million or 5.45% in the 1996 fourth quarter. The
12-month-lagged loss ratio was 5.86% in the quarter, compared
with 6.03% (excluding the 10 basis point benefit from the sale of
certain charged-off accounts) in the prior quarter and 5.73% a
year-ago. The percent of gross write-offs from bankruptcies in
the quarter was 40.8%, compared with 39.8% in the prior quarter
and 38.0% in the 1996 quarter. Managed loans delinquent 90 days
or more were $856 million or 1.80% at quarter-end, compared with
$806 million or 1.76% for the third quarter and $886 million or
1.90% a year-ago. The increase in U.S. bankcards delinquencies
from the third quarter reflected seasonal factors.
o Credit costs in non-U.S. bankcard portfolios were $81 million or
3.52% of managed loans, compared with $90 million or 3.92% in the
third quarter and $77 million or 3.58% in the 1996 quarter.
Private Bank Fourth Quarter % Full Year %
(In Millions of 1997 1996(A) Change 1997 1996(A) Change
Dollars)
Adjusted Revenue $288 $285 1 $1,128 $1,033 9
Adjusted Operating 194 186 4 728 686 6
Expense
Operating Margin 94 99 (5) 400 347 15
Credit (Benefits) Costs (9) 4 NM (19) (1) NM
Operating Margin
Less Credit 103 95 8 419 348 20
(Benefits) Costs
Restructuring Charge - - - 28 - NM
Income Before Taxes 103 95 8 391 348 12
Income Taxes 24 17 41 80 67 19
Net Income $ 79 $ 78 1 $ 311 $ 281 11
Average Assets (In $16 $16 - $16 $16 -
Billions of Dollars)
Return on Assets (%) 1.96 1.94 - 1.94 1.76 -
Excluding Restructuring Charge:
Income $329 $281 17
Return on Assets (%) 2.06 1.76 -
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
o Private Bank income before taxes was $103 million for the
quarter, up 8% from the 1996 fourth quarter. Net income growth in
the quarter was reduced by a higher effective tax rate. For the
1997 full year, income was $329 million (excluding the $18
million after-tax effect of the restructuring charge), up $48
million or 17% from 1996.
o Client business volumes under management at the end of the
quarter reached $101 billion, up 5% from $96 billion a year
earlier. Growth in discretionary and advisory investments, and
trust and fiduciary contributed substantially all of the
increase.
o Revenue increased 1% in the quarter, 3% excluding the effect of
foreign currency translation. Emerging markets revenue was down
2%, primarily due to market volatility in Asia Pacific, while
developed markets revenue was up 3%. Revenue growth was also
reduced by lower revenue related to market performance, and
increased by client- related foreign exchange revenue.
6
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o Adjusted operating expense increased 4% -- 8% excluding the
effect of foreign currency translation -- primarily reflecting
increased staffing needed to support higher business volumes, and
marketing and technology initiatives.
o Credit costs for the quarter and the full year were a benefit as
a result of recoveries combined with low credit losses. Overall
credit trends continued to improve, with loans delinquent 90 days
or more down to $110 million or 0.72% of loans, from $146 million
or 0.94% in the preceding quarter, and $193 million or 1.26% in
the fourth quarter of 1996, reflecting continued active portfolio
management.
Global Consumer in Fourth Quarter % Full Year %
Emerging Markets
(In Millions of 1997 1996(A) Change 1997 1996(A) Change
Dollars)
Adjusted Revenue $910 $983 (7) $3,810 $3,635 5
Adjusted Operating 585 540 8 2,260 2,060 10
Expense
Operating Margin 325 443 (27) 1,550 1,575 (2)
Credit Costs 88 77 14 368 357 3
Operating Margin Less 237 366 (35) 1,182 1,218 (3)
Credit Costs
Additional Provision 25 1 NM 51 15 NM
Restructuring Charge - - - 131 - NM
Income Before Taxes 212 365 (42) 1,000 1,203 (17)
Income Taxes 35 81 (57) 181 270 (33)
Net Income $177 $284 (38) $ 819 $ 933 (12)
Average Assets (In $42 $40 5 $42 $38 11
Billions of Dollars)
Return on Assets (%) 1.67 2.82 - 1.95 2.46 -
Excluding Restructuring Charge:
Income $901 $933 (3)
Return on Assets (%) 2.15 2.46 -
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
o Net income in the emerging markets was $177 million in the
quarter, down $107 million from a year ago, reflecting the
economic turmoil in Asia Pacific and the contagion effect on
Brazil. For the 1997 full year, income was $901 million
(excluding the $82 million after-tax effect of the 1997 third
quarter restructuring charge), down $32 million or 3% from 1996.
o Revenue declined by 7% in the quarter, but was up slightly after
adjusting for the effect of foreign currency translation.
