UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

Commission file number 1-9924

Citigroup Inc.
(Exact name of registrant as specified in its charter)

Delaware 52-1568099
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
 
399 Park Avenue, New York, NY 10022
(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: (212) 559-1000

Securities registered pursuant to Section 12(b) of the Act: See Exhibit 99.01

Securities registered pursuant to Section 12(g) of the Act: none

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  ¨  Yes  X  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  ¨  Yes  X  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  X  Yes  ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  X  Yes  ¨  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  X

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

X  Large accelerated filer ¨  Accelerated filer ¨  Non-accelerated filer ¨  Smaller reporting company
(Do not check if a smaller reporting company)  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ¨  Yes  X  No

The aggregate market value of Citigroup Inc. common stock held by non-affiliates of Citigroup Inc. on June 30, 2012 was approximately $80.4 billion.

Number of shares of Citigroup, Inc. common stock outstanding on January 31, 2013: 3,038,758,550

Documents Incorporated by Reference: Portions of the registrant’s proxy statement for the annual meeting of stockholders scheduled to be held on April 24, 2013, are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III.


FORM 10-K CROSS-REFERENCE INDEX

 
Item Number Page
 
Part I
 
1.   Business 4–36, 40, 126–132,
135–136, 163,
290–293
 
1A. Risk Factors 60–71
 
1B. Unresolved Staff Comments Not Applicable
 
2. Properties 293
 
3. Legal Proceedings 280–287
 
4. Mine Safety Disclosures Not Applicable
   
Part II  
 
5. Market for Registrant’s Common
Equity, Related Stockholder Matters,
and Issuer Purchases of Equity
Securities 44, 169, 288,
294–295, 297
 
6. Selected Financial Data 10–11
 
7. Management’s Discussion and
Analysis of Financial Condition and
Results of Operations 6–59, 72–125
 
7A. Quantitative and Qualitative
Disclosures About Market Risk 72–125, 164–165,
187–218, 223–273
 
8. Financial Statements and
Supplementary Data 140–289
 
9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure Not Applicable
 
9A. Controls and Procedures 133–134
 
9B. Other Information Not Applicable
 
Part III  
 
10.   Directors, Executive Officers and  
Corporate Governance 296–297, 299*
 
11. Executive Compensation **
 
12. Security Ownership of Certain
Beneficial Owners and Management
and Related Stockholder Matters ***
 
13. Certain Relationships and Related
Transactions and Director
Independence ****
 
14. Principal Accountant Fees and
Services *****
 
Part IV
 
15. Exhibits and Financial Statement
Schedules

*        For additional information regarding Citigroup’s Directors, see “Corporate Governance,” “Proposal 1: Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the definitive Proxy Statement for Citigroup’s Annual Meeting of Stockholders scheduled to be held on April 24, 2013, to be filed with the SEC (the Proxy Statement), incorporated herein by reference.
** See “Executive Compensation—The Personnel and Compensation Committee Report,” “—Compensation Discussion and Analysis” and “—2012 Summary Compensation Table” in the Proxy Statement, incorporated herein by reference.
*** See “About the Annual Meeting”, “Stock Ownership” and “Proposal 4, Approval of Amendment to the Citigroup 2009 Stock Incentive Plan” in the Proxy Statement, incorporated herein by reference.
**** See “Corporate Governance—Director Independence,” “—Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation,” and “—Indebtedness” in the Proxy Statement, incorporated herein by reference.
***** See “Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm” in the Proxy Statement, incorporated herein by reference.


2


CITIGROUP’S 2012 ANNUAL REPORT ON FORM 10-K

OVERVIEW   4
MANAGEMENT’S DISCUSSION AND ANALYSIS
     OF FINANCIAL CONDITION AND RESULTS
     OF OPERATIONS 6
     Executive Summary 6
     Five-Year Summary of Selected Financial Data 10
SEGMENT AND BUSINESS—INCOME (LOSS)
     AND REVENUES 12
CITICORP 14
     Global Consumer Banking 15
          North America Regional Consumer Banking 16
          EMEA Regional Consumer Banking 18
          Latin America Regional Consumer Banking 20
          Asia Regional Consumer Banking 22
     Institutional Clients Group 24
          Securities and Banking 25
          Transaction Services 28
     Corporate/Other 30
CITI HOLDINGS 31
     Brokerage and Asset Management 32
     Local Consumer Lending 33
     Special Asset Pool 36
BALANCE SHEET REVIEW 37
CAPITAL RESOURCES AND LIQUIDITY 41
     Capital Resources 41
     Funding and Liquidity 50
OFF-BALANCE-SHEET ARRANGEMENTS 58
CONTRACTUAL OBLIGATIONS 59
RISK FACTORS 60
MANAGING GLOBAL RISK 72
     CREDIT RISK 74
          Loans Outstanding 75
          Details of Credit Loss Experience 76
          Non-Accrual Loans and Assets and
               Renegotiated Loans 78
          North America Consumer Mortgage Lending 83
          North America Cards 97
          Consumer Loan Details 98
          Corporate Loan Details 100
     MARKET RISK 102
     OPERATIONAL RISK 112
     COUNTRY AND CROSS-BORDER RISK 113
          Country Risk 113
          Cross-Border Risk 120
FAIR VALUE ADJUSTMENTS FOR  
     DERIVATIVES AND STRUCTURED DEBT 123
CREDIT DERIVATIVES 124
SIGNIFICANT ACCOUNTING POLICIES AND
     SIGNIFICANT ESTIMATES 126
DISCLOSURE CONTROLS AND PROCEDURES 133
MANAGEMENT’S ANNUAL REPORT ON
     INTERNAL CONTROL OVER FINANCIAL
     REPORTING 134
FORWARD-LOOKING STATEMENTS 135
REPORT OF INDEPENDENT REGISTERED  
     PUBLIC ACCOUNTING FIRM—INTERNAL
     CONTROL OVER FINANCIAL REPORTING 137
REPORT OF INDEPENDENT REGISTERED
     PUBLIC ACCOUNTING FIRM—
     CONSOLIDATED FINANCIAL STATEMENTS 138
FINANCIAL STATEMENTS AND NOTES
     TABLE OF CONTENTS   139
CONSOLIDATED FINANCIAL STATEMENTS 140
NOTES TO CONSOLIDATED FINANCIAL
     STATEMENTS 146
FINANCIAL DATA SUPPLEMENT (Unaudited) 289
SUPERVISION, REGULATION AND OTHER 290
     Disclosure Pursuant to Section 219 of the
          Iran Threat Reduction and Syria Human Rights Act 291
     Customers 292
     Competition 292
     Properties 293
LEGAL PROCEEDINGS 293
UNREGISTERED SALES OF EQUITY,
     PURCHASES OF EQUITY SECURITIES,
     DIVIDENDS		 294
PERFORMANCE GRAPH 295
CORPORATE INFORMATION 296
     Citigroup Executive Officers 296
CITIGROUP BOARD OF DIRECTORS 299


3

 


OVERVIEW

Citigroup’s history dates back to the founding of Citibank in 1812. Citigroup’s original corporate predecessor was incorporated in 1988 under the laws of the State of Delaware. Following a series of transactions over a number of years, Citigroup Inc. was formed in 1998 upon the merger of Citicorp and Travelers Group Inc.
     Citigroup is a global diversified financial services holding company whose businesses provide consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. Citi has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions.
     Citigroup currently operates, for management reporting purposes, via two primary business segments: Citicorp, consisting of Citi’s Global Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of Brokerage and Asset Management, Local Consumer Lending and Special Asset Pool. For a further description of the business segments and the products and services they provide, see “Citigroup Segments” below, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 4 to the Consolidated Financial Statements.
     Throughout this report, “Citigroup,” “Citi” and “the Company” refer to Citigroup Inc. and its consolidated subsidiaries.
     Additional information about Citigroup is available on Citi’s website at www.citigroup.com. Citigroup’s recent annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, as well as other filings with the SEC, are available free of charge through Citi’s website by clicking on the “Investors” page and selecting “All SEC Filings.” The SEC’s website also contains current reports, information statements, and other information regarding Citi at www.sec.gov.
     Within this Form 10-K, please refer to the tables of contents on pages 3 and 139 for page references to Management’s Discussion and Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statements, respectively.

      Certain reclassifications have been made to the prior periods’ financial statements to conform to the current period’s presentation. For information on certain recent such reclassifications, including the transfer of the substantial majority of Citi’s retail partner cards businesses (which are now referred to as Citi retail services) from Citi Holdings—Local Consumer Lending to Citicorp—North America Regional Consumer Banking, which was effective January 1, 2012, see Citi’s Form 8-K furnished to the SEC on March 26, 2012.
     At December 31, 2012, Citi had approximately 259,000 full-time employees compared to approximately 266,000 full-time employees at December 31, 2011.

     Please see “Risk Factors” below for a discussion of the most significant risks and uncertainties that could impact Citigroup’s businesses, financial condition and results of operations.



4


As described above, Citigroup is managed pursuant to the following segments:

The following are the four regions in which Citigroup operates. The regional results are fully reflected in the segment results above.


(1) North America includes the U.S., Canada and Puerto Rico, Latin America includes Mexico, and Asia includes Japan.

5


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

Overview

2012—Ongoing Transformation of Citigroup
During 2012, Citigroup continued to build on the significant transformation of the Company that has occurred over the last several years. Despite a challenging operating environment (as discussed below), Citi’s 2012 results showed ongoing momentum in most of its core businesses, as Citi continued to simplify its business model and focus resources on its core Citicorp franchise while continuing to wind down Citi Holdings as quickly as practicable in an economically rational manner. Citi made steady progress toward the successful execution of its strategy, which is to:

     With these goals in mind, on December 5, 2012, Citi announced a number of repositioning efforts to optimize its footprint, re-size and re-align certain businesses and improve efficiencies, while at the same time maintaining its unique competitive advantages. As a result of these repositioning efforts, in the fourth quarter of 2012, Citi recorded pretax repositioning charges of approximately $1 billion, and expects to incur an additional $100 million of charges in the first half of 2013.

Continued Challenges in 2013
Citi continued to face a challenging operating environment during 2012, many aspects of which it expects will continue into 2013. While showing some signs of improvement, the overall economic environment—both in the U.S. and globally—remains largely uncertain, and spread compression1 continues to negatively impact the results of operations of several of Citi’s businesses, particularly in the U.S. and Asia. Citi also continues to face a significant number of regulatory changes and uncertainties, including the timing and implementation of the final U.S. regulatory capital standards. Further, Citi’s legal and related costs remain elevated and likely volatile as it continues to work through “legacy” issues, such as mortgage-related expenses, and operates in a heightened litigious and regulatory environment. Finally, while Citi reduced the size of Citi Holdings by approximately 31% during 2012, the remaining assets within Citi Holdings will continue to have a negative impact on Citi’s overall results of operations in 2013, although this negative impact should continue to abate as the wind-down continues. For a more detailed discussion of these and other risks that could impact Citi’s businesses, results of operations and financial condition, see “Risk Factors” below. As a result of these continuing challenges, Citi remains highly focused on the areas within its control, including operational efficiency and optimizing its core businesses in order to drive improved returns.



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1       As used throughout this report, spread compression refers to the reduction in net interest revenue as a percentage of loans or deposits, as applicable, as driven by either lower yields on interest-earning assets or higher costs to fund such assets (or a combination thereof).


6


2012 Summary Results

Citigroup
For 2012, Citigroup reported net income of $7.5 billion and diluted earnings per share of $2.44, compared to $11.1 billion and $3.63 per share, respectively, for 2011. 2012 results included several significant items:

     Excluding CVA/DVA, the impact of minority investments, the repositioning charges in the fourth quarters of 2012 and 2011 and the tax benefit, net income was $11.9 billion, or $3.86 per diluted share, in 2012, an increase of 18% compared to $10.1 billion, or $3.30 per diluted share, reported in 2011, as higher revenues, lower core operating expenses and lower net credit losses were partially offset by higher legal and related costs and a lower net loan loss reserve release.3

     Citi’s revenues, net of interest expense, were $70.2 billion in 2012, down 10% versus the prior year. Excluding CVA/DVA and the impact of minority investments, revenues were $77.1 billion, up 1% from 2011, as revenues in Citicorp rose 5%, but were offset by a 40% decline in Citi Holdings revenues compared to the prior year. Net interest revenues of $47.6 billion were 2% lower than the prior year, largely driven by the decline in loan balances in Local Consumer Lending in Citi Holdings as well as spread compression in North America and Asia Regional Consumer Banking (RCB) in Citicorp. Non-interest revenues were $22.6 billion, down 25% from the prior year, driven by CVA/DVA and the loss on MSSB in the third quarter of 2012. Excluding CVA/DVA and the impact of minority investments, non-interest revenues were $29.5 billion, up 6% from the prior year, principally driven by higher revenues in Securities and Banking and higher mortgage revenues in North America RCB, partially offset by lower revenues in the Special Asset Pool within Citi Holdings.

Operating Expenses
Citigroup expenses decreased 1% versus the prior year to $50.5 billion. In 2012, in addition to the previously mentioned repositioning charges, Citi incurred elevated legal and related costs of $2.8 billion compared to $2.2 billion in the prior year. Excluding legal and related costs, repositioning charges for the fourth quarters of 2012 and 2011, and the impact of foreign exchange translation into U.S. dollars for reporting purposes (as used throughout this report, FX translation), which lowered reported expenses by approximately $0.9 billion in 2012 as compared to the prior year, operating expenses declined 1% to $46.6 billion versus $47.3 billion in the prior year.
     Citicorp’s expenses were $45.3 billion, up 2% from the prior year, as efficiency savings were more than offset by higher legal and related costs and repositioning charges. Citi Holdings expenses were down 19% year-over-year to $5.3 billion, principally due to the continued decline in assets.



