Citibank 2009 Annual Report Download - page 33

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2008 vs. 2007
Revenues, net of interest expense increased 6% compared to the prior year,
associated with higher volumes and partially offset by the extraordinary gains
recorded in 2007: a $235 million gain on the sale of Visa shares and a $78
million gain on the sale of MasterCard shares.
Net interest revenue increased 15% driven by higher volumes in both the
branded cards and retail businesses.
Non-interest revenue declined, driven by the 2007 Visa and MasterCard
extraordinary gains.
Operating expenses growth of 97% was mainly driven by goodwill
impairment of $4.3 billion in 2008, and to a lesser extent, restructuring
charges of $125 million. Partially offsetting these increases was a $257
million expense benefit related to a legal vehicle restructuring.
Provisions for loan losses and for benefits and claims increased 94%,
primarily driven by higher loan loss reserve builds in 2008 reflecting portfolio
growth and market conditions.
2010 Outlook
Improving economic conditions across the region, including the level
of exchange rates, the credit environment and unemployment rates, are
currently expected to have a positive impact on LATAM RCB performance in
2010. However, LATAM RCB results will depend on overall macroeconomic
conditions in the region as well as the impact of loss mitigation efforts and
the repositioning of the portfolio.
During the fourth quarter of 2009, LATAM RCB began to increase
investments in card account acquisition, with a focus on higher-quality
accounts. This step may begin to contribute to account and card revenue
growth in 2010. While the business anticipates continued selective marketing
and investment spending during the year, management of LATAM RCB
currently expects that overall operating expenses will continue to reflect
re-engineering efforts.
In addition, Mexico’s Ministry of Finance has publicly stated that the
U.S. government ownership stake in Citigroup does not violate Mexican law
barring indirect foreign government ownership of Mexican affiliate banks.
The Mexican Senate has asked the Mexican Supreme Court to determine
the constitutionality of the Ministry’s interpretation. The Mexican Supreme
Court is considering and will issue a resolution on the matter. Neither Citi,
Banamex nor the U.S. government is a party to this proceeding.