Business volume growth was partially offset by reduced spreads,
mainly due to higher funding costs associated with economic
conditions, as well as related initiatives including the
extension of funding tenors, increased liquidity cushions, and
tightened credit criteria in certain countries. Expense growth of
8% -- 18% adjusted for the effect of foreign currency translation
-- reflected spending associated with business volume growth,
including double-digit growth in accounts and customer loans and
deposits (adjusted for the effect of foreign currency
translation). Expense growth also reflected continued franchise
building efforts including product development, new and existing
market expansion, and technology initiatives.
o Credit costs in the emerging markets decreased $3 million
(increased $5 million adjusted for the effect of foreign currency
translation) from the 1997 third quarter, and increased $11
million ($28 million adjusted for the effect of foreign currency
translation) from the 1996 fourth quarter. The net credit loss
ratio in Asia Pacific was 0.88%, up from 0.83% in the third
quarter and 0.79% a year ago. The net credit loss ratio in Latin
America was 2.29%, down from 2.57% in the third quarter and up
from 2.14% a year ago. Emerging markets managed loans delinquent
90 days or more were $465 million or 1.43% at quarter-end,
compared with $453 million or 1.31% for the third quarter and
$370 million or 1.12% a year-ago. The emerging markets built the
loan loss allowance by $25 million.
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Global Consumer in Fourth Quarter % Full Year %
Developed Markets
(In Millions of 1997 1996(A) Change 1997 1996(A) Change
Dollars)
Adjusted Revenue $2,621 $2,584 1 $10,251 $9,860 4
Adjusted Operating 1,382 1,347 3 5,435 5,237 4
Expense
Operating Margin 1,239 1,237 - 4,816 4,623 4
Credit Costs 778 767 1 3,170 2,758 15
Operating Margin Less 461 470 (2) 1,646 1,865 (12)
Credit Costs
Additional Provision - 49 NM 49 185 (74)
Restructuring Charge - - - 449 - NM
Income Before Taxes 461 421 10 1,148 1,680 (32)
Income Taxes 182 134 36 414 585 (29)
Net Income $ 279 $ 287 (3) $ 734 $1,095 (33)
Average Assets (In $91 $89 2 $90 $88 2
Billions of Dollars)
Return on Assets (%) 1.22 1.28 - 0.82 1.24 -
Excluding Restructuring Charge:
Income $1,003 $1,095 (8)
Return on Assets (%) 1.11 1.24 -
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
o Income before taxes in the developed markets was $461 million in
the quarter, up $40 million from 1996, reflecting strong
performance in Citibanking and lower earnings in U.S. bankcards.
Net income was reduced by a higher effective tax rate of 39%, up
from 32% in 1996, primarily reflecting changes in the nature and
geographic mix of earnings. For the 1997 year, income was $1.0
billion (excluding the $269 million after-tax effect of the 1997
third quarter restructuring charge), down $92 million or 8% from
1996.
o Revenue was up 1% in the quarter -- 4% adjusted for the effect of
foreign currency translation, primarily in Germany -- reflecting
strong growth in the U.S. Citibanking business, partially offset
by lower revenue in U.S. bankcards. Expense grew 3% -- 6%
adjusted for the effect of foreign currency translation -- in
support of higher business volumes, new product development, and
risk management activities in U.S. bankcards. Managed loans
delinquent 90 days or more were $2,733 million or 2.58% at
quarter-end, compared with $2,763 million or 2.66% for the third
quarter and $3,218 million or 3.10% a year-ago.
o Credit costs in the developed markets increased by 1% in the
quarter from the 1996 fourth quarter, reflecting higher credit
costs in U.S. bankcards, offset by improvements in Citibanking
and the Private Bank.
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Global Corporate Banking net income was $556 million in quarter
Global Corporate Fourth Quarter % Full Year %
Banking
(In Millions of 1997 1996(A) Change 1997 1996(A) Change
Dollars)
Adjusted Revenue $2,182 $1,994 9 $8,269 $7,152 16
Adjusted Operating 1,360 1,224 11 5,000 4,467 12
Expense
Operating Margin 822 770 7 3,269 2,685 22
Credit Costs (Benefits) 24 (15) NM (95) (87) (9)
Operating Margin
Less Credit Costs 798 785 2 3,364 2,772 21
(Benefits)
Restructuring Charge - - - 281 - NM
Income Before Taxes 798 785 2 3,083 2,772 11
Income Taxes 242 240 1 693 611 13
Net Income $ 556 $ 545 2 $2,390 $2,161 11
Average Assets (In $164 $142 15 $156 $139 12
Billions of Dollars)
Return on Assets (%) 1.35 1.53 - 1.53 1.55 -
Excluding Restructuring Charge:
Income $2,558 $2,161 18
Return on Assets (%) 1.64 1.55 -
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
o Net income was $556 million in the quarter, up $11 million or 2%
from 1996. For the full year, income (excluding the $168 million
after-tax effect of the restructuring charge) was $2.6 billion,
up $397 million or 18%.
o Revenue in the quarter increased $188 million or 9% from the
year-ago quarter, with $53 million of the increase attributable
to the Emerging Markets business and $135 million attributable to
Global Relationship Banking. Excluding the effect of foreign
currency translation, revenue rose 15% compared with the 1996
fourth quarter. Adjusted operating expense increased $136 million
or 11% from 1996 -- 15% excluding the effect of foreign currency
translation -- with $69 million of the increase in the Emerging
Markets business and $67 million in Global Relationship Banking.
