Citibank 2015 Annual Report Download - page 45

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2014 vs. 2013
Net income increased 1%, primarily driven by lower expenses, largely offset
by lower revenues. Excluding the impact of the net fraud loss of $360 million
in Mexico in the fourth quarter of 2013, net income decreased 1%, primarily
driven by the lower revenues and higher expenses, largely offset by lower
credit costs.
• Revenues decreased 1%, reflecting lower revenues in Markets and
securities services (decrease of 8%), partially offset by higher revenues in
Banking (increase of 7%, or 5% excluding the gains/(losses) on hedges
on accrual loans).
Within Banking:
• Investment banking revenues increased 7%, reflecting a stronger overall
market environment and improved wallet share with ICG’s target clients,
partially offset by a modest decline in overall wallet share. The decline in
overall wallet share was primarily driven by equity and debt underwriting
and reflected market fragmentation. Advisory revenues increased 12%,
reflecting the increased target client activity and an expansion of the
overall M&A market. Equity underwriting revenues increased 18% largely
in line with overall growth in market fees. Debt underwriting revenues
were largely unchanged.
• Treasury and trade solutions revenues increased 1%. Excluding the
impact of FX translation, revenues increased 3% as continued higher
deposit balances, fee growth and trade activity were partially offset
by the impact of spread compression globally. End-of-period deposit
balances were unchanged, but increased 3% excluding the impact of
FX translation, largely driven by North America. Average trade loans
decreased 9% (7% excluding the impact of FX translation).
• Corporate lending revenues increased 52%. Excluding the impact of
gains/(losses) on hedges on accrual loans, revenues increased 15%,
primarily due to continued growth in average loan balances and lower
funding costs.
• Private bank revenues increased 7% due to growth in client business
volumes and improved spreads in banking, higher capital markets activity
and an increase in assets under management in managed investments,
partially offset by continued spread compression in lending.
Within Markets and securities services:
• Fixed income markets revenues decreased 11%, driven by a decrease
in rates and currencies revenues, partially offset by increased securitized
products and commodities revenues. Rates and currencies revenues
declined due to historically muted levels of volatility, uncertainties around
Russia and Greece and lower client activity in the first half of 2014. In
addition, the first half of 2013 included a strong performance in rates and
currencies, driven in part by the impact of quantitative easing globally.
Municipals and credit markets revenues declined due to challenging
trading conditions resulting from macroeconomic uncertainties,
particularly in the fourth quarter of 2014. These declines were partially
offset by increased securitized products and commodities revenues, largely
in North America.
• Equity markets revenues decreased 1%, primarily reflecting weakness in
EMEA, particularly cash equities, driven by volatility in Europe, largely
offset by improved performance in prime finance due to increased
customer flows.
• Securities services revenues increased 4%. Excluding the impact of FX
translation, revenues increased 5% due to increased volumes, assets under
custody and overall client activity.
Expenses decreased 1% as efficiency savings, the absence of the net
fraud loss and lower performance-based compensation were partially
offset by higher repositioning charges and legal and related expenses as
well as increased regulatory and compliance costs. Excluding the impact
of the net fraud loss, expenses increased 1%, as higher repositioning
charges and legal and related expenses as well as increased regulatory
and compliance costs were partially offset by efficiency savings and lower
performance-based compensation.
Provisions decreased 27%, primarily reflecting a release for unfunded
lending commitments in the corporate loan portfolio, compared to a build
in 2013, partially offset by higher net credit losses and a lower loan loss
reserve release driven by the overall economic environment. Net credit losses
increased 52%, largely related to the Pemex supplier program during 2014 as
well as write-offs related to a specific counterparty.