____________________
2       As referenced above, in 2012, the sale of minority investments included a pretax loss of $4.7 billion ($2.9 billion after-tax) from the sale of a 14% interest and other-than-temporary impairment of the carrying value of Citi’s remaining 35% interest in MSSB recorded in Citi Holdings—Brokerage and Asset Management during the third quarter of 2012. In addition, Citi recorded a net pretax loss of $424 million ($274 million after-tax) from the partial sale of Citi’s minority interest in Akbank T.A.S. (Akbank) recorded in Corporate/Other during the second quarter of 2012. In the first quarter of 2012, Citi recorded a net pretax gain on minority investments of $477 million ($308 million after-tax), which included pretax gains of $1.1 billion and $542 million on the sales of Citi’s remaining stake in Housing Development Finance Corporation Ltd. (HDFC) and its stake in Shanghai Pudong Development Bank (SPDB), respectively, offset by a pretax impairment charge relating to Akbank of $1.2 billion, all within Corporate/Other. In 2011, Citi recorded a $199 million pretax gain ($128 million after-tax) from the partial sale of Citi’s minority interest in HDFC, recorded in Corporate/Other.
3 Presentation of Citi’s results excluding CVA/DVA, the impact of minority investments, the repositioning charges in the fourth quarters of 2012 and 2011 and the tax benefit, as applicable, represent non- GAAP financial measures. Citigroup believes the presentation of its results of operations excluding these impacts provides a more meaningful depiction of the underlying fundamentals of Citi’s businesses and enhances the comparison of results across periods.


7


Credit Costs
Citi’s total provisions for credit losses and for benefits and claims of $11.7 billion declined 8% from the prior year. Net credit losses of $14.6 billion were down 27% from 2011, largely reflecting improvements in North America cards and Local Consumer Lending and the Special Asset Pool within Citi Holdings. Consumer net credit losses declined 22% to $14.4 billion reflecting improvements in North America Citi-branded cards and Citi retail services in Citicorp and Local Consumer Lending within Citi Holdings. Corporate net credit losses decreased 86% year-over-year to $223 million, driven primarily by continued credit improvement in both the Special Asset Pool in Citi Holdings and Securities and Banking in Citicorp.
     The net release of allowance for loan losses and unfunded lending commitments was $3.7 billion in 2012, 55% lower than 2011. Of the $3.7 billion net reserve release, $2.1 billion was attributable to Citicorp compared to a $4.9 billion release in the prior year. The decline in the Citicorp reserve release year-over-year mostly reflected a lower reserve release in North America Citi-branded cards and Citi retail services and Securities and Banking. The $1.6 billion net reserve release in Citi Holdings was down from $3.3 billion in the prior year, due primarily to lower releases within the Special Asset Pool, reflecting the decline in assets. Of the $3.7 billion net reserve release, $3.6 billion related to Consumer, with the remainder in Corporate.

Capital and Loan Loss Reserve Positions
Citigroup’s Tier 1 Capital and Tier 1 Common ratios were 14.1% and 12.7% as of December 31, 2012, respectively, compared to 13.6% and 11.8% in the prior year. Citi’s estimated Tier 1 Common ratio under Basel III was 8.7% at December 31, 2012, up slightly from an estimated 8.6% at September 30, 2012.4
     Citigroup’s total allowance for loan losses was $25.5 billion at year end, or 3.9% of total loans, compared to $30.1 billion, or 4.7%, at the end of the prior year. The decline in the total allowance for loan losses reflected the continued wind-down of Citi Holdings and overall continued improvement in the credit quality of Citi’s loan portfolios.
     The Consumer allowance for loan losses was $22.7 billion, or 5.6% of total Consumer loans, at year end, compared to $27.2 billion, or 6.5% of total loans, at December 31, 2011. Total non-accrual assets increased 3% to $12.0 billion as compared to December 31, 2011. Corporate non-accrual loans declined 28% to $2.3 billion, reflecting continued credit improvement. Consumer non-accrual loans increased $1.4 billion, or 17%, to $9.2 billion versus the prior year. The increase in Consumer non-accrual loans predominantly reflected the Office of the Comptroller of the Currency (OCC) guidance issued in the third quarter of 2012 regarding the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy, which added $1.5 billion to Consumer non-accrual loans (of which approximately $1.3 billion were current).

Citicorp5
Citicorp net income decreased 8% from the prior year to $14.1 billion. The decrease largely reflected the impact of CVA/DVA and higher legal and related costs and repositioning charges, partially offset by lower provisions for income taxes. CVA/DVA, recorded in Securities and Banking, was $(2.5) billion in 2012, compared to $1.7 billion in the prior year. Within Citicorp, repositioning charges were $951 million ($604 million after-tax) in the fourth quarter 2012, versus $368 million ($237 million after-tax) in the prior year period. Excluding CVA/DVA, the impact of minority investments, the repositioning charges in the fourth quarters of 2012 and 2011, and the tax benefit in the third quarter of 2012, Citicorp net income increased 9% from the prior year to $15.6 billion, primarily driven by growth in revenues and lower net credit losses partially offset by lower loan loss reserve releases and higher taxes.
     Citicorp revenues, net of interest expense, were $71 billion in 2012, down 1% versus the prior year. Excluding CVA/DVA and the impact of minority investments, Citicorp revenues were $73.4 billion in 2012, 5% higher than 2011. Global Consumer Banking (GCB) revenues of $40.2 billion increased 3% versus the prior year. North America RCB revenues grew 5% to $21.1 billion. International RCB revenues (consisting of Asia RCB, Latin America RCB and EMEA RCB) increased 1% year-over-year to $19.1 billion. Excluding the impact of FX translation,6 international RCB revenues increased 5% year-over-year. Securities and Banking revenues were $19.7 billion in 2012, down 8% year-over-year. Securities and Banking revenues, excluding CVA/DVA, were $22.2 billion, or 13%, higher than the prior year. Transaction Services revenues were $10.9 billion, up 3% from the prior year, but up 5% excluding the impact of FX translation. Corporate/Other revenues, excluding the impact of minority investments, declined 80% from the prior year mainly reflecting the absence of hedging gains.
     In North America RCB, the revenue growth year-over-year was driven by higher mortgage revenues, partially offset by lower revenues in Citi-branded cards and Citi retail services, mostly driven by lower average card loans. North America RCB average deposits of $154 billion grew 6% year-over-year and average retail loans of $41 billion grew 19%. Average card loans of $109 billion declined 3%, driven by increased payment rates resulting from consumer deleveraging, and card purchase sales of $232 billion were roughly flat. Citi retail services revenues were also negatively impacted by improving credit trends, which increased contractual partner payments.



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4       Citi’s estimated Basel III Tier 1 Common ratio is a non-GAAP financial measure. For additional information on Citi’s estimated Basel III Tier 1 Common Capital and Tier 1 Common ratio, including the calculation of these measures, see “Capital Resources and Liquidity—Capital Resources” below.
____________________
5       Citicorp includes Citi’s three operating businesses—Global Consumer Banking, Securities and Banking and Transaction Services—as well as Corporate/Other. See “Citicorp” below for additional information on the results of operations for each of the businesses in Citicorp.
6 For the impact of FX translation on 2012 results of operations for each of EMEA RCB, Latin America RCB, Asia RCB and Transaction Services, see the table accompanying the discussion of each respective business’ results of operations below.


8


     The international RCB revenue growth year-over-year, excluding the impact of FX translation, was driven by 9% revenue growth in Latin America RCB and 2% revenue growth in EMEA RCB. Asia RCB revenues were flat year-over-year, primarily reflecting spread compression in some countries in the region and the impact of regulatory actions in certain countries, particularly Korea. International RCB average deposits grew 2% versus the prior year, average retail loans increased 11%, investment sales grew 12%, average card loans grew 6%, and international card purchase sales grew 10%, all excluding the impact of FX translation.
     In Securities and Banking, fixed income markets revenues of $14.0 billion, excluding CVA/DVA,7 increased 28% from the prior year, reflecting higher revenues in rates and currencies and credit-related and securitized products. Equity markets revenues of $2.4 billion in 2012, excluding CVA/DVA, increased 1% driven by improved derivatives performance as well as the absence in the current year of proprietary trading losses, partially offset by lower cash equity volumes.
     Investment banking revenues rose 10% from the prior year to $3.6 billion, principally driven by higher revenues in debt underwriting and advisory activities, partially offset by lower equity underwriting revenues. Lending revenues of $997 million were down 45% from the prior year, reflecting $698 million in losses on hedges related to accrual loans as credit spreads tightened during 2012 (compared to a $519 million gain in the prior year as spreads widened). Excluding the mark-to-market impact of loan hedges related to accrual loans, lending revenues rose 31% year-over-year to $1.7 billion reflecting growth in the Corporate loan portfolio and improved spreads in most regions. Private Bank revenues of $2.3 billion increased 8% from the prior year, excluding CVA/DVA, driven primarily by growth in North America lending and deposits.
     In Transaction Services, the increase in revenues year-over-year, excluding the impact of FX translation, was driven by growth in Treasury and Trade Solutions, which was partially offset by a decline in Securities and Fund Services. Excluding the impact of FX translation, Treasury and Trade Solutions revenues were up 8%, driven by growth in trade as end-of-period trade loans grew 23%, partially offset by ongoing spread compression given the low interest rate environment. Securities and Fund Services revenues were down 2%, excluding the impact of FX translation, mostly reflecting lower market volumes as well as spread compression on deposits.
     Citicorp end-of-period loans increased 7% year-over-year to $540 billion, with 3% growth in Consumer loans, primarily in Latin America, and 11% growth in Corporate loans.

Citi Holdings8
Citi Holdings net loss was $6.6 billion compared to a net loss of $4.2 billion in 2011. The increase in the net loss was driven by the $4.7 billion pretax ($2.9 billion after-tax) loss on MSSB described above. In addition, Citi Holdings results included $77 million in repositioning charges in the fourth quarter of 2012, compared to $60 million in the fourth quarter of 2011. Excluding the loss on MSSB, CVA/DVA9 and the repositioning charges in the fourth quarters of 2012 and 2011, Citi Holdings net loss decreased to $3.7 billion compared to a net loss of $4.2 billion in the prior year, as revenue declines and lower loan loss reserve releases were more than offset by lower operating expenses and lower net credit losses. These improved results in 2012 reflected the continued decline in Citi Holdings assets.
     Citi Holdings revenues decreased to $(833) million from $6.3 billion in the prior year. Excluding CVA/DVA and the loss on MSSB, Citi Holdings revenues were $3.7 billion in 2012 compared to $6.2 billion in the prior year. Special Asset Pool revenues, excluding CVA/DVA, were $(657) million in 2012, compared to $473 million in the prior year, largely due to lower non-interest revenue resulting from lower gains on asset sales. Local Consumer Lending revenues of $4.4 billion declined 20% from the prior year primarily due to the 24% decline in average assets. Brokerage and Asset Management revenues, excluding the loss on MSSB, were $(15) million, compared to $282 million in the prior year, mostly reflecting higher funding costs. Net interest revenues declined 30% year-over-year to $2.6 billion, largely driven by continued declining loan balances in Local Consumer Lending. Non-interest revenues, excluding the loss on MSSB and CVA/DVA, were $1.1 billion versus $2.5 billion in the prior year, principally reflecting lower gains on asset sales within the Special Asset Pool.
     As noted above, Citi Holdings assets declined 31% year-over-year to $156 billion as of the end of 2012. Also at the end of 2012, Citi Holdings assets comprised approximately 8% of total Citigroup GAAP assets and 15% of risk-weighted assets (as defined under current regulatory guidelines). Local Consumer Lending continued to represent the largest segment within Citi Holdings, with $126 billion of assets as of the end of 2012, of which approximately 73% consisted of mortgages in North America real estate lending.



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7       For the summary of CVA/DVA by business within Securities and Banking for 2012 and comparable periods, see “Citicorp—Institutional Clients Group.”
____________________
8       Citi Holdings includes Local Consumer Lending, Special Asset Pool and Brokerage and Asset Management. See “Citi Holdings” below for additional information on the results of operations for each of the businesses in Citi Holdings.
9 CVA/DVA in Citi Holdings, recorded in the Special Asset Pool, was $157 million in 2012, compared to $74 million in the prior year.


9


FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA—PAGE 1 Citigroup Inc. and Consolidated Subsidiaries

In millions of dollars, except per-share amounts and ratios 2012 2011 2010 2009 2008
Net interest revenue $ 47,603       $ 48,447       $ 54,186       $ 48,496       $ 53,366
Non-interest revenue 22,570 29,906 32,415 31,789 (1,767 )
Revenues, net of interest expense $ 70,173 $ 78,353 $ 86,601 $ 80,285 $ 51,599
Operating expenses 50,518 50,933 47,375 47,822 69,240
Provisions for credit losses and for benefits and claims 11,719 12,796 26,042 40,262 34,714
Income (loss) from continuing operations before income taxes $ 7,936 $ 14,624 $ 13,184 $ (7,799 ) $ (52,355 )
Income taxes (benefits) 27 3,521 2,233 (6,733 ) (20,326 )
Income (loss) from continuing operations $ 7,909 $ 11,103 $ 10,951 $ (1,066 ) $ (32,029 )
Income (loss) from discontinued operations, net of taxes (1) (149 ) 112 (68 ) (445 ) 4,002
Net income (loss) before attribution of noncontrolling interests $ 7,760 $ 11,215 $ 10,883 $ (1,511 ) $ (28,027 )
Net income (loss) attributable to noncontrolling interests 219 148 281 95 (343 )
Citigroup’s net income (loss) $ 7,541 $ 11,067 $ 10,602 $ (1,606 ) $ (27,684 )
Less:
       Preferred dividends—Basic $ 26 $ 26 $ 9 $ 2,988 $ 1,695
       Impact of the conversion price reset related to the $12.5
              billion convertible preferred stock private issuance—Basic — — — 1,285 —
       Preferred stock Series H discount accretion—Basic — — — 123 37
       Impact of the public and private preferred stock exchange offers — — — 3,242 —
       Dividends and undistributed earnings allocated to employee restricted
              and deferred shares that contain nonforfeitable rights to dividends,
              applicable to Basic EPS 166 186 90 2 221
Income (loss) allocated to unrestricted common shareholders for Basic EPS $ 7,349 $ 10,855 $ 10,503 $ (9,246 ) $ (29,637 )
       Less: Convertible preferred stock dividends — — — (540 ) (877 )
       Add: Interest expense, net of tax, on convertible securities and
              adjustment of undistributed earnings allocated to employee
              restricted and deferred shares that contain nonforfeitable rights to
              dividends, applicable to diluted EPS 11 17 2 — —
Income (loss) allocated to unrestricted common shareholders for diluted EPS (2) $ 7,360 $ 10,872 $ 10,505 $ (8,706 ) $ (28,760 )
Earnings per share (3)
Basic (3)
Income (loss) from continuing operations 2.56 3.69 3.66 (7.61 ) (63.89 )
Net income (loss) 2.51 3.73 3.65 (7.99 ) (56.29 )
Diluted (2)(3)
Income (loss) from continuing operations $ 2.49 $ 3.59 $ 3.55 $ (7.61 ) $ (63.89 )
Net income (loss) 2.44 3.63 3.54 (7.99 ) (56.29 )
Dividends declared per common share (3)(4) 0.04 0.03 0.00 0.10 11.20

Statement continues on the next page, including notes to the table.

