Citibank 2011 Annual Report Download - page 41

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2010 vs. 2009
Net income improved by $313 million, driven by the reduction in credit
costs, partly offset by lower revenues and higher expenses. During 2010,
the U.S. dollar generally appreciated versus local currencies. As a result,
the impact of FX translation accounted for an approximately 1% decline in
revenues and expenses, respectively.
Revenues declined 3% driven by FX translation and the continued
liquidation of non-strategic customer portfolios. Net interest revenue was
5% lower due to the continued decline in the higher yielding non-strategic
retail banking portfolio. In 2010, Citi focused its lending strategy around
higher credit quality customers who tend to revolve less, meaning they
have lower average balances than customers previously had. While this led
to lower credit costs, it also negatively impacted Net interest revenue as
customers paid off their loans more quickly. Non-interest revenue increased
1%, reflecting higher investment sales and a higher contribution from Citi’s
equity investment in Akbank.
Expenses increased 5%, due to account acquisition-focused investment
spending and volumes. As the average customer credit quality improved,
Citi focused on volume growth to compensate for the lower revenue. The
expansion of the sales force in 2010 drove some of the expense increase as
compared to 2009.
Provisions decreased 75% from the prior year driven by reduction in net
credit losses and higher loan loss reserve releases. Net credit losses decreased
33%, reflecting continued credit quality improvement and the move to lower
risk products.