Credit costs were $24 million and compared with a net benefit of
$15 million in 1996.
o Cash-basis loans of $1,064 million increased $159 million from a
year ago reflecting improvements of $122 million in Global
Relationship Banking (primarily real estate) and increases of
$281 million in the Emerging Markets, primarily in South Asia and
South Latin America. The increase in South Asia includes foreign
currency derivative contracts with a balance sheet credit
exposure of $59 million for which the accrual of trading-related
revenue has been suspended. Commercial cash-basis loans in the
Emerging Markets were $663 million at year end.
o Citibank was named top bank globally in foreign exchange,
derivatives, securitization, Eurocommercial paper, and cash
management by Corporate Finance magazine; best commercial bank in
Asia by Finance Asia magazine; best bank in a survey of global
companies by Global Finance magazine; top emerging markets
custodian bank by Global Custodian magazine; emerging markets
loan house by International Financing Review; depository bank of
the year by World Equity magazine; and, for the fifth year in a
row, the global financial institution best known in Asia by the
Far Eastern Economic Review.
9
<PAGE>
Emerging Markets Fourth Quarter % Full Year %
(In Millions of 1997 1996(A) Change 1997 1996(A) Change
Dollars)
Adjusted Revenue $962 $909 6 $3,903 $3,447 13
Adjusted Operating 535 466 15 1,964 1,700 16
Expense
Operating Margin 427 443 (4) 1,939 1,747 11
Credit Costs (Benefits) 53 41 29 71 (4) NM
Operating Margin
Less Credit Costs 374 402 (7) 1,868 1,751 7
(Benefits)
Restructuring Charge - - - 54 - NM
Income Before Taxes 374 402 (7) 1,814 1,751 4
Income Taxes 76 117 (35) 255 315 (19)
Net Income $298 $285 5 $1,559 $1,436 9
Average Assets (In $79 $64 23 $72 $60 20
Billions of Dollars)
Return on Assets (%) 1.50 1.77 - 2.17 2.39 -
Excluding Restructuring Charge:
Income $1,591 $1,436 11
Return on Assets (%) 2.21 2.39 -
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
o Income before taxes of $374 million for Emerging Markets in the
1997 fourth quarter decreased $28 million or 7% from 1996, while
a decline in the effective income tax rate to 20% from 29%,
primarily due to a change in the geographic mix and nature of
pretax earnings, benefited net income. Income (excluding the $32
million after-tax effect of the restructuring charge) in 1997 was
$1.6 billion, up $155 million or 11% from 1996.
o Revenue in the quarter increased $53 million or 6% from the year-
ago fourth quarter. The increase reflected moderate growth in
transaction banking services revenue and improved treasury
results. An increase in net asset gains and securities
transactions of $129 million to $242 million was offset by an $85
million decline in trading-related revenue to $86 million,
together with lower affiliate earnings. Higher asset levels
across the franchise mitigated the effect on revenue growth of
net interest spread compression. Aggregate securities
transactions included $186 million and $55 million of gains from
the sale of Brady bonds in the 1997 and 1996 fourth quarters. A
$74 million increase in the foreign exchange component of
trading-related revenue was more than offset by a decline in
derivative and fixed income revenue of $167 million attributable
to volatile global market conditions. About 26% 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 18% from the 1996 fourth
quarter.
o Adjusted operating expense of $535 million in 1997 increased $69
million or 15% -- 21% excluding the effect of foreign currency
translation -- from the year-ago quarter, primarily reflecting
business expansion and investment spending to build the
franchise, including costs associated with Citicorp's plan to
gain market share in selected emerging market countries,
increased spending on technology and customer service
initiatives, and volume growth.
o Credit costs of $53 million in the quarter, up $12 million from
$41 million a year ago, were concentrated in Thailand.
o Two additional offices were opened in the Czech Republic, adding
Brno and Pardubice to locations in Prague and Ostrava.