10


FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA—PAGE 2 Citigroup Inc. and Consolidated Subsidiaries
 
In millions of dollars, except per-share amounts, ratios and direct staff         2012         2011         2010         2009         2008
At December 31:
Total assets $ 1,864,660 $ 1,873,878 $ 1,913,902 $ 1,856,646 $ 1,938,470
Total deposits 930,560 865,936 844,968 835,903 774,185
Long-term debt 239,463 323,505 381,183 364,019 359,593
Trust preferred securities (included in long-term debt) 10,110 16,057 18,131 19,345 24,060
Citigroup common stockholders’ equity 186,487 177,494 163,156 152,388 70,966
Total Citigroup stockholders’ equity 189,049 177,806 163,468 152,700 141,630
Direct staff (in thousands) 259 266 260 265 323
Ratios
Return on average assets 0.4 % 0.6 % 0.5 % (0.08 )% (1.28 )%
Return on average common stockholders’ equity (5) 4.1 6.3 6.8 (9.4 ) (28.8 )
Return on average total stockholders’ equity (5) 4.1 6.3 6.8 (1.1 ) (20.9 )
Efficiency ratio 72 65 55 60 134
Tier 1 Common (6) 12.67 % 11.80 % 10.75 % 9.60 % 2.30 %
Tier 1 Capital 14.06 13.55 12.91 11.67 11.92
Total Capital 17.26     16.99 16.59 15.25   15.70
Leverage (7) 7.48 7.19 6.60   6.87 6.08
Citigroup common stockholders’ equity to assets 10.00 % 9.47 % 8.52 % 8.21 % 3.66 %
Total Citigroup stockholders’ equity to assets   10.14 9.49   8.54 8.22 7.31
Dividend payout ratio (4) 1.6 0.8   NM NM   NM
Book value per common share (3) $ 61.57 $ 60.70 $ 56.15 $ 53.50 $ 130.21  
Ratio of earnings to fixed charges and preferred stock dividends 1.38 x 1.59 x 1.51 x NM NM

(1) Discontinued operations in 2012 includes a carve-out of Citi’s liquid strategies business within Citi Capital Advisors, the sale of which is expected to close in the first half of 2013. Discontinued operations in 2012 and 2011 reflect the sale of the Egg Banking PLC credit card business. Discontinued operations for 2008 to 2009 reflect the sale of Nikko Cordial Securities to Sumitomo Mitsui Banking Corporation, the sale of Citigroup’s German retail banking operations to Crédit Mutuel, and the sale of CitiCapital’s equipment finance unit to General Electric. Discontinued operations for 2008 to 2010 also include the operations and associated gain on sale of Citigroup’s Travelers Life & Annuity, substantially all of Citigroup’s international insurance business, and Citigroup’s Argentine pension business sold to MetLife Inc. Discontinued operations for the second half of 2010 also reflect the sale of The Student Loan Corporation. See Note 3 to the Consolidated Financial Statements for additional information on Citi’s discontinued operations.
(2) The diluted EPS calculation for 2009 and 2008 utilizes basic shares and income allocated to unrestricted common stockholders (Basic) due to the negative income allocated to unrestricted common stockholders. Using diluted shares and income allocated to unrestricted common stockholders (Diluted) would result in anti-dilution. As of December 31, 2012, primarily all stock options were out of the money and did not impact diluted EPS. The year-end share price was $39.56. See Note 11 to the Consolidated Financial Statements.
(3)       All per share amounts and Citigroup shares outstanding for all periods reflect Citigroup’s 1-for-10 reverse stock split, which was effective May 6, 2011.
(4)   Dividends declared per common share as a percentage of net income per diluted share.
(5) The return on average common stockholders’ equity is calculated using net income less preferred stock dividends divided by average common stockholders’ equity. The return on average total Citigroup stockholders’ equity is calculated using net income divided by average Citigroup stockholders’ equity.
(6) As currently defined by the U.S. banking regulators, the Tier 1 Common ratio represents Tier 1 Capital less non-common elements, including qualifying perpetual preferred stock, qualifying noncontrolling interests in subsidiaries and qualifying trust preferred securities divided by risk-weighted assets.
(7)   The leverage ratio represents Tier 1 Capital divided by quarterly adjusted average total assets.

Note: The following accounting changes were adopted by Citi during the respective years:

11


SEGMENT AND BUSINESS—INCOME (LOSS) AND REVENUES

The following tables show the income (loss) and revenues for Citigroup on a segment and business view:

CITIGROUP INCOME

% Change % Change
In millions of dollars         2012         2011         2010         2012 vs. 2011         2011 vs. 2010
Income (loss) from continuing operations
CITICORP
Global Consumer Banking
       North America $ 4,815 $ 4,095 $ 974 18 % NM
       EMEA (18 ) 95 97 NM (2 )%
       Latin America 1,510 1,578 1,788 (4 ) (12 )
       Asia 1,797 1,904 2,110 (6 ) (10 )
              Total $ 8,104 $ 7,672 $ 4,969 6 % 54 %
Securities and Banking
       North America $ 1,011 $ 1,044 $ 2,495 (3 )% (58 )%
       EMEA 1,354 2,000 1,811 (32 ) 10
       Latin America 1,308 974 1,093 34 (11 )
       Asia 822 895 1,152 (8 ) (22 )
              Total $ 4,495 $ 4,913 $ 6,551 (9 )% (25 )%
Transaction Services
       North America $ 470 $ 415 $ 490 13 % (15 )%
       EMEA 1,244 1,130 1,218 10 (7 )
       Latin America 654 639 663 2 (4 )
       Asia 1,127 1,165 1,251 (3 ) (7 )
              Total $ 3,495 $ 3,349 $ 3,622 4 % (8 )%
       Institutional Clients Group $ 7,990 $ 8,262 $ 10,173 (3 )% (19 )%
Corporate/Other $ (1,625 ) $ (728 ) $ 242 NM   NM
Total Citicorp $ 14,469 $ 15,206 $ 15,384 (5 )% (1 )%
CITI HOLDINGS    
Brokerage and Asset Management $ (3,190 ) $ (286 ) $ (226 ) NM (27 )%
Local Consumer Lending (3,193 ) (4,413 ) (5,365 ) 28 % 18
Special Asset Pool   (177 ) 596     1,158 NM (49 )
Total Citi Holdings $ (6,560 ) $ (4,103 ) $ (4,433 ) (60 )% 7 %
Income from continuing operations $ 7,909   $ 11,103 $ 10,951 (29 )% 1 %
Discontinued operations $ (149 ) $ 112 $ (68 ) NM NM
Net income attributable to noncontrolling interests 219 148 281 48 % (47 )%
Citigroup’s net income $ 7,541 $ 11,067 $ 10,602 (32 )% 4 %

NM Not meaningful

12


CITIGROUP REVENUES

% Change % Change
In millions of dollars         2012         2011         2010         2012 vs. 2011         2011 vs. 2010
CITICORP
Global Consumer Banking
       North America $ 21,081 $ 20,159 $ 21,747 5 % (7 )%
       EMEA 1,516 1,558 1,559 (3 ) —
       Latin America 9,702 9,469 8,667 2 9
       Asia 7,915 8,009 7,396 (1 ) 8
              Total $ 40,214 $ 39,195 $ 39,369 3 % — %
Securities and Banking
       North America $ 6,104 $ 7,558 $ 9,393 (19 )% (20 )%
       EMEA 6,417 7,221 6,849 (11 ) 5
       Latin America 3,019 2,370 2,554 27 (7 )
       Asia 4,203 4,274 4,326 (2 ) (1 )
              Total $ 19,743 $ 21,423 $ 23,122 (8 )% (7 )%
Transaction Services
       North America $ 2,564 $ 2,444 $ 2,485 5 % (2 )%
       EMEA 3,576 3,486 3,356 3 4
       Latin America 1,797 1,713 1,530 5 12
       Asia 2,920 2,936 2,714 (1 ) 8
              Total $ 10,857 $ 10,579 $ 10,085 3 % 5 %
       Institutional Clients Group $ 30,600 $ 32,002 $ 33,207 (4 )% (4 )%
Corporate/Other $ 192 $ 885 $ 1,754 (78 )% (50 )%
Total Citicorp $ 71,006 $ 72,082 $ 74,330 (1 )% (3 )%
CITI HOLDINGS
Brokerage and Asset Management $ (4,699 ) $ 282 $ 609 NM (54 )%
Local Consumer Lending 4,366 5,442 8,810 (20 )% (38 )
Special Asset Pool (500 ) 547 2,852 NM (81 )
Total Citi Holdings $ (833 ) $ 6,271 $ 12,271 NM (49 )%
Total Citigroup net revenues $ 70,173 $ 78,353 $ 86,601 (10 )% (10 )%

NM Not meaningful

13


CITICORP

 
Citicorp is Citigroup’s global bank for consumers and businesses and represents Citi’s core franchises. Citicorp is focused on providing best-in-class products and services to customers and leveraging Citigroup’s unparalleled global network, including many of the world’s emerging economies. Citicorp is physically present in approximately 100 countries, many for over 100 years, and offers services in over 160 countries and jurisdictions. Citi believes this global network provides a strong foundation for servicing the broad financial services needs of its large multinational clients and for meeting the needs of retail, private banking, commercial, public sector and institutional clients around the world. At December 31, 2012, Citicorp had $1.7 trillion of assets and $863 billion of deposits, representing 92% of Citi’s total assets and 93% of its deposits.
     Citicorp consists of the following operating businesses: Global Consumer Banking (which consists of Regional Consumer Banking in North America, EMEA, Latin America and Asia) and Institutional Clients Group (which includes Securities and Banking and Transaction Services). Citicorp also includes Corporate/Other.

% Change % Change
In millions of dollars except as otherwise noted         2012         2011         2010         2012 vs. 2011         2011 vs. 2010
       Net interest revenue $ 45,026 $ 44,764 $ 46,101 1 % (3 )%
       Non-interest revenue 25,980 27,318 28,229 (5 ) (3 )
Total revenues, net of interest expense $ 71,006 $ 72,082 $ 74,330 (1 )% (3 )%
Provisions for credit losses and for benefits and claims
Net credit losses $ 8,734 $ 11,462 $ 16,901 (24 )% (32 )%
Credit reserve build (release) (2,177 ) (4,988 ) (3,171 ) 56 (57 )
Provision for loan losses $ 6,557 $ 6,474 $ 13,730 1 % (53 )%
Provision for benefits and claims 236 193 184 22 5
Provision for unfunded lending commitments 40 92 (35 ) (57 ) NM
Total provisions for credit losses and for benefits and claims $ 6,833 $ 6,759 $ 13,879 1 % (51 )%
Total operating expenses $ 45,265 $ 44,469 $ 40,019 2 % 11 %
Income from continuing operations before taxes $ 18,908 $ 20,854 $ 20,432 (9 )% 2 %
Provisions for income taxes 4,439 5,648 5,048 (21 ) 12
Income from continuing operations $ 14,469 $ 15,206 $ 15,384 (5 )% (1 )%
Income (loss) from discontinued operations, net of taxes (149 ) 112 (68 ) NM NM
Noncontrolling interests 216 29 74 NM (61 )
Net income $ 14,104 $ 15,289 $ 15,242 (8 )% — %
Balance sheet data (in billions of dollars)
Total end-of-period (EOP) assets $ 1,709 $ 1,649 $ 1,601 4 % 3 %
Average assets 1,717 1,684 1,578 2 7
Return on average assets 0.82 % 0.91 % 0.97 %
Efficiency ratio (Operating expenses/Total revenues) 64 % 62 % 54 %
Total EOP loans $ 540 $ 507 $ 450 7 13
Total EOP deposits 863 804 769 7 5

NM Not meaningful

14


GLOBAL CONSUMER BANKING

Global Consumer Banking (GCB) consists of Citigroup’s four geographical Regional Consumer Banking (RCB) businesses that provide traditional banking services to retail customers through retail banking, commercial banking, Citi-branded cards and Citi retail services. GCB is a globally diversified business with 4,008 branches in 39 countries around the world. For the year ended December 31, 2012, GCB had $387 billion of average assets and $322 billion of average deposits. Citi’s strategy is to focus on the top 150 cities globally that it believes have the highest growth potential in consumer banking. Consistent with this strategy, as announced in the fourth quarter of 2012 as part of its repositioning efforts, Citi intends to optimize its branch footprint and further concentrate its presence in major metropolitan areas. As of December 31, 2012, Citi had consumer banking operations in approximately 120, or 80%, of these cities.

