Citigroup has reported net income of $4.3 billion for the second quarter of 2009. Second quarter revenues were $30 billion. These results include $11.1 billion pre-tax ($6.7 billion after-tax) gain associated with the Morgan Stanley Smith Barney joint venture transaction, which was closed on June 1, 2009.
Total revenues were $30 billion, up $12.4 billion from the second quarter of 2008, primarily due to the Smith Barney gain on sale. Managed revenues were $33.1 billion, or $22.0 billion excluding the Smith Barney gain. Institutional Clients Group had net income of $2.8 billion, up 17% from prior year. Total deposits were $805 billion, up 6% sequentially, and flat with prior year levels. Credit costs increased to $12.4 billion, including an addition of $3.9 billion to loan loss reserves, bringing the total allowance for loan losses to 5.6% of total loans. Operating expenses were $12 billion, down 21% from the second quarter of 2008.
Citi has reported that the capital position improved during the quarter. Tier 1 capital ratio was approximately 12.7%, versus 8.7% in the second quarter of 2008 and 11.9% in the first quarter 2009. Tangible common equity grew by $9.1 billion during the quarter.
Vikram Pandit, Chief Executive Officer of Citi, said: “This quarter also marks a key milestone in our plan, as we are now reporting our financial results to reflect the separation of Citi into two primary operating segments: Citicorp and Citi Holdings. Citicorp is our core franchise and will be the source of Citi’s long term profitability and growth. Citicorp is unique with institutional and consumer businesses operating on an unmatched global footprint. We will manage our businesses and assets in Citi Holdings to optimize their value over time. We have already announced the sale of a number of businesses within Citi Holdings, and its assets have been reduced by approximately $250 billion since the first quarter of 2008.”
Our earnings of $4.3 billion reflect the benefit of the closing of the Smith Barney joint venture with Morgan Stanley, which was a key element in our Citi Holdings strategy. This quarter’s results underscore the earnings power of Citicorp, with over $3 billion of net income,” he added.