10
<PAGE>
Global Relationship Fourth Quarter % Full Year %
Banking
(In Millions of 1997 1996(A) Change 1997 1996(A) Change
Dollars)
Adjusted Revenue $1,220 $1,085 12 $4,366 $3,705 18
Adjusted Operating 825 758 9 3,036 2,767 10
Expense
Operating Margin 395 327 21 1,330 938 42
Credit Benefits (29) (56) (48) (166) (83) NM
Operating Margin
Plus Credit Benefits 424 383 11 1,496 1,021 47
Restructuring Charge - - - 227 - NM
Income Before Taxes 424 383 11 1,269 1,021 24
Income Taxes 166 123 35 438 296 48
Net Income $ 258 $ 260 (1) $ 831 $ 725 15
Average Assets (In $85 $78 9 $84 $79 6
Billions of Dollars)
Return on Assets (%) 1.20 1.33 - 0.99 0.92 -
Excluding Restructuring Charge:
Income $967 $725 33
Return on Assets (%) 1.15 0.92 -
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
o Income before taxes of $424 million from the Global Relationship
Banking business in North America, Europe, and Japan increased
$41 million or 11% compared with the 1996 fourth quarter, while
an increase in the effective tax rate, primarily due to a change
in the nature and geographic mix of earnings, reduced net income.
Income (excluding the $136 million after-tax effect of the
restructuring charge) in 1997 was $967 million, up $242 million
or 33% from 1996.
o Revenue of $1.2 billion increased $135 million or 12% from a year
ago. Revenue reflected a $119 million decline in trading-related
revenue to $180 million, and a $126 million increase in net asset
gains and securities transactions. Venture capital revenue rose
$72 million to $248 million, and was complemented by growth in
corporate finance and transaction banking services revenue. The
decline in trading-related revenue was primarily attributable to
mortgage asset gains recognized in the 1996 fourth quarter and
challenging trading markets in the current quarter. Net asset
gains and securities transactions of $142 million were largely
attributable to the real estate portfolio.
o Adjusted operating expense of $825 million increased $67 million
or 9% -- 11% excluding the effect of foreign currency translation
-- compared with the 1996 fourth quarter, primarily reflecting
volume-related expense in transaction banking services, increased
spending on technology, and higher incentive compensation.
o Credit costs in the quarter were a net benefit of $29 million,
compared with a net benefit of $56 million in the 1996 fourth
quarter, with the continuing net benefits primarily resulting
from lower gross write-offs while recoveries continued.
11
<PAGE>
Corporate Items (A) Fourth Quarter % Full Year %
(In Millions of 1997 1996(B) Change 1997 1996(B) Change
Dollars)
Revenue $293 $ 186 58 $ 994 $ 895 11
Restructuring Charge - - - 28 - NM
Other Operating Expense 90 177 (49) 475 477 -
Total Operating Expense 90 177 (49) 503 477 5
Income Before Taxes 203 9 NM 491 418 17
Income Taxes 154 138 12 843 819 3
Net Income (Loss) $ 49 ($129) NM ($352) ($401) 12
Average Assets (In $5 $5 - $7 $5 40
Billions of Dollars)
Excluding Restructuring Charge:
Loss ($315) ($401) (21)
(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%.
o Citicorp's effective tax rate was 37% in both the 1997 fourth
quarter and full year, compared with 38% for both 1996 periods.
Income taxes are attributed to core businesses, including their
restructuring charges, on the basis of local tax rates, which
resulted in effective tax rates for the core businesses of 31%
and 25% in the 1997 quarter and year, compared with 29% and 26%
for the respective 1996 periods, 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.
o Corporate Items revenue in the 1997 quarter included $42 million
realized on the sale of investment securities while the 1996
quarter reflected investment writedowns of $50 million ($72
million and $100 million for the 1997 and 1996 full years).
Expense in the 1996 fourth quarter included an incremental pretax
charge of $55 million for performance-based options ($60 million
in the 1997 first quarter).
Other Items
o During the quarter, the company generated an estimated $1.0
billion of free capital. The number of shares acquired since June
20, 1995, when the Board of Directors authorized the stock
repurchase program, totaled 78.0 million for an outlay of $6.9
billion. As expanded in January and November 1996, the program is
authorized to make total purchases for up to $8.5 billion.
o At December 31, 1997, credit loss reserves (including reserves of
$185 million for off-balance sheet credit exposures) totaled $6.0
billion.
Selected financial statements and tables detailing an analysis of
earnings and credit indicators follow. Further details concerning the
financial results will be available in March in Citicorp's Form 10-K.