% Change % Change
In millions of dollars except as otherwise noted         2012         2011         2010         2012 vs. 2011         2011 vs. 2010
Net interest revenue $ 29,468 $ 29,683 $ 29,858 (1 )% (1 )%
Non-interest revenue 10,746 9,512 9,511 13 —
Total revenues, net of interest expense $ 40,214 $ 39,195 $ 39,369 3 % — %
Total operating expenses $ 21,819 $ 21,408 $ 18,887 2 % 13 %
       Net credit losses $ 8,452 $ 10,840 $ 16,328 (22 )% (34 )%
       Credit reserve build (release) (2,131 ) (4,429 ) (2,547 ) 52 (74 )
       Provisions for unfunded lending commitments — 3 (3 ) (100 ) NM
       Provision for benefits and claims 237 192 184 23 4
Provisions for credit losses and for benefits and claims $ 6,558 $ 6,606 $ 13,962 (1 )% (53 )%
Income from continuing operations before taxes $ 11,837 $ 11,181 $ 6,520 6 % 71 %
Income taxes 3,733 3,509 1,551 6 NM
Income from continuing operations $ 8,104 $ 7,672 $ 4,969 6 % 54 %
Noncontrolling interests 3 — (9 ) — 100
Net income $ 8,101 $ 7,672 $ 4,978 6 % 54 %
Balance Sheet data (in billions of dollars)
Average assets $ 387 $ 376 $ 353 3 % 7 %
Return on assets 2.09 % 2.04 % 1.41 %
Efficiency ratio 54 % 55 % 48 %
Total EOP assets $ 402 $ 385 $ 374 4 3
Average deposits 322 314 299 3 5
Net credit losses as a percentage of average loans 2.95 % 3.93 % 6.22 %
Revenue by business
       Retail banking $ 18,059 $ 16,398 $ 15,874 10 % 3 %
       Cards (1) 22,155 22,797 23,495 (3 ) (3 )
              Total $ 40,214 $ 39,195 $ 39,369 3 % — %
Income from continuing operations by business
       Retail banking $ 2,986 $ 2,523 $ 3,052 18 % (17 )%
       Cards (1) 5,118 5,149 1,917 (1 ) NM
              Total $ 8,104 $ 7,672 $ 4,969 6 % 54 %
Foreign Currency (FX) Translation Impact
       Total revenue—as reported $ 40,214 $ 39,195 $ 39,369 3 % — %
       Impact of FX translation (2) — (742 ) (153 )
       Total revenues—ex-FX $ 40,214 $ 38,453 $ 39,216 5 % (2 )%
       Total operating expenses—as reported $ 21,819 $ 21,408 $ 18,887 2 % 13 %
       Impact of FX translation (2) — (494 ) (134 )
       Total operating expenses—ex-FX $ 21,819 $ 20,914 $ 18,753 4 % 12 %
       Total provisions for LLR & PBC—as reported $ 6,558 $ 6,606 $ 13,962 (1 )% (53 )%
       Impact of FX translation (2) — (167 ) (19 )
       Total provisions for LLR & PBC—ex-FX $ 6,558 $ 6,439 $ 13,943 2 % (54 )%
       Net income—as reported $ 8,101 $ 7,672 $ 4,978 6 % 54 %
       Impact of FX translation (2) — (102 ) (17 )
       Net income—ex-FX $ 8,101 $ 7,570 $ 4,961 7 % 53 %

(1)      Includes both Citi-branded cards and Citi retail services.
(2) Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the current exchange rate for all periods presented.
NM Not meaningful

15


NORTH AMERICA REGIONAL CONSUMER BANKING

North America Regional Consumer Banking (NA RCB) provides traditional banking and Citi-branded cards and Citi retail services to retail customers and small to mid-size businesses in the U.S. NA RCB’s approximate 1,000 retail bank branches as of December 31, 2012 are largely concentrated in the greater metropolitan areas of New York, Los Angeles, San Francisco, Chicago, Miami, Washington, D.C., Boston, Philadelphia, Dallas, Houston, San Antonio and Austin. As announced in the fourth quarter of 2012, as part of its repositioning efforts, Citi expects to optimize its branch network in North America and further concentrate its presence in major metropolitan areas. At December 31, 2012, NA RCB had approximately 12.4 million customer accounts, $42.7 billion of retail banking loans and $165.2 billion of deposits. In addition, NA RCB had approximately 102.1 million Citi-branded and Citi retail services credit card accounts, with $111.5 billion in outstanding card loan balances.

% Change % Change
In millions of dollars, except as otherwise noted         2012         2011         2010         2012 vs. 2011         2011 vs. 2010
Net interest revenue $ 16,591 $ 16,915 $ 17,892 (2 )% (5 )%
Non-interest revenue 4,490 3,244 3,855 38 (16 )
Total revenues, net of interest expense $ 21,081 $ 20,159 $ 21,747 5 % (7 )%
Total operating expenses $ 9,933 $ 9,690 $ 8,445 3 % 15 %
       Net credit losses $ 5,756 $ 8,101 $ 13,132 (29 )% (38 )%
       Credit reserve build (release) (2,389 ) (4,181 ) (1,319 ) 43 NM
       Provisions for benefits and claims 1 (1 ) — NM —
       Provision for unfunded lending commitments 70 62 57 13 9
Provisions for credit losses and for benefits and claims $ 3,438 $ 3,981 $ 11,870 (14 )% (66 )%
Income from continuing operations before taxes $ 7,710 $ 6,488 $ 1,432 19 % NM
Income taxes 2,895 2,393 458 21 NM
Income from continuing operations $ 4,815 $ 4,095 $ 974 18 % NM
Noncontrolling interests 1 — — — —
Net income $ 4,814 $ 4,095 $ 974 18 % NM
Balance Sheet data (in billions of dollars)
Average assets $ 172 $ 165 $ 163 4 % 1 %
Return on average assets 2.80 % 2.48 % 0.60 %
Efficiency ratio 47 % 48 % 39 %
Average deposits $ 154 $ 145 $ 145 6 —
Net credit losses as a percentage of average loans 3.83 % 5.50 % 8.71 %
Revenue by business
       Retail banking $ 6,677 $ 5,113 $ 5,323 31 % (4 )%
       Citi-branded cards 8,323 8,730 9,695 (5 ) (10 )
       Citi retail services 6,081 6,316 6,729 (4 ) (6 )
              Total $ 21,081 $ 20,159 $ 21,747 5 % (7 )%
Income from continuing operations by business
       Retail banking $ 1,237 $ 463 $ 744 NM (38 )%
       Citi-branded cards 2,080 2,151 (24 ) (3 )% NM
       Citi retail services 1,498 1,481 254 1 NM
              Total $ 4,815 $ 4,095 $ 974 18 % NM

NM Not meaningful

16


2012 vs. 2011
Net income increased 18%, mainly driven by higher mortgage revenues and a $2.3 billion decrease in net credit losses, partially offset by a $1.8 billion reduction in loan loss reserve releases.
     Revenues increased 5%, driven by a 38% increase in non-interest revenues from higher gains on sale of mortgages, partly offset by a 2% decline in net interest revenues. The higher gains on sale of mortgages were driven by high volumes of mortgage refinancing activity, due largely to the U.S. government’s Home Affordable Refinance Program (HARP), as well as higher margins resulting from the shift to retail as compared to third-party origination channels. Assuming the continued low interest rate environment, Citi believes the higher mortgage refinancing volumes could continue into the first half of 2013. Excluding mortgages, revenue from the retail banking business was essentially flat, as volume growth and improved mix in the deposit and lending portfolios was offset by significant spread compression. Citi expects spread compression to continue to negatively impact revenues during 2013.
     Cards revenues declined 4%. In Citi-branded cards, both average loans and net interest revenue declined year-over-year, reflecting continued increased payment rates resulting from consumer deleveraging and the impact of the look-back provisions of The Credit Card Accountability Responsibility and Disclosure Act (CARD Act).10 Citi expects the look-back provisions of the CARD Act will likely have a diminishing impact on the results of operations of its cards businesses during 2013. In Citi retail services, net interest revenues improved slightly but were offset by declining non-interest revenues, driven by improving credit and the resulting impact on contractual partner payments. Citi expects cards revenues could continue to be negatively impacted by higher payment rates for consumers, reflecting ongoing economic uncertainty and deleveraging as well as Citi’s shift to higher credit quality borrowers.
     As part of its U.S. Citi-branded cards business, Citibank, N.A. issues a co-branded credit card product with American Airlines, the Citi/AAdvantage card. AMR Corporation and certain of its subsidiaries, including American Airlines, Inc., filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in November 2011. On February 14, 2013, AMR Corporation and US Airways Group, Inc. announced that the boards of directors of both companies had approved a merger agreement under which the companies would be combined. For additional information, see “Risk Factors—Business and Operational Risks” below.
     Expenses increased 3%, primarily due to increased mortgage origination costs resulting from the higher retail channel mortgage volumes and $100 million of repositioning charges in the fourth quarter of 2012, partially offset by lower expenses in cards. Expenses continued to be impacted by elevated legal and related costs.
     Provisions decreased 14%, due to lower net credit losses in the cards portfolio partly offset by continued lower loan loss reserve releases ($2.4 billion in 2012 compared to $4.2 billion in 2011). Assuming no downturn in the U.S. economic environment, Citi believes credit trends have largely stabilized in the cards portfolios.

2011 vs. 2010
Net income increased $3.1 billion, driven by higher loan loss reserve releases and an improvement in net credit losses, partly offset by lower revenues and higher expenses.
     Revenues decreased 7% due to a decrease in net interest and non-interest revenues. Net interest revenue decreased 5%, driven primarily by lower cards net interest revenue, which was negatively impacted by the look-back provision of the CARD Act. In addition, net interest revenue for cards was negatively impacted by higher promotional balances and lower total average loans. Non-interest revenue decreased 16%, primarily due to lower gains from the sale of mortgage loans, as margins declined and Citi held more loans on-balance sheet, and declining revenues driven by improving credit and the resulting impact on contractual partner payments in Citi retail services. In addition, the decline in non-interest revenue reflected lower retail banking fee income.
     Expenses increased 15%, primarily driven by higher investment spending in the business during the second half of 2011, particularly in cards marketing and technology, and increases in litigation accruals related to the interchange fees litigation (see Note 28 to the Consolidated Financial Statements).
     Provisions decreased 66%, primarily due to a loan loss reserve release of $4.2 billion in 2011, compared to a loan loss reserve release of $1.3 billion in 2010, and lower net credit losses in the cards portfolios (cards net credit losses declined $5.0 billion, or 38%, from 2010).



____________________ 
10       The CARD Act requires a review once every six months for card accounts where the annual percentage rate (APR) has been increased since January 1, 2009 to assess whether changes in credit risk, market conditions or other factors merit a future decline in the APR.


17


EMEA REGIONAL CONSUMER BANKING

EMEA Regional Consumer Banking (EMEA RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, primarily in Central and Eastern Europe, the Middle East and Africa. The countries in which EMEA RCB has the largest presence are Poland, Turkey, Russia and the United Arab Emirates. As announced in the fourth quarter of 2012, as part of its repositioning efforts, Citi expects to either sell or significantly scale back its consumer operations in Turkey, Romania and Pakistan, and expects to further optimize its branch network in Hungary. At December 31, 2012, EMEA RCB had 228 retail bank branches with 3.9 million customer accounts, $5.1 billion in retail banking loans and $13.2 billion in deposits. In addition, the business had 2.8 million Citi-branded card accounts with $2.9 billion in outstanding card loan balances.

% Change % Change
In millions of dollars, except as otherwise noted         2012         2011         2010         2012 vs. 2011         2011 vs. 2010
Net interest revenue $ 1,040 $ 947 $ 936 10 % 1 %
Non-interest revenue 476 611 623 (22 ) (2 )
Total revenues, net of interest expense $ 1,516 $ 1,558 $ 1,559 (3 )% — %
Total operating expenses $ 1,434 $ 1,343 $ 1,225 7 % 10 %
       Net credit losses $ 105 $ 172 $ 315 (39 )% (45 )%
       Credit reserve build (release) (5 ) (118 ) (118 ) 96 —
       Provision for unfunded lending commitments (1 ) 4 (3 ) NM NM
Provisions for credit losses $ 99 $ 58 $ 194 71 % (70 )%
Income from continuing operations before taxes $ (17 ) $ 157 $ 140 NM 12 %
Income taxes 1 62 43 (98 ) 44
Income from continuing operations $ (18 ) $ 95 $ 97 NM (2 )%
Noncontrolling interests 4 — (1 ) — 100
Net income $ (22 ) $ 95 $ 98 NM (3 )%
Balance Sheet data (in billions of dollars)
Average assets $ 9 $ 10 10 (10 )% — %
Return on average assets (0.24 )% 0.95 % 0.98 %
Efficiency ratio 95 % 86 % 79 %
Average deposits $ 12.6 $ 12.5 $ 13.7 1 (9 )
Net credit losses as a percentage of average loans 1.40 % 2.37 % 4.42 %
Revenue by business
       Retail banking $ 889 $ 890 $ 878 — 1 %
       Citi-branded cards 627 668 681 (6 ) (2 )
              Total $ 1,516 $ 1,558 $ 1,559 (3 )% — %
Income (loss) from continuing operations by business
       Retail banking $ (81 ) $ (37 ) $ (59 ) NM 37 %
       Citi-branded cards 63 132 156 (52 ) (15 )
              Total $ (18 ) $ 95 $ 97 NM (2 )%
Foreign Currency (FX) Translation Impact
       Total revenue—as reported $ 1,516 $ 1,558 $ 1,559 (3 )% — %
       Impact of FX translation (1) — (75 ) (55 )
       Total revenues—ex-FX $ 1,516 $ 1,483 $ 1,504 2 % (1 )%
       Total operating expenses—as reported $ 1,434 $ 1,343 $ 1,225 7 % 10 %
       Impact of FX translation (1) — (66 ) (34 )
       Total operating expenses—ex-FX $ 1,434 $ 1,277 $ 1,191 12 % 7 %
       Provisions for credit losses—as reported $ 99 $ 58 $ 194 71 % (70 )%
       Impact of FX translation (1) — (2 ) (7 )
       Provisions for credit losses—ex-FX $ 99 $ 56 $ 187 77 % (70 )%
       Net income—as reported $ (22 ) $ 95 $ 98 NM (3 )%
       Impact of FX translation (1) — (11 ) (13 )
       Net income—ex-FX $ (22 ) $ 84 $ 85 NM (1 )%

(1)       Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the current exchange rate for all periods presented.
NM       Not meaningful

18


The discussion of the results of operations for EMEA RCB below excludes the impact of FX translation for all periods presented. Presentation of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of EMEA RCB’s results excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of certain of these metrics to the reported results, see the table above.

2012 vs. 2011
The net loss of $22 million compared to net income of $84 million in 2011 was mainly due to higher operating expenses and lower loan loss reserve releases, partially offset by higher revenues.
     Revenues increased 2%, with growth across the major products, including strong growth in Russia. Year-over-year, cards purchase sales increased 12%, investment sales increased 15% and retail loan volume increased 17%. Revenue growth year-over-year was partly offset by the absence of Akbank, Citi’s equity investment in Turkey, which was moved to Corporate/Other in the first quarter of 2012. Net interest revenue increased 17%, driven by the absence of Akbank investment funding costs and growth in average deposits of 5%, average retail loans of 16% and average cards loans of 6%, partially offset by spread compression. Interest rate caps on credit cards, particularly in Turkey and Poland, the continued liquidation of a higher yielding non-strategic retail banking portfolio and the continued low interest rate environment were the main contributors to the lower spreads. Citi expects spread compression to continue to negatively impact revenues in this business during 2013. Non-interest revenue decreased 20%, mainly reflecting the absence of Akbank.
     Expenses grew 12%, primarily due to the $57 million of fourth quarter of 2012 repositioning charges in Turkey, Romania and Pakistan and the impact of continued investment spending on new internal operating platforms during the year.
     Provisions increased $43 million due to lower loan loss reserve releases, partially offset by lower net credit losses across most countries. Net credit losses continued to decline, decreasing 36% due to the ongoing improvement in credit quality and the move toward lower-risk customers. Citi believes that net credit losses in EMEA RCB have largely stabilized and assuming the underlying core portfolio continues to grow in 2013, credit costs could begin to rise.

