Citibank 2011 Annual Report Download - page 43

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2010 vs. 2009
Net income increased $1.4 billion driven by lower credit costs as Citi released
reserves in 2010 as compared to reserve builds in 2009. During 2010, the
U.S. dollar generally appreciated versus local currencies. As a result, FX
translation contributed approximately 5% to the decline in both revenues
and expenses.
Revenues increased 10%. Net interest revenue increased 11% as higher
loan volumes, particularly in the retail bank, offset the effect of spread
compression. Spread compression was driven by the lower interest rates and
move towards the above referenced lower risk customer base. Non-interest
revenue increased 8% due to higher banking fee income from increased
purchase sale activity and FX translation.
Expenses increased 13% due to FX translation as well as higher volumes
and transaction-related expenses as economic conditions improved. The
increase in expenses was also due to increased investment spending,
including new cards acquisitions and new branches.
Provisions decreased 61% primarily reflecting loan loss reserve releases
of $823 million compared to a build of $463 million in the prior year as well
as a $564 million improvement in net credit losses. The increase in loan
loss reserve releases and decrease in net credit losses primarily resulted from
improved credit conditions and portfolio quality in the Citi-branded cards
portfolio, primarily in Mexico, as well as the move to customers with a lower
risk profile and stricter underwriting criteria referenced above.