Bancherul - BANCI / ENGLISH / Citi Reports Second Quarter Net Loss of $2.2 Billion

Citi today reported a net loss for the 2008 second quarter of $2.5 billion, or $0.54 per share, based on 5,287 million shares outstanding. Solid results in the core franchise were offset by write-downs and credit costs. Results include $7.2 billion in pre-tax write-downs in Securities and Banking. Additionally, credit costs increased $4.5 billion, mainly driven by Consumer Banking in North America and Global Cards.

Second Quarter Highlights

- Results improved substantially versus first quarter 2008 due to lower write-downs and good performance in the core franchise.
- Total assets declined by $99 billion since first quarter 2008; approximately two-thirds from legacy assets.
- Sale of non-strategic businesses on track; announced CitiCapital, Diners Club International and CitiStreet transactions.
- Capital position improved as Tier 1 Capital ratio increased to 8.7%; total allowance for loans, leases and unfunded lending commitments increased to $22 billion.
- Re-engineering efforts resulted in sequential decline in headcount and expenses.
- Headcount reduced by approximately 6,000 in the second quarter and approximately 11,000 in the first half of 2008.
- Net interest margin expanded 34 basis points versus the first quarter 2008, to 3.18%.
- Talent enhanced by strong new hires.

Management Comment

"We continue to demonstrate strength in our core franchise. We cut our second quarter losses in half compared to the first quarter. The cost of credit increased by 20% from the first quarter, but write-downs in our Securities and Banking business dropped by 42%. Additionally, headcount and expenses declined sequentially. While there is still much to do, we are encouraged by our progress in delivering on our commitment to the re-engineering efforts," said Vikram Pandit, Chief Executive Officer of Citi.