2011 vs. 2010
Net income decreased 1%, as an improvement in credit costs was offset by higher expenses from increased investment spending and lower revenues.
     Revenues decreased 1%, driven by the liquidation of higher yielding non-strategic customer portfolios and a lower contribution from Akbank. Net interest revenue declined 1% due to the decline in the higher yielding non-strategic retail banking portfolio and spread compression in the Citi-branded cards portfolio. Interest rate caps on credit cards, particularly in Turkey and Poland, contributed to the lower spreads in the cards portfolio. Non-interest revenue decreased 2%, mainly reflecting the lower contribution from Akbank. Despite the negative impacts to revenues described above, underlying businesses showed growth, with investment sales up 28% from the prior year and cards purchase sales up 15%.
     Expenses increased 7% due to the impact of account acquisition, focused investment spending and higher transactional expenses, partly offset by continued savings initiatives.
     Provisions decreased 70%, driven by a reduction in net credit losses. Net credit losses decreased 46%, reflecting the continued credit quality improvement during the year, stricter underwriting criteria and the move to lower-risk products.



19


LATIN AMERICA REGIONAL CONSUMER BANKING

Latin America Regional Consumer Banking (Latin America RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, with the largest presence in Mexico and Brazil. Latin America RCB includes branch networks throughout Latin America as well as Banco Nacional de Mexico, or Banamex, Mexico’s second-largest bank, with over 1,700 branches. As announced in the fourth quarter of 2012, as part of its repositioning efforts, Citi expects to either sell or significantly scale back consumer operations in Paraguay and Uruguay, and expects to further optimize its branch network in Brazil. At December 31, 2012, Latin America RCB had 2,181 retail branches, with approximately 31.8 million customer accounts, $28.3 billion in retail banking loans and $48.6 billion in deposits. In addition, the business had approximately 12.9 million Citi-branded card accounts with $14.8 billion in outstanding loan balances.

% Change % Change
In millions of dollars, except as otherwise noted         2012         2011         2010         2012 vs. 2011         2011 vs. 2010
Net interest revenue $ 6,695 $ 6,456 $ 5,953 4 % 8 %
Non-interest revenue 3,007 3,013 2,714 — 11
Total revenues, net of interest expense $ 9,702 $ 9,469 $ 8,667 2 % 9 %
Total operating expenses $ 5,702 $ 5,756 $ 5,139 (1 )% 12 %
       Net credit losses $ 1,750 $ 1,684 $ 1,868 4 % (10 )%
       Credit reserve build (release) 299 (67 ) (823 ) NM 92
       Provision for benefits and claims 167 130 127 28 2
Provisions for loan losses and for benefits and claims (LLR & PBC) $ 2,216 $ 1,747 $ 1,172 27 % 49 %
Income from continuing operations before taxes $ 1,784 $ 1,966 $ 2,356 (9 )% (17 )%
Income taxes 274 388 568 (29 ) (32 )
Income from continuing operations $ 1,510 $ 1,578 $ 1,788 (4 )% (12 )%
Noncontrolling interests (2 ) — (8 ) — 100
Net income $ 1,512 $ 1,578 $ 1,796 (4 )% (12 )%
Balance Sheet data (in billions of dollars)
Average assets $ 80 $ 80 $ 72 — % 11 %
Return on average assets 1.89 % 1.97 % 2.50 %
Efficiency ratio 59 % 61 % 59 %
Average deposits $ 45.0 $ 45.8 $ 40.3 (2 ) 14
Net credit losses as a percentage of average loans 4.34 % 4.69 % 6.14 %
Revenue by business
       Retail banking $ 5,766 $ 5,468 $ 5,016 5 % 9 %
       Citi-branded cards 3,936 4,001 3,651 (2 ) 10
              Total $ 9,702 $ 9,469 $ 8,667 2 % 9 %
Income from continuing operations by business
       Retail banking $ 861 $ 902 $ 927 (5 )% (3 )%
       Citi-branded cards 649 676 861 (4 ) (21 )
              Total $ 1,510 $ 1,578 $ 1,788 (4 )% (12 )%
Foreign Currency (FX) Translation Impact
       Total revenue—as reported $ 9,702 $ 9,469 $ 8,667 2 % 9 %
       Impact of FX translation (1) — (569 ) (335 )
       Total revenues—ex-FX $ 9,702 $ 8,900 $ 8,332 9 % 7 %
       Total operating expenses—as reported $ 5,702 $ 5,756 $ 5,139 (1 )% 12 %
       Impact of FX translation (1) — (367 ) (233 )
       Total operating expenses—ex-FX $ 5,702 $ 5,389 $ 4,906 6 % 10 %
       Provisions for LLR & PBC—as reported $ 2,216 $ 1,747 $ 1,172 27 % 49 %
       Impact of FX translation (1) — (156 ) (57 )
       Provisions for LLR & PBC—ex-FX $ 2,216 $ 1,591 $ 1,115 39 % 43 %
       Net income—as reported $ 1,512 $ 1,578 $ 1,796 (4 )% (12 )%
       Impact of FX translation (1) — (66 ) (39 )
       Net income—ex-FX $ 1,512 $ 1,512 $ 1,757 — % (14 )%

(1)       Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the current exchange rate for all periods presented.
NM       Not meaningful

20


The discussion of the results of operations for Latin America RCB below excludes the impact of FX translation for all periods presented. Presentation of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of Latin America RCB’s results excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of certain of these metrics to the reported results, see the table above.

2012 vs. 2011
Net income was flat to the prior year as higher revenues were offset by higher credit costs and repositioning charges.
     Revenues increased 9%, primarily due to strong revenue growth in Mexico and higher volumes, mostly related to personal loans and credit cards. However, continued regulatory pressure involving foreign exchange controls and related measures in Argentina and Venezuela is expected to negatively impact revenues in the near term. Net interest revenue increased 10% due to increased volumes, partially offset by continued spread compression. Citi expects spread compression to continue to negatively impact revenues in this business during 2013. Non-interest revenue increased 7%, primarily due to increased business volumes in the private pension fund and insurance businesses.
     Expenses increased 6%, primarily due to $131 million of repositioning charges in the fourth quarter of 2012, higher volume-driven expenses and increased legal and related costs.
     Provisions increased 39%, primarily due to increased loan loss reserve builds driven by underlying business volume growth, primarily in Mexico and Colombia. In addition, net credit losses increased in the retail portfolios, primarily in Mexico, reflecting volume growth. Citi believes that net credit losses in Latin America will likely continue to trend higher as various loan portfolios continue to mature.

2011 vs. 2010
Net income declined 14% as higher revenues were more than offset by higher expenses and higher credit costs.
     Revenues increased 7% primarily due to higher volumes. Net interest revenue increased 6% driven by the continued growth in lending and deposit volumes, partially offset by spread compression driven in part by the continued move toward customers with a lower risk profile and stricter underwriting criteria, especially in the Citi-branded cards portfolio. Non-interest revenue increased 8%, primarily driven by an increase in banking fee income from credit card purchase sales.
     Expenses increased 10% due to higher volumes and investment spending, including increased marketing and customer acquisition costs as well as new branches, partially offset by continued savings initiatives. The increase in the level of investment spending in the business was largely completed at the end of 2011.
     Provisions increased 43%, reflecting lower loan loss reserve releases. Net credit losses declined 13%, driven primarily by improvements in the Mexico cards portfolio due to the move toward customers with a lower-risk profile and stricter underwriting criteria.



21


ASIA REGIONAL CONSUMER BANKING

Asia Regional Consumer Banking (Asia RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, with the largest Citi presence in Korea, Australia, Singapore, Japan, Taiwan, Hong Kong, India and Indonesia. As announced in the fourth quarter of 2012, as part of its repositioning efforts, Citi expects to optimize its branch network and further concentrate its presence in major metropolitan areas. The markets affected by the reductions include Hong Kong and Korea. At December 31, 2012, Asia RCB had approximately 600 retail branches, 16.9 million customer accounts, $69.7 billion in retail banking loans and $110 billion in deposits. In addition, the business had approximately 16.0 million Citi-branded card accounts with $20.4 billion in outstanding loan balances.

% Change % Change
In millions of dollars, except as otherwise noted       2012       2011       2010       2012 vs. 2011       2011 vs. 2010
Net interest revenue $ 5,142 $ 5,365 $ 5,077 (4 )% 6 %
Non-interest revenue 2,773 2,644 2,319 5 14
Total revenues, net of interest expense $ 7,915 $ 8,009 $ 7,396 (1 )% 8 %
Total operating expenses $ 4,750 $ 4,619 $ 4,078 3 % 13 %
       Net credit losses $ 841 $ 883 $ 1,013 (5 )% (13 )%
       Credit reserve build (release) (36 ) (63 ) (287 ) 43 78
Provisions for loan losses $ 805 820 726 (2 )% 13 %
Income from continuing operations before taxes $ 2,360 $ 2,570 $ 2,592 (8 )% (1 )%
Income taxes 563 666 482 (15 ) 38
Income from continuing operations $ 1,797 $ 1,904 $ 2,110 (6 )% (10 )%
Noncontrolling interests — — — — —
Net income $ 1,797 $ 1,904 $ 2,110 (6 )% (10 )%
Balance Sheet data (in billions of dollars)
Average assets $ 126 $ 122 $ 108 3 % 13 %
Return on average assets 1.43 % 1.56 % 1.96 %
Efficiency ratio 60 % 58 % 55 %
Average deposits $ 110.8 $ 110.5 $ 99.8 — 11
Net credit losses as a percentage of average loans 0.95 % 1.03 % 1.37 %
Revenue by business
       Retail banking $ 4,727 $ 4,927 $ 4,657 (4 )% 6 %
       Citi-branded cards 3,188 3,082 2,739 3 13
              Total $ 7,915 $ 8,009 $ 7,396 (1 )% 8 %
Income from continuing operations by business
       Retail banking $ 969 $ 1,195 $ 1,440 (19 )% (17 )%
       Citi-branded cards 828 709 670 17 6
              Total $ 1,797 $ 1,904 $ 2,110 (6 )% (10 )%
Foreign Currency (FX) Translation Impact
       Total revenue—as reported $ 7,915 $ 8,009 $ 7,396 (1 )% 8 %
       Impact of FX translation (1) — (98 ) 237
       Total revenues—ex-FX $ 7,915 $ 7,911 $ 7,633 — % 4 %
       Total operating expenses—as reported $ 4,750 $ 4,619 $ 4,078 3 % 13 %
       Impact of FX translation (1) — (61 ) 133
       Total operating expenses—ex-FX $ 4,750 $ 4,558 $ 4,211 4 % 8 %
       Provisions for loan losses—as reported $ 805 $ 820 $ 726 (2 )% 13 %
       Impact of FX translation (1) — (9 ) 45
       Provisions for loan losses—ex-FX $ 805 $ 811 $ 771 (1 )% 5 %
       Net income—as reported $ 1,797 $ 1,904 $ 2,110 (6 )% (10 )%
       Impact of FX translation (1) — (25 ) 35
       Net income—ex-FX $ 1,797 $ 1,879 $ 2,145 (4 )% (12 )%

(1)      Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the current exchange rate for all periods presented.
NM Not meaningful

22


The discussion of the results of operations for Asia RCB below excludes the impact of FX translation for all periods presented. Presentation of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of Asia RCB’s results excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of certain of these metrics to the reported results, see the table above.

2012 vs. 2011
Net income decreased 4% primarily due to higher expenses.
     Revenues were flat year-over-year. Net interest revenue decreased 3%, as the benefit of higher loan and deposit balances was offset by spread compression, mainly in retail lending. Spread compression continued to reflect improvements in the customer risk profile, stricter underwriting criteria and certain regulatory changes in Korea where, as previously disclosed, policy actions, including rate caps and other initiatives, have been implemented to slow the growth of consumer credit in that market, thus impacting volume growth, lending rates and fees. Spread compression is expected to continue to have a negative impact on net interest revenue as regulatory pressure and low interest rates persist. Non-interest revenue increased 6%, reflecting growth in Citi-branded cards purchase sales, partially offset by a decrease in revenue from foreign exchange products. Despite the continued spread compression and regulatory changes in the region, the underlying business metrics continued to grow, with average retail loans up 6% and average card loans up 2%.
     Expenses increased 4%, primarily due to approximately $78 million of repositioning charges in the fourth quarter of 2012, largely in Korea, and increased investment spending, including China cards and branches, higher volume-driven expenses and increased regulatory costs.
     Provisions decreased 1%, reflecting continued overall credit quality improvement. Net credit losses continued to improve, declining 3% due to the ongoing improvement in credit quality. Citi believes that net credit losses in Asia RCB will largely remain stable, with increases largely in line with portfolio growth.

2011 vs. 2010
Net income decreased 12%, driven by higher operating expenses, lower loan loss reserve releases and a higher effective tax rate, partially offset by higher revenue. The higher effective tax rate was due to lower tax benefits Accounting Principles Bulletin (APB) 23 and a tax charge of $66 million due to a write-down in the value of deferred tax assets due to a change in the tax law, each in Japan.
     Revenues increased 4%, primarily driven by higher business volumes, partially offset by continued spread compression and $65 million of net charges relating to the repurchase of certain Lehman structured notes. Net interest revenue increased 1%, as investment initiatives and economic growth in the region drove higher lending and deposit volumes. Spread compression continued to partly offset the benefit of higher balances and continued to be driven by stricter underwriting criteria, resulting in a lowering of the risk profile for personal and other loans. Non-interest revenue increased 10%, primarily due to a 9% increase in Citi-branded cards purchase sales and higher revenues from foreign exchange products, partially offset by a 16% decrease in investment sales, particularly in the second half of 2011, and the net charges for the repurchase of certain Lehman structured notes.
     Expenses increased 8%, due to investment spending, growth in business volumes, repositioning charges and higher legal and related costs, partially offset by ongoing productivity savings.
     Provisions increased 5% as lower loan loss reserve releases were partially offset by lower net credit losses. The increase in provisions reflected increasing volumes in the region, partially offset by continued credit quality improvement. India was a significant driver of the improvement in credit quality, as it continued to de-risk elements of its legacy portfolio.



23


INSTITUTIONAL CLIENTS GROUP

Institutional Clients Group (ICG) includes Securities and Banking and Transaction Services. ICG provides corporate, institutional, public sector and high-net-worth clients around the world with a full range of products and services, including cash management, foreign exchange, trade finance and services, securities services, sales and trading of loans and securities, institutional brokerage, underwriting, lending and advisory services. ICG’s international presence is supported by trading floors in approximately 75 countries and jurisdictions and a proprietary network within Transaction Services in over 95 countries and jurisdictions. At December 31, 2012, ICG had approximately $1.1 trillion of assets and $523 billion of deposits.

