Citibank 2007 Annual Report Download - page 4

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With our capital base strengthened, we have been conducting
an objective review of every one of our businesses to ensure
that the company is well positioned in light of new global
trends. I am keenly aware of the need to distinguish between
our strong operating assets and those that are lower-returning.
Our lower-returning assets need to be astutely managed as
they mature and wind down, and we are doing just that.
Citi’s strong operating businesses will fuel our future earnings
power. We are fortunate to have businesses that are specically
positioned to capture trends in global growth. With capital ows
around the world rising rapidly and sizable new wealth being
created in developing markets, the need for nancial products
and services is growing at a multiple of economic growth. Citi
sits squarely in the middle of these trends.
For example, our institutional businesses, such as Global
Transaction Services, have benetted from the dramatic rise in
the number and inuence of multinational corporations as well
as from the enormous growth in trade ows. Furthermore, our
Securities and Banking business is preeminently positioned to
take advantage of increasing foreign exchange, emerging
markets, and cross-border capital ows the world over.
Our consumer-related operations are capturing the gains from
the rising afuence of a new middle class in emerging
countries. As people begin to be able to purchase more goods,
they need dependable credit and payment vehicles and our
credit card business is serving such customers around the
world. For the developed and emerging markets’ booming
afuent communities, which may be new to nancial decisions,
Citi Private Bank and Smith Barney, as well as our CitiGold
offering, are helping clients to simplify and manage their assets
and liabilities.
Each business is rmly situated on a highway of vast global
and cross-border ows, in large part due to our long presence —
more than 100 years each — in countries such as Mexico, India,
Poland, and China; we were also early among international
banks in establishing a local bank in Russia, in 1994. Part of
Citi’s strength lies in its ability to bring its global reach together
with its local depth.
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I am sharply focused on excellence in productivity, efcient use
of capital, operating excellence, and making sure the right
people are in the right place. Let me elaborate:
n Capital allocation. This is my top priority, and I am
aggressively building a new risk culture at Citi. We have
named a new Chief Risk Ofcer and I will stay actively
involved in strengthening and reshaping our risk philosophy
It is with a great sense of honor and pride that I address my
rst letter to you.
2007 was a year marked by both great successes and
signicant disappointments. Many of our large businesses,
including International Consumer, Global Wealth Management,
Global Transaction Services, and our franchises in Asia and
Latin America, generated record results and strong momentum.
These rm-wide successes were overshadowed, however, by
unprecedented losses resulting from the sudden and severe
deterioration in the U.S. sub-prime market. These losses,
combined with higher credit costs in the U.S. Consumer
portfolio, drove a sharp decline in earnings. Our overall results
for 2007 were clearly unacceptable to us all.
But 2008 is a new year, and I hope that after reading this letter
you will share my excitement about our businesses. In my rst
few months as CEO, we have taken decisive action on a number
of issues. Our actions will leverage Citi’s footprint and many
fundamental strengths, and enhance the company’s ability to
generate sustainable, long-term growth in earnings.
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Since November we have raised more than $30 billion of new
capital through public and private offerings to long-term
investors. The success of these transactions speaks to the
underlying strength of our franchise and the growth
opportunities before us. Having raised this capital, we are well
positioned to endure a potential economic slowdown and stand
rmly by our clients in these volatile markets.
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In January 2008, the company lowered the dividend to $0.32.
This was a very difcult but necessary decision. We realize its
signicance for many of you, particularly in these tough market
conditions. Nonetheless, this new dividend level will allow us to
reinvest in growth and at the same time ensure Citi is properly
positioned for both favorable and unfavorable economic conditions.
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