12
<PAGE>
Consolidated Statement of Income CITICORP and
Subsidiaries
(In Millions of Fourth Quarter % Full Year %
Dollars,
Except Per Share 1997 1996 Change 1997 1996 Change
Amounts)
Interest Revenue $6,290 $6,007 5 $24,483 $23,349 5
Interest Expense 3,431 3,189 8 13,081 12,409 5
Net Interest Revenue 2,859 2,818 1 11,402 10,940 4
Provision for Credit 486 504 (4) 1,907 1,926 (1)
Losses
Net Interest Revenue
after 2,373 2,314 3 9,495 9,014 5
Provision for Credit
Losses
Fees, Commissions, and
Other Revenue
Fees and Commissions 1,546 1,445 7 5,817 5,469 6
Foreign Exchange 443 224 98 1,486 864 72
Trading Account (188) 217 NM 241 637 (62)
Securities Transactions 250 64 NM 668 210 NM
Other Revenue 658 597 10 2,002 2,076 (4)
Total Fees,
Commissions, 2,709 2,547 6 10,214 9,256 10
and Other Revenue
Operating Expense
Salaries 1,380 1,296 6 5,286 4,880 8
Employee Benefits 292 358 (18) 1,331 1,364 (2)
Total Employee Expense 1,672 1,654 1 6,617 6,244 6
Net Premises & 496 476 4 1,961 1,843 6
Equipment Expense
Restructuring Charge - - - 889 - NM
Other Expense 1,240 1,151 8 4,520 4,110 10
Total Operating Expense 3,408 3,281 4 13,987 12,197 15
Income Before Taxes 1,674 1,580 6 5,722 6,073 (6)
Income Taxes 613 593 3 2,131 2,285 (7)
Net Income $1,061 $ 987 7 $ 3,591 $ 3,788 (5)
Income Applicable to $1,027 $949 8 $3,451 $3,631 (5)
Common Stock
Earnings Per Share:
Basic $2.26 $2.03 11 $7.53 $7.73 (3)
Diluted (A) $2.20 $1.97 12 $7.33 $7.43 (1)
(A) Dividends of $5 million on convertible preferred stock are added
back to income applicable to common stock for purposes of the
diluted earnings per share calculation for the 1996 full year.
NM Not meaningful, as percentage equals or exceeds 100%.
Weighted Average Shares Outstanding (In Millions)
Basic 454.6 467.2 (3) 458.1 469.6 (2)
Diluted (A) 466.6 480.7 (3) 471.1 489.3 (4)
(A) Includes dilutive effect of shares issuable under employee plans
of 12.0 million and 13.5 million for the quarters and 13.0
million and 14.5 million for the full years, and 5.2 million
shares related to convertible preferred stock for the 1996 full
year.
13
<PAGE>
Consolidated Balance Sheet CITICORP and
Subsidiaries
Dec. 31, Dec. 31, %
(In Millions of Dollars) 1997 1996 Change
Assets
Cash and Due from Banks $ 8,585 $ 6,905 24
Deposits at Interest with Banks 13,049 11,648 12
Securities, at Fair Value
Available for Sale 30,762 26,062 18
Venture Capital 2,599 2,124 22
Trading Account Assets 40,356 30,785 31
Loans Held for Sale (A) 3,515 - NM
Federal Funds Sold and Securities Purchased 10,233 11,133 (8)
Under Resale Agreements
Loans, Net
Consumer 108,066 111,847 (3)
Commercial 75,947 62,765 21
Loans, Net of Unearned Income 184,013 174,612 5
Allowance for Credit Losses (5,816) (5,503) 6
Total Loans, Net 178,197 169,109 5
Customers' Acceptance Liability 1,726 2,077 (17)
Premises and Equipment, Net 4,474 4,667 (4)
Interest and Fees Receivable 3,288 3,068 7
Other Assets 14,113 13,440 5
Total $310,897 $281,018 11
Liabilities
Non-Interest-Bearing Deposits in U.S. $ 16,901 $ 14,867 14
Offices
Interest-Bearing Deposits in U.S. Offices 40,361 40,254 -
Non-Interest-Bearing Deposits in Offices 9,627 9,891 (3)
Outside the U.S.
Interest-Bearing Deposits in Offices Outside 132,232 119,943 10
the U.S.
Total Deposits 199,121 184,955 8
Trading Account Liabilities 30,986 22,003 41
Purchased Funds and Other Borrowings 21,231 18,191 17
Acceptances Outstanding 1,826 2,104 (13)
Accrued Taxes and Other Expense 6,464 5,992 8
Other Liabilities 10,288 8,201 25
Long-Term Debt 19,785 18,850 5
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 6,501 6,595 (1)
Retained Earnings 16,789 14,303 17
Net Unrealized Gains - Securities 535 676 (21)
Available for Sale
Foreign Currency Translation (626) (486) 29
Common Stock in Treasury, at Cost (4,412) (2,950) 50
Shares: 52,355,947 and 43,081,217,
respectively
Total Stockholders' Equity 21,196 20,722 2
Total $310,897 $281,018 11
(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%.
14
<PAGE>
Net Interest Revenue 4th 3rd 2nd 1st 4th
Statistics Qtr. Qtr. Qtr. Qtr. Qtr.