% Change % Change
In millions of dollars, except as otherwise noted       2012       2011       2010       2012 vs. 2011       2011 vs. 2010
Commissions and fees $ 4,318 $ 4,449 $ 4,267 (3 )% 4 %
Administration and other fiduciary fees 2,790 2,775 2,753 1 1
Investment banking 3,618 3,029 3,520 19 (14 )
Principal transactions 4,130 4,873 5,566 (15 ) (12 )
Other (85 ) 1,821 1,686 NM 8
Total non-interest revenue $ 14,771 $ 16,947 $ 17,792 (13 )% (5 )%
Net interest revenue (including dividends) 15,829 15,055 15,415 5 (2 )
Total revenues, net of interest expense $ 30,600 $ 32,002 $ 33,207 (4 )% (4 )%
Total operating expenses $ 20,232 $ 20,768 $ 19,626 (3 )% 6 %
       Net credit losses $ 282 $ 619 $ 573 (54 )% 8 %
       Provision (release) for unfunded lending commitments 39 89 (29 ) (56 ) NM
       Credit reserve build (release) (45 ) (556 ) (626 ) 92 11
Provisions for loan losses and benefits and claims $ 276 $ 152 $ (82 ) 82 % NM
Income from continuing operations before taxes $ 10,092 $ 11,082 $ 13,663 (9 )% (19 )%
Income taxes 2,102 2,820 3,490 (25 ) (19 )
Income from continuing operations $ 7,990 $ 8,262 $ 10,173 (3 )% (19 )%
Noncontrolling interests 128 56 131 NM (57 )
Net income $ 7,862 $ 8,206 $ 10,042 (4 )% (18 )%
Average assets (in billions of dollars) $ 1,042 $ 1,024 $ 949 2 % 8 %
Return on average assets 0.75 % 0.80 % 1.06 %
Efficiency ratio 66 % 65 % 59 %
Revenues by region
       North America $ 8,668 $ 10,002 $ 11,878 (13 )% (16 )%
       EMEA 9,993 10,707 10,205 (7 ) 5
       Latin America 4,816 4,083 4,084 18 —
       Asia 7,123 7,210 7,040 (1 ) 2
Total revenues $ 30,600 $ 32,002 $ 33,207 (4 )% (4 )%
Income from continuing operations by region
       North America $ 1,481 $ 1,459 $ 2,985 2 % (51 )%
       EMEA 2,598 3,130 3,029 (17 ) 3
       Latin America 1,962 1,613 1,756 22 (8 )
       Asia 1,949 2,060 2,403 (5 ) (14 )
Total income from continuing operations $ 7,990 $ 8,262 $ 10,173 (3 )% (19 )%
       Average loans by region (in billions of dollars)
       North America $ 83 $ 69 $ 67 20 % 3 %
       EMEA 53 47 38 13 24
       Latin America 35 29 23 21 26
       Asia 63 52 36 21 44
Total average loans $ 234 $ 197 $ 164 19 % 20 %

NM Not meaningful

24


SECURITIES AND BANKING

Securities and Banking (S&B) offers a wide array of investment and commercial banking services and products for corporations, governments, institutional and public sector entities, and high-net-worth individuals. S&B transacts with clients in both cash instruments and derivatives, including fixed income, foreign currency, equity, and commodity products. S&B includes investment banking and advisory services, lending, debt and equity sales and trading, institutional brokerage, derivative services and private banking.
     S&B revenue is generated primarily from fees and spreads associated with these activities. S&B earns fee income for assisting clients in clearing transactions, providing brokerage and investment banking services and other such activities. Revenue generated from these activities is recorded in Commissions and fees. In addition, as a market maker, S&B facilitates transactions, including holding product inventory to meet client demand, and earns the differential between the price at which it buys and sells the products. These price differentials and the unrealized gains and losses on the inventory are recorded in Principal transactions. S&B interest income earned on inventory and loans held is recorded as a component of net interest revenue.

% Change % Change
In millions of dollars, except as otherwise noted       2012       2011       2010       2012 vs. 2011       2011 vs. 2010
Net interest revenue $ 9,676 $ 9,123 $ 9,728 6 % (6 )%
Non-interest revenue 10,067 12,300 13,394 (18 ) (8 )
Revenues, net of interest expense $ 19,743 $ 21,423 $ 23,122 (8 )% (7 )%
Total operating expenses 14,444 15,013 14,628 (4 ) 3
       Net credit losses 168 602 567 (72 ) 6
       Provision (release) for unfunded lending commitments 33 86 (29 ) (62 ) NM
       Credit reserve build (release) (79 ) (572 ) (562 ) 86 (2 )
Provisions for credit losses $ 122 $ 116 $ (24 ) 5 % NM
Income before taxes and noncontrolling interests $ 5,177 $ 6,294 $ 8,518 (18 )% (26 )%
Income taxes 682 1,381 1,967 (51 ) (30 )
Income from continuing operations $ 4,495 $ 4,913 $ 6,551 (9 )% (25 )%
Noncontrolling interests 111 37 110 NM (66 )
Net income $ 4,384 $ 4,876 $ 6,441 (10 )% (24 )%
Average assets (in billions of dollars) $ 904 $ 894 $ 842 1 % 6 %
Return on average assets 0.48 % 0.55 % 0.77 %
Efficiency ratio 73 % 70 % 63 %  
Revenues by region  
       North America $ 6,104 $ 7,558 $ 9,393 (19 )% (20 )%
       EMEA 6,417 7,221 6,849 (11 ) 5
       Latin America 3,019 2,370 2,554 27 (7 )
       Asia 4,203 4,274 4,326 (2 ) (1 )
Total revenues $ 19,743 $ 21,423 $ 23,122 (8 )% (7 )%
Income from continuing operations by region
       North America $ 1,011 $ 1,044 $ 2,495 (3 )% (58 )%
       EMEA 1,354 2,000 1,811 (32 ) 10
       Latin America 1,308 974 1,093 34 (11 )
       Asia 822 895 1,152 (8 ) (22 )
Total income from continuing operations $ 4,495 $ 4,913 $ 6,551 (9 )% (25 )%
Securities and Banking revenue details (excluding CVA/DVA)
       Total investment banking        $ 3,641 $ 3,310 $ 3,828 10 % (14 )%
       Fixed income markets 13,961 10,891 14,265 28 (24 )
       Equity markets 2,418 2,402 3,710 1 (35 )
       Lending 997 1,809 971 (45 ) 86
       Private bank 2,314 2,138 2,009 8 6
       Other Securities and Banking (1,101 ) (859 ) (1,262 ) (28 ) 32
Total Securities and Banking revenues (ex-CVA/DVA) $ 22,230 $ 19,691 $ 23,521 13 % (16 )%
CVA/DVA $ (2,487 ) $ 1,732 $ (399 ) NM NM
Total revenues, net of interest expense $ 19,743 $ 21,423 $ 23,122 (8 )% (7 )%

NM Not meaningful

25


2012 vs. 2011
Net income decreased 10%. Excluding $2.5 billion of negative CVA/DVA (see table below), net income increased 56%, primarily driven by a 13% increase in revenues.
     Revenues decreased 8%, driven by the negative CVA/DVA and mark-to-market losses on hedges related to accrual loans. Excluding CVA/DVA:

     Expenses decreased 4%. Excluding repositioning charges of $349 million in 2012 (including $237 million in the fourth quarter of 2012) compared to $267 million in 2011, expenses also decreased 4%, driven by efficiency savings from ongoing re-engineering programs and lower compensation costs. The repositioning efforts in S&B announced in the fourth quarter of 2012 are designed to streamline S&B’s client coverage model and improve overall productivity.
     Provisions increased 5% to $122 million, primarily reflecting lower loan loss reserve releases, partially offset by lower net credit losses, both due to portfolio stabilization.



26


2011 vs. 2010
Net income decreased 24%. Excluding $1.7 billion of positive CVA/DVA (see table below), net income decreased 43%, primarily driven by lower revenues in most products and higher expenses.
     Revenues decreased 7%, driven by lower revenues partially offset by positive CVA/DVA resulting from the widening of Citi’s credit spreads in 2011. Excluding CVA/DVA:

     Expenses increased 3%, primarily due to investment spending, which largely occurred in the first half of 2011, relating to new hires and technology investments. The increase in expenses was also driven by higher repositioning charges and the negative impact of FX translation (which contributed approximately 2% to the expense growth), partially offset by productivity saves and reduced incentive compensation due to business results. The increase in the level of investment spending in S&B was largely completed at the end of 2011.
     Provisions increased $140 million, primarily due to builds in the allowance for unfunded lending commitments as a result of portfolio growth and higher net credit losses.

In millions of dollars 2012 2011 2010
S&B CVA/DVA
Fixed Income Markets $ (2,047 )      $ 1,368       $ (187 )
Equity Markets (424 ) 355 (207 )
Private Bank (16 ) 9 (5 )
Total S&B CVA/DVA $ (2,487 ) $ 1,732 $ (399 )
S&B Hedges on Accrual  
       Loans gain (loss) (1) $ (698 ) $ 519 $ (65 )

(1)      Hedges on S&B accrual loans reflect the mark-to-market on credit derivatives used to hedge the corporate loan accrual portfolio. The fixed premium cost of these hedges is included (netted against) the core lending revenues to reflect the cost of the credit protection.


27


TRANSACTION SERVICES

Transaction Services is composed of Treasury and Trade Solutions and Securities and Fund Services. Treasury and Trade Solutions provides comprehensive cash management and trade finance services for corporations, financial institutions and public sector entities worldwide. Securities and Fund Services provides securities services to investors, such as global asset managers, custody and clearing services to intermediaries, such as broker-dealers, and depository and agency/trust services to multinational corporations and governments globally. Revenue is generated from net interest revenue on deposits and trade loans as well as fees for transaction processing and fees on assets under custody and administration.

% Change % Change
In millions of dollars, except as otherwise noted       2012       2011       2010       2012 vs. 2011       2011 vs. 2010
Net interest revenue       $ 6,153 $ 5,932 $ 5,687 4 % 4 %
Non-interest revenue 4,704 4,647 4,398 1 6
Total revenues, net of interest expense $ 10,857 $ 10,579 $ 10,085 3 % 5
Total operating expenses 5,788 5,755 4,998 1 15
Provisions (releases) for credit losses and for benefits and claims 154 36 (58 ) NM NM
Income before taxes and noncontrolling interests $ 4,915 $ 4,788 $ 5,145 3 % (7 )%
Income taxes 1,420 1,439 1,523 (1 ) (6 )
Income from continuing operations 3,495 3,349 3,622 4 (8 )
Noncontrolling interests 17 19 21 (11 ) (10 )
Net income $ 3,478 $ 3,330 $ 3,601 4 % (8 )%
Average assets (in billions of dollars) $ 138 $ 130 $ 107 6 % 21
Return on average assets 2.52 % 2.56 % 3.37 %
Efficiency ratio 53 % 54 % 50 %
Revenues by region  
       North America $ 2,564 $ 2,444 $ 2,485 5 % (2 )%
       EMEA 3,576 3,486 3,356 3 4
       Latin America 1,797 1,713 1,530 5 12
       Asia 2,920 2,936 2,714 (1 ) 8
Total revenues $ 10,857 $ 10,579 $ 10,085 3 % 5 %
Income from continuing operations by region
       North America $ 470 $ 415 $ 490 13 % (15 )%
       EMEA 1,244 1,130 1,218 10 (7 )
       Latin America 654 639 663 2 (4 )
       Asia 1,127 1,165 1,251 (3 ) (7 )
Total income from continuing operations $ 3,495 $ 3,349 $ 3,622 4 % (8 )%
Foreign Currency (FX) Translation Impact
       Total revenue—as reported $ 10,857 $ 10,579 $ 10,085 3 % 5 %
       Impact of FX translation (1) — (254 ) (84 )
       Total revenues—ex-FX $ 10,857 $ 10,325 $ 10,001 5 % 3 %
       Total operating expenses—as reported $ 5,788 $ 5,755 $ 4,998 1 % 15 %
       Impact of FX translation (1) — (64 ) (3 )
       Total operating expenses—ex-FX $ 5,788 $ 5,691 $ 4,995 2 % 14 %
       Net income—as reported $ 3,478 $ 3,330 $ 3,601 4 % (8 )%
       Impact of FX translation (1) — (173 ) (65 )
       Net income—ex-FX $ 3,478 $ 3,157 $ 3,536 10 % (11 )%
Key indicators (in billions of dollars)
Average deposits and other customer liability balances—as reported $ 404 $ 364 $ 334 11 % 9 %
       Impact of FX translation (1) — (6 ) 1
       Average deposits and other customer liability balances—ex-FX $ 404 $ 358 $ 335 13 % 7 %
EOP assets under custody (2) (in trillions of dollars) $ 13.2 $ 12.0 $ 12.3 10 % (2 )%

(1)      Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the current exchange rate for all periods presented.
(2) Includes assets under custody, assets under trust and assets under administration.
NM Not meaningful

28


The discussion of the results of operations for Transaction Services below excludes the impact of FX translation for all periods presented. Presentation of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of Transaction Services’ results excluding the impact of FX translation is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of certain of these metrics to the reported results, see the table above.

2012 vs. 2011
Net income increased 10%, reflecting growth in revenues, partially offset by higher expenses and credit costs.
     Revenues increased 5% as higher trade loan and deposit balances were partially offset by continued spread compression and lower market volumes. Treasury and Trade Solutions revenues were up 8%, driven by growth in trade as end-of-period trade loans grew 23%. Cash management revenues also grew, reflecting growth in deposit balances and fees, partially offset by continued spread compression due to the continued low interest rate environment. Securities and Fund Services revenues decreased 2%, primarily driven by lower market volumes as well as spread compression on deposits. Citi expects spread compression will continue to negatively impact Transaction Services.
     Expenses increased 2%. Excluding repositioning charges of $134 million in 2012 (including $95 million in the fourth quarter of 2012) compared to $60 million in 2011, expenses were flat, primarily driven by incremental investment spending and higher legal and related costs, offset by efficiency savings.
     Average deposits and other customer liabilities grew 13%, driven by focused deposit building activities as well as continued market demand for U.S. dollar deposits (for additional information on Citi’s deposits, see “Capital Resources and Liquidity—Funding and Liquidity” below).

