Citibank 2008 Annual Report Download - page 171

18. ALLOWANCE FOR CREDIT LOSSES
In millions of dollars 2008 2007 2006
Allowance for loan losses at beginning of year $16,117 $ 8,940 $ 9,782
Additions
Consumer provision for credit losses (1) 28,282 15,599 6,224
Corporate provision for credit losses 5,392 1,233 96
Total provision for credit losses $33,674 $16,832 $ 6,320
Deductions (2)
Consumer credit losses $18,848 $10,916 $ 8,328
Consumer credit recoveries (1,600) (1,661) (1,547)
Net consumer loan losses $17,248 $ 9,255 $ 6,781
Corporate credit losses $ 1,922 $ 948 $ 312
Corporate credit recoveries (149) (277) (232)
Net corporate credit losses (recoveries) $ 1,773 $ 671 $ 80
Other, net (3) $ (1,154) $ 271 $ (301)
Allowance for loan losses at end of year $29,616 $16,117 $ 8,940
Allowance for credit losses on unfunded lending commitments at beginning of year (4) $ 1,250 $ 1,100 $ 850
Provision for unfunded lending commitments (363) 150 250
Allowance for credit losses on unfunded lending commitments at end of year (4) $ 887 $ 1,250 $ 1,100
Total allowance for credit losses $30,503 $17,367 $10,040
(1) During 2007, the Company changed its estimate of loan losses inherent in the Global Cards and Consumer Banking portfolios that were not yet visible in delinquency statistics. The changes in estimate were accounted
for prospectively. For the quarter ended March 31, 2007, the change in estimate decreased the Company’s pretax net income by $170 million, or $0.02 per diluted share. For the quarter ended June 30, 2007, the
change in estimate decreased the Company’s pretax net income by $240 million, or $0.03 per diluted share. For the quarter ended September 30, 2007, the change in estimate decreased the Company’s pretax net
income by $900 million, or $0.11 per diluted share.
(2) Consumer credit losses primarily relate to U.S. mortgages, revolving credit and installment loans. Recoveries primarily relate to revolving credit and installment loans.
(3) 2008 primarily includes reductions to the loan loss reserve of approximately $800 million related to foreign currency translation, $102 million related to securitizations, $244 million for the sale of the German retail
banking operations, and $156 million for the sale of CitiCapital partially offset by additions of $106 million related to the Cuscatlán and Bank of the Overseas Chinese acquisitions. 2007 primarily includes reductions to
the loan loss reserve of $475 million related to securitizations and transfers to loans held-for-sale, reductions of $83 million related to the transfer of the U.K. CitiFinancial portfolio to held-for-sale, and additions of $610
million related to the acquisition of Egg, Nikko Cordial, Grupo Cuscatlán and Grupo Financiero Uno. 2006 primarily includes reductions to the loan loss reserve of $429 million related to securitizations and portfolio sales
and the addition of $84 million related to the acquisition of the CrediCard portfolio.
(4) Represents additional credit loss reserves for unfunded corporate lending commitments and letters of credit recorded within Other liabilities on the Consolidated Balance Sheet.
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