(Taxable Equivalent Basis)(A) 1997 1997 1997 1997 1996
(In Millions of Dollars)
Adjusted Net Interest Revenue $3,467 $3,453 $3,454 $3,449 $3,484
(B):
Effect of Credit Card (596) (565) (578) (630) (650)
Securitization Activity
Total $2,871 $2,888 $2,876 $2,819 $2,834
(In Billions of Dollars)
Adjusted Average Interest- $283.3 $280.5 $277.3 $267.3 $262.2
Earning Assets (B):
Securitized Credit Card (26.3) (24.8) (24.7) (25.1) (25.9)
Receivables
Total $257.0 $255.7 $252.6 $242.2 $236.3
Adjusted Net Interest Margin 4.85% 4.88% 5.00% 5.23% 5.28%
(B):
Effect of Credit Card (.42)% (.40)% (.43)% (.51)% (.51)%
Securitization Activity
Total 4.43% 4.48% 4.57% 4.72% 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.
Trading-Related Revenue Fourth Quarter % Full Year %
(In Millions of 1997 1996(A) Change 1997 1996(A) Change
Dollars)
By Business Sector:
Global Corporate
Banking:
Emerging Markets $ 86 $171 (50) $ 777 $ 763 2
Global Relationship 180 299 (40) 1,015 892 14
Banking
Total Global Corporate 266 470 (43) 1,792 1,655 8
Banking
Global Consumer and 81 73 11 315 254 24
Other
Total $347 $543 (36) $2,107 $1,909 10
By Trading Activity:
Foreign Exchange (B) $341 $240 42 $1,255 $ 926 36
Derivative (C) (36) 110 NM 401 557 (28)
Fixed Income (D) (16) 132 NM 198 156 27
Other 58 61 (5) 253 270 (6)
Total $347 $543 (36) $2,107 $1,909 10
By Income Statement
Line:
Foreign Exchange $443 $224 98 $1,486 $ 864 72
Trading Account (188) 217 NM 241 637 (62)
Other (E) 92 102 (10) 380 408 (7)
Total $347 $543 (36) $2,107 $1,909 10
(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%.
15
<PAGE>
Other Revenue Fourth Quarter % Full Year %
(In Millions of 1997 1996 Change 1997 1996 Change
Dollars)
Credit Card $142 $249 (43) $ 559 $ 907 (38)
Securitization Activity
(A)
Venture Capital 248 176 41 749 450 66
Affiliate Earnings 33 102 (68) 255 290 (12)
Net Asset Gains and 235 70 NM 439 429 2
Other Items
Total $658 $597 10 $2,002 $2,076 (4)
(A) Includes net credit losses on credit card receivables held for
sale commencing with the 1997 first quarter (see page 18).
NM Not meaningful, as percentage equals or exceeds 100%.
Provision for Credit Fourth Quarter % Full Year %
Losses
(In Millions of 1997 1996 Change 1997 1996 Change
Dollars)
Global Consumer Net $432 $455 (5) $1,831 $1,728 6
Write-Offs
Global Corporate
Banking 29 (1) NM (24) (2) NM
Net Write-Offs
(Recoveries)
Additional Provision 25 50 (50) 100 200 (50)
Total $486 $504 (4) $1,907 $1,926 (1)
NM Not meaningful, as percentage equals or exceeds 100%.
16
<PAGE>
Margin Basis Fourth Quarter % Full Year %
Reconciliation
(In Millions of 1997 1996 Change 1997 1996 Change
Dollars)
Revenue $5,568 $5,365 4 $21,616 $20,196 7
Effect of Credit Card
Securitization 434 389 12 1,713 1,392 23
Activity (A)
Net Cost to Carry (B) 4 (7) NM (5) (46) 89
Adjusted Revenue 6,006 5,747 5 23,324 21,542 8
Total Operating Expense 3,408 3,281 4 13,987 12,197 15
Net OREO Benefits (C) 9 7 29 72 44 64
Restructuring Charge - - - (889) - NM
Adjusted Operating 3,417 3,288 4 13,170 12,241 8
Expense
Operating Margin 2,589 2,459 5 10,154 9,301 9
Global Consumer Net 432 455 (5) 1,831 1,728 6
Write-Offs
Effect of Credit Card
Securitization 434 389 12 1,713 1,392 23
Activity (A)
Net Cost to Carry and
Net - - - (6) (5) 20
OREO Benefits (B) (C)
Adjusted Global
Consumer Credit Costs 866 844 3 3,538 3,115 14
Global Corporate
Banking 29 (1) NM (24) (2) NM
Net Write-Offs
(Recoveries)
Net Cost to Carry and
Net (5) (14) (64) (71) (85) (16)
OREO Benefits (B) (C)
Adjusted Global
Corporate 24 (15) NM (95) (87) (9)
Banking Credit
Costs (Benefits)
Additional Provision 25 50 (50) 100 200 (50)
(D)
Restructuring Charge - - - 889 - NM
Income Before Taxes $1,674 $1,580 6 $ 5,722 $ 6,073 (6)
(A) Commencing with the 1997 first quarter, includes effect related
to credit card receivables held for sale.
(B) Includes the net cost to carry cash-basis loans and other real
estate owned ("OREO").