2011 vs. 2010
Net income decreased 11%, as higher expenses, driven by investment spending, outpaced revenue growth.
     Revenues grew 3%, driven primarily by international growth, as improvement in fees and increased deposit balances more than offset the continued spread compression. Treasury and Trade Solutions revenues increased 4%, driven primarily by growth in the trade and commercial cards businesses and increased deposits, partially offset by the impact of the continued low rate environment. Securities and Fund Services revenues increased 1%, primarily due to growth in transaction and settlement volumes, driven in part by the increase in activity resulting from market volatility, and new client mandates.
     Expenses increased 14%, reflecting investment spending and higher business volumes, partially offset by productivity savings. 
     Average deposits and other customer liabilities grew 7% and included the shift to operating balances as the business continued to emphasize more stable, lower cost deposits as a way to mitigate spread compression (for additional information on Citi’s deposits, see “Capital Resources and Liquidity—Funding and Liquidity” below).



29


CORPORATE/OTHER

Corporate/Other includes unallocated global staff functions (including finance, risk, human resources, legal and compliance), other corporate expenses and unallocated global operations and technology expenses, Corporate Treasury and discontinued operations. At December 31, 2012, this segment had approximately $249 billion of assets, or 13%, of Citigroup’s total assets, consisting primarily of Citi’s liquidity portfolio (approximately $46 billion of cash and cash equivalents and $145 billion of liquid available-for-sale securities, each as of December 31, 2012).

In millions of dollars       2012       2011       2010
Net interest revenue $ (271 ) $ 26 $ 828
Non-interest revenue 463 859 926
Revenues, net of interest expense $ 192 $ 885 $ 1,754
Total operating expenses $ 3,214 $ 2,293 $ 1,506
Provisions for loan losses and for benefits and claims (1 ) 1 (1 )
Loss from continuing operations before taxes $ (3,021 ) $ (1,409 ) $ 249
Benefits for income taxes (1,396 ) (681 ) 7
Income (loss) from continuing operations $ (1,625 ) $ (728 ) $ 242
Income (loss) from discontinued operations, net of taxes (149 ) 112 (68 )
Net income (loss) before attribution of noncontrolling interests $ (1,774 ) $ (616 ) $ 174
Noncontrolling interests 85 (27 ) (48 )
Net income (loss) $ (1,859 ) $ (589 ) $ 222

2012 vs. 2011
The net loss increased by $1.3 billion due to a decrease in revenues and an increase in repositioning charges and legal and related expenses. The net loss increased despite a $582 million tax benefit related to the resolution of certain tax audit items in the third quarter of 2012 (see the “Executive Summary” above for a discussion of this tax benefit as well as the impact of minority investments on the results of operations of Corporate/Other during 2012, also as discussed below).
     Revenues decreased $693 million, driven by an other-than-temporary impairment of pretax $(1.2) billion on Citi’s investment in Akbank and a loss of pretax $424 million on the partial sale of Akbank, as well as lower investment yields on Citi’s treasury portfolio and the negative impact of hedging activities. These negative impacts to revenues were partially offset by an aggregate pretax gain on the sales of Citi’s remaining interest in HDFC and its interest in SPDB.
     Expenses increased by $921 million, largely driven by higher legal and related costs, as well as higher repositioning charges, including $253 million in the fourth quarter of 2012.

2011 vs. 2010
The net loss of $589 million reflected a decline of $811 million compared to net income of $222 million in 2010. This decline was primarily due to lower revenues and higher expenses.
     Revenues decreased $869 million, primarily driven by lower investment yields on Citi’s treasury portfolio and lower gains on sales of available-for-sale securities, partially offset by gains on hedging activities and the gain on the sale of a portion of Citi’s holdings in HDFC (see the “Executive Summary” above).
     Expenses increased $787 million, due to higher legal and related costs and investment spending, primarily in technology.



30


CITI HOLDINGS

Citi Holdings contains businesses and portfolios of assets that Citigroup has determined are not central to its core Citicorp businesses and consists of Brokerage and Asset Management, Local Consumer Lending and Special Asset Pool.
     Consistent with its strategy, Citi intends to continue to exit these businesses and portfolios as quickly as practicable in an economically rational manner. Citi Holdings assets have declined by approximately $302 billion since the end of 2009. To date, the decrease in Citi Holdings assets has been primarily driven by asset sales and business dispositions, as well as portfolio run-off and pay-downs. Asset levels have also been impacted, and will continue to be impacted, by charge-offs and fair value marks as and when appropriate. Citi expects the wind-down of the assets in Citi Holdings will continue, although likely at a slower pace than experienced over the past several years as Citi has already disposed of some of the larger operating businesses within Citi Holdings (see also “Risk Factors—Business and Operational Risks” below).
     As of December 31, 2012, Citi Holdings assets were approximately $156 billion, a decrease of approximately 31% year-over-year and a decrease of 9% from September 30, 2012. The decline in assets of $69 billion in 2012 was composed of a decline of approximately $17 billion related to MSSB (primarily consisting of $6.6 billion related to the sale of Citi’s 14% interest and impairment on the remaining investment and approximately $11 billion of margin loans), $18 billion of other asset sales and business dispositions, $30 billion of run-off and pay-downs and $4 billion of charge-offs and fair value marks. Citi Holdings represented approximately 8% of Citi’s assets as of December 31, 2012, while Citi Holdings risk-weighted assets (as defined under current regulatory guidelines) of approximately $144 billion at December 31, 2012 represented approximately 15% of Citi’s risk-weighted assets as of that date.



% Change % Change
In millions of dollars, except as otherwise noted 2012         2011 2010         2012 vs. 2011         2011 vs. 2010
Net interest revenue $ 2,577 $ 3,683         $ 8,085 (30 )% (54 )%
Non-interest revenue (3,410 ) 2,588 4,186 NM (38 )
Total revenues, net of interest expense $ (833 ) $ 6,271 $ 12,271 NM (49 )%
Provisions for credit losses and for benefits and claims
Net credit losses $ 5,842 $ 8,576 $ 13,958 (32 )% (39 )%
Credit reserve build (release) (1,551 ) (3,277 ) (2,494 ) 53 (31 )
Provision for loan losses $ 4,291 $ 5,299 $ 11,464 (19 )% (54 )%
Provision for benefits and claims 651 779 781 (16 ) —
Provision (release) for unfunded lending commitments (56 ) (41 ) (82 ) (37 ) 50
Total provisions for credit losses and for benefits and claims $ 4,886 $ 6,037 $ 12,163 (19 )% (50 )%
Total operating expenses $ 5,253 $ 6,464 $ 7,356 (19 )% (12 )%
Loss from continuing operations before taxes $ (10,972 ) $ (6,230 ) $ (7,248 ) (76 )% 14 %
Benefits for income taxes (4,412 ) (2,127 ) (2,815 ) NM 24
(Loss) from continuing operations $ (6,560 ) $ (4,103 ) $ (4,433 ) (60 )% 7 %
Noncontrolling interests 3 119 207 (97 ) (43 )
Citi Holdings net loss $ (6,563 ) $ (4,222 ) $ (4,640 ) (55 )% 9 %
Balance sheet data (in billions of dollars)
Average assets $ 194 $ 269 $ 420 (28 )% (36 )%
Return on average assets (3.38 )% (1.57 )% (1.10 )%
Efficiency ratio NM 103 % 60 %
Total EOP assets $ 156 $ 225 $ 313 (31 ) (28 )
Total EOP loans 116 141 199 (18 ) (29 )
Total EOP deposits $ 68 $ 62 $ 76 10 (18 )

NM Not meaningful

31


BROKERAGE AND ASSET MANAGEMENT

Brokerage and Asset Management (BAM) primarily consists of Citi’s remaining investment in, and assets related to, MSSB. At December 31, 2012, BAM had approximately $9 billion of assets, or approximately 6% of Citi Holdings assets, of which approximately $8 billion related to MSSB. During 2012, BAM’s assets declined 67% due to the decline in assets related to MSSB (see discussion below). At December 31, 2012, the MSSB assets were composed of an approximate $4.7 billion equity investment and $3 billion of other MSSB financing (consisting of approximately $2 billion of preferred stock and $1 billion of loans). For information on the agreement entered into with Morgan Stanley regarding MSSB on September 11, 2012, see Citigroup’s Current Report on Form 8-K filed with the SEC on September 11, 2012. The remaining assets in BAM consist of other retail alternative investments.

% Change % Change
In millions of dollars, except as otherwise noted 2012        2011        2010        2012 vs. 2011        2011 vs. 2010
Net interest revenue $ (471 ) $ (180 ) $ (277 ) NM 35 %
Non-interest revenue (4,228 ) 462 886 NM (48 )
Total revenues, net of interest expense $ (4,699 ) $ 282 $ 609 NM (54 )%
Total operating expenses $ 462 $ 729 $ 987 (37 )% (26 )%
       Net credit losses $ — $ 4 $ 17 (100 )% (76 )%
       Credit reserve build (release) (1 ) (3 ) (18 ) 67 83
       Provision for unfunded lending commitments — (1 ) (6 ) 100 83
       Provision (release) for benefits and claims — 48 38 (100 ) 26
Provisions for credit losses and for benefits and claims $ (1 ) $ 48 $ 31 NM 55 %
Income (loss) from continuing operations before taxes $ (5,160 ) $ (495 ) $ (409 ) NM (21 )%
Income taxes (benefits) (1,970 ) (209 ) (183 ) NM (14 )
Loss from continuing operations $ (3,190 ) $ (286 ) $ (226 ) NM (27 )%
Noncontrolling interests 3 9 11 (67 )% (18 )
Net (loss) $ (3,193 ) $ (295 ) $ (237 ) NM (24 )%
EOP assets (in billions of dollars) $ 9 $ 27 $ 27 (67 )% —%
EOP deposits (in billions of dollars) 59 55 58 7 (5 )

NM Not meaningful

2012 vs. 2011
The net loss in BAM increased by $2.9 billion due to the loss related to MSSB, consisting of (i) an $800 million after-tax loss on Citi’s sale of the 14% interest in MSSB to Morgan Stanley and (ii) a $2.1 billion after-tax other-than-temporary impairment of the carrying value of Citigroup’s remaining 35% interest in MSSB. For additional information on MSSB, see Note 15 to the Consolidated Financial Statements. Excluding the impact of MSSB, the net loss in BAM was flat.
     Revenues decreased by $5.0 billion to $(4.7) billion due to the MSSB impact described above. Excluding this impact, revenues in BAM were $(15) million, compared to $282 million in the prior-year period, due to higher funding costs related to MSSB assets, partially offset by a higher equity contribution from MSSB.
     Expenses decreased 37%, primarily driven by lower legal and related costs.
     Provisions decreased by $49 million due to the absence of certain unfunded lending commitments.

2011 vs. 2010
The net loss increased 24% as lower revenues were partly offset by lower expenses.
     Revenues decreased by 54%, driven by the 2010 sale of Citi’s Habitat and Colfondos businesses (including a $78 million pretax gain on sale related to the transactions in the first quarter of 2010) and lower revenues from MSSB.
     Expenses decreased 26%, also driven by divestitures, as well as lower legal and related expenses.
     Provisions increased 55%, primarily due to the absence of the prior-year reserve releases.



32


LOCAL CONSUMER LENDING

Local Consumer Lending (LCL) includes a substantial portion of Citigroup’s North America mortgage business (see “North America Consumer Mortgage Lending” below), CitiFinancial North America (consisting of the OneMain and CitiFinancial Servicing businesses), remaining student loans and credit card portfolios, and other local consumer finance businesses globally (including Western European cards and retail banking and Japan Consumer Finance). At December 31, 2012, LCL consisted of approximately $126 billion of assets (with approximately $123 billion in North America), or approximately 81% of Citi Holdings assets, and thus represents the largest segment within Citi Holdings. The North America assets primarily consist of residential mortgages (residential first mortgages and home equity loans), which stood at $92 billion as of December 31, 2012.

% Change % Change
In millions of dollars, except as otherwise noted 2012        2011        2010        2012 vs. 2011        2011 vs. 2010
Net interest revenue $ 3,335 $ 4,268 $ 7,143 (22 )% (40 )%
Non-interest revenue 1,031 1,174 1,667 (12 ) (30 )
Total revenues, net of interest expense $ 4,366 $ 5,442 $ 8,810 (20 )% (38 )%
Total operating expenses $ 4,465 $ 5,442 $ 5,798 (18 )% (6 )%
       Net credit losses $ 5,870 $ 7,504 $ 11,928 (22 )% (37 )%
       Credit reserve build (release) (1,410 ) (1,419 ) (765 ) 1 (85 )
       Provision for benefits and claims 651 731 743 (11 ) (2 )
Provisions for credit losses and for benefits and claims $ 5,111 $ 6,816 $ 11,906 (25 )% (43 )%
(Loss) from continuing operations before taxes $ (5,210 ) (6,816 ) $ (8,894 ) 24 % 23 %
Benefits for income taxes (2,017 ) (2,403 ) (3,529 ) 16 32
(Loss) from continuing operations $ (3,193 ) $ (4,413 ) $ (5,365 ) 28 % 18 %
Noncontrolling interests — 2 8 (100 ) (75 )
Net (loss) $ (3,193 ) $ (4,415 ) $ (5,373 ) 28 % 18 %
Balance sheet data (in billions of dollars)
Average assets $ 142 $ 186 $ 280 (24 )% (34 )%
Return on average assets (2.25 )% (2.37 )% (1.92 )%
Efficiency ratio 102 % 100 % 66 %
EOP assets $ 126 $ 157 $ 206 (20 ) (24 )
Net credit losses as a percentage of average loans 4.72 % 4.69 % 5.16 %

2012 vs. 2011
The net loss decreased by 28%, driven mainly by the improved credit environment primarily in North America mortgages.
     Revenues decreased 20%, primarily due to a 22% net interest revenue decline resulting from a 24% decline in loan balances. This decline was driven by continued asset sales, divestitures and run-off. Non-interest revenue decreased 12%, primarily due to portfolio run-off, partially offset by a lower repurchase reserve build. The repurchase reserve build was $700 million compared to $945 million in 2011 (see “Managing Global Risk—Credit Risk—Citigroup Residential Mortgages—Representations and Warranties” below).
     Expenses decreased 18%, driven by lower volumes and divestitures. Legal and related expenses in LCL remained elevated due to the previously disclosed $305 million charge in the fourth quarter of 2012, related to the settlement agreement reached with the Federal Reserve Board and OCC regarding the independent foreclosure review process required by the Federal Reserve Board and OCC consent orders entered into in April 2011 (see “Managing

Global Risk—Credit Risk—North America Consumer Mortgage Lending—Independent Foreclosure Review Settlement” below). In addition, legal and related expenses were elevated due to additional reserves related to payment protection insurance (PPI) (see “Payment Protection Insurance” below) and other legal and related matters impacting the business.
     Provisions decreased 25%, driven primarily by the improved credit environment in North America mortgages, lower volumes and divestitures. Net credit losses decreased by 22%, despite being impacted by incremental charge-offs of approximately $635 million in the third quarter of 2012 relating to OCC guidance regarding the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy (see Note 1 to the Consolidated Financial Statements) and $370 million of incremental charge-offs in the first quarter of 2012 related to previously deferred principal balances on modified mortgages related to anticipated forgiveness of principal in connection with the national mortgage settlement. Substantially all of these charge-offs were offset by reserve releases. In addition, net credit losses in 2012 were negatively impacted by an additional aggregate amount



33


of $146 million related to the national mortgage settlement. Citi expects that net credit losses in LCL will continue to be negatively impacted by Citi’s fulfillment of the terms of the national mortgage settlement through the second quarter of 2013 (see “Managing Global Risk—Credit Risk—National Mortgage Settlement” below).
     Excluding the incremental charge-offs arising from the OCC guidance and the previously deferred balances on modified mortgages, net credit losses in LCL would have declined 35%, with net credit losses in North America mortgages decreasing by 20%, other portfolios in North America by 56% and international by 49%. These declines were driven by lower overall asset levels driven partly by the sale of delinquent loans as well as underlying credit improvements. While Citi expects some continued improvement in credit going forward, declines in net credit losses in LCL will largely be driven by declines in asset levels, including continued sales of delinquent residential first mortgages (see “Managing Global Risk—Credit Risk—North America Consumer Mortgage Lending—North America Consumer Mortgage Quarterly Credit Trends” below).
     Average assets declined 24%, driven by the impact of asset sales and portfolio run-off, including declines of $16 billion in North America mortgage loans and $11 billion in international average assets.

