Citigroup Inc. (
C)
Q2 2011 Earnings Call Transcript
July 15, 2011 11:00 a.m. ET
Executives
John Andrews Head, Investor Relations
Vikram S. Pandit Chief Executive Officer
John C. Gerspach Chief Financial Officer
Analysts
Glenn Schorr Nomura Securities International, Inc.
Jason Goldberg Barclays Capital
James Mitchell Buckingham Research
Guy Moszkowski Bank of America/Merrill Lynch
Betsy Graseck Morgan Stanley
John McDonald Sanford C. Bernstein
Ronald Mandle GIC
Matthew OConnor Deutsche Bank
Edward Najarian ISI Group
Gerard Cassidy RBC Capital
Moshe Orenbuch Credit Suisse
Peter Ganucheau Carlson Capital
Michael Mayo Caylon Securities
John Dunn Meredith Whitney Advisory
Michael Holton The Boston Company
Presentation
Operator
Hello and welcome to Citi''s Second Quarter 2011 Earnings Review with Chief Executive Officer, Vikram Pandit and Chief Financial Officer, John Gerspach. Today''s call will be hosted by John Andrews, Head of Citi Investor Relations. We ask that you please hold all questions until the completion of the formal remarks at which time you will be given instructions for the question-and-answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Mr. Andrews, you may begin.
John Andrews
Sarah [ph], thank you very much and good morning to everybody. Thank you for joining us this morning. On our call today, we will start off with Vikram, our CEO, who will give you an overview of the quarter, and then John Gerspach, our CFO, will take you through the earnings presentation, which is available for download on our website, www.citigroup.com. Afterwards we will be happy to take your questions.
Before we get started, I would like to remind you that today''s presentation may contain forward-looking statements which are based on management''s current expectations and are subject to uncertainty and changes in circumstances. Actual results and capital and other financial conditions may differ materially from these statements due to a variety of factors, including the precautionary statements referenced in our discussion today and those included in our SEC filings and including, without limitation, the Risk Factors section of our 2010 Form 10-K.
With that out of the way, now let me turn it over to Vikram.
Vikram S. Pandit
John, thank you, and good morning, everybody. Thank you for joining us today. We announced earnings of $3.3 billion for the second quarter, which brings our total net income for the first half to $6.3 billion. This was another solid quarter of operating performance as we continue to execute our strategy and invest in our franchise.
Loans grew throughout our core businesses in the second quarter at a level that more than offset the reduction in Citi Holdings. Revenues from our international consumer banking operations increased from the previous quarter and year, as did the net income from the North American consumer bank.
In our institutional businesses, investment, corporate and private banking revenues improved. Global transaction services performed very well as net income increased from the previous quarter despite continued low interest rates. However, our markets business was clearly impacted by the trading environment.
In Citi Holdings, we continued the reduction of assets in an economically rational matter. Our holdings assets were reduced by $29 billion during the quarter from 337 billion to 308 billion and now make up less than 16% of Citigroup''s balance sheet.
We remain on track to meet the Basel III capital requirements through both the optimization of our assets and the generation of capital. We continue to expect that Citi will be in a position to return capital to shareholders in 2012 and still have an 8% to 9% Basel III Tier 1 common capital ratio at the end of that year.
As we will show later in the presentation and John Gerspach will take you through this, our earnings and utilization of deferred tax assets create a multiplier effect on regulatory capital formation. In the first half of this year, this generated $9 billion of Basel III regulatory capital on $6.3 billion of earnings and $1.5 billion of DTA utilization.
Looking forward, while we are comfortable with the broader macroeconomic trends that underpin our strategy, we are concerned with the impact the near-term economic environment will have on the industry for the second half of the year. But that said, we are consistently profitable and remain focused on growing responsibly.
Let me turn it over to John, who will take you through our presentation and we will come back to the Q&A later.