(C) Includes gains and losses on sales, direct revenue and expense,
and writedowns of OREO.
(D) Represents amounts in excess of net write-offs.
NM Not meaningful, as percentage equals or exceeds 100%.
17
<PAGE>
Consumer Loan Delinquency Amounts, Net Credit Losses, and Ratios
(In Millions Total 90 Days or More Past Avg. Net Credit Losses
of $'s, Loans Due (A) Loans (A)
except Loan Dec. Dec. Sept. Dec. 4th 4th 3rd 4th
Amounts in 31, 31, 30, 31, Qtr. Qtr. Qtr. Qtr.
Billions) 1997 1997 1997 1996 1997 1997 1997 1996
Citibanking $ 66.4 $2,038 $2,082 $2,320 $ 66.9 $139 $135 $155
Ratio 3.07% 3.07% 3.50% 0.83% 0.80% 0.94%
Cards
U.S. 47.6 856 806 886 46.0 655 639 608
Bankcards
Ratio 1.80% 1.76% 1.90% 5.64% 5.58% 5.45%
Other (B) 9.2 194 182 189 9.2 81 90 77
Ratio 2.12% 1.98% 2.13% 3.52% 3.92% 3.58%
Private Bank 15.2 110 146 193 15.3 (9) (4) 4
Ratio 0.72% 0.94% 1.26% NM NM 0.07%
Total Managed 138.4 3,198 3,216 3,588 137.4 866 860 844
Ratio 2.31% 2.32% 2.62% 2.50% 2.50% 2.51%
Securitized
Credit (26.8) (481) (452) (501) (26.3) (403) (378) (389)
Card
Receivables
Loans Held
for Sale(C) (3.5) (35) (34) - (3.6) (31) (30) -
Total Loans $108.1 $2,682 $2,730 $3,087 $107.5 $432 $452 $455
Ratio 2.48% 2.51% 2.76% 1.60% 1.67% 1.68%
Managed
Portfolio:
Developed $105.8 $2,733 $2,763 $3,218 $104.4 $778 $769 $767
Ratio 2.58% 2.66% 3.10% 2.96% 2.98% 3.01%
Emerging 32.6 465 453 370 33.0 88 91 77
Ratio 1.43% 1.31% 1.12% 1.06% 1.06% 0.94%
Emerging
Portfolio:
Asia Pacific $20.1 $288 $289 $243 $20.6 $46 $47 $42
Ratio 1.43% 1.31% 1.12% 0.88% 0.83% 0.79%
Latin America 7.4 173 158 124 7.2 41 44 32
Ratio 2.34% 2.24% 2.05% 2.29% 2.57% 2.14%
Private Bank 5.1 4 6 3 5.2 1 - 3
Ratio 0.08% 0.11% 0.06% 0.06% - 0.17%
(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) Includes bankcards outside of the U.S, worldwide Diners, and
private label cards.
(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.
18
<PAGE>
Cash-Basis and Renegotiated Loans Dec. Sept. Dec.
(In Millions of Dollars) 31, 30, 31,
1997 1997 1996
Commercial Cash-Basis Loans
Collateral-Dependent (at Lower of Cost or $ 258 $271 $263
Collateral Value) (A)
Other (B) 806 698 642
Total Commercial Cash-Basis Loans $1,064 $969 $905
Commercial Renegotiated Loans $59 $70 $321
Consumer Loans on which Accrual of Interest $1,849 $1,902 $2,187
has been Suspended
(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.
(B) Includes foreign currency derivative contracts with a balance
sheet credit exposure of $59 million for which the accrual of
trading-related revenue has been suspended.
Other Real Estate Owned (OREO) and Assets Dec. Sept. Dec.
Pending Disposition (A) 31, 30, 31,
(In Millions of Dollars) 1997 1997 1996
Consumer OREO $263 $309 $ 452
Commercial OREO 461 479 614
Total $724 $788 $1,066
Assets Pending Disposition (B) $96 $88 $160
(A) Carried at lower of cost or collateral value.
(B) Represents consumer residential mortgage loans that have a high
probability of foreclosure.
Consolidated Average Balances 4th 3rd 2nd 1st 4th
(In Billions of Dollars) Qtr. Qtr. Qtr. Qtr. Qtr.
1997 1997 1997 1997 1996
Loans:
Consumer $107 $108 $107 $106 $108
Commercial 73 69 67 62 61
Total Average Loans $180 $177 $174 $168 $169
Total Average Assets $302 $299 $293 $285 $276
(In Millions of Dollars)
Common Stockholders' Equity $18,952 $19,633 $18,933 $18,698 $18,321
Preferred Equity 1,903 1,903 1,903 2,049 2,078
Total Average Stockholders' $20,855 $21,536 $20,836 $20,747 $20,399
Equity
19
<PAGE>
Capital and Other Items Fourth Quarter %
(In Billions of Dollars, Except Share Data) 1997 1996 Change
Common Stockholders' Equity Per Share $42.50 $40.25 6
Closing Stock Price At Quarter End $126.44 $103.00 23
Dividends Per Common Share - For the Fourth $0.525 $0.45 17
Quarter
Dividends Per Common Share -- For the Full $2.10 $1.80 17
Year
Tier 1 Capital $21.1 $19.8 7
Total Capital (Tier 1 and 2) (A) $31.2 $28.9 8
Tier 1 Capital Ratio (A) 8.3% 8.4% -
Total Capital Ratio (Tier 1 and 2) (A) 12.3% 12.2% -
Common Equity as a Percentage of Total Assets 6.2% 6.6% -
Total Equity as a Percentage of Total Assets 6.8% 7.4% -
(A) 1997 estimated.
20
<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
20
<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: January 21, 1998
21
CITICORP AND SUBSIDIARIES
CALCULATION OF RATIO OF INCOME TO FIXED CHARGES
(In Millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
EXCLUDING INTEREST ON DEPOSITS: 1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
FIXED CHARGES:
INTEREST EXPENSE (OTHER THAN
INTEREST ON DEPOSITS) 3,468 3,435 4,110 5,906 6,324
INTEREST FACTOR IN RENT EXPENSE 159 150 140 143 147
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 3,627 3,585 4,250 6,049 6,471
------ ------ ------ ------ ------
INCOME:
NET INCOME 3,591 3,788 3,464 3,422 (A) 1,919 (B)
INCOME TAXES 2,131 2,285 2,121 1,189 941
FIXED CHARGES 3,627 3,585 4,250 6,049 6,471
------ ------ ------ ------ ------
TOTAL INCOME 9,349 9,658 9,835 10,660 9,331
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS 2.58 2.69 2.31 1.76 1.44
====== ====== ====== ====== ======
INCLUDING INTEREST ON DEPOSITS:
FIXED CHARGES:
INTEREST EXPENSE 13,081 12,409 13,012 14,902 16,121
INTEREST FACTOR IN RENT EXPENSE 159 150 140 143 147
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 13,240 12,559 13,152 15,045 16,268
------ ------ ------ ------ ------
INCOME:
NET INCOME 3,591 3,788 3,464 3,422(A) 1,919(B)
INCOME TAXES 2,131 2,285 2,121 1,189 941
FIXED CHARGES 13,240 12,559 13,152 15,045 16,268
------ ------ ------ ------ ------
TOTAL INCOME 18,962 18,632 18,737 19,656 19,128
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
INCLUDING INTEREST ON DEPOSITS 1.43 1.48 1.42 1.31 1.18
====== ====== ====== ====== ======
</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.
CITICORP AND SUBSIDIARIES
CALCULATION OF RATIO OF INCOME TO FIXED CHARGES
INCLUDING PREFERRED STOCK DIVIDENDS
(In Millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
EXCLUDING INTEREST ON DEPOSITS: 1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
FIXED CHARGES:
INTEREST EXPENSE (OTHER THAN
INTEREST ON DEPOSITS) 3,468 3,435 4,110 5,906 6,324
INTEREST FACTOR IN RENT EXPENSE 159 150 140 143 147
DIVIDENDS--PREFERRED STOCK 223 261 553 505 (A) 465
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 3,850 3,846 4,803 6,554 6,936
------ ------ ------ ------ ------
INCOME:
NET INCOME 3,591 3,788 3,464 3,422 (B) 1,919 (C)
INCOME TAXES 2,131 2,285 2,121 1,189 941
FIXED CHARGES (EXCLUDING PREFERRED
STOCK DIVIDENDS) 3,627 3,585 4,250 6,049 6,471
------ ------ ------ ------ ------
TOTAL INCOME 9,349 9,658 9,835 10,660 9,331
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS 2.43 2.51 2.05 1.63 1.35
====== ====== ====== ====== ======
INCLUDING INTEREST ON DEPOSITS:
FIXED CHARGES:
INTEREST EXPENSE 13,081 12,409 13,012 14,902 16,121
INTEREST FACTOR IN RENT EXPENSE 159 150 140 143 147
DIVIDENDS--PREFERRED STOCK 223 261 553 505(A) 465
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 13,463 12,820 13,705 15,550 16,733
------ ------ ------ ------ ------
INCOME:
NET INCOME 3,591 3,788 3,464 3,422 (B) 1,919 (C)
INCOME TAXES 2,131 2,285 2,121 1,189 941
FIXED CHARGES (EXCLUDING PREFERRED
STOCK DIVIDENDS) 13,240 12,559 13,152 15,045 16,268
------ ------ ------ ------ ------
TOTAL INCOME 18,962 18,632 18,737 19,656 19,128
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
INCLUDING INTEREST ON DEPOSITS 1.41 1.45 1.37 1.26 1.14
====== ====== ====== ====== ======
</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.