2011 vs. 2010
The net loss decreased 18%, driven primarily by the improving credit environment, including lower net credit losses and higher loan loss reserve releases in mortgages. The improvement in credit was partly offset by lower revenues due to decreasing asset balances and sales.
     Revenues decreased 38%, driven primarily by the lower asset balances due to asset sales, divestitures and run-offs, which also drove the 40% decline in net interest revenue. Non-interest revenue decreased 30% due to the impact of divestitures. The repurchase reserve build was $945 million compared to $917 million in 2010.
     Expenses decreased 6%, driven by the lower volumes and divestitures, partly offset by higher legal and related expenses, including those relating to the national mortgage settlement, reserves related to potential PPI refunds (see “Payment Protection Insurance” below) and implementation costs associated with the Federal Reserve Board and OCC consent orders (see “Managing Global Risk—Credit Risk—North America Consumer Mortgage Lending—National Mortgage Settlement” below).
     Provisions decreased 43%, driven by lower credit losses and higher loan loss reserve releases. Net credit losses decreased 37%, primarily due to the credit improvements of $1.6 billion in North America mortgages, although the pace of the decline in net credit losses slowed. Loan loss reserve releases increased 85%, driven by higher releases in CitiFinancial North America due to better credit quality and lower loan balances.
     Average assets declined 34%, primarily driven by portfolio run-off and the impact of asset sales and divestitures, including continued sales of student loans, auto loans and delinquent mortgages.



34


Japan Consumer Finance
Citi continues to actively monitor various aspects of its Japan Consumer Finance business, including customer defaults, refund claims and litigation, as well as financial, legislative, regulatory, judicial and other political developments, relating to the charging of “gray zone” interest. Gray zone interest represents interest at rates that are legal but for which claims may not be enforceable. In 2008, Citi decided to exit its Japan Consumer Finance business and has liquidated approximately 85% of the portfolio since that time. As of December 31, 2012, Citi’s Japan Consumer Finance business had approximately $709 million in outstanding loans that currently charge or have previously charged interest rates in the gray zone, compared to approximately $2.1 billion as of December 31, 2011. However, Citi could also be subject to refund claims on previously outstanding loans that charged gray zone interest and thus could be subject to losses on loans in excess of these amounts.
     During 2012, LCL recorded a net decrease in its reserves related to customer refunds in the Japan Consumer Finance business of approximately $117 million (pretax) compared to an increase in reserves of approximately $119 million (pretax) in 2011. At December 31, 2012, Citi’s reserves related to customer refunds in the Japan Consumer Finance business were approximately $736 million. Although Citi recorded a net decrease in its reserves in 2012, the charging of gray zone interest continues to be a focus in Japan. Regulators in Japan have stated that they are planning to submit legislation to establish a framework for collective legal action proceedings. If such legislation is passed and implemented, it could potentially introduce a more accessible procedure for current and former customers to pursue refund claims.
     Citi continues to monitor and evaluate these developments and the potential impact to both currently and previously outstanding loans in this business and its reserves related thereto. The potential amount of losses and their impact on Citi is subject to significant uncertainty and continues to be difficult to predict.

Payment Protection Insurance
The alleged misselling of PPI by financial institutions in the U.K. has been, and continues to be, the subject of intense review and focus by U.K. regulators, particularly the Financial Services Authority (FSA). The FSA has found certain problems across the industry with how these products were sold, including customers not realizing that the cost of PPI premiums was being added to their loan or PPI being unsuitable for the customer.
     PPI is designed to cover a customer’s loan repayments if certain events occur, such as long-term illness or unemployment. Prior to 2008, certain of Citi’s U.K. consumer finance businesses, primarily CitiFinancial Europe plc and Canada Square Operations Ltd (formerly Egg Banking plc), engaged in the sale of PPI. While Citi has sold a significant portion of these businesses, and the remaining businesses are in the process of wind down, Citi generally remains subject to customer complaints for, and retains the potential liability relating to, the sale of PPI by these businesses.

     In 2011, the FSA required all firms engaged in the sale of PPI in the U.K. to review their historical sales processes for PPI. In addition, the FSA is requiring all such firms to contact proactively any customers who may have been mis-sold PPI after January 2005 and invite them to have their individual sale reviewed (Customer Contact Exercise).
     Citi initiated a pilot Customer Contact Exercise during the third quarter of 2012 and expects to initiate the full Customer Contact Exercise during the first quarter of 2013; however, the timing and details of the Customer Contact Exercise are subject to discussion and agreement with the FSA. While Citi is not required to contact customers proactively for the sale of PPI prior to January 2005, it is still subject to customer complaints for those sales.
     During the third quarter of 2012, the FSA also requested that a number of firms, including Citi, re-evaluate PPI customer complaints that were reviewed and rejected prior to December 2010 to determine if, based on the current regulations for the assessment of PPI complaints, customers would have been entitled to redress (Customer Re-Evaluation Exercise). Citi currently expects to complete the Customer Re-Evaluation Exercise by the end of the first quarter of 2013.
     Redress, whether as a result of customer complaints pursuant to or outside of the required Customer Contact Exercise, or pursuant to the Customer Re-Evaluation Exercise, generally involves the repayment of premiums and the refund of all applicable contractual interest together with compensatory interest of 8%. Citi estimates that the number of PPI policies sold after January 2005 (across all applicable Citi businesses in the U.K.) was approximately 417,000, for which premiums totaling approximately $490 million were collected. As noted above, however, Citi also remains subject to customer complaints on the sale of PPI prior to January 2005, and thus it could be subject to customer complaints substantially higher than this amount.
     During 2012, Citi increased its PPI reserves by approximately $266 million ($175 million of which was recorded in LCL and $91 million of which was recorded in Corporate/Other for discontinued operations). This amount included a $148 million reserve increase in the fourth quarter of 2012 ($57 million of which was recorded in LCL and $91 million of which was recorded in Corporate/Other for discontinued operations). PPI claims paid during 2012 totaled $181 million, which were charged against the reserve. The increase in the reserves during 2012 was mainly due to a significant increase in the level of customer complaints outside of the Customer Contact Exercise, which Citi believes is largely as a result of the continued regulatory focus and increased customer awareness of PPI issues across the industry. The fourth quarter of 2012 reserve increase was also driven by a higher than anticipated rate of response to the pilot Customer Contact Exercise, which Citi believes was also likely due in part to the heightened awareness of PPI issues. At December 31, 2012, Citi’s PPI reserve was $376 million.
     While the number of customer complaints regarding the sale of PPI significantly increased in 2012, and the number could continue to increase, the potential losses and impact on Citi remain volatile and are subject to significant uncertainty.



35


SPECIAL ASSET POOL

The Special Asset Pool (SAP) consists of a portfolio of securities, loans and other assets that Citigroup intends to continue to reduce over time through asset sales and portfolio run-off. SAP had approximately $21 billion of assets as of December 31, 2012, which constituted approximately 13% of Citi Holdings assets.

% Change % Change
In millions of dollars, except as otherwise noted 2012        2011        2010        2012 vs. 2011        2011 vs. 2010
Net interest revenue $ (287 ) $ (405 ) $ 1,219 29 % NM
Non-interest revenue (213 ) 952 1,633 NM (42 )%
Revenues, net of interest expense $ (500 ) $ 547 $ 2,852 NM (81 )%
Total operating expenses $ 326 $ 293 $ 571 11 % (49 )%
       Net credit losses $ (28 ) $ 1,068 $ 2,013 NM (47 )%
       Credit reserve builds (releases) (140 ) (1,855 ) (1,711 ) 92 (8 )
       Provision (releases) for unfunded lending commitments (56 ) (40 ) (76 ) (40 ) 47
Provisions for credit losses and for benefits and claims $ (224 ) $ (827 ) $ 226 73 % NM
Income (loss) from continuing operations before taxes $ (602 ) $ 1,081 $ 2,055 NM (47 )%
Income taxes (benefits) (425 ) 485 897 NM (46 )
Net income (loss) from continuing operations $ (177 ) $ 596 $ 1,158 NM (49 )%
Noncontrolling interests — 108 188 (100 )% (43 )
Net income (loss) $ (177 ) $ 488 $ 970 NM (50 )%
EOP assets (in billions of dollars) $ 21 $ 41 $ 80 (49 )% (49 )%

NM Not meaningful

     

2012 vs. 2011
The net loss of $177 million reflected a decline of $665 million compared to net income of $488 million in 2011, mainly driven by a decrease in revenues and higher credit costs, partially offset by a tax benefit on the sale of a business in 2012.
     Revenues were $(500) million. CVA/DVA was $157 million, compared to $74 million in 2011. Excluding the impact of CVA/DVA, revenues in SAP were $(657) million, compared to $473 million in 2011. The decline in revenues was driven in part by lower non-interest revenue due to the absence of positive private equity marks and lower gains on asset sales, as well as an aggregate repurchase reserve build in 2012 of approximately $244 million related to private-label mortgage securitizations (see “Managing Global Risk—Credit Risk—Citigroup Residential Mortgages—Representations and Warranties” below). The loss in net interest revenues improved from the prior year due to lower funding costs, but remained negative. Citi expects continued negative net interest revenues, as interest earning assets continue to be a smaller portion of the overall asset pool. 
     Expenses increased 11%, driven by higher legal and related costs, partially offset by lower expenses from lower volume and asset levels.
     Provisions were a benefit of $224 million, which represented a 73% decline from 2011 due to a decrease in loan loss reserve releases (a release of $140 million compared to a release of $1.9 billion in 2011), partially offset by a $1.1 billion decline in net credit losses.
     Assets declined 49% to $21 billion, primarily driven by sales, amortization and prepayments. Asset sales of $11 billion generated pretax gains of approximately $0.3 billion, compared to asset sales of $29 billion and pretax gains of $0.5 billion in 2011.

2011 vs. 2010
Net income decreased 50%, driven by the decrease in revenues due to lower asset balances, partially offset by lower expenses and improved credit.
     Revenues decreased 81%, driven by the overall decline in net interest revenue during the year, as interest-earning assets declined and thus represented a smaller portion of the overall asset pool. Non-interest revenue decreased by 42% due to lower gains on asset sales and the absence of positive private equity marks from the prior-year period. 
     Expenses decreased 49%, driven by lower volume and asset levels, as well as lower legal and related costs.
     Provisions were a benefit of $827 million, which represented an improvement of $1.1 billion from the prior year, as credit conditions improved during 2011. The improvement was primarily driven by a $945 million decrease in net credit losses as well as an increase in loan loss reserve releases.
     Assets declined 49%, primarily driven by sales, amortization and prepayments. Asset sales of $29 billion generated pretax gains of approximately $0.5 billion, compared to asset sales of $39 billion and pretax gains of $1.3 billion in 2010.



36


BALANCE SHEET REVIEW

The following sets forth a general discussion of the changes in certain of the more significant line items of Citi’s Consolidated Balance Sheet. For additional information on Citigroup’s aggregate liquidity resources, including its deposits, short-term and long-term debt and secured financing transactions, see “Capital Resources and Liquidity—Funding and Liquidity” below.

EOP EOP
4Q12 vs. 3Q12 4Q12 vs.
December 31, September 30, December 31, Increase % 4Q11 Increase %
In billions of dollars 2012      2012      2011      (decrease)       Change      (decrease)      Change
Assets
Cash and deposits with banks $ 139 $ 204 $ 184                   $ (65 ) (32 )%                   $ (45 ) (24 )%
Federal funds sold and securities borrowed
       or purchased under agreements to resell 261 278 276 (17 ) (6 ) (15 ) (5 )
Trading account assets 321 315 292 6 2 29 10
Investments 312 295 293 17 6 19 6
Loans, net of unearned income and
       allowance for loan losses 630 633 617 (3 ) — 13 2
Other assets 202 206 212 (4 ) (2 ) (10 ) (5 )
Total assets $ 1,865 $ 1,931 $ 1,874 $ (66 ) (3 )% $ (9 ) — %
Liabilities
Deposits $ 931 $ 945 $ 866 $ (14 ) (1 )% $ 65 8 %
Federal funds purchased and securities loaned or sold
       under agreements to repurchase 211 224 198 (13 ) (6 ) 13 7
Trading account liabilities 116 130 126 (14 ) (11 ) (10 ) (8 )
Short-term borrowings 52 49 54 3 6 (2 ) (4 )
Long-term debt 239 272 324 (33 ) (12 ) (85 